GSU report outlines wide autonomy, authority in popular tool to fund urban renewal

By David Pendered

A new report by researchers at Georgia State University piques interest about future funding for big civic projects ranging from the Atlanta Streetcar to SunTrust Park, in addition to smaller projects such as a worn retail district in Buckhead that seems largely unchanged for 50 years.

Researchers from GSU’s Center for State and Local Finance examined Georgia’s community improvement districts. CIDs aren’t new and aren’t particularly sexy. But they are powerful tools to reinvigorate communities, according to the report. And they’re wielding a growing amount of influence.

Just for starters, the report examines the increasing diversity of services CIDs are providing now, as opposed to 25 years ago. CIDs now account for more than 60 percent of the loans and grants provided by the Georgia Transportation Infrastructure Bank.

CIDs enable business owners to vote to raise their tax rate to pay for far-reaching improvements. For example, Midtown’s streetscapes are paid for through its CID. Cobb County’s Cumberland CID has built an extensive road and trail network. Buckhead’s CID is building PATH 400 in the right-of-way of Ga. 400 and maintain flowerbeds along Peachtree Street.

Where the report stands out is in the way it quietly points to some possible growing pains in the popular CID program, which was first used in Georgia in 1988 to create the Cumberland CID.

Consider the Atlanta Streetcar.

The Downtown Atlanta CID provided $6 million for construction costs and financially supports the streetcar’s operation, according to the report. This cost continues even as the tax base for the CID diminishes.

The Downtown Atlanta CID loses money with every multifamily residence built in the CID because the Georgia Constitution specifies residential properties are exempt from paying CID taxes, according to the report. Every former commercial building purchased by GSU or another tax-exempt organization is a CID revenue loss because they are exempt from CID taxes, according to the report. Finally, the report notes, the CID includes numerous other properties that are tax exempt because they are churches, non-profit organizations or federally owned properties.

For a time, the CID had success in seeking voluntary contributions from these property owners. But that has decreased over time, according to the report.

The CID has raised the millage rate in the CID multiple times since 2002. The tax rate went from about 2.2 mills to 5 mills by 2005. The rate has not changed since 2005, according to the report. A mill is a $1 tax on every $1,000 of assessed property value.

The report doesn’t name the DACID in the following comment, but does observe:

• “Urban CIDs in Georgia report that they are facing increasing challenges associated with the growth of commercial multifamily residential properties. … Alternatives to CIDs, such as SSDs [special service districts] and BIDs [business improvement districts] provide a mechanism for including these types of properties in the digest.”

One of these alternatives, an SSD, was used to help finance construction of SunTrust Park, where the Atlanta Braves are to play starting in 2017.

Cumberland CID agreed to pay $10 million into the $300 million to be provided by Cobb County, according to the 2013 memorandum of understanding signed by the Braves, Cobb County, and Cobb-Marietta Coliseum Exhibit Hall Authority.

This sum and other revenue streams weren’t enough to meet the annual debt payment on bonds sold to fund the ballpark’s construction. That’s because the Cumberland CID has a maximum tax rate of 5 mills and the rate has been at 5 mills since inception, according to the report.

To raise sufficient funds to make debt payments, Cobb County formed a brand new tax district that generally overlaps the Cumberland CID. The county’s board of commissioners enabled this special service district to tax properties that are exempt under CID provisions.

The new Cumberland SSD will levy a 3-mill property tax on apartment complexes. The measure specifically excludes privately owned townhouses and apartments. The SSD is projected to raise $5.2 million a year that will be used to make debt payments on the bonds, according to the MOU.

The report sheds light on a little retail district in Buckhead, north of the Whole Foods store on West Paces Ferry Road. This area is not in the report, but the function of CIDs is about to change a place that feels unchanged for at least 40 years.

It’s not just that the iconic Henri’s Bakery has sold its half-acre acre site for redevelopment into a multifamily structure. There’s supposed to be room for the bakery in the new building.

It’s that the retail district has been annexed by the Buckhead CID. The Atlanta City Council vote June 20 to approve the CID’s request to expand into this wedge of land located between West Paces Ferry and Roswell roads.

As the GSU report notes, Georgia law provides for CIDs to be closely tailored to meet a community’s interest. In this case, CID advocates barely overcame opponents, but did meet the threshold.

Records show the annexed area contains 66 properties. Thirty owners consented to enter in the Buckhead CID, records show. These owners account for 75.3 percent of assessed values in the area, which is above the 75 percent minimum set forth in state law.

The amount needed for approval was $19,020,742.50, records show. The amount consented was $19,086,990, a sum that provided a margin of $66,247.50.

Owners of all property in the new territory face an additional tax rate of 3 mills that will be paid to the Buckhead CID. Henri’s owner voted in favor of joining the Buckhead CID.

Three authors wrote the GSU report:

• Lindsay Kuhn, a public finance fellow with the Center for State and Local Finance;
• Sarah Larson, a senior research associate at the Center for State and Local Finance;
• Carolyn Bourdeaux, director of the Center for State and Local Finance and an associate professor of public management and policy at GSU’ Andrew Young School of Policy Studies.