![]() In Georgia, not all areas can qualify to be included in a TAD. Alternatively, improvements may be financed on a “pay-as-you-go” basis under which, for example, the development costs initially may be paid from cash on hand or other sources and then reimbursed if and when tax increment revenues are generated. The bonds are then fully or partially paid with tax increment revenues as they are collected. In some situations, tax allocation bonds are sold by the local government at the outset of the project so that funds are available for front-end costs such as land acquisition or initial infrastructure costs. These new revenues will arise if new development takes place in the TIF or if the value of existing properties rises. TIF allows a local government to reinvest all new incremental property tax dollars in the neighborhood from which they came for a prescribed period of time. Accordingly, if county and school board taxes are also to be frozen and the incremental increases allocated for the project, the county or school board must formally consent at the outset. For example, when a city undertakes a TAD, it can affect taxes for the county and the school board. For example, in the Atlantic Station project, the developer arranged for a $7 million third-party payment guaranty to cover debt service in the first few years following the bond issue as, during those years, there would be insufficient incremental increases in tax revenues.Ī TAD can affect other political bodies. Supplemental credit enhancement may facilitate the sale of TIF bonds. Tax allocation bonds are not considered general obligations of the city or county but may be secured by a lien on the improvements financed by the bonds. These tax allocation bonds are payable from the incremental increase in tax revenues and can be qualified to pay interest exempt from federal and Georgia income taxes. Once a tax allocation district is in place, the city or county may issue tax allocation bonds for the purpose of paying redevelopment costs related to projects located within the TAD. Certain procedures must be followed in order to establish such a district, including a public hearing, the adoption of a redevelopment plan and the approval of the plan by the city council or county commission. The city or county will then designate an area or areas for redevelopment, not to exceed 10 percent of the tax digest, as a Tax Allocation District (TAD). Georgia’s Redevelopment Powers Law, which allows TIF to be used, must first be made applicable to a particular city or county by the passage of a local law by the Georgia General Assembly and its approval by a special election in the city or county to be affected. Recently, TIF financing was used to finance infrastructure improvements and environmental remediation in connection with the Atlantic Steel redevelopment project at 17th Street in Atlanta (Atlantic Station), and to finance infrastructure improvements in connection with a mixed-use development at Camp Creek Parkway in south Atlanta. Following recent revisions in Georgia’s statutes, TIF has been utilized or planned in DeKalb County and the cities of Atlanta, Macon, College Park, East Point, Marietta, Acworth and Smyrna. While originally used for urban renewal projects, in the 1980s and 1990s states began to allow the use of TIF for other types of development and redevelopment projects. How TIF WorksĪlthough certain forms of TIF have existed since the early 1940s, TIF did not come into widespread use until the 1970s. ![]() TIF can be used to pay for the public and sometimes the private improvements related to development. In the proper circumstances, the potential future increases in property tax revenues can almost magically be brought to the present to create or spur the development that will create those increases. TIF utilizes future incremental increases in the property tax revenues that will be created by development to finance improvements associated with the project. TIF is a local government financing technique that can be utilized to finance projects designed to stimulate private sector investments which otherwise may not have been feasible. Can one create something from nothing? Can an underdeveloped area “pull itself up by its bootstraps”? Perhaps, with tax increment financing (TIF), an increasingly popular method for funding economic development and redevelopment, also known as tax allocation bond financing.
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