The Augusta Metro Chamber of Commerce is working to educate the voters of Augusta-Richmond County about an important ballot question on the November 7th ballot. The ability to use the Redevelopment Powers act will be a powerful tool for our community to spur redevelopment of our city. The Chamber has prepared the following information to inform the public about the possibilities of the act. We believe once you consider the possibilities you too will support the passage of the Redevelopment Powers Act ballot question.

What is the Redevelopment Powers Act?

In 1985 the State of Georgia passed the act to bring the concept of tax increment funding (TIF) to the state. This type of funding has been in use across the country for over fifty years.

Redevelopment Powers Act/TAD/TIF?

The Redevelopment Powers Act is the name of Georgia’s enabling legislation; tax allocation district (TAD) is the name for an area designated to use the powers of the act; tax increment funding (TIF) is the term for the type of funding mechanism.

How does TIF work?

As an example: A property has a property tax value of $1 before a redevelopment project. Funds are spent to improve an area through projects which result in a higher value for the property. The new increased value of the property means it now has a property tax value of $2. The city continues to receive the $1 for the general fund, but the additional $1 is directed towards the payment of expenses of the improvements, until such time as those expenses are paid, and then both dollars go to the general fund.

What are the steps?

The Augusta-Richmond County Commission designates an area as a TAD. The Richmond County School Board agrees to participate. Typically a project is identified and bonds are issued. (However this is not the only fashion projects can be conducted.) Bonds are sold on the financial markets. Proceeds from the bond sale are used to facilitate the project. The property owner pays taxes, part of which are directed to pay off the bonds.

Who controls the process?

The only body with the authority to create a tax allocation district is the county commission. The school board also must agree for its portion of the property tax to be included. The commission will decide what entity will administer each TAD.

What costs can be supported by a TAD?

Capital costs, financing costs, professional services, administrative costs, relocation costs, organizational costs, related payments by one political subdivision to another, property assembly costs.

Is there risk to the taxpayer?

It is against the provisions of the act to use the taxing authority of the local government to pay the bonds. Were the project to produce insufficient funds to pay the debt service the bond holders would bear the burden.

Can all of Augusta-Richmond County be a tax allocation district?

No. The act restricts the amount of the tax digest placed into a TAD to 10%. In addition the definition of the type of area eligible for the act is spelled out within the act. An area declared a TAD must meet the description of blighted or disadvantaged as described by the act.

Why is this good for the city?

The use of the Redevelopment Powers Act facilitates economic development that might not otherwise be economically viable. Projects inside tax allocation districts produce jobs, improved quality of life, and in many cases, other kinds of taxes. Improvements inside of the district often spur growth in the areas bordering the district that lead to increased property taxes. The city gets the full amount of increased tax value once the debt is retired.

Why is this good for developers?

By being able to spread out some of the up-front cost of a project, and pay those costs through their property tax, developers are able to make the economics of certain projects viable.

What is the difference between using the Redevelopment Powers Act and a tax abatement?

Abatements forgive the tax on a property, reducing the tax bill of the property holder. The use of the Redevelopment Powers Act results in the property holder paying a regular tax rate, but with the proceeds partially designated to support improvements. The city receives the same amount of taxes as before, and after payment of the cost of improvements they receive the new increased taxes.

How long does it take to pay off the cost of improvements?

Each project is unique, but it is typical that in the case of bond issuance that the payments last between ten and twenty years.

What do we need to do to get the ability to use the Redevelopment Powers Act in Augusta-Richmond County?

Voters need to vote yes on the ballot question on November 7th.

 

Prepared by the Augusta Metro Chamber of Commerce,
contact (706) 821-1314 for further information.