Mayor & Commission Meetings

LEGISLATIVE REVIEW COMMITTEE Thursday, November 7, 2024 City Hall Conference Room 301B Committee Members Present: Committee Members Absent: Commissioner Carol Myers, Chair Commissioner Allison Wright Commissioner John Culpepper Commissioner Jesse Houle Commissioner Ovita Thornton Staff: Niki Jones, Acting Manager Ilka McConnell, Economic Development Sherrie Hines, Deputy Chief Attorney Daniel Young, Economic Development Courtney Davis, Senior Attorney Sarah George, Recorder Commissioner Myers called the meeting to order at 1:02 p.m. A. Approval of Minutes: Commissioner Houle made a motion to approve the October 3, 2024 minutes. Commissioner Culpepper seconded the motion. The motion was approved unanimously. B. Public Input: There was none. Commission Identified Items of Interest: C. Develop a Process for Creating New Tax Allocation Districts or Amending Existing TADs Acting Manager shared the Mayor’s Charge for the topic. Ilka McConnell and Daniel Young shared a presentation to provide an overview of Tax Allocation Districts (TADs). Daniel Young explained that most of the United States refers to tax allocation districts as tax increment financing (TIFs). He noted that they are characterized by being underdeveloped or having older or inadequate infrastructure. Ilka McConnell and Daniel Young also explained how TADs work. They explained the base value property taxes continue to be applied to the General Fund, and the TAD accrues new revenues (increment) from taxable additions to the tax digest, which are set aside specifically for projects within the TAD; the TAD is not an additional tax. Acting Manager Jones requested clarification on what would be considered an improvement. Ilka McConnell shared that an example of an improvement would be if something was built upon a vacant piece of land or if a building was given an additional wing or was renovated. She explained the new assessed value for the property that is higher than the value from the base year when the TADs were created (2020) is put in the TAD fund. Commissioner Culpepper inquired about how the TAD worked for government property that increases in value. Ilka McConnell explained that, since governmental buildings are not taxed, increases to the value of government property would not be included in the TAD. Commissioner Culpepper requested clarification on how governmental property, like the Arena, would benefit the TAD. Acting Manager Jones explained the Arena would not benefit the TAD; however, the development around the Arena would benefit it. Daniel Young explained that the Georgia Redevelopment Powers Law was created in 1985 and approved the use of TAD funding. He shared they can be created as either a project-specific or  an area-specific TAD; he clarified that the TADs within Athens-Clarke County are area-specific TADs. He noted that they have to be contiguous with some exceptions. Additionally, special government districts within a proposed TAD, such as the Clarke County School District, must consent to their tax increment being set aside in the TAD, and a school impact study is required to be conducted. Commissioner Myers requested clarification on how the project-based TAD works. Ilka McConnell explained that the process from the State is that a redevelopment plan has to be developed to basically outline why the area qualifies; this process is the same for a project- specific TAD, but it would be based around the project. She noted, however, that the timeline would have to be very compressed. Commissioner Thornton inquired about where the initial money would come from for a project- specific TAD. Ilka McConnell explained that, to date, the Mayor and Commission have indicated that they would like to have the TADs be funded through pay-as-you-go method (PAYGO); the developer would submit their plan and the Tax Assessor would look at the current value of the parcels involved, the site plans for the intended development, and the Tax Assessor would forecast the amount of value that the development would bring above the current value. The developer would have to wait each year as they would be assessed for the value that they were asking. She explained that some communities will do a bond up-front based on the estimated increments. Commissioner Houle shared that, from their understanding, if the Commission were to amend or modify a TAD, it would reset all of the valuations. They requested clarification on what happens to the existing increment if the Commission modifies the TAD. Daniel Young explained that his understanding is, if the boundaries changed, the existing increment can either continue to be applied to the TAD or can go back to the General Fund. Ilka McConnell explained that they would follow-up with their TAD attorney to confirm and further clarify. Daniel Young shared an overview of the timeline for the development of the existing TADs. He explained that the Mayor and Commission approved the six redevelopment plans in September 2020 and voted to approve the six TAD districts in November 2020. The TADs were formally created on December 31, 2020. He also provided an overview of the geography of each of the TADs. The six existing TADs are the following:  Mall Area;  West Broad/Hawthorne;  Newton Bridge;  East Downtown;  North Avenue; and  Lexington Road. Daniel Young also shared the timeline for the TAD Advisory Committees (TAC) for each of the TADs. Ilka McConnell explained that there are six TACs and the Mall Area Redevelopment Committee; the Mall Area Redevelopment Committee is comprised of three Mayor and Commission members and two Clarke County School District Board of Education members. She also provided an overview of the process the TACs utilize for developing the Community- Identified Priority Recommendations. The process includes the following steps:  Public meeting and survey to gather community input on specific projects within the TAD;  TAD Advisory Committee creates Community-Identified Project List within the Mayor and Commission’s four TAD funding goals;  Community-Identified Project List and recommended funding percentage is presented to the Mayor and Commission; and  Mayor and Commission accept the Community-Identified Priority List and funding percentage recommendations. Legislative Review Committee Meeting Minutes Page 2 110724  Ilka McConnell and Daniel Young also shared status updates for each of the TACs, as well as the account balance accumulated for each TAD account as of October 1. The balances for the TAD accounts are:  East Downtown TAD: $579,169.91;  Newton Bridge TAD: $424,756.69;  Lexington Road TAD: $891,287.08;  Mall Area TAD: $323,355.03;  West Broad/Hawthorne Area TAD: $512,964.92; and  North Avenue TAD: $154,430.03. Commissioner Culpepper requested clarification on if the TAD funding was added to the TAD accounts once a year. Ilka McConnell explained that staff would have to get clarification from the Finance Department on the frequency of property tax payments being added to the TAD account. Commissioner Culpepper inquired as to whether or not there were projections on the anticipated TAD increments. Ilka McConnell explained that she believed that, on the whole, for the Board of Assessors, any estimate would be based on overall percentage of past development unless they know of any new projects coming in. Ilka McConnell also presented a graph comparing the percentage of the tax digest for each TAD in 2020 and 2024, based on the parcels within those TADs. Commissioner Myers asked why the East Downtown TAD shows a decrease in its percentage of the tax digest between 2020 and 2024. Daniel Young explained that the numbers are just percentages, so there are many variables in determining why they may have decreased. Sarah George also noted that the tax digest as a whole has grown significantly since 2020, which may explain the decrease in the percentage that the TAD represents of the total digest. Ilka McConnell also shared an overview of the process to amend or add a TAD, which would require creating or amending an existing Redevelopment Plan for the defined area, engaging with the Board of Education, and conducting public hearings before the local governing bodies could consider adoption of the Redevelopment Plans and resolution for the TAD. Once the Mayor and Commission adopt the Redevelopment Plan and resolution for the TAD, the Georgia Department of Revenue would review and certify the tax allocation base value. Commissioner Myers shared that the discussions about the TADs within the Commission took place before she assumed office. Initially, she understood that TAD funding would be used for infrastructure, similar to SPLOST funding; however, during the discussion on the Mall TAD project, she realized that TADs are actually intended to support private development, functioning as a public-private development tool. Acting Manager Jones added that in other municipalities, the tax increment generated by TADs typically goes toward debt service for development projects. Ilka McConnell explained that in most communities, the main benefit of a TAD is the development itself—its purpose is generally to stimulate development, increase the tax digest, and attract surrounding businesses; however, in Athens-Clarke County, the approach is somewhat split. Athens-Clarke County requires additional community benefits beyond just the development, which may explain why fewer developers apply for TAD funding here. She also pointed out that applying for TAD funding involves significant risk for developers. They must pay an application fee upfront, cover legal fees for both their attorney and the ACCGov's attorney to draft a community benefits agreement, which is often a lengthy process, and their project is subject to public debate and discussion. This creates uncertainty for developers. Ilka McConnell explained that any boundary changes would require the restart of the entire TAD creation process. She noted that the TAD base increment is reset to the current year, which could potentially cause a loss of value. Commissioner Myers inquired as to whether a project- Legislative Review Committee Meeting Minutes Page 3 110724  based TAD could be created adjacent to an area TAD. Ilka McConnell explained that she believed it could as long as eligibility requirements could be met for the project-based TAD. She also inquired as to whether or not ACCGov had a process for a developer to apply for a project- based TAD. Ilka McConnell explained that they would likely have to go through the TAD application process, but there is not an existing process specific to applying to have a project- based TAD. Commissioner Thornton requested clarification on whether the process was a state requirement or if the complexity was created by ACCGov. Ilka McConnell explained the process of creating a TAD is outlined in the Redevelopment Powers Act. Acting Manager Jones clarified that, the state lays out requirements to establish a TAD, but, after the TAD has been established, there can and has been additional process added to it locally. Commissioner Houle acknowledged the feedback about the complexity of the process but stated that, after being deeply involved in the mall negotiations, they believe the community received significant benefits out of the process, such as the transit transfer station and childcare facility, among others. They suggested that there might be ways to make the negotiation process more efficient. Ilka McConnell explained that the community engagement process with the TADs was designed to help streamline negotiations. This allows developers to understand upfront what the community has expressed a desire to see in the TAD, helping them as they prepare their TAD applications. Commissioner Houle further explained that, as modifications are made to the process, it would be helpful to continue having discussions about the community benefits agreement. They noted that community needs can evolve quickly, often faster than the process allows for revisiting the community-identified priorities list, and priorities may vary from one project site to another. Additionally, they pointed out that any community engagement process has limits, including who is involved and when distilling priorities into a list that is easy to understand, which may lack detail. The more detailed negotiations are important, and if the Mayor and Commission had been involved earlier, the process might have felt less rushed and messy; however, they emphasized that this is not to suggest the process should have been done differently, but rather to highlight opportunities for improvement. They also noted that the Mall TAD is the one TAD that the school district has consented to contributing their funding towards the increment, and the Board of Education felt it was important to participate in the discussions earlier moving forward. Commissioner Houle shared that it is important to bring representatives from the Board of Education into the conversation early enough for them to feel their input matters. If the school district feels excluded from these discussions, they may not want to be involved in future TADs. Commissioner Myers explained that it would be helpful for the Committee to distinguish between aspects of the process that are set by the state and those that are controlled locally. This distinction would allow the Committee to focus on revising the parts of the process that are under local control. Commissioner Houle suggested that it might also be beneficial to create a process allowing developers to request a project-based TAD for projects located outside of an established TAD boundary. Commissioner Thornton expressed interest in learning more about how the TAD process works in other communities. Acting Manager Jones responded that staff could provide information on Gainesville's approach. Commissioner Houle also asked staff to provide recommendations for improving the negotiation process for the community benefits agreement when the Board of Education is involved, specifically regarding how and when the Board should be engaged in the process. Schedule/Agenda Changes The next LRC meeting is scheduled for December 5, 2024 at 1:00 p.m. Legislative Review Committee Meeting Minutes Page 4 110724  Commissioner Thornton made a motion to adjourn the meeting. Commissioner Culpepper seconded the motion. The motion passed unanimously. The meeting adjourned at 2:35 p.m. Legislative Review Committee Meeting Minutes Page 5 110724