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TAX NEWS - JUNE 2010

Georgia Tax: DeKalb County wants taxpayers to fund GM redevelopment

DeKalb County wants taxpayers to foot the bill to redevelop the sprawling GM plant in Doraville, a $36-million proposition.

A behind-the-scenes deal by the county, city and developer New Broad Street Companies calls for a tax increase to jump-start a makeover of the former factory into a complex of retail, offices and residences, according to documents reviewed by The Atlanta Journal-Constitution. 

The plan, outlined in a memo drafted by the Doraville mayor's office and obtained by the AJC, calls for the DeKalb Development Authority to issue $36 million in bonds to cover the cost of tearing down the plant and rebuilding infrastructure on the site. DeKalb taxpayers would pay back the bonds.

Proponents argue the plan will speed redevelopment and create 4,000 jobs. But some residents have already begun to question why taxpayers should be on the hook for building shops, condos and offices.

"DeKalb County taxpayers don't need to pay for another Atlantic Station," said Chris Avers, treasurer of the Northwoods Neighborhood Association, Doraville's largest. "If that means New Broad Street walks away, so be it."

County Commissioner Jeff Rader said the county would only own the "infrastructure" and tenants would still be required to pay taxes.

"It's safe to say right now there is a lot of risk in the project and the risk is only being proposed to be borne by DeKalb County," Rader said. "This has to pay taxes for it to pay back."

Still, property taxes or sales taxes would have to be increased to pay back the $36 million in tax-free bonds the authority would use to fund demolition and building infrastructure such as roads at the GM site.

Countywide, that means either a .12-mil increase to property taxes or a new penny in sales tax, creating the highest sales tax in the state at 8.5 cents.

"Raising sales tax would give people the incentive to shop elsewhere. I'm not sure this is the right time to do retail or to be investing taxpayers' money in retail and mixed-use development," Georgia State University economist Carter Doyle said. "That's kind of strange in my opinion. It's using funds for private development instead of a public project like a park."

Doraville's property tax rate could jump by one third for it to come up with $10 million - or the equivalent of the small city's annual budget - as its share of that debt. The city would have to add 2.5 mils to its 7.5-mil tax rate to raise $10 million.

"I don't think the citizens or the council will go along with that," said Doraville Mayor Ray Jenkins, who only votes when the council ties.

The county's consultant late Monday canceled a planned presentation before the Doraville City Council. Council chambers were packed with residents anticipating the chance to hear more about the financing plan. The council later went into executive session to discuss the GM property.

On Tuesday, the DeKalb commission will vote on whether to ask the state for a 90-day extension for a June 30 deadline for detailing its financing plans. Rader said the commission needs more time to figure out the financing.

But after unanimously refusing to raise property taxes to pay for county operating expenses this year, it's doubtful that county commissioners would be willing to raise taxes for development. The county has already slashed services and cut staff through early retirements and it still has a $10 million shortfall.

Commissioner Larry Johnson said he is not willing to support any project that calls for a tax increase.

"I'm not willing to go that far. People are hurting too much. It's just too much, too fast, too soon," said Johnson, the commission's presiding officer. "Everybody doesn't have six-figure incomes. We are not going to cut essential services like libraries and things that are being proposed and fund this."

With just 10,000 residents, Doraville remains the David to the combined Goliaths of GM, the county and New Broad Street. City officials say they've felt overlooked in discussions and believe the county and developer explained the plan to Doraville only after they had already hashed out a proposal.

New Broad Street - which has declined public comment, citing a confidentiality agreement with GM - has a record for such remakes. Baldwin Park, a former Naval Base in its Orlando home, has earned national awards for its redevelopment into a new neighborhood.

But the developers created their own mini-government for that project, issuing $76 million in bonds for the redevelopment. The debt is being paid back by owners of the new homes and businesses built on the site, according to the Orlando Sentinel.

The Doraville project calls for nearly an opposite tack.

"If New Broad Street is wanting this much up front, it makes me think they may not have the money to finance it themselves," said state Rep. Jill Chambers, a Republican whose district includes the project. "That should kill the project."

Jabari Simama, DeKalb's deputy chief operating officer, argues that the private-public partnership will turn around the GM site, which took away 4,000 jobs when it was shuttered in September 2008. DeKalb received $90 million in federal stimulus money, due to its high rate of foreclosures and economic blight, and the project could qualify for funding.

"There have only been a few counties that have been able to utilize this [federal stimulus] program. I don't think any county has attempted to do anything this large," he said.

The county hopes to include in that agreement that all jobs must go residents of DeKalb, which has a 10 percent unemployment rate.

In addition to the GM plant redevelopment, the Development Authority is considering other projects for the county's economic redevelopments bond. DeKalb will only have to guarantee the bonds on the GM project. All other projects must qualify through a private bank before the county issues the bonds:

$36.349 million for the former GM plant in Doraville

$1 million for a barbecue restaurant on Panola Road

$5 million for a North Decatur Road strip mall

$1.5 million for a Stone Mountain chiropractic business

$3.5 million for Stonecrest Hotel

$10 million for Sembler's mixed use office park

$1 million for a Memorial Drive medical manufacturing company

$10 million for a Druid Hills office park

$7 million for a Lawrenceville Highway shopping center and hotel

$7 million for an Emory University research building

$3 million for Emory Point mixed use development

$16 million for Crowne Plaza hotel on Northeast Expressway

$1 million for manufacturing warehouse upgrades

$4 million for the old K-Mart on Wesley Chapel Road

$7 million for a Memorial Drive trucking facility
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