The City of Atlanta, under the direction of Mayor Dickens, has proposed extending all of the tax allocation districts (TADs) in the city beyond 2050.
These TADs are generally about 20 to 33 years old and were intended, per state legislation, to spur property value appreciation in “undervalued” neighborhoods and then wind down by the 25th year.
Extending all TADs is bad public policy. Most parts of these TADs are no longer “undervalued.” Most importantly, the extension will harm city schools and local services for decades and push more tax burden onto renters and homeowners.
Low-income Atlantans will be hurt the most.
TAD extension would subsidize development projects
Credit: David Ferebee
Credit: David Ferebee
Property values have been rising in almost all parts of the city for well over 10 years. Atlanta is regularly classified as one of the fastest gentrifying cities in the country. A carte-blanche extension of all TADs under these conditions will mostly redirect tax dollars away from schools and subsidize development projects, projects that must lie within the TADs
A TAD is a subsidy tool that freezes the tax revenue in an area going to the city, schools and county at the current level, and then redirects all of the growth in property taxes over the next 25 years toward subsidizing development only within the TAD.
Any growth that would have occurred anyway is, therefore, effectively diverted away from schools and government. The subsidies flowing from the TADs are overseen not by the City Council but by the city’s less-accountable development arms, Invest Atlanta and Atlanta Beltline Inc., which are governed by unelected boards.
The key question to ask of geographically targeted policies like TADs is: What would happen without it? The research on tax increment districts shows that they often do not cause new development but rather capture property tax revenue that would have occurred anyway and redirect it away from public schools and basic services and/or push a greater share of the tax burden onto renters and homeowners.
Examine Beltline and nongrowing areas
The Beltline is an example where a TAD (together with a great deal of other philanthropic and government funding) did cause increased property values (with some negative impacts in terms of higher rents and property taxes nearby) but that effect occurred well over a decade ago.
The TAD has done its thing, values will keep rising, and so it is time to let it and other TADs expire and return the revenue to the city, schools and county, as was the original intent.
If there are still places in the existing TADs where property values are not growing, then this begs three questions:
- Why, in one of the fastest gentrifying cities in the country, are property values there still not growing there?
- Why would extending the TAD after 20 to 30 years change this?
- Why not simply end the existing TADs and start over by creating new, smaller TADs focused on helping these depressed neighborhoods?
The city’s lobbyist bemoans the fact that there remains deep inequality and family distress in the city, including among many low-income residents in some of the TAD neighborhoods.
Ironically, the biggest winner from extending the TADs would likely be the Los Angeles billionaire developer of the Gulch, who would receive a huge windfall because of the additional years of subsidy.
Low-income families are not benefiting from this policy
The fact that so much inequality persists in these areas suggests that 20 to 30 years of TADs in these areas have not been effective at improving conditions for low-income families.
One reason for this is that very little of TAD funds have gone to help low-income Atlantans. For example, in the Beltline, the largest TAD, fewer than 12% of affordable housing units claimed by Atlanta Beltline Inc. have been for families earning under 50% of area median income (about $51,000 for a family of four). (The number is only a bit higher citywide, at less than 18%.)
Is extending the same policy another 25 years, continuing to subsidize developers who deliver little truly affordable housing, sound policy? And how will 25 more years of diverting large amounts of property tax revenue from public schools serve low-income Atlanta families? The Beltline portion of TAD revenues alone now exceeds $100 million per year, and half that would return to the public schools should the TAD end in 2030 as intended.
Finally, in many parts of the TADs, lower-income families have been displaced or excluded from these neighborhoods under existing policies. Hopefully, the real goal is not to continue the current, rapidly gentrifying trajectory of the city, resulting in the continued exclusion of lower-income residents.
Dan Immergluck is professor emeritus of urban studies at Georgia State University and the author over 100 research articles and five books, including “Red Hot City: Housing, Race, and Exclusion in Twenty-First Century Atlanta” (UC Press, 2022).
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