Educator, teach thyself

doraville

DeKalb County school officials apparently think the best way to maximize revenue from the site of the former Doraville GM plant is to leave it like this.

If I were a resident, taxpayer or parent in DeKalb County — and thank goodness I’m not — I would have grave concerns about the competence of the school board and superintendent.

The DeKalb school district is the lone holdout in a plan to add public infrastructure at the site of the old GM plant in Doraville. Developers want to build a mini-city (think: Atlantic Station) on the large tract fronting I-285 near Spaghetti Junction. The public contribution of streets and water/sewer infrastructure, among other things, would be paid from the incremental growth in property taxes as the site’s value rose over the next two decades, a financing tool known as a tax allocation district.

TADs are not without controversy. Done badly, they can lead to revenue shortfalls and legal disputes; just ask Atlanta Public Schools. Perhaps the Doraville TAD is poorly conceived. But school board members wouldn’t know because they have refused even to let the city and the developer make their case.

That’s right: There’s a potentially transformative project at a site that has sat dormant for nearly a decade, in a county that hasn’t gotten much right during those same years. And the school board turned it down without even listening.

Based on their public comments, board members and the superintendent worry the TAD would take money from the system. This calls into serious question their understanding of how TADs work.

Today, DeKalb schools receive less than $500,000 per year in property taxes from the 165-acre site. The schools would still get that money. What they wouldn’t get, at first, is any increase in revenue, which would go toward the new infrastructure. But — and this is the matter in a nutshell — absent that new infrastructure, there won’t be an increase in revenue anyway.

The system is holding up the best economic prospect DeKalb has had in years because it wants 100 percent of what today, and for the foreseeable future absent this project, amounts to $0.00.

Worse, Plan B for the site would likely include more housing. Rather than eventually increasing the system’s revenues, that could make the system worse off financially by adding students to the area’s overcrowded schools. Do board members understand that? Who knows? They won’t discuss it.

Unfortunately, that’s not the board’s only dereliction of duty. On May 24, DeKalb voters will be asked to renew a five-year sales tax for education, or E-SPLOST, without knowing anything about how the money would be spent.

The E-SPLOST plan, which merely says money will go toward such vague categories as “safety and security” or “new facilities and additions” without explaining where and how, appears to be legally deficient. The state law creating SPLOSTs holds that governing agencies “shall specify eligible expenditures” for the money raised.

The system may face a lawsuit even if the tax is approved, which itself isn’t guaranteed given the lack of details voters have. The system’s legal defense would cost a lot more than the $0.00 in new property taxes it will get from Dora-ville if it scuttles the TAD.

If you’re thinking “same old DeKalb,” well, you’re not alone.

Reader Comments 0

114 comments
Neil Baublitz
Neil Baublitz

Good they need to fix there damb roads first.

Tony Rodgers
Tony Rodgers

I agree that school boards shouldn't be involved in speculative real estate projects.

RTS04
RTS04

A number of large projects are being built in the neighboring streets in Doraville and Chamblee (quite a few on Peachtree Industrial). None of these projects received special concessions from the county. Why should this project be subsided by the school board when other projects in the area proceeded with no subsidy? 

What proof do we have that the only way to make this project profitable is through tax concessions? The project site has the best location in the metro area and the concession from the school board will just contribute to the developers' profits. Giving special concessions to the the developer is unfair to the rest of the citizens of DeKalb who receive no discounts on their tax bills. 

The area schools need additional enrollment as the population is aging, so the " area’s overcrowded schools" argument does not have a basis in fact. The School board was even considering closing some schools in the area two years ago.

Kyle_Wingfield
Kyle_Wingfield moderator

@RTS04 There is nothing happening in the area that remotely compares to the size of the Doraville redevelopment. We are talking about a 165-acre mini-city, not a single apartment building. And I wouldn't be too sure about even those smaller developments not getting any tax breaks ...

Speaking of which -- and for the umpteenth time -- a TAD is not a tax break. The developers/land owners pay exactly what they would pay absent a TAD. The difference is how the money is used: for specific infrastructure improvements related to the redevelopment, not the general fund. In this case, it's not a question of profitability, as you suggest, but whether the land will be developed fully or not.

And you really are mistaken about the overcrowded schools. Google "Cross Keys overcrowding," if you don't believe me.

HadleyV
HadleyV

The property tax subsidy is not a deal breaker---it is a negotiating point. The development can still make a profit with paying the regular property tax rates---the county will ultimately cave and allow the subsidy, and end up with less revenue long-term. The developers are in no hurry--they know the country will break.

Looking4truth
Looking4truth

Thank you, Kyle, for an explanation of this situation I can understand.  With that said, citizens of the metro area are still waiting for economic development that does what it promises - more permanent, high paying jobs from companies that don't blackmail the politicians into even more giveaways to keep the jobs here.  I do think DeKalb should listen to the developers, but then decide what is going to be best for the students both now and in the long run. 

Vespidie
Vespidie

@Looking4truth Ahem, "decide what is going to be best for the students both now and in the long run".  You're kidding, right?  High paying jobs in Dekalb Co, with the current infrastructure and horrible gridlock to boot...no thanks.  The school board may essentially be 'mental midgets', but they may actually be on to something in this case.

Kyle_Wingfield
Kyle_Wingfield moderator

@Looking4truth "I do think DeKalb should listen to the developers, but then decide what is going to be best for the students both now and in the long run"

Thanks. That's all I'm asking here.

waitaminit
waitaminit

@Kyle_Wingfield @Looking4truth Is that all your asking? In other words, all the condemnation for DeKalb and DeKalb officials would be taken back if they accede to holding a MEETING? That is in fact, not the thrust of your opinion--which is that the Assembly Project (not the TAD boundary) is an opportunity that the school system should PARTICIPATE in--not hold a meeting about. I'm trying to envision under what circumstances the media would not refer to DeKalb's decision as moronic if they voted and voted "no". A "no" vote would just go on the AJC's list of bad, rotten to the core, "culture of corruption", indictments etc about DeKalb to be washed, rinsed and repeated until the state finds a way to take over the county. 

BurroughstonBroch
BurroughstonBroch

The developer's game plan is always the same - build the project with minimum investment of your own money and then sell it as quickly as you can for as much as you can. The developer maximizes his profit while leaving other investors holding the bag.

> DCS cannot properly educate its students, much less invest the taxpayer's money in risky real estate investments.

> I am a DeKalb taxpayer and have watched TAD abuse in Atlanta City. I want no part of it.

Bill O'Rourke
Bill O'Rourke

Why would a school board get involved in a project that is not directly related to their main mission of teaching students? Good for you Dekalb school board!

Ayrio Cronin
Ayrio Cronin

Bill O'Rourke nope - you didn't read the article

Bill O'Rourke
Bill O'Rourke

Do you need help? I disagree with a school system putting money into projects unrelated to teaching students.

Holly Holland Stewart
Holly Holland Stewart

I read the article...and it STILL isn't the school's job to invest in real estate development. That would be a city or developer's job. That is what put DeKalb County in the mess it is today..."investing" in construction companies/corrupt board member's pockets... kudos to the school board on this decision!!

Bill O'Rourke
Bill O'Rourke

Ayrio Cronin, what is in the deal for you and yours?

Cedric Weeks
Cedric Weeks

Where in the article does it say the school board would be investing?

Karrah Hammock
Karrah Hammock

The school board isn't investing any money but they would have to approve what money they are getting in tax gains from the property which right now is nothing seeing as how it's been empty and gaining no value for years. This project would significantly raise that properties value hence giving them more in tax revenue. Dekalb county is ridiculous.

Karrah Hammock
Karrah Hammock

Especially seeing as how that area is currently full of blighted properties and this would help revitalize the entire area

Cedric Weeks
Cedric Weeks

BillO'Rourke I am assuming that the way Dekalb is set up they have to give an up or down vote no matter what.

AvgGeorgian
AvgGeorgian

What a joke Kyle - how about this for every taxpayer - 



I will be glad build rental houses, remodel, etc if the school system will let me not pay taxes for 20 years in the hopes that two decades from now they might make a little tax money from it.



I will also benevolently buy a new car if the state will forgo vehicle and gas taxes for the first 20 years.



I will even hire an employee if the state will give up state taxes for said employee for 20 years.


Notice that none of these things are in existence now, but I will create them if I can get a 20 year tax break.


Lil_Barry_Bailout
Lil_Barry_Bailout

This is about Dekalb, not the state.

And Dekalb might take you up on the offers if they believe the net present value of doing so is positive.

That is the question before the county regarding the old GM site, but for some reason they won't do their job and evaluate the proposal.

Lil_Barry_Bailout
Lil_Barry_Bailout

@AvgGeorgian BTW, you may recall that Democrats at the national level did two of those things a while back--recall "Cash for Clunkers" and "Cash for Caulkers"!

Kyle_Wingfield
Kyle_Wingfield moderator

@AvgGeorgian "will let me not pay taxes for 20 years"

Thanks for showing you have no idea how TADs work. As you might say, "What a joke."

The developers/owners don't get to avoid paying property taxes under a TAD. The taxes are collected -- at the new, higher appraised values, meaning the developer/owner is paying far more than today -- and the funds are used to make payments on bonds sold to fund public infrastructure on the site.

Maybe you think a 165-acre site containing housing, office space, retail space, park space, etc. doesn't need public infrastructure. Maybe you think the developer should pay the taxes and pay for the public infrastructure; that view has been shared on this comment thread.

I think that, if you're counting on that, you should get comfortable with the idea of the site remaining underdeveloped.

AvgGeorgian
AvgGeorgian

@Kyle_Wingfield @AvgGeorgian My bad. I will use the forgone tax money to build infrastructure(a nice, long driveway) to get my car to the street so I can pay taxes in the future.

Lil_Barry_Bailout
Lil_Barry_Bailout

Dekalb isn't "Clayton dumb" but they're headed that direction.

Kyle_Wingfield
Kyle_Wingfield moderator

The irony of this discussion is that, as a news story linked above points out, Plan B probably involves a tax abatement -- in which case the school district actually loses the revenue it's getting now, in addition to any incremental revenue -- and the development is still less than what it could have been. Which is pretty much lose-lose for the school district.

Here's the story: http://www.myajc.com/news/news/local-govt-politics/without-schools-support-gm-site-redevelopment-may-/nrG4z/

Astropig
Astropig

@Kyle_Wingfield


They don't legally have to listen to this guy. (other than as you pointed out,the standard 3 minute presentation).


I probably wouldn't agree with 5% of the board and super on most matters,but i'm behind them on this.If they allow these guys to have a dog-and-pony presentation,they will have a circus of astroturf shills preening before the gullible media to "demand" that the board do this.I'd tell them to get lost.They should develop properties(with their own money) and the school system should educate kids.

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig That's a nice sentiment, but the fact is that both economic development agencies and school districts rely disproportionately on the property tax for their revenue stream. There is going to be a conflict, and both sides have to work together -- even if that ultimately means one side decides against being involved in a particular project.

Now, you might counter by saying local governments have no role in economic development. Which is another nice sentiment, and I can show you what it gets you: DeKalb County, circa 2016.

Astropig
Astropig

@Kyle_Wingfield @Astropig


Nope. I'll counter by saying that just about everyone that is not connected to these type deals know that they benefit a few connected insiders.Otherwise, why would they go to the trouble? 

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig Well, we shall see who was right when the TAD doesn't happen (as I suspect will be the case) and the land is either developed to its highest and best use anyway, or isn't.

Jefferson1776
Jefferson1776

@Kyle_Wingfield @Jefferson1776 Fine,  disconnect the education funding from property and it is not an education issue, one way or another.


Its not gonna happen...the lawmakers won't levy the taxes to perform their constitutional duty.

Kyle_Wingfield
Kyle_Wingfield moderator

Again, it'd be one thing if the school board had heard the arguments, had reservations about participating, and declined to do so. I doubt I'd have written anything in that scenario. But refusing to listen is just derelict.

Kyle_Wingfield
Kyle_Wingfield moderator

@Starik Sure, but not being able to talk to each other about this kind of a deal will only exacerbate the other factors.

Lil_Barry_Bailout
Lil_Barry_Bailout

No need to. There's already a tax system in place...property taxes.

If you don't like it, win some elections.

xxxzzz
xxxzzz

@Astropig @Kyle_Wingfield Absolutely.  And if they do an end run around the school district, I believe Deal has to approve it.  If he did, it would be the end of these development boards in the state.

xxxzzz
xxxzzz

@Kyle_Wingfield @Astropig The highest and best use is what happens when the government doesn't distort the market by giving subsidies.  As the conservative columnist you should understand that!

Astropig
Astropig

@Kyle_Wingfield @Astropig


"...the land is either developed to its highest and best use anyway, or isn't."


Why not let the market determine the "best use"?  Who's to say that a better developer won't come up with a better plan for the site that doesn't depend on an implicit tax subsidy? You seem to be saying that the guy that is pushing this is the only option that will ever be.


His name,by the way,is Egbert L.J Perry  and he's one of the most "connected" men in finance today.I suspect that his name wasn't mentioned here because too many readers would Google it and discover that he's an influence peddling wheeler-dealer from way back. He can pick up the phone and pull the money together for this deal in a thrice.Why he would need to shake down a school board for help in developing this should make you very,very suspicious.


This guy already has access to what is essentially free money,an unemployment picture that favors development and govermnet leaders that want to facilitate this deal.Why is the only missing piece some tax gimmes? 

Kyle_Wingfield
Kyle_Wingfield moderator

@Jefferson1776 @Lil_Barry_Bailout A common misconception. Any type of taxation represents a "permanent lien": on your income when it's an income tax, on your purchasing power when it's a sales tax, and so on. The idea that a property tax is unique in this respect is narrow-minded.

That's why some of us aren't in favor of raising taxes.

Astropig
Astropig

This project is the kind of stuff that has turned liberals and conservatives against their government.This is obviously a crony capitalist/socialist project that uses a tax dodging gimmick to make the connected insiders a little more wealthy than they already are, while schools don't have copy or toilet paper and teachers have to beg for basic supplies.


The guy pushing this must be the dumbest "businessman" that ever lived if he can't make the business case work for this without robbing the school kids of DeKalb of their share of the increased tax revenue that redevelopment would provide.Interest rates are near zero.There are plenty of unemployed looking for jobs to do the actual work.An interstate borders the site to ease the transportation and storage of materials.But he needs the freakin' school system to give up what is legally theirs so that this thing will fly.He's not a business genius,but he does seem to be a genius at fooling the AJC and local politicos.

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig My point is that the district has two options: something for something, and nothing for nothing. Something for nothing is a false option the district has latched onto.

Astropig
Astropig

@Kyle_Wingfield @Astropig


If the developer wants something for nothing,it's only fair that the schoolkids get something for nothing.Kind of some circular reasoning we have here,huh?

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig So your argument, just to be sure, is that developers are now responsible for building public roads, sewers, fire stations, etc. Is that what you are arguing? Because that's what the money would pay for.

xxxzzz
xxxzzz

@Kyle_Wingfield @Astropig Developers are responsible for their initial roads and sewers.  They support fire, police, etc. with their property taxes.

Kyle_Wingfield
Kyle_Wingfield moderator

@xxxzzz Let me ask you a question: Where do you think this money is coming from?

Astropig
Astropig

@Kyle_Wingfield @Astropig


No, my argument is that this is crony socialism.


You may want to save the template of this column because if they agree to this,every little two-bit wheeler dealer Trump wannabe will be over there demanding the same deal.

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig This is not some novel concept. It's been done before. It's worked well in some instances, worse in others.

Astropig
Astropig

@Kyle_Wingfield @Astropig


If the guy is really trying to "help" the community,he could offer DCCS a piece of equity for the tax breaks.If this is such a win-win,why won't he do that?

Astropig
Astropig

@Kyle_Wingfield @Astropig


You still haven't answered my question.If the school district gives up tax revenue increases,why can't Mr. Moneybags give them a piece of his action on the back end?


Because he wants the profits all for himself and his cronies,maybe? 

Astropig
Astropig

@Kyle_Wingfield @Astropig


He must be a hypnotist.You seem to be able to only spout his rosiest of rosy scenarios to justify this.If its such a slam dunk,why does he need the school system to have ANY involvement at all? Wouldn't financiers trip over one another to fund this?

Kyle_Wingfield
Kyle_Wingfield moderator

@Jefferson1776 No, it's the question. The money is still being paid by the developer, in the form of property taxes. The difference with a TAD is the developer gets certainty that the related public infrastructure will actually be built.


Astropig
Astropig

@Kyle_Wingfield @Astropig


I'll just gently point out that "something for nothing" is the oldest con in the world. Something for nothing is not reality.



Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig And I'll gently point out that you might want to reread my comment, and see that I called it a false option ...

Jefferson1776
Jefferson1776

@Kyle_Wingfield Let the deal makers not change education funds one way or another,  they should not be tied to property.

Kyle_Wingfield
Kyle_Wingfield moderator

@Jefferson1776 There is no shift in burden. The schools are not losing something they have now; they are forgoing, in the medium term, something they wouldn't have had anyway. And in the long term, they're getting a whole lot more than they have now.

xxxzzz
xxxzzz

@Kyle_Wingfield @Astropig Its not the school district's purpose.  As for cities, it makes sense in a place like Atlantic Station which was a toxic waste site.

dsw2contributor
dsw2contributor

@Kyle_Wingfield @Astropig Kyle, you are overlooking the third option:  MONEY FOR NOTHING.  That is what the Dekalb Schools has now. The system gets $500,000 each year from vacant land that does not send any children to the schools.  MONEY FOR NOTHING.   


Development would change that to "Some Money for A Lot of Problems" -- new children would be enrolling in a school cluster that is already terribly overcrowded.


The real story is not whether or not the Doraville site gets a SPLOST -- the real story is that the school system has ZERO incentive to do anything to help with developing the site.


It will make sense when you understand that Dekalb's school system is actually a full-employment program for adults on Mountain Industrial and in South Dekalb's failing schools.  


(The DSW in my moniker refers to the defunct Dekalb Schools Watch blog.)

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig You're going to complain about crony socialism, and then suggest actual government ownership of the development?

What they have offered, to no avail, is to allow the school district to keep the portion of the incremental revenue increase not needed to make the bond payments. There would be conditions to ensure it isn't a replay of the APS-Beltline dispute, but the amount is projected to be at least $90M over the lifetime of the TAD.

Now, let's be very skeptical and assume only a quarter of that would be delivered, which amounts to about $1M per year. As already stated, the district currently gets less than $500K per year, which it would keep in this scenario. So we are talking about at least tripling the revenue from the property during the life of the TAD.  Kill the TAD, and there's no guarantee the revenue from the property would increase at that rate (not to mention what I already said about costs rising because of higher student enrollment).

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig At the back end, the owners of the property will be paying an estimated $30M-plus a year in property taxes, plus sales taxes generated on site, plus revenues from any growth nearby not included in the TAD (another factor often overlooked by the critics). And the city and county will own the infrastructure built with the incremental tax revenue in the meantime. And none of that will depend on whether the owners of the property are running profitable businesses. That's a pretty good deal IMO -- again, if it all checks out, which the school board wouldn't know because it won't consider the proposal.

Kyle_Wingfield
Kyle_Wingfield moderator

@Astropig I'm responding to your claim the county/city/district could instead get rich with a "piece of the action." Which itself assumes the rosy scenario, no?

In any case, I included -- once again -- the caveat "if it all checks out."