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34 Comments

  1. 1

    JFB

    I don’t disagree with any of these points. My discomfort is how the project got this far without the TAD request. Certainly the developer foresaw the need when the parcel was purchased.

  2. 2

    Hunter Burke

    I have no dog in this race – but – every politician seems to claim that money is ‘lost’ if development doesn’t happen NOW, most everyone seems to want to tell their personal history with the area, most want to increase taxes or liability with no acknowledgment of risk.
    Educate, don’t dictate, then let people decide.

  3. 3

    Redevelopmemt Powers 101

    Mayor Pittman is doing everything she can to save this projects downward spiral. All of her statements guaranteeing revenue are speculation. She should show at least 3 TAD’s anywhere in the country with attached financial statements proving her points. Won’t happen. They don’t exist.

  4. 4

    RAJ

    This project,in it’s current form is DEAD, the victim of it’s own inflated promotion as evident above and other similar hyperbole. Lets face one important fact; the revenue to pay the school system thru PILOT bond financing or the ability to pay quarterly interest on ANY bond issuance does not exist under this plan. Why? Because no revenue generating source has been identified! Property values have to increase above the”Base Assessed Value”….$38,806,958….. of the 151 properties in the TAD area to produce any property tax revenue for the TAD with which to pay obligations. It takes PRIVATE projects within the TAD area to pay for infrastructure and other costs and none exist for such a large project when we are well beyond the peak of the current development cycle. The developer(and others)strive to create a project “to big to fail” and leave the taxpayers on the hook for the end result…..sound familiar? On March 1st 2016 the State Revenue Department approved the Doraville TAD #1 without the participation of the County or the School System, but one small problem; Calvin Hicks DeKalb’s Tax Assessor has filed suit(15 CV12292-2) in DeKalb Superior Count challenging a tax appeal for 2015 by the developer. The disputed amount is $29,000,000. I doubt if Doraville can issue bonds until this dispute is settled!

  5. 5

    YOURtruth

    blows the mind that ANYONE would complain about school systems not participating in TADs with the record of Kansas City and the Beltline. Like an annual payment is a savior–cause the problems in the first place. there are so many assumptions in this article it would take three times as much space to explain why they come from a self-interested point of view. This kind of message just begs people to keep bringing the LOSERS up in conversations.

  6. 6

    Disbelief

    Are you suggesting there are no successful ‘tax incentive financing’ arrangements anywhere in the country? TAD is the Georgia version and appears to be supported by the Georgua Municipal Association.

  7. 7

    RAJ

    Please read carefully! You can’t finance infrastructure with infrastructure, you need revenue producing property of increasing value to finance the cost of the infrastructure. Think about it!!

  8. 8

    Dean

    Please don’t tell me you think the GMA has considered the best interest of city citizens with their recommendations do you?

  9. 9

    Disbelief

    I would think infrastructure is what you would want built. If a municipality puts in the infrastructure, aren’t the developers more likely to develop and lease or sell at a higher price, consequently raising tax roles.

    I’m imaging two parcels, one with septic and one with sewer connections. The one with sewer should have a higher price tag then the parcel with septic. If the city used a TAD to upgraded the parcel with septic, wouldn’t it be more appealing and thus draw a higher price.

  10. 10

    Skeptical

    I would like to know what bank has promised to loan $247 million or any amount based on new development that hasn’t been built yet. You can finance an excel spreadsheet after the Great Recession? A bank that makes the loan is to be repaid from the PILOT payment (TAD increment) from all the new buildings. Who is Integral’s equity provider? Who is their Senior Lender? To try and sell this that $247 million in TAD Bonds can be issues is sheer fantasy. Where is the Term Sheet from a bank or a commitment from a lender to loan $247 million?

  11. 11

    RAJ

    Is it my inability to explain clearly or your inability to understand…if the former I apologize! Look, costs are associated with building infrastructure, financed in this case by bonded indebtedness and repayment of principle and quarterly interest are due on the bonds. Infrastructure is not free under a TAD. The State law provides for a legal mechanism for the city(Doraville) to issue the bonds thru it’s Development Authority, but before the bonds are issued the underwriters(and others)want to know who will be responsible for repayment. These are NOT general obligation bonds repayable with taxpayer funds, the property tax increment above the established basis($38,806,958) is projected for this repayment. The problem in this case is that NO private project is committed to be built to increase the “Base” property value to generate the additional taxes to fund the cost of the infrastructure. Once again you can’t fund infrastructure with infrastructure!

  12. 12

    Redevelopmemt Powers 101

    Not only am I suggesting it, I am challenging anyone anywhere to post a spreadsheet with actual increased property tax revenues that equal the bond interest payments made, in lieu of taxes, plus lost taxes plus $1.

  13. 13

    Banker

    Skep–
    the $247 refers to bonds that must be sold–currently the only planned source of funds is bond indebtedness–at “junk” status (projected in the plan to be 6 %) . Bonds will be sold in four sequential packages in the case of the Doraville Redevelopment Plan. The first $43 million is scheduled to be sold by Dec. of this year. The first sale is predicated on a projected $15 million in private investment on the site. (Note: its not unusual for public vs private investment to be in arrears for 5 to 10 years, but not a good idea when the “site” is not attracting revenue).

    Revenue from that or those amounts of projects is supposed to immediately begin paying quarterly interest payments.

    There are two things that can kill this thing immediately: (1) Nothing other than a tax increment (from Doraville, DeKalb and School System millage) above $38 million can cover the interest payments (no taxpayer funds)–so the land must have an increase in value to create a increment; (2) bonds aren’t successfully marketed to build any infrastructure because the project isn’t viewed as attractive even for “junk bond” status. (It is actually possible that Integral is already in trouble by spending infrastructure money ahead of TAD funds appearing).

    The only bank that is involved is Bank of the Ozarks for a medium term construction loan. (It’s not clear whether the loan is for construction of infrastructure or the movie studio which Integral is building under a separate LLC).
    Loan payments (for infrastructure only) can be paid for by a TAD, but if they use increment financing for that purpose, it means they don’t have that money to pay of interest on bonds. Integral does NOT want to do that. It needs every penny of bond funds to build infrastructure–supposedly required to attract investment.

    The other private financing is even more precarious. It is not a bank, but a group that financed the land purchase. They extended their deal by six months last September have the option to keep doing that every six months–or unbelievably, they will take the property if payments aren’t made. Six months is up in March–oh, that’s this month.

    The only “revenue” that has been produced to pay off any lending source is the sale of junk and equipment from the GM factory–estimated at $12 million. It’s estimated that this was used to pay down the land purchase loan (which is at loan shark rates of 12%).

  14. 14

    Tom Doolittle

    You can discuss the TAD and you can discuss the Assembly project, not both at the same time. The TAD is a project area (not a project or any kind of financial asset). You can talk about the benefits of the Assembly project, but shouldn’t neglect the weaknesses of including Doraville’s downtown in the TAD. Will funds that should be directed at the Assembly project be diverted to Downtown projects like building a new government center? That’s allowed in the plan and would be a case of bait and switch for those that thought they were financing the Assembly.

    The implications of favoring the Assembly project and not looking at the TAD for what it really is are alarmingly significant. You’ll note that every media article and quote from officials refer to “the project” while trying to endorse the entire TAD…thereby endorsing the Downtown Development Plan by inference.

    Huge problem for the county government (and county taxpayers) that really has no business financing Doraville’s new city infrastructure and government buildings.

  15. 15

    Eddie E.

    Did the GM plant operate without water/sewer/power infrastructure for 50 years?

  16. 16

    Eddie E.

    Wonder why the state of California outlawed TAD’s?

  17. 17

    RAJ

    Tom …As of March1st 2016 this is a Doraville ONLY TAD! See letter from Georgia State Revenue Dept for details….no County or School Board participation at this point.

  18. 18

    RAJ

    Banker…Not sure but don’t think Doraville will be selling $247M in bonds without the participation of the County and the School Board. How does the civil suit filed by the tax assessor against the developer in DeKalb Superior Court factor into all this. Big gap in the TAD “base” and Calvin and the developer are going to mediation the last week of the month. I think this one gets settled in the court room and Calvin is using google photos and the $20M sale of 20 acres for the auto dealership as his comparable!

  19. 19

    RAJ

    Answer….no,but after 50 Years all that has to be replaced at today’s cost, and an industrial site is not suitable for it’s new proposed use. The bulk of the infrastructure cost is in the tunnel(covered road)a bridge at the south end of the property and environmental remediation.

  20. 20

    Eddie E.

    The supposed Senator from this are stated recently that environmental remediation costs would be borne by the buyer/developer. Has that changed?

  21. 21

    Tom Doolittle

    Eddie–I don’t know if your question is rhetorical, but it certainly is ironic as to the subject of the article–the “sadness” that the Mayor feels about the school system not taking advantage of taking a bet on one project —
    and completely not being interested in paying for the other part of the TAD in Doraville’s Downtown (that is in fact the TAD and the whole TAD is the real issue).

    So here’s your answer about California. TADs had proliferated in a ghastly fashion, paying for everything that couldn’t be nailed down. (California’s TADs exceeded all TADs in the other 49 states at the time the law was repealed).
    The issue became clear that school funding was being bled dry, but it only became “actionable” in the Republican legislature when the diversion of funds became the cause of INCREASED state funding to make up for the diversions.

    That is the slippery slope that Georgia is on having multiplied its TADs by 300% in the first 8 years after 2000.
    However, it is important to note that most TADs in Georgia are “shells”–they are areas that are mapped on paper with no development activity. Oh–and school systems haven’t even been asked for participation–and won’t until there is developer interest.
    (Think of Kensington TAD in DeKalb, even tho its not a city TAD)

    So in most of Georgia, there have been no increments in “tax increment financing”. When is a TAD not a TAD?

    We may know soon enough right in our own back yard.

  22. 22

    Banker

    I still don’t understand why Doraville’s $60 million on its own can’t jumpstart a project on the Assembly site–and since DeKalb County is willing to bend over and take it up the … why they won’t apply their $60 million.

    It’s criminal that state officials aren’t showing as much interest in the way the entire TAD is structured as they are pumping the Assembly project and tunnel.

  23. 23

    RAJ

    ANYONE capable of thinking clearly on this project?? You can’t jumpstart a vehicle that does not exist! Do you really think ANYONE would buy bonds from a Development Authority in a city of 10,000 with NO revenue source to repay principle or interest. The logic of the 7-0 vote favoring the TAD by the DeKalb commissioners was ONLY on the condition of DCSS participation, don’t think the developer can go back to the County. The situation became more desperate last week when the Doraville City Council passed a resolution asking the Legislature to pass CID enabling legislation and they said “sorry,to late” for this year. Top lever State officials are willing to pressure DeKalb County and the developer into this project,but won’t participate themselves with FBI & GBI investigations ongoing in DeKalb….to much risk for the Gov in an election year!

  24. 24

    Eddie E.

    Meanwhile, our State Education Budget has been chronically underfunded since 2003 to the tune of over 8 billion dollars. Why should what education funding remains be part of a gamble on private development?
    Unless Georgia Voters say clearly NO, ghastly misuses of public money to fund private projects lacking sufficient demand are very likely to proliferate.

  25. 25

    Tom Doolittle

    Flip side perspective…focus on school funding. Mayor Pittman and state officials don’t realize how unpopular that can still make this “TAD issue” (Assembly, actually) by continuing to attack school officials. Unwittingly, they are getting into uncharted territory by breaching the spirit behind the constitutional local govt/local schools divide. In Georgia, local government officials even THINKING about school funding and thereby operations is TABOO.

    Bottom line…Is DeKalb’s really the school system that can afford the imposition of the second largest individual TAD fund in Georgia history?

    So to DeKalb’s particular issues–D-TAD would purport to remove about $10 million a year from current school funding and an even larger tax cut ($60 million annual) is being threatened by legislation BECAUSE Green refuses to play “TAD-ball”.
    Meanwhile, any funding reductions have not been put into focus with DeKalb’s historical challenges that have handicapped DCSD since the 1970’s–and in fact are endemic in the rise of ALL of DeKalb’s corruption which everyone thinks “just happens”.

    It is IMPOSSIBLE to educate DeKalb’s SOCIETY without “getting this”–and funding reductions (and diversions) have to be put in this perspective:
    DeKalb History:
    1. Racial segregation law suits, blockbusting in the “white flight” era–neighborhood disruption

    2. DeKalb was the location where special education of what used to be called mental retardation “cut its teeth”–WHILE society was learning to shift views on mental health and disabilities.

    3. DeKalb is the chosen location not only in Georgia, but also the East Coast for refugee resettlement. To its credit, when timely, the AJC has covered this, but not put in perspective of ALL of its challenges.

    In many ways, DeKalb has been the proving ground for changing social issues–experiments of sorts. Imposing massive budgetary issues.

    School systems all have different historical challenges because they are tied to the social makeup of their communities. School funding for TADs can’t be justified with sweeping philosophical opinions. “TADs bring in tax dollars, so therefore TADs are good for funding schools and therefor good for educating kids.”

    Economic development is only tangentially related to improving SOCIETY–regardless of the supposed treasure trove it brings in. Has education really received the promised benfits from the Lottery? Would it with casinos?

    …and those funding sources are DIRECT and relatively assured–not speculative like real estate development.

  26. 26

    RAJ

    The environmental cost is modest(as far as we know),the previous developer(New Broad Street) had a bond for $20M before the deal fell thru,that said, three “hot spots” have been identified on the property that could present problems for over-all certification; this excludes compartmental approval of site specific sale of future acreage. The developer’s VP Eric Pickney stated recently that cleanup had begun, however evidence suggests that proper permits have not been obtained from State and local governments for this work under contract with a Floride company. A $500K loan is in place with the DeKalb Development Authority(Decide DeKalb)to finance some of this work. Be advised that most State Legislators(both Sen & Reps)know little about this project beyond the obvious politics. Any more questions? Just post and I will answer on line while protecting some sensitive sources. I have been following this project, with the grateful help of many others since 2010. Feel free to call me out on anything I post(I’m most deserving)but I was previously involved for 42 years with development projects with three of the Country’s largest Retail Corporations(toot,toot),just a job like any other!

  27. 27

    Dekalb Blues

    Is the school system completely useless?? They soak up money like a sponge and contribute NOTHING! I will remember next time they ask me to vote for another ESPLOST.

  28. 28

    Eddie E.

    I was just wondering since the Senator I referenced was essentially flippant about the environmental remediation.
    I have no data (since none is public) but I ASSUME the ‘hot spots’ are mercuric antibacterials used in the hydraulic fluid for the GM tooling as well as the inevitable trichlorethylene and percoethane used for decades like water as a degreaser.
    All of these compounds migrate through porous soil and into the water table so the costs might be a teeny bit more than moderate.
    Is this in any way similar to the information you might have been provided?

  29. 29

    Enviro

    They are going to use TAD dollars for environmental cleanup (they have said so), which will be a multimillion project (this they won’t admit). This should be GM’s liability.

    The TAD is not going to meet these expectations, as little is likely to bebuilt here. The only confirmed tenants they have are car dealerships.

  30. 30

    Enviro

    The “hot spots” are volatile organics, including an active benzene plume. It’s all mobile,so not really a “spot”.

  31. 31

    Prof Engineer

    Mobile in clay based soils?? Not so. The environmental remediation has most likely already been completed by removing on site contaminated soils. Although, the EPA will require more expensive techniques to fill their coffers. They never saw an Environmental Defense Fund that needed to be raided.

  32. 32

    RAJ

    Keep in mind that this site sits on an aquifer and a stream running thru the property was piped and runoff goes into Nancy Creek. Water quality is being monitored at the exit at the South end of the property, but with what frequency is unknown. More than 100 cores have been pulled from the site and the area most suspect was always around the paint shop. This was a union plant so some environmental safety measures were always in place; how effective is unknown. Hundreds of tons of contaminated soil has been removed from the site…..this is usually hauled to South Georgia or Alabama, burned in an open field and returned to the site. To my knowledge few of the environmental reports are public as they are proprietary info of the developer. “Old GM”(the bankrupt entity) reserved $300M for environmental cleanup on the plants that were included in the bankruptcy, Doraville was not one of those plants. So whats it to you?? Brookhaven should be cautious in approving tax abatements around environmentally sensitive areas(MARTA)with developers that do not have credible, real projects of lasting value to the City. Ongoing development will create infrastructure maintenance costs for the future taxpayers that may not be presently accounted for today.

  33. 33

    Guest

    I’m still on the fence about this. I will say that I have been less than impressed with the “face” of Integral that has been at the neighborhood meetings for MARTA. He is condesending, argumentative and overall comes off like a sleazy car dealer that is trying to hide something. Makes me hesitatant to believe anything from Integral.

  34. 34

    salahkar

    Raj, applaud your perspicacity and would like to discuss further with you

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