MARIETTA - After suffering a $44 million dip in property values over the past decade, the City Council unanimously decided to disband the Franklin Gateway Tax Allocation District.
A Tax Allocation District freezes the tax digest in a defined area to what properties are worth at a specific time. Any increase in tax revenue over the years is put back into the district to update infrastructure and spur economic growth.
Mayor Steve Tumlin asked city staff for a report on the Franklin Gateway TAD that was established by the City Council in 2004, when properties in the defined area were valued at $161,623,725.
After reaching $196 million in 2006, the district is now at an all-time low at $117 million.
"The Franklin Gateway TAD has experienced a 27.4 percent decrease ($44 million loss) in value from 2004 to 2013," according to a report by Beth Sessoms, Marietta's director of economic development.
Councilman Philip Goldstein said the Franklin Gateway TAD is not performing and is of no benefit to the area. The council voted unanimously Aug. 14 to dissolve it.
"Dissolving the TAD does no harm," Goldstein said.
The City Council was the only governing body to administer the Franklin TAD, so the $75,694 left over in the district's funds will go to the city's general fund. Cobb County and the Marietta School System did not subsidize the redevelopment area.
Goldstein said an individual property owner does not feel a direct effect from being in a TAD and no additional taxes are imposed on the area. The TAD essentially caps what the city collects within the district's boundaries.
The benefit comes if property values in the area go up, which allows for reinvestment in the success of the district.
"A TAD sets an area up to improve," Goldstein said. "It is one of the tools in the kit to spur economic development."
The Franklin Gateway TAD includes personal residential property and commercial buildings. Goldstein said the recession caused the TAD to go "upside down," or have an assessed value lower than when it was set in 2004.
For instance, the Marquis Place apartments at 1019 Franklin Road, which is on a 31-acre track, sold in August 2011 for $4.8 million, down from a $15.7 million sale price in 2007.
The Citgo gas station at 780 Franklin Road was appraised for $97,119 in 2005, but is now valued at $49,760, according to the Cobb County Assessor's Office
The boundaries of the Franklin TAD cannot be moved nor can the value be reappraised. And it could take years for the area to rebound to the frozen level, Goldstein said.
The Marietta City Council has placed a $68 million redevelopment bond on the Nov. 5 ballot that would allow the city to buy a number of the aging apartment complexes along Franklin Road, raze them and prepare the land for new development.
If the bond passes, the purchased apartment complexes would be city-owned land and not included as taxable properties, if a TAD were to be redrawn in the area.
That would mean entire blocks of properties, when taken together, would be part of a very low valued tax digest with a large potential for growth.
If the city were to establish a new Franklin Gateway TAD, as was discussed by the council and Tumlin this month, then the economic growth along that corridor would create excess funds that could be reinvested in the success of the redevelopment project.
Goldstein said he would wait to see if the new TAD is the best decision, if the bond passes and properties have been acquired by the city.
The establishment of a tax allocation district and the management of the fund is under the control of the City Council.
Staff said it would take eight months to set new boundaries and appraise the district.
Councilman Jim King, who represents many of the properties in the dissolved Franklin Gateway TAD, said any new district needs to have a redevelopment plan with a clear goal and vision for the area.