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Martha Reimann, Georgia Department of Community Affairs Frederick Gardiner, City of Griffin, Ga

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Redevelopment Tax Incentive Ordinances Martha Reimann, Georgia Department of Community Affairs Frederick Gardiner, City of Griffin, Ga – PowerPoint PPT presentation

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Title: Martha Reimann, Georgia Department of Community Affairs Frederick Gardiner, City of Griffin, Ga


1
Martha Reimann, Georgia Department of Community
Affairs Frederick Gardiner, City of Griffin, Ga
  • Redevelopment Tax Incentive Ordinances

2
Regulatory Powers May Be STATUTORY or
CONSTITUTIONAL
  • Constitutional
  • Statutory

Official Code of Georgia Annotated
Georgia Constitution
3
Redevelopment Tax Incentives are Constitutionally
Created Powers
  • Enabled in
  • Georgia Constitution
  • Article IX Section II Paragraph VII Section
    4(d) (Ga. Laws 2002p 1497)

4
Constitutional Powers Are Usually More General
and Easier to Defend
  • Constitution
  • Local Ordinance (if required)
  • Constitution
  • State Statute passed by Legislature
  • As interpreted by State Agency Rules
  • And State Case Law
  • Local Ordinance (if required)

5
What Sort of Properties Can Have Ad Valorem Tax
Adjustments?
  • Properties with blighted Commercial or Industrial
    Structures.
  • Properties with blighted Residential Structures
    that are vacant or used for purposes other that
    primary residences.
  • Special sites such as brownfields if specified by
    local ordinance
  • Not usually undeveloped land.
  • The applicable definition of blight is whatever
    you put in your local ordinance.

6
What Taxes May Be Raised?
  • City ad valorem taxes going toward general
    revenues
  • County ad valorem taxes going toward general
    revenues
  • Both City and County taxes may be raised on the
    same property using parallel ordinances
  • Not School taxes or other special district taxes
    (CIDs, BIDs, Development Authority Millage, etc.)

7
Required Elements of the Local Ordinance
  • ascertainable standards which shall be applied in
    determining whether property is maintained in a
    blighted condition at a minimum endangerment to
    health and public safety
  • Prohibition against raising taxes on principal
    residences
  • Specified increased rate of ad valorem taxation .
    . . through application of a factor to the
    millage rate applied to the property
  • ascertainable standards for rehabilitation
    through remedial actions or redevelopment to have
    the property removed from identification as
    maintained in a blighted condition

8
Required Elements of the Local Ordinance
  • Specified increased rate of ad valorem taxation .
    . . through application of a factor to the
    millage rate applied to the property
  • Specification of a decreased rate of ad valorem
    taxation to be applied for a specified period of
    time after the county or municipality has
    accepted a plan submitted by the owner for
    remedial action or redevelopment of the blighted
    property and the owner is in compliance with the
    terms of the plan.
  • ascertainable standards for rehabilitation
    through remedial actions or redevelopment to have
    the property removed from identification as
    maintained in a blighted condition

9
How Much Can Property Taxes Be Increased?
  • There is no limit specified in the Georgia
    Constitution.
  • A millage rate factor is established in the local
    ordinance.
  • So far they seem to vary between 3 to 7 times
    higher than basic millage.
  • Keep in mind that when you back out school taxes,
    city and county general millage rates may be so
    low that you have to raise them significantly to
    have an impact.
  • You are looking for the tipping point.

10
Appropriate Uses Redevelopment Incentive Tax
Revenues
  • Proceeds must be used for Community
    Redevelopment. This is a broad category and
    might be interpreted to include
  • Infrastructure, public facility expansion or
    upgrades to support neighborhood revitalization
  • Cost of repairing, demolishing and cleaning up
    other blighted properties
  • Creation of Local Revolving Loan Funds, Façade
    Easement Programs, Energy Efficiency Programs
  • Business incubators, recruitment and marketing of
    CBDs
  • You cant use tax money for grants to individual
    property owners, but you could use it to match
    public sector grants such as CDBG, Federal
    Stimulus Funding, etc.

11
Redevelopment Incentive Tax Revenues Appropriate
Uses
  • Special Planning Initiatives (Master Plans, Urban
    Redevelopment Plans, TAD Plans, Code Updates)
  • Establishment and support of various
    redevelopment authorities, housing authorities,
    land banks, etc.
  • acquisition of property for public uses
  • Creation/ Enhancement of Revitalization Areas
    (Local Historic Districts, NSP Areas, etc.)
  • Maintenance of foreclosed properties to avoid
    lowering property values of neighboring homes.
  • Cost of inspections and operating the community
    redevelopment tax incentive program

12
Are Their Geographic Limitations On Where Extra
Taxes Can be Collected or Spent?
  • The Constitution states that Variations in rate
    of taxation as authorized . . . shall be a
    permissible variation in the uniformity of
    taxation otherwise required.
  • It is probably not a good idea to limit increased
    taxes to a specific district. All properties
    meeting the the blight definition should be taxed
    consistently.
  • However, location within specific local district
    boundaries may dictate different rules and
    requirements for appropriate remediation.
  • There is no geographic rational nexus text
    between where taxes are collected and where they
    are spent as long as they are used for Community
    Redevelopment.

13
Design the Program to Motivate Property Owners to
Take Positive Actions
  • May cause owner to invest in stabilizing or
    improving property
  • May encourage owner to sell to someone willing to
    do the work.
  • May cause owner to rent structures previously
    left vacant to pay the extra taxes.

14
Consider Possible Unintended Consequences
  • Owner may choose to demolish or destroy a useful
    or historic structure to avoid paying higher
    taxes. You cant collect taxes on a structure
    that has been removed.
  • Existing businesses renting in deteriorated
    buildings may be displaced or their rent may be
    increased to pay for repairs.
  • Increasing taxes to address blight may increase
    neighborhood property values, but can also affect
    the supply of affordable rental housing.
  • Ordinance provisions may be particularly hard on
    elderly property owners or struggling new
    businesses.
  • May not work for blighted properties held by
    churches, non-profits, quasi-public entities like
    Development or Housing Authorities.

15
Promoting Preservation of Historic Buildings
  • If you have an Urban Redevelopment Plan (URP) or
    Form-Based Zoning Code you can create a unique
    Special Area Plan for designated land mark
    properties. If (as in Griffins ordinance) you
    require consistency with a URP this may allow you
    to set higher that average rehab standards or put
    stricter constraints on demolition or
    inappropriate site or building changes.
  • Cross-reference any local preservation ordinances
    and require compliance with any historic rehab
    provisions therein as a condition of removing
    blight designation.
  • You can theoretically have more liberal
    post-remediation payback provisions to reward
    property owners that go beyond the minimum in
    improving historically significant structures.

16
Notes On Defining Blight
  • Constitution does not dictate a specific
    definition of blight, but requires that you put
    one in your local ordinance.
  • Various state statues have slightly different
    definitions of blight or blighted none of
    which are you required to use.
  • If you are using other statutory tools or
    programs based on blight designation, this
    ordinance probably needs to say that lack of
    blight determination under this ordinance does
    not preclude a property from qualified as
    blighted under other statutory programs.
  • Most state statutes did not envision the current
    mortgage meltdown. If you are thinking of using
    age as part of your definition, remember that
    with high foreclosure rates, some fairly new
    property may end up being blighted.

17
Constitution Does Not Specify How Much of Tax
Collected Must Be Reimbursed
  • While you are required to reduce taxes for some
    period for owners who mitigate blight, you dont
    have to compensate for 100 of their expenses or
    give back all the additional taxes collected.
  • Remember you need to cover the cost of the
    rehabilitation programinspections, planning,
    legal costs, staff time, etc.
  • You must specify the length of time the lower tax
    rate applies, but it could be a small percentage
    reimbursement spread over a long time. For
    example a reduction factor of .1 spread over 10
    years might be more fiscally advantageous to the
    local government than a factor of .5 spread over
    3 years.

18
Do the Math on Cost Recovery
  • Example 1
  • Blight Tax factor (millage times 3.0) is applied
    to a property. Owner complies with rehab plan in
    less than 6 months and thus owner pays a factor
    of only 1.5 in the remediation year, since taxes
    are billed semi annually.
  • Ordinance specifies that after remediation the
    general property tax millage will be reduced by
    .5 for 5 years.
  • Result City forfeits more property tax than it
    collected from the increase.

19
Do the Math on Cost Recovery
  • In cases where the millage factor is 7,and court
    orders are sought in all instances of blight
    determination
  • Citation, hearing and finding required within 45
    days.
  • Remediation plan to be completed within the next
    120 days.
  • Result Higher Tax would only be imposed for six
    months, therefore theoretically the City would
    never collect more than 3.5 times the normal tax
    rate for one year on a given property.

20
Consider Your Policy Intent
  • City of Albany
  • factor of . 5 is applied to the post
    remediation taxes. The decreased rate of
    taxation may be given in successive years
    depending on the cost expended . . . With every
    25,000 or portion thereof equaling one year of
    tax reduction, with no property receiving more
    than 4 years of tax reduction.
  • Question Are you trying to return to the
    property owner 1) all the extra taxes collected,
    or 2) some approximation of the actual cost of
    remediation?

21
Things You May Not Have Thought of or may need to
address . . .
  • How would this type of ordinance work in a state
    Enterprise Zone?
  • How would redevelopment tax incentive money be
    allocated in a TAD?
  • Should the blight designation be filed with the
    deed to protect innocent buyers?
  • In cases of foreclosure, the bank is liable for
    property taxes. Are you sure banks in your area
    are transferring titles promptly when they take
    someones property?
  • Are you going to automatically take blighted
    properties to municipal court, or just keep
    billing them at a higher tax rate indefinitely?

22
Other Points to Consider
  • If you are going to require a court action, you
    should probably make sure the penalty for
    non-compliance with the court ordered remediation
    plan is specified.
  • Using this tool does not limit any of the other
    safety code, nuisance regulations, zoning or
    other statutory redevelopment powers of a
    jurisdiction.
  • Have you done an adequate survey of the scope of
    the problem and run scenarios on revenues based
    on different interpretations of blight?
  • Do a well planned public information campaign
    before putting this tool in place. Make sure the
    public knows that this tool in no way broadens
    the local governments eminent domain powers or
    affects school revenues.

23
Procedural Considerations
  • You are required to offer some sort of hearing /
    appeals opportunity
  • Some communities appoint citizen boards of
    appeal, others may have administrative or
    judicial appeals.

24
Eliminating Substandard Housing
The City Housing Condition Survey
  • Conduct an analysis of all housing in the City of
    Griffin
  • Rate all Structures as follow
  • Excellent 7 to 9
  • Good 10 to 12
  • Fair 13 to 15
  • Deteriorated 16 to 20
  • Dilapidated 21 to 28

25
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26
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27
Griffin Substandard Structure Flow Chart
ID Substandard Structures Per IPM Code
Photo, Placard Green Tag Structure-Document
Findings
Compose Letter to Property Owner Outlining
conditions to be remedied and time period in
which to complete remedies
  • Owner Respond to letter outlining remedy
  • 2. No Response from Owner-File turned over to
  • Code Enforcement for issuance of a citation

Code and Building Official present case against
the property for Court Action City Attorney is
forwarded a case file to continue legal action
City Attorney seeks Demolition Order from Court
after due diligence on the property is completed

Notification to demo is forwarded to Public Works
and Solid Waste Departments
28
Blight Tax Program Process Flowchart
Citywide Housing Survey
Blighted Vacant Structures Identified
Notice of Conditions is sent to owner)
Owner has 45 days to request hearing
No Response
Yes Response
No request for hearing Property is automatically
Municipal Court Clerk Schedules hearing
Affirms blight determination
Reverse blight determination
Property Tax Commissioner is notified to
increase Taxes
Property Tax is increase
29
Eliminating Substandard Housing
Since 2007, 51 Structures have been demolished
  • City of Griffin has Demolished 14 Structures.
  • Owners have Demolished 37 Structures

30
Eliminate Substandard Housing
31
Eliminate Substandard Housing
32
Eliminate Substandard Housing
33
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