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Redevelopment
Tax Incentive
Ordinances
Martha Reimann, Georgia Department
of Community Affairs
Frederick Gardiner, City of Griffin, Ga
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Regulatory Powers May Be
STATUTORY or CONSTITUTIONAL

Constitutional
Georgia Constitution

Statutory
Official Code of Georgia Annotated
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Redevelopment Tax Incentives are
Constitutionally Created Powers
Enabled in:
Georgia Constitution
Article IX
Section II
Paragraph VII
Section 4(d)
(Ga. Laws 2002p 1497)
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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)
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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.
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What Taxes May Be Raised?

City ad valorem taxes going toward general revenues
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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.)
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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”
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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
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How Much Can Property Taxes Be
Increased?
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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”.
+ 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 can’t 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.
+ Redevelopment Incentive Tax
Revenues: Appropriate Uses
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Special Planning Initiatives (Master Plans, Urban
Redevelopment Plans, TAD Plans, Code Updates)
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Establishment and support of various redevelopment
authorities, housing authorities, land banks, etc.
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acquisition of property for public uses
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Creation/ Enhancement of Revitalization Areas (Local
Historic Districts, NSP Areas, etc.)
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Maintenance of foreclosed properties to avoid lowering
property values of neighboring homes.

Cost of inspections and operating the community
redevelopment tax incentive program
+ 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.
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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.
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Consider Possible Unintended
Consequences

Owner may choose to demolish or destroy a useful or historic
structure to avoid paying higher taxes. You can’t 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, nonprofits, quasi-public entities like Development or Housing
Authorities.
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Promoting Preservation of Historic
Buildings

If you have an Urban Redevelopment Plan (URP) or FormBased Zoning Code you can create a unique Special Area
Plan for designated land mark properties. If (as in Griffin’s
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.
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You can theoretically have more liberal post-remediation
payback provisions to reward property owners that go
beyond the minimum in improving historically significant
structures.
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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.
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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 don’t 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
program—inspections, 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.
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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.
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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:
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Citation, hearing and finding required within 45 days.
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Remediation plan to be completed within the next 120 days.
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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.
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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?
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Things You May Not Have Thought
of or may need to address . . .
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How would this type of ordinance work in a state Enterprise
Zone?
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How would redevelopment tax incentive money be allocated in
a TAD?
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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 someone’s property?

Are you going to automatically take blighted properties to
municipal court, or just keep billing them at a higher tax rate
indefinitely?
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Other Points to Consider
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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 scenario’s 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 government’s eminent domain
powers or affects school revenues.
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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.
+Eliminating Substandard Housing
The City Housing Condition Survey:
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Conduct an analysis of all housing in the City of
Griffin
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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
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Griffin
Housing Conditions Survey Results
8.63%
16.65%
11.52%
8.79%
54.40%
Excellent
Good
Fair
Deteriorated
Dilapidated
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Griffin
Housing Condition Survey Results
Number
4,000
3,479
3,000
2,000
1,065
562 737
1,000
552
0
Condition
Excellent
Good
Fair
Deteriorated
Dilapidated
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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
1. 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
+ Blight Tax Program Process Flowchart
Citywide Housing
Survey
Blighted Vacant Structures
Identified
Notice of Conditions
is sent to owner)
Yes Response
Owner has 45 days to
request hearing
Municipal Court Clerk
Schedules hearing
Affirms blight
determination
Property Tax
is increase
Reverse blight
determination
No Response
No request for hearing
Property is automatically
Property Tax Commissioner
is notified to increase
Taxes
+Eliminating Substandard Housing
Since 2007, 51 Structures have been demolished
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City of Griffin has Demolished 14 Structures.
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Owners have Demolished 37 Structures
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Eliminate Substandard Housing
+ Eliminate Substandard Housing
+ Eliminate Substandard Housing
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