Tax Allocation Districts
An Overview
A Tax Allocation District (TAD) is neither a tax break for developers, nor a tax increase
for residents. Rather, TADs are a way for a local government to make challenging
redevelopment sites attractive to developers by leveraging future property tax revenues
from new development to offer bonds to pay for infrastructure improvements.
Once a TAD is approved, counties and/or municipalities may issue bonds to finance
infrastructure and other development costs within that district. These bonds are
secured by a tax increment, which represents the increase in property tax revenues
resulting from redevelopment activities within the TAD district. Over the term of a bond
issue, this increment will be set aside to pay debt service on the bonds. Once the
bonds have been retired, this increment goes back into the general funds to be spent at
the taxing jurisdictions discretion. Additionally, throughout the term of the bond issue,
the taxing jurisdictions continue to receive property tax revenue on an annual basis that
is computed upon the pre-development value of the property.
Tax Allocation Districts are authorized in Georgia under the Redevelopment Powers
Law, Title 36, Chapter 44. TADs, or Tax Increment Financing (TIF) as they are
commonly referred are now authorized in 44 states. TADs are relatively low-risk for
governments in that they are not considered public debt and only require payment if
redevelopment occurs. They rely on an increase in the tax base and not on general
funds to pay for infrastructure and other improvements necessary to revitalize underdeveloped or blighted areas.
Benefits of Tax Allocation Districts

The power to establish a TAD attracts developers to an area that would
otherwise be undesirable or unsuitable for redevelopment.

The ability of local governments to leverage the tax increment to get millions of
dollars worth of new public infrastructure and private investment without
spending current tax revenues.

Development of new retail and restaurants increases sales tax revenues to cities,
counties and school boards.

Creation of new jobs.

A multiplier impact on the areas surrounding the TAD district. Redevelopment of
the TAD district will increase property values of the surrounding neighborhoods
and lead to further development and redevelopment of nearby properties that are
outside the TAD district.

An increase in property tax revenues for areas within the TAD district once the
bonds are retired.
Eligible Uses for TAD Proceeds

Infrastructure improvements such as streets, sidewalks, parking structures, water
and sewer, etc.

Construction of new buildings or the rehab of existing structures.

Real property assembly.

Professional services costs such as architectural, financial, legal, marketing and
engineering, etc.
Examples in the Atlanta Region
Atlantic Station – Established in 1999 to finance infrastructure for the redevelopment of
the 138-acre former steel mill. ($76 million phase I)
East Point – Established in 2001 to finance infrastructure for Camp Creek Marketplace
retail center and office park. ($22 million)
Smyrna – Established in 2003 to finance infrastructure for the redevelopment of two
obsolete shopping centers along Atlanta Rd. ($27 million)