Is Northlake Ground Zero For the Success of a City?

If you read the AJC, or watch WSB-TV, you may think that Northlake Mall is a killer property. If you don’t “get” it, you can’t finance your city. So there has to be one winner and one loser.

When WSB-TV covered our press conference, they had to talk about Northlake. When they report on Tucker efforts, they talk about Northlake. In this morning’s AJC, in an article about Century Center, they had to find a way to bring up Northlake. Even the Patch (which has actually reported on a lot of the activity in the area) sometimes finds the “conflict” more interesting than the problem we’re trying to solve.

Or is it simply a problem of how to cut a pie?

This is a long analysis – sorry.  But the punch line is very simple -- the decision about whether the mall and surrounding areas are in the City of Tucker or the City of Briarcliff has essentially no effect on the financial viability of either city. Read on if you’re curious.

There are two big math issues in the financing of cities that get missed in the news stories. First, the numbers are not that big. And secondly, if revenue goes down; costs go down. If management roles go down; costs go down.

I’ll use Tucker’s feasibility study numbers illustrate what I mean. Their numbers are smaller and their functions are more limited, so it’s easier to do a comparative analysis on theirs.

TUCKER:

Start off with property taxes. The total property tax revenue (and the related HOST funds) of the entire proposed City of Tucker is $2.6 million. The net effect if the ITP area was excluded would probably be less than one fifth of the property tax revenue – less than $500,000. There are really no costs associated with that revenue, since all the appraisal and billing work would remain at the County.

Then there’s all the other business and related taxes and fees. That’s less than $6 million in the Tucker feasibility study. What if the entire ITP area made up a third of the business (it doesn’t); that would mean a decrease of less than $2 million in revenue.

But look at the other side of the equation. The estimated administrative costs in the Tucker study (as is) are $7.5 million. If all of the zoning, enforcement, billing and other administrative requirements went down by one third, the costs of operation would certainly go down by more than one fifth -- $1.5 million.

Putting those elements together, you could imagine a decrease in the “surplus” of Tucker of $1 million. So the surplus would be near $2.3 million. If you’re doing the math, you get a change in the excess margin of error from 25% to about 21% of expenses. Nothing in that changes the viability of the City.

BRIARCLIFF:

The same kind of analysis of Briarcliff is a lot harder to do, but you can make some grossly generalized estimates.

The property tax millage rate being transferred to Briarcliff is about seven times the value transferred to Tucker.  That’s because Briarcliff is taking over police and roads. Using the same gross estimates as I did above, the property tax revenues of Briarcliff would decrease $3.5 million, with no significant change in costs.

The business tax change would be the same in the Briarcliff version -- $2 million. The administrative expense proposed for Briarcliff is $9.5 million; a comparable decrease in expenses would be $1.9 million. Briarcliff would also decrease police and roads cost, maybe by as much as $2 million.

Put those together, and you’d get a decrease in Briarcliff’s surplus of around $1.6 million. The margin of error would go from 14% to 12%. Nothing in that changes the viability of the City.

The point of all of this calculation is that the decision about whether the mall and surrounding areas are in the City of Tucker or the City of Briarcliff has essentially no effect on the financial viability of either city.

So what’s left to talk about? 

The Briarcliff folks started out with a principle of “clean and clear” borders that would be recognizable by everyone inside and outside of the cities themselves.  Who does not know what ITP and OTP mean?

The Tucker folks started out with more of a historical and emotional perspective of what people think of as part of Tucker. They tried to map what the residents in their area thought of as “Tucker”.

The Briarcliff folks looked at the overall geography; the Tucker folks looked at Tucker.

Is one “right” or one “wrong” in their perspective?  No.

We have two right answers that come to different conclusions. Is that a killer issue? How do you solve that kind of problem?  Stay tuned.