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Health & Fitness

New cities adding to glut of competing jurisdictions as "econ dev" science goes mainstream

As economic development competition heats up between Atlanta’s jurisdictions, the media is shedding light on incentives and the public is engaged. Two downsides are emerging as issues: the efficacy of “cannibal” recruitment from one to another locality and the cost of “whale” project incentives to taxpayers. Unreported to date however, is the effect of further “balkanization” with new cities and special districts with constitutional financing authority.

I attended the Northlake Community Alliance, Inc. 2014 annual meeting last week. Every year, NCA’s guest speaker has the kind of presence that suggests the Northlake business district is an important strategic district, the flagship for an undervalued county. This year was no different. DeKalb County’s new economic development chief Doug Stoner spoke, coming with credentials from Smyrna’s downtown development authority and a host of Cobb County credentials, including more than a decade in the state General Assembly. Stoner’s message was that his hiring was the product of a commitment by CEO Lee May to streamline business relations and make economic development more effective—the first move placing Stoner in coordinating role with all entities in the county, including cities.

NCAs mission is indirectly related to economic development and the Tucker/Northlake CID and Northlake Business Association were announced. If offered, a cityhood discussion might have yielded questions about a new city’s means for focusing economic resources. One question that I have is whether new cities are inherently more reliant on economic development than mature jurisdictions, thereby prompting more ambitious use of incentives and “accommodative” zoning regulation. Another question relates to the imperatives of the “no added tax pledge”, without which new cities are a non-starter: are cities started on a shoestring forced into early aggressive development postures? Third, will the public’s growing awareness of incented redevelopment risks become a cause celebre that effectively transforms the promise of new cities’ “government closer to the people” into “people too close for government’s comfort”? 

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More people are becoming acquainted with the economic development process. Ten years from now, the language of business attraction—bonds, incentives, infrastructure, tax allocation districts (TADs), eminent domain and a big one, zoning “accommodation”—will be as “close to the people” as new city governments have promised to be. Until now, cities, exception being the City of Atlanta, barely participated in the “incentive sweeps”, exception being the City of Atlanta—it was primarily county business. However, the new cities have changed that. They acquire massive amounts of unincorporated territory along interstate byways that have always been county government commercial jewels. To wit, Dunwoody markets Perimeter Center (and I-285) and Brookhaven wants to annex Century Center and rumor has it, Executive Park along I-85.

It’s all about “mixed-use” town centers and hard to imagine how so many will fill their space without inter-regional bidding wars. For example—how would Century Center (Brookhaven/Chamblee) plans and that of the General Motors (Doraville) cooperate—and might they rob Perimeter Center (Dunwoody/Sandy Springs) and kill any opportunity for revitalizing Northlake? Each are new cities with attractive tax bases, but with speculative fever, untested revenue formulas and unforeseen “creep” in proposed services.

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News came out recently that Egbert Perry, CEO of Integral Group LLC and recently named Chairman of Fannie Mae will develop the GM Doraville site. It is a no-brainer for a city or a county to want fallow land re-developed. However, issues related to public financial incentives are in play, as they are now for every “trophy” project that are assumed to bring in more revenue than either the cost or liabilities (direct and indirect). I expect Doraville’s contribution to the Integral project will be publicized soon. However, I’ve been advised by someone watching closely that $200 million in infrastructure support (bridges, streets and utilities) will be paid for with “tax increment financing” via a Tax Allocation District (TAD). A TAD, like a SPLOST is a scheme that uses a bet on uncertain future tax revenue. The common theme between the two approaches is they are generally sold to the public as benign financing instruments, more or less “free of charge” and “no risk” to taxpayers.

There’s another trend in the area of incentives and replacement projects: using public facilities to “anchor” private development. For instance, would the current Doraville proposal move along without the first “tenants” being the relocation of the city’s “center”? The land emptied by relocating city buildings then probably will go to another public use and investment, just as the Turner Field site may go to Georgia State University—essentially “covering” the Braves move with an untaxed government entity. What is supposed to be tax revenue producing private land is being slowly turned to non-revenue producing entities—that revenue has to be replaced by someone and that is the existing tax base. It’s worth noting that much of the remainder of the Doraville project may not be taxable either, the anchors being related to public health agencies and academia.

The point to this article isn’t to question the value of public incentives or the ethical considerations of other convenient “accommodations” such as zoning lenience—a subject well covered by economic experts. It’s the “race”, a mushroom cloud that will be exacerbated by new cities’ plans of grandeur becoming a potential public participation liability if voters think more appropriate services are being supplanted.

Northlake Business Assn is at http://www.northlakebusiness.org/

The Development Authority's work-in-progress pages (consultant studies) are at http://dekalbcounty2020.com

Northlake Community Alliance is at http://www.nlake.org (not included in my notes)

Tucker/Northlake CID http://www.tuckerCID.com  

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