Source: https://www.jbwpc.com/Articles/Local-Government-article/DOWNTOWN-DEVELOPMENT-AUTHORITY-LAW-AND-URBAN-REDEVELOPMENT-LAW-OVERVIEW.shtml
Timestamp: 2019-04-23 02:51:58+00:00

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The development of trade, commerce, industry, and employment opportunities being a public purpose vital to the welfare of the people of this state, the General Assembly may create development authorities to promote and further such purposes or may authorize the creation of such an authority by any county or municipality or combination thereof under such uniform terms and conditions as it may deem necessary. The General Assembly may exempt from taxation development authority obligations, properties, activities, or income and may authorize the issuance of revenue bonds by such authorities which shall not constitute an indebtedness of the state within the meaning of Section V of this article.
This article provides that the General Assembly may create development authorities to promote the development of trade, commerce, industry and employment. Development authorities may be exempted from certain taxes, including property taxes. Development authorities may be authorized to issue revenue bonds that do not constitute an indebtedness of the state. This allows authorities to issue bonds that do not count toward their local government debt limitation, which is generally 10 percent of the assessed value of all taxable property within the jurisdiction.
The General Assembly has by general law authorized two types of development authorities. O.C.G.A. § 36-62-1 et seq. authorizes development authorities in both cities and counties, and is geared toward industrial developments. O.C.G.A. § 36-42-1 et seq. authorizes downtown development authorities, which are generally aimed toward developing downtown business districts. These two types of authorities are very similar, but do have some differences. The subject of this paper is Downtown development authorities and applicable law.
The expressed legislative purpose of the DDA is to revitalize and redevelop central business districts of cities in the state by financing projects to promote trade, commerce, industry, and employment opportunities.
any undertaking under the Urban Redevelopment Law when the DDA has been designated as an urban redevelopment agency.
These activities are within the meaning of the word project if their overarching purpose is the development of trade, commerce, industry, or employment in the downtown development area. A project may be for any industrial, commercial, business, office, parking, public, or other use, provided that a majority of the members of the authority determine by resolution that the project and its use would further the purpose of the law. This expressly includes buildings and structures used as non-profit hospitals, non-profit skilled nursing homes, or non-profit intermediate care homes, along with related equipment.
Cost of the project: This term is defined by a long list including almost every cost and fee imaginable arising from the project, from the obvious cost of acquisition to the minute, such as title insurance, surveying fees and loan fees. All of these costs are expressly allowed to be repaid from the proceeds of revenue bonds, notes or other obligations issued by the DDA.
Creation of DDA, O.C.G.A.§ 36-42-4.
The General Assembly has created a downtown development authority for each municipality in Georgia, which only need be activated by the governing authority. Each such DDA shall consist of a board of seven directors, one of which may be a member of the city council. The initial terms of the board shall be two years for two members, four years for two members, and six years for three members. Subsequent terms shall be for four year periods, except for the member who is also a member of the local government governing body, whose term expires with his term in office.
Geographical Area of Responsibility, O.C.G.A.§ 36-42-5.
The city shall by resolution designate the geographical area in its central business district which shall be known as the downtown development area. The resolution must state that the city has a need for a downtown development authority. Though it is not expressly required, the better practice is to reference a map, such as a tax map, clearly delineating the bounds of the central business district and the parcels within it.
A copy of the resolution creating the DDA must be filed with the Secretary of State and the Department of Community Affairs. The DCA may, but is not required to, furnish written comments to the authority which are to be informal and not affect any action taken by the DDA or the city government.
Amendments to Authorizing Resolution, O.C.G.A.§ 36-42-6.
After adopting the authorizing resolution, the city council may by resolution adjust the boundaries of the central business district. Such change is effective prospectively only, and shall not affect any project undertaken in the downtown development area before the change. The city council may appoint new members to the DDA when authorized. The city council may disapprove the issuance of revenue bonds or other obligations by the DDA.
Qualification and Reimbursement of Directors, O.C.G.A.§ 36-42-7.
A director must be a tax payer living in the city or the owner or operator of a business within the downtown development area who is also a resident taxpayer of the county within which the city is located.
At least four of the directors shall have an economic interest in the redevelopment and revitalization of the downtown development area. Thus, what some opponents to DDA activities would call a conflict of interest is actually required by the General Assembly.
The directors are required to elect one of their members as chairman and another as vice-chairman. They may select one to be secretary and one to be treasurer, or one to be both secretary and treasurer. The secretary and treasurer need not be a director. The directors are not paid for their services except they may be reimbursed for actual expenses incurred in the performance of their duties.
Each director, except the director who is an elected member of the city council, is required to complete at least eight hours of training on downtown development within the first twelve months of the director's appointment.
Powers of the DDA, O.C.G.A.§ 36-42-8.
to serve as redevelopment agency as provided by Chapter 44 of O.C.G.A. Title 36.
Eminent Domain Power, O.C.G.A.§ 36-42-8.1.
A DDA has the authority to exercise the power of imminent domain to take real property necessary for purposes authorized under the DDA laws. This is subject to certain procedural limitations contained within the DDA law.
Revenue Bonds, O.C.G.A.§§ 36-42-9, 10 & 11.
Revenue bonds, notes or other obligations issued by an authority shall be paid solely from the property (real, personal and revenues) encumbered to secure the bonds or obligations. The DDA board must adopt a resolution authorizing the issuance of the bonds.
The bonds shall be dated, show a maturity date of no more than 40 years from issuance, and bear interest which may be fixed or adjustable. The bonds shall be redeemable, and may be subject to other terms as provided by the authorizing resolution. The terms of the bonds are binding on the directors of the authority and their successors.
The DDA may refund bonds by the issuance of new bonds, at or before maturity. There is no limit upon the amount of bonds that an authority may issue. The DDA's bonds are exempt from all general laws pertaining to maximum interest rates. DDA bonds must be issued in accordance with the Revenue Bond Law. The bonds are validated by a procedure in which a petition and complaint for validation is filed in the superior court of the county and served upon the district attorney. The superior court then conducts a validation hearing, of which the public must be notified. The bonds may be sold at public or private sale.
The DDA may also issue notes in anticipation of bonds. Such notes may be issued for the same purposes as the anticipated bonds. No judicial validation is required for the notes to be issued. The issuance of the notes shall not exceed the par value of the anticipated bonds.
Obligations of authority not public debt, O.C.G.A.§ 36-42-12.
The debts of the DDA are not binding on the municipality, nor may creditors compel the performance of the taxing power to repay the indebtedness.
Tax Exempt Status of DDA, O.C.G.A.§ 46-42-13.
The DDA is exempt from taxes on any property acquired by the authority, but this does not include exemption from sales and use tax on property purchased by the authority or used by the authority.
Creation of Special Districts, O.C.G.A.§ 36-42-16.
Cities may create one or more special districts within the area of operation of the DDA for levying and collecting taxes, fees, or assessments to pay the cost of any project authorized under the DDA law.
This chapter of the Georgia code authorizes municipalities to create city business improvement districts, and then collect extra fees and an increased millage rate in the district to pay for supplemental services intended to restore and promote business activity within the business district.
Supplemental services means those services provided for the improvement and promotion of the CBID, including, but not limited to, advertising, promotion, sanitation, security, and business recruitment and development.
Municipal Powers in the CBID, O.C.G.A.§ 36-43-4.
To provide supplemental services in the CBID, and to contract with non-profits and DDA for all or part of the supplemental services.
To levy and collect a surcharge on existing business licenses and occupation taxes upon businesses and occupations within the district, which may be liens upon the properties in the CBID.
Procedural Requirements for the Adoption of the District Plan, O.C.G.A.§ 36-43-5.
A central business improvement district may not be created unless it is approved by at least 51% of the taxpayers of the district or by the taxpayers owning at least 51% of the taxable property in the district.
This requires a written petition signed by the taxpayers which must include a proposed district plan and a budget for payment of the services to be provided within the district.
Upon receipt of the petition, the governing authority shall refer it to the appropriate municipal departments for review of its sufficiency, reasonableness of assessments, and financial feasibility. The departments shall submit to the governing authority reports approving, disapproving or giving qualified approval with modifications to the district plan, with reasons. The governing authority shall hold a public hearing upon whether or not the CBID should be created, with notice in a newspaper of general circulation in the community at least ten days prior to the date of hearing. The governing authority may then approve, approve with modifications, or disapprove the plan. Once the plan is adopted, it may be amended, rescinded or revised by ordinance.
Because the CBID involves both taxation and land use regulation, the procedural requirements should be strictly followed to avoid legal challenge.
Earmarking of Funds, O.C.G.A. § 36-43-6 & 7.
The expense of supplemental services in the CBID may be paid from the increased millage rate, occupation and business license fees charged in the CBID, which shall be collected at the same time and manner, and by the same officers as the general millage and fees. The extra taxes levied under the central business improvement district plan shall be expended only for the services or other improvements authorized under the district plan, and the extra taxes shall not be used to pay for services provided by the City on a city-wide basis.
Design and Rehabilitation Standard, O.C.G.A. § 36-43-9.
The governing authority may adopt special building standards for buildings in the CBID if it finds that such standards are necessary to prevent or eliminate blight, improve property values, or to foster economic development. Compliance with these standards may be enforced just like any other municipal ordinance, including citation to the municipal court or civil enforcement action.
Termination of Plan and Districts, O.C.G.A. § 36-43-9.
Any special district created under this law shall terminate on a specific date no less than five years nor more than ten years from its creation or renewal by ordinance.
REDEVELOPMENT POWERS LAW, O.C.G.A. § 36-44-1 ET SEQ.
The Redevelopment Powers Law allows counties and municipalities to redevelop economically depressed areas, and to fund such redevelopment with bonds secured by the increased ad valorem tax revenues from the redeveloped areas.
- acquisition, retention, use and disposition of real property.
-specifies the property proposed to be pledged as security for the bonds, which may include positive tax allocation increments from the tax allocation district, general funds derived from the tax allocation district, and certain other property.
Tax Allocation District (TAD) means a contiguous geographic area within a redevelopment area which is created to issue tax allocation bonds to finance redevelopment in the area.
Thus, as redevelopment increases the tax value of the property in the TAD, more of the ad valorem taxes collected in the TAD are available for bond financing.
Tax allocation increment base means the taxable value of all taxable property located in the TAD on the date of its creation.
Redevelopment Agency, O.C.G.A.§ 36-44-4, 5 & 6.
-all powers in the Urban Redevelopment Law.
The adoption of the redevelopment plan, the boundaries of the redevelopment area and the TAD, and the issuance of the tax allocation bonds must still be accomplished by the adoption of a resolution of the local government. DDAs are authorized to exercise eminent domain, in conjunction with the Downtown Development Authority Law.
Several corporate bodies are authorized to serve as the redevelopment agency, including the local government, a newly created public body, a housing authority, a previously created urban redevelopment agency, a joint redevelopment agency created by multiple local governments, and DDAs within their downtown development area.
Procedure for adopting redevelopment plans, O.C.G.A. § 36-44-7.
Once the plan is prepared, it is submitted to the local government, which must hold a public hearing within 60 days. Notice of the public hearing shall be published in a newspaper of general circulation in the area at least once in a period at least 5 days immediately preceding the date of the public hearing. Within 45 days after the public hearing, the local government shall hold a public meeting to consider approval of the plan, which must be published in the same fashion. The local government must approve, amend and approve, or reject and return the plan to the redevelopment agency. If a plan is resubmitted, the same public hearings must be held. After the plan is adopted, it may be amended subject to the same procedures.
Creation of the TAD, O.C.G.A.36-55-8.
The redevelopment plan that is approved by the local government must describe the boundaries of the TAD and create the TAD on December 31 following the adoption of the resolution or some subsequent year. The TAD is named Tax Allocation District 1, (name of local government). The plan must specify the estimated tax allocation increment base, the property taxes to be used for computing the tax allocation increments, and the property to be used to secure the payment of tax allocation bonds. Finally, the plan must contain a finding that the redevelopment area has not been subject to growth and development through private enterprise and would not reasonably be anticipated to be developed without the redevelopment plan, and that the improvement of the area is likely to enhance the value of a substantial portion of the other real property in the district.
Computation of tax allocation increments, O.C.G.A.§ 36-44-9.
In cities having independent school systems, ad valorem taxes for education purposes are included in computing the tax allocation increments. In cities where a board of education sets the millage rate and the city has no authority to change it, the ad valorem taxes used for educational purposes may only be used for computation of tax increment credits if the board of education consents. County ad valorem property taxes collected in the TAD may be included in the computation if the county consents. A county may pledge all or part of the general funds derived from a municipal TAD as security for tax allocation bonds and for payment of other redevelopment costs of the TAD. Each of these consenting actions requires a resolution from the consenting body.
Determining the tax allocation increment base, O.C.G.A.§ 36-44-10.
Prior to the date of creation of the TAD, the redevelopment agency must apply to the state revenue commissioner for a determination of the tax allocation increment base of the TAD. Such determination must be made within 60 days after the creation of the TAD. If the TAD boundaries are later amended, the base must be redetermined as of the date of the amendment, in the same manner. The state revenue commissioner will presume that any property within the TAD that is acquired by the local government or any agency thereof within one year prior to the creation of the TAD was done so in contemplation of the creation of the TAD. If that presumption is not rebutted, the property will not be treated as exempt from taxation for the purpose of determining the tax allocation increment base.
Allocation of tax allocation increments, O.C.G.A.§ 36-44-11, 20.
All positive tax allocation increments received for a TAD are paid out to the redevelopment agency each year until all redevelopment costs are paid off. The increments received are put into a special fund. General funds arising from the TAD that have been pledged, and moneys derived from lease or contract payments, should also be deposited into the special fund, but accounted for separately. General funds may only be used to pay bonds if positive tax allocation increments and lease payments are insufficient, and the local legislative body enters a resolution making such finding. After the bonds and redevelopment costs have been repaid, any money left over in the special fund is paid back in a proportionate manner to the various local governments whose ad valorem taxes were affected by the TAD. Once all redevelopment costs have been paid, the local government may dissolve the TAD.
Issuance of Tax Allocation Bonds, O.C.G.A.§36-44-14.
Tax allocation bonds may be issued to pay redevelopment costs in conjunction with a TAD created by the local government. The bonds are declared to be essential for governmental purposes, and are therefore tax exempt. Bonds must be authorized by resolution stating the name of the TAD and the aggregate principal of the bonds authorized, which may not exceed the estimated aggregate redevelopment costs of the TAD. The local government may create a lien upon the public improvements financed by the bonds, or the revenues therefrom, for the benefit of bondholders. Tax allocation bonds shall mature within 30 years, and are subject to the Revenue Bond Law, and are judicially validated. The local government may issue notes in anticipation of the tax allocation bonds.
In addition to bonds, a redevelopment agency may borrow funds from financial institutions and pledge lease contracts or revenue from lease contracts as security. The terms of such loans shall be no greater than 25 years.
Limitation on TADs, O.C.G.A.§ 36-44-17.
No local government may create a TAD when the total taxable value within the TAD along with the total taxable value of the other TADs in the local government jurisdiction exceeds 10% of the total current taxable value of all taxable property located within the jurisdiction.
Political subdivisions may enter contracts with private persons and entities related to the exercise of redevelopment powers, provided such contracts are for no more than 30 years.
Conflicts of Interest, O.C.G.A.§ 36-44-21.
Elected and appointed officials, and employees of local governments and redevelopment agencies, may not voluntary acquire any interest in any property included or planned to be included in a redevelopment area, or in redevelopment contracts. Where such interest is not voluntary, it must be immediately disclosed to the local government and entered upon the minutes. Any such official or employee that acquires an interest in property in the two years prior to the submittal of the redevelopment plan, and retains the interest at the time the plan is submitted, shall disclose the interest at least 30 days prior to the public meeting scheduled for the adoption of the plan, and shall not participate in any action which affects that property.
Thus, no official or employee may acquire property in the redevelopment area while the redevelopment plan is in effect, and if the property was acquired two years before the submittal of the plan, it must be disclosed. This appears to suggest that if the property interest was acquired more than two years before the submittal of the plan, there may not be a disclosure requirement; however, that assumption is inconsistent with the intent of the law, and should not be relied upon.
It should be remembered too that the Downtown Development Authority Law expressly requires 4 out of 7 DDA board members to have an economic interest in the downtown development area. This creates a potential conflict catch-22 about which DDA members must be wary.
Local law required, O.C.G.A.§ 36-44-22.
Before redevelopment powers may be exercised under this chapter, a local law must be passed which may authorize some or all of the powers provided. Such local law, and all amendments, shall only become effective if approved in a special election.
URBAN REDEVELOPMENT LAW, O.C.G.A.§ 36-61-1 et seq.
Under this act, a city may declare an area as a slum area and appropriate for an urban redevelopment project.
Slum area means an area where the predominance of buildings, by reason of dilapidation, deterioration, or obsolescence, is conducive to ill health, disease transmission, infant mortality, juvenile delinquency, crime, or is otherwise harmful to the public health. The definition is generally consistent with the Redevelopment Powers Law's definition of redevelopment area.
Urban redevelopment area is a slum area that has been designated as appropriate for an urban redevelopment project.
Urban redevelopment project includes undertakings in an urban redevelopment area for the elimination or prevention of slum, including clearing and redevelopment, rehabilitation, or both, in accordance with the urban redevelopment plan.
Resolution of necessity, O.C.G.A.§ 36-61-5.
Preparation of plan, O.C.G.A.§ 36-61-6 and 7.
Upon designating a slum area for redevelopment, a city is required to prepare a plan or a program to eliminate and prevent the development or spread of slums or to provide for redevelopment of slum areas. The plan may be prepared by the local government, or by a designated redevelopment agency. Prior to adoption or amendment of the plan, a public hearing must be held, with prior notification in a newspaper of general circulation.
-the plan will afford maximum opportunity for redevelopment by private enterprise.
-appraisals, title searches, and other plans to prepare for urban redevelopment projects.
to organize, coordinate, and direct the administration of the provisions of the chapter in order that the objective of remedying slums and preventing the causes may be most effectively promoted and achieved.
Eminent domain, O.C.G.A. § 36-61-9.
Local governments may exercise the power of eminent domain in furtherance of the purposes of the redevelopment plan after adoption of a resolution finding that the acquisition of a particular property is necessary. If the property is not to be acquired for the purpose of devoting it to a public use, the owner has the right to notify the local government of his intention and willingness to rehabilitate the property and maintain it in accordance with the redevelopment plan, and enter an enforceable agreement with the local government to ensure performance.
Disposal of property, O.C.G.A. § 36-61-10.
A local government may sell, lease or otherwise transfer property in an urban redevelopment area for residential, recreation, commercial, industrial or other uses or for public use, or may retain the property for public use, in accordance with the redevelopment plan. The local government may place restrictions on the property that run with the land so that it may only be used in conformance with the redevelopment plan after it is transferred. Prior to disposing of property, the local government must comply with competitive bidding procedures, including running a notice in the newspaper each week for two consecutive weeks prior to the execution of any contract to sell, lease or otherwise transfer real property. In contracting to transfer property, the local government may take into consideration the ability of the purchaser to comply with the terms of the redevelopment plan, and may consider factors other than prices.
The local government may exchange real property with veterans' administration organizations if the property to be acquired is to be used for civil improvements.
A local government may issue bonds to finance an urban redevelopment project. Such bonds are payable solely from income and revenues from the urban redevelopment projects, and from grants or loans from federal or other sources. Such bonds do not constitute an indebtedness within the meaning of the local government debt limitation, and are tax exempt.
Powers of the DDA as the Urban Redevelopment Agency.
the power to appropriate funds, to levy taxes, or to close a street.
Urban redevelopment agency, O.C.G.A.§ 36-61-18.
In the alternative to having a DDA serve as the redevelopment agency, a local government may authorize an urban redevelopment agency under this section of the law.
Conflicts of interest, O.C.G.A.§ 36-61-19.

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