It sounds too good to be true: a community raising millions of dollars in new revenues to upgrade blighted neighborhoods without raising taxes.
No, it's not manna from heaven; it's a tax allocation district, and it will be on Richmond County's June 21 referendum. There also is a TAD pending in Columbia County.
TADs have been around for a while - and used successfully in Atlanta, Aiken and elsewhere - as an urban redevelopment tool. It's a way of saying to bond investors, "Hey, come take a look at us. We're open for business." This will be the first chance Augustans have to do that.
If voters approve TADs next month, they'll be empowering the Augusta Commission, with the consent of the local school board, to geographically define neglected or undeveloped districts, then freeze property taxes in the defined areas at current levels for however long the infrastructure improvement project takes - usually 12 to 25 years.
As construction and other investments grow in the affected districts and property tax values increase, the extra revenues are put in a fund to pay for the infrastructure improvements or to finance new bonds for upgrades.
Of course, the commission and school board will lose out on the extra revenues that higher property taxes would otherwise bring them. Yet without the upgrades - that is, without the tax allocation district - the extra revenues wouldn't be there anyway.
Special tax districts can work minor miracles, but they shouldn't be regarded as a cure-all. Sometimes they fizzle. Under the TAD concept, local government issues public debt to fund a given project via a bond issue with the assumption the debt will be paid off with money raised by higher property tax collections. However, if the project's benefits aren't enough to cover the costs of the debt, bond ratings can slip.
So obviously, there's some risk involved in creating special tax districts. But based on how successful they've been in other communities, it's a risk well worth taking. The upside potential is clearly much greater than the downside.
Remember, bond holders take the serious financial risk, not taxpayers. Yet as improvements are made, local taxpayers get to see for themselves that the TAD money is being spent where it was promised. Imagine that: political truth in advertising.
The June 21 TAD referendum provides Augustans with an opportunity to invest in their future. We hope they make the most of it. A community unwilling to take some risks for a better future has no future.
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