Value Capture Case Studies: Atlanta BeltLine
By Chrissy Mancini Nichols
Mar 1, 2012
This post first appeared at metroplanning.org
Value Capture Case Studies is an ongoing series highlighting ways in which cities and regions across the country are using value capture mechanisms to fund transportation plans. These case studies present novel learnings for the Chicago region as it grapples with how to pay for necessary transportation improvements. Each post will focus on real-life examples of value capture mechanisms at work.
To learn more about the basics of value capture read: Value capture case studies: What is value capture
Value capture mechanisms referenced in this post:
• Tax Allocation District (similar to Tax Increment Financing)
Atlanta is widely known for its traffic gridlock and suburban sprawl. Over the last few decades, growth in region’s low-density suburbs has extended greater metropolitan Atlanta’s reach nearly to Chattanooga, Tenn. The average commuter in Atlanta spends 127 minutes on the road every day or more than 10.5 hours each week. This pattern of growth has resulted in unbalanced development and congested roads, and has strained the region’s economy and quality of life. Absent a plan to manage future growth, traffic gridlock will only get worse as the region is expected to gain 3 million people and 1.6 million jobs by 2040.
Recognizing that Atlanta’s economic future was dependent on counteracting sprawl and reducing congestion, in 2005 the Atlanta City Council, Fulton County Board of Commissioners, and Atlanta Public School Board of Education approved the Atlanta BeltLine Redevelopment Plan, a comprehensive redevelopment and mobility project that will build a network of public parks, multi-use trails, workforce housing and transit. The BeltLine will increase the overall health and livability of the entire region over the next several decades, by targeting growth to infill areas in the south and west near transit and open space. The $2.8 billion BeltLine is the most ambitious public works project in the city’s history and one of the largest and most comprehensive urban redevelopment efforts underway in the United States. It will connect people with place – specifically, Atlanta’s urban core.
The $2.8 billion budget will build:
• Transit: A 22-mile loop of rail transit, using mostly abandoned former rail lines, through 45 neighborhoods surrounding Atlanta’s urban core, with anticipated daily ridership of 73,000 people;
• Trails: A 33-mile network of multi-use trails;
• Parks: Nearly 1,300 acres of new parks and green space that will increase Atlanta’s total green by nearly 40 percent; and
• Affordable workforce housing: More than 5,600 new units of affordable workforce housing.
In total, the 6,545 acres of redevelopment (approximately seven percent of the city’s land area) will create more than 29,000 new housing units, 30,000 new permanent jobs, 48,000 temporary construction jobs, 5.3 million sq. ft. of office space, over 1.3 million sq. ft. of retail space, and 5.2 million sq. ft. of industrial space.
The project is funded through philanthropic, and local, state, and federal public funds, including $1.7 billion in Tax Allocation District (TAD) dollars. Created in 2005 as part of the redevelopment plan, the 6,500 acre BeltLine TAD is the primary local source of funding for the project and operates the same way as a tax increment finance (TIF) district.
Atlanta BeltLine Inc., in partnership with the City of Atlanta, is the entity tasked with managing, securing funding and implementing the Atlanta BeltLine. Spending of BeltLine TAD bonds is approved by the Atlanta City Council, who approved the Atlanta BeltLine Redevelopment Plan with extensive community engagement and input. The redevelopment plan outlines the 25-year vision for the project. In July 2006, Atlanta City Council approved the BeltLine Five-Year Work Plan, including priorities, goals, organizational structure, and a $427 million budget for the project’s first five years.
As part of the Community Engagement Framework authorized by the BeltLine legislation, the Tax Allocation District Advisory Committee (TADAC) was created to advise on how TAD funds are used. This committee is comprised of technical experts and community leaders and is managed through Atlanta BeltLine, Inc. The TADAC makes recommendations to the Atlanta Development Authority and the City on the issuance, allocation and distribution of tax allocation proceeds within the BeltLine Development Area; monitors the effective and equitable distribution of the BeltLine Redevelopment Plan; and measures the impact of the BeltLine.
How the Atlanta BeltLine’s TAD works
TIF financing (TAD and TIF are used interchangeably in Atlanta) is a useful value capture funding mechanism for promoting community development without raising taxes. A TIF district is created early in the development period, when the area is still considered “blighted” or economically depressed. The tax base is frozen at the predevelopment level, with the assumption redevelopment would not occur in the area without public investment or intervention. Property owners continue to pay taxes, but the “tax increment” – tax revenues derived from increases in assessed values that result from new development – is either funneled into a special fund created to retire bonds issued to finance the development, or is used to leverage continued community revitalization by attracting additional private investment.
As new development occurs on the BeltLine, spurred by the public investment in transit, open space, and affordable housing, land values will increase generating additional property tax revenue. Beginning in 2005, all of the incremental property tax revenue from that new development will go into the BeltLine TAD fund. It will be used to pay off the principal and interest on the bonds issued to fund the capital investments in the BeltLine over the 25-year project period.
Property taxes in the City of Atlanta are split between the City, Fulton County, and Atlanta Public Schools, who all approved the TAD. They also agreed to continue to receive the same 2005 level of property tax revenue within the BeltLine TAD for the next 25 years, at which point the TAD will expire.
It’s a win for the three government entities: Land in the BeltLine TAD was comprised of parcels of underutilized or abandoned industrial properties that did not generate considerable property tax revenues (the TAD boundaries were created to avoid the inclusion of existing single-family homes). When the TAD expires after 25 years, they will receive the entire tax revenue generated by properties within the BeltLine TAD, but at a tax base projected to be approximately $20 billion higher than in 2005, as a result of the redevelopment associated with the BeltLine.
How will TAD funds be spent?
The Atlanta BeltLine Redevelopment Plan guides spending of BeltLine TAD bonds. The money will be used to invest in land acquisition, trails, green space, brownfield cleanup, transit, and transportation improvements. The Atlanta City Council requires that 15 percent of TAD bond proceeds are set-aside to capitalize a housing trust fund that will build 5,600 affordable workforce housing units in the corridor. The new affordable housing units are intended to ensure working families can afford to live near the BeltLine; the units will be marketed to service sector workers, including firefighters, police officers, teachers and nurses. To keep housing costs within reach for middle-class families, the Atlanta Land Trust Collaborative (ALTC) is working to establish community land trustsin the projectarea. These trusts will keep homes prices attainable by separating the price of homes from the price of the land that are built upon. The trusts buy and hold land permanently, while allowing the homes themselves to be bought and sold by residents with limited incomes.
Schools in the Atlanta BeltLine TAD also will benefit directly by the project, with $10 million in funding for construction of recreational facilities or athletic fields at school sites, subsidized or free transit rides for APS students, and $150 million for educational programming paid in $7.5 million installments in years six through 25 of the life of the TAD.
To date, several trails and parks have opened to the public, which will serve to attract new development that will provide the necessary density to support transit. TAD bond proceeds provided $8.8 million in capital to seed the BeltLine Affordable Housing Trust Fund. Right of way acquisition and transit design and engineering is underway. The first leg of transit is projected to start running by 2015.
To better understand the health impacts of the BeltLine, a Health Impact Assessment was conducted by the Georgia Institute of Technology’s Center for Quality Growth and Regional Development. An HIA is an emerging practice that aims to bring a greater understanding of human health consequences to public policy and decision-making. For example, Atlanta’s HIA indicates that the Atlanta BeltLine’s 1,300 acres of parks, 33 miles of trails, $45 million in streetscape and intersection improvements, and 22-mile transit extension will create greater opportunities for people to become physically active. The redevelopment will give 11,000 residents direct access for the first time to a park, and it will connect an additional 127,000 people to transit. As a result, it will improve access to employment opportunities, services, healthy foods, and recreational facilities and potentially increase daily physical activity, such as walking or biking to work or transit.
The Atlanta BeltLine project is another great example of how value capture mechanisms can be used to fund a significant development through innovative financing. The BeltLine will change the face of Atlanta, spurring economic growth and creating a more vibrant and livable Atlanta region.