Pri­vate taxes

Busi­ness own­ers could opt to tax them­selves to en­hance U.S. 278

The Covington News - - FRONT PAGE - GABRIEL KHOULI gkhouli@cov­news.com

Does U.S. High­way 278 have any­thing that makes it spe­cial? Many people don’t think so, at least, not yet.

The commercial cor­ri­dor is Cov­ing­ton’s largest, but vis­i­tors and even some of its own property own­ers ad­mit the cor­ri­dor is at best non-de­script.

“I, like many of you, have lived here all my life, and we can ride up and down 278 ev­ery day. You kind of get de­sen­si­tized. But if you put a vis­i­tors’ eyes in your head, ‘What do they see?’ And it’s kind of scary. It re­ally is,” said a lo­cal property owner, who is part of an ef­fort to im­prove the cor­ri­dor.

Commercial property own­ers on U.S. 278 in Cov­ing­ton want to bring new life and a new look to the cor­ri­dor, and they’re will­ing to tax them­selves to do it.

Some of the high­way’s largest property own­ers are work­ing to form a Commercial Im­prove­ment District (CID), which will place an ex­tra property tax on them and their fel­low commercial property own­ers, but the tax funds would be com­pletely pri­vately con­trolled and spent.

CIDs are be­ing used all over Metro At­lanta to re­vive strug­gling commercial cor­ri­dors and en­hance those that have grown stag­nant.

What is a CID?

A CID is a collection of com­mer-

Be­fore I bring one busi­ness in and we start im­prov­ing in an­other area, we’ve got to im­prove what we have in our home, and we’ve got im­prove our home in that cor­ri­dor and make sure we pro­tect it and not for­get about it and move to a dif­fer­ent area.

Serra Phillips Cov­ing­ton -New­ton County Cham­ber of Com­merce’s commercial/ re­tail re­cruiter

cial property own­ers — not res­i­den­tial property and not nec­es­sar­ily busi­ness own­ers, un­less they also own their property — who vol­un­tar­ily agree to pay additional property taxes that are put into a spe­cial fund that they con­trol.

The idea be­hind CIDs is that by com­bin­ing their money, commercial property own­ers can make im­prove­ments that ben­e­fit them­selves and the en­tire cor­ri­dor, in­clud­ing road con­struc­tion projects and up- grades, side­walks, stormwa­ter projects, land­scap­ing, park­ing and even parks and other recre­ational fa­cil­i­ties.

While govern­ment at the lo­cal, state and federal lev­els typ­i­cally tackle these types of projects, gov­ern­ments are both short of avail­able cash and have to try to bal­ance projects for the en­tire area they serve.

CIDs don’t re­place gov­ern­ments; in­stead, they look to part­ner with gov­ern­ments. Be­cause CIDs are will­ing to put up a share of the money for larger projects, thus re­duc­ing gov­ern­ments in­vest­ment, CIDs can help ex­pe­dite such projects.

In­vest money to get money

“Why in the world would any busi­ness per­son want to tax them­selves more?” Snel­lville state Rep. Brent Har­rell asked at a June 5 meet­ing of U.S. 278 property own­ers. “We’re con­cerned about re­turn on in­vest­ment.”

Har­rell was for­merly in charge the Ev­er­more CID in Gwin­nett County, which now has five CIDs. Dur­ing the peak of the econ­omy, the Ev­er­more CID along U.S. High­way 78 was see­ing a re­turn on in­vest­ment (ROI) of 23 to 1.

That re­turn came in the form of pub­lic fund­ing and grants, two sources that have since dried up, but Har­rell said the aver­age ROI is still 3 to 1.

“Even 3-to-1 is still worth in­ves­ti­gat­ing fur­ther, and you’ll prob­a­bly want to par­tic­i­pate,” Har­rell said. “Are you sat­is­fied with the num­ber of driv­ers (on U.S. 278)? You can al­ways get more cus­tomers.”

Cur­rent Ev­er­more CID Ex­ec­u­tive Di­rec­tor Jim Brooks said in an in­ter­view that Ev­er­more CID property own­ers have paid 10.9 mil­lion dur­ing the past 11 years and that has money has con­trib­uted to $110 mil­lion of projects that have ei­ther been com­pleted, are in the works or are slated to be done.

The Lil­burn CID, also in Gwin­nett County, has col­lected $850,000 since 2010 and that has led to ap­prox­i­mately $6 mil­lion in com­pleted projects, ac­cord­ing to CID Ex­ec­u­tive Di­rec­tor Ger­ald McDow­ell. The Lil­burn CID is one of the clos­est in size to Cov­ing­ton’s U.S. 278 in terms of to­tal property val­ues and the amount of money that could be raised.

Among Lil­burn’s big­gest projects to date were the $4 mil­lion re­align­ment of Main Street, a $950,000 multi-use trail along the cor­ri­dor and $150,000 in me­dian land­scap­ing for U.S. High­way 29, McDow­ell said.

While the fig­ures will vary by CID, Brooks said about 16 per­cent of the Ev­er­more CID’s budget goes to­ward salaries and ben­e­fits for two-full time em­ploy­ees. The Ev­er­more CID is al­most four times as large as Cov­ing­ton’s would be, so it would be up to Cov­ing­ton’s property own­ers to de­cide how they would struc­ture their CID.

How do you start and end a CID?

A CID can be cre­ated if a ma­jor­ity of commercial property own­ers in a district agree to form one. There are two re­quire­ments that must be met: 1. A ma­jor­ity of property own­ers (50 per­cent plus one owner) must give writ­ten con­sent to form a CID. 2. Those property own­ers in fa­vor have to own at least 75 per­cent of the to­tal commercial property value in the district (as mea­sured by the county tax as­ses­sor). The Ge­or­gia Gen­eral As­sem­bly has to pass a bill — this is called lo­cal leg­is­la­tion and is usu­ally a for­mal­ity if the lo­cal com­mu­nity is firmly be­hind the leg­is­la­tion — and the Cov­ing­ton City Coun­cil would also have to pass a res­o­lu­tion con­sent­ing to the cre­ation of the district, said CID con­sul­tant Lar- ry Kaiser, an en­gi­neer and pres­i­dent of Col­lab­o­ra­tive In­fra­struc­ture Ser­vices.

In or­der to drum up sup­port for the CID, Kaiser said there’s gen­er­ally a mar­ket­ing ef­fort to sell the CID con­cept to property own­ers. All of these ini­tial ef­forts — mar­ket­ing and work­ing through the ini­tial process, re­quire start-up money, Kaiser said; usu­ally a non­profit is formed to lead the ef­fort un­til the CID is de­vel­oped.

If a CID is formed, property own­ers would then vote on a CID board of di­rec­tors; which Kaiser said is typ­i­cally five to seven mem­bers in size. The bal­lots for this process are weighted by the value of the voter’s property.

Once a CID is formed, it lasts for an ini­tial six-year pe­riod. The CID is then voted on dur­ing that sixth year and once ev­ery six years af­ter that, and own­ers can ei­ther keep the CID in place or dis­con­tinue it.

Kaiser and Har­rell said they have never yet heard of a CID in Ge­or­gia be­ing dis­banded, though many CIDs are less than six years old.

Why does 278 need a CID?

“Exit 90 and 278 is the gate­way to Cov­ing­ton and about 10,000 ve­hi­cles a day come off this non-de­script in­ter­state exit,” Kaiser said. “25,000 ve­hi­cles a day drive down the 278 cor­ri­dor. What’s spe­cial about it? I can’t see any­thing spe­cial about it, per­son­ally speak­ing.”

Kaiser pointed to cow paths along the side of the road, ar­eas of worn-out grass that show a walk­ing trail in ab­sence of a side­walk, as well as tem­po­rary signs and other un­sightly items.

Serra Phillips, the Cov­ing­ton-New­ton County Cham­ber of Com­merce’s commercial/re­tail re­cruiter, said pro­tect­ing and re­viv­ing 278 is one of her first pri­or­i­ties.

“Be­fore I bring one busi­ness in and we start im­prov­ing in an­other area, we’ve got to im­prove what we have in our home, and we‘ve got im­prove our home in that cor­ri­dor and make sure we pro­tect it and not for­get about it and move to a dif­fer­ent area,” Phillips told property own­ers.

“You are the eco­nomic gate­way of Cov­ing­ton. You have the most sales tax. You have more com­pa­nies and businesses lo­cated up in that cor­ri­dor than any­where else in the county, as well as em­ploy you more people than any­where in the county.”

Jerry Bouch­illon, who owns mul­ti­ple prop­er­ties along 278, said one of his ‘pet peeves’ in past years is the fact the city and county have spent so much money on down­town Cov­ing­ton and ig­nored 278 de­spite the fact 278 brings in so much more tax rev­enue and pro­vides so many more jobs.

How­ever, Bouch­illon said part of that is be­cause a group of businesses own­ers decades ago de­cided to start up a Main Street Cov­ing­ton pro­gram, which has re­ceived ho­tel/mo­tel tax money for many years. He said if a CID is started, he would hope the city and county would be will­ing to give pub­lic sup­port to 278.

Mayor Ron­nie John­ston and Councilman Chris Smith both told property own­ers at the June 5 meet­ing that the city sup­ports the for­ma­tion of a CID and are will­ing to part­ner with the property own­ers.

Large property owner Rob Fowler said an­other ben­e­fit of a CID for 278 is that it would give the vast group of businesses a group to act as a spokesper­son to rep­re­sent the cor­ri­dors’ in­ter­ests and bring some co­he­sive­ness.

CID’s pri­or­i­ties

While there is no con­crete list in place, Phillips said most of the ini­tial pri­or­i­ties for busi­ness own­ers in sup­port of a CID are to clean up the cor­ri­dor, in­clud­ing: clean­ing up lit­ter bet­ter main­tain­ing and land­scap­ing the cor­ri­dor, in­clud­ing the in­ter­state ex­its in­stalling new sig­nage that’s con­sis­tent and brands the cor­ri­dor and bet­ter di­rects people to im­por­tant lo­ca­tions in­stalling more light­ing David Bai­ley, with Colony Realty, said he didn’t op­pose the CID, but he asked whether the ef­forts weren’t just try­ing to “put on a pretty face” with­out re­ally fun­da­men­tally chang­ing the cor­ri­dor. For ex­am­ple, there are mul­ti­ple pawn shops on the cor­ri­dor, which Bai­ley said he doesn’t op­pose but those shops aren’t ex­am­ple of the high-end businesses people want.

Har­rell said the change won’t hap­pen overnight, but a more scenic and eye-pleas­ing cor­ri­dor should lead to more cus­tomers and rev­enue. He’s seen a pawn shop along U.S. 78 up­grade from a bad build­ing to a nice, two-story, four-sided stone build­ing. He’s also seen ex­am­ple of tra­di­tional car deal­er­ships come in and re­place buy here, pay here lo­ca­tions.

Next steps

The cham­ber’s Of­fice of Eco­nomic De­vel­op­ment, New­ton Federal and Knight and Tabb In­sur­ance Agency were among the en­ti­ties that pub­licly pledged startup funds and other own­ers are also con­tribut­ing. Mayor John­ston said he would also ask the Coun­cil to fi­nan­cially par­tic­i­pate.

For more in­for­ma­tion about the CID, con­tact Phillips at skphillips@se­lect­new­ton.com or 770786-7510 ext. 12, or Jiommy Tan­ner with New­ton Federal, at jim­my­tan­ner@new­ton­fed­eral.com or 678729-9781.

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