ATLANTA - A legislative attempt to get around a recent Georgia Supreme Court ruling on the funding of tax allocation districts barely survived its first hearing Friday.
A House subcommittee voted 3-2 in favor of a constitutional amendment that would allow TADs to use school property taxes to finance redevelopment projects.
The court ruled earlier this month that school taxes may not be used for non-educational purposes.
Such a narrow interpretation of Georgia's Constitution would threaten the future viability of TADs, which have been used across the state for more than two decades to revitalize decaying communities, said Rep. Chuck Martin, R-Alpharetta, the legislation's chief sponsor.
"This constitutional amendment seeks to put the process back to the way it's been operating for 20 years," he said. "It's been working."
TADs have become an increasingly popular way of financing redevelopment projects in blighted neighborhoods throughout the state. One of the largest and most well known is Atlantic Station, built on the site of an abandoned factory just west of Midtown Atlanta.
The districts are created by local governments, subject to voter approval. Before this month's court ruling, school districts were allowed to participate if they wished.
Projects inside TADs are funded by bonds. Then, until those loans are paid off, the additional tax revenue generated by rising property values resulting from the improvements goes toward the redevelopment projects.
The two subcommittee members who voted against the legislation said TADs can be abused, either if they are attempted in areas that aren't blighted and could be redeveloped using private money, or if school boards that badly need to improve the quality of education divert their revenue instead into community improvements.
But Rep. Ed Lindsey, R-Atlanta, said school systems in blighted areas need redevelopment to grow their low tax bases.
"(Instead of) getting 100 percent of nothing, they get a small percent of something in the short run and 100 percent in the long run," he said. "It's a win-win for them."
The constitutional amendment squeezed past the subcommittee only when Chairman Wendell Willard, R-Sandy Springs, broke a tie vote and sent it on to the full House Judiciary Committee.
A companion constitutional amendment has been introduced into the Senate by Sen. Don Balfour, R-Snellville.