In addition to tax-exempt financing for manufacturing and other qualified projects, including 501 (c) (3) projects, under federal law, many state and local governments offer taxable bonds as a way to encourage economic development. For project owners and developers, bonds are an often-overlooked source of capital that may offer significant tax advantages, thereby reducing the overall cost of financing projects.

For projects meeting certain criteria, the DAFC issues a taxable bond (for which the client must identify a purchaser). The Authority holds ownership of the property and leases it to the client. The leasehold interest in the property is initially valued, for ad valorem tax purposes, at 50% of the assessed fee interest, and that value increases by 5% annually over a 10-year period. Thereafter, the leasehold interest terminates, and the property is fully taxable.

Projects range from new construction and equipment upgrades to the renovation and expansion of existing facilities. DAFC clients include small entrepreneurial enterprises, non-profit organizations and major corporations and institutions funding diverse projects. These projects can include warehouses, manufacturing facilities, mixed-use developments, residential facilities, including workforce, affordable, and/or senior housing, hotels, performing arts centers, educational and athletic facilities, office space, including corporate headquarters, employee training facilities, technology upgrades, hospitals and healthcare facilities, and more.

Bond financing applicants, whose projects are subject to DAFC qualifying guidelines, must first complete an application to be reviewed by DAFC staff. The professional staff of the DAFC evaluates each proposed project, including the number and quality of new jobs each project creates, and works in conjunction with the Fulton County Board of Assessors.

There is not a "one-size-fits-all" when it comes to economic development. We look at various aspects of the proposed project and consider many factors as the process is constantly evolving. One tool that the DAFC uses is to look at the current taxes being paid on the parcel(s) of a proposed project as compared to the projected taxes after completion of construction of the proposed project, also known as the hurdle rate. The DAFC suggests a 5x hurdle rate for proposed projects or, in other words, the projected taxes after completion of construction of a proposed project is estimated to equal or exceed the current taxes being paid on the parcel(s) by 5 times.

In addition to the hurdle rate, the DAFC pays close attention to extraordinary costs of proposed projects, including, but not limited to, system improvements, community enhancements, the historical and current state of the property, and site challenges. We notice that often times the projected incentive amount is actually less than some of these extraordinary costs that many of the DAFC projects face. The DAFC also considers job creation, neighborhood and community support, overall competitiveness, and recruiting tenants on a national and global level.

No. Only quality projects come before the DAFC Board. Ultimately, DAFC staff takes all of the aforementioned factors into consideration prior to bringing a project before the DAFC Board. This is intentional. If a project does not have the merits that warrant incentive approval, those conversations happen long before any DAFC meeting, and those projects do not advance to the Board level.

Since the DAFC is an independent entity from Fulton County, bonds issued by the DAFC do not impact Fulton County’s credit rating. In addition, DAFC serves as a conduit and clients must obtain their own bond purchaser or buy the bonds themselves. It is noteworthy, however, that the DAFC has a record of virtually default-free bond-financed projects.

No. Projects funded through the DAFC actually create jobs and expand the tax base, rather than impose a greater burden. When vacant land is developed and outmoded facilities are modernized, their assessed value increases—resulting in greater property tax obligations annually. For example, property with an assessed value that increases from $5 million to $50 million as a result of new development immediately begins to generate more tax revenue, even during years when the tax relief is in effect.

While DAFC believes Fulton County is the premiere place to start/relocate a business or build a development, there is intense competition locally, regionally, nationally and internationally to attract and retain quality development and jobs. Developers can choose between several jurisdictions and have limited dollars to invest. Without such incentives, Fulton County may not even be considered.

It is important to remember that our incentive is extremely conservative, with a net 25% discount over the 10-year incentive period. Companies and developers have choices when faced with how to spend their capital dollars and have internal thresholds they must meet before they are able to proceed with a project. As a result, even if certain projects move forward without an incentive, the developers will undoubtedly have to make cuts that lower the value of the project, reduce the benefit to the tax base, give less to the community, and will be less focused on MFBE utilization for the project development, operations, and management. DAFC always looks beyond the ten-year incentive period and remains mindful of facilitating quality development that will positively impact the community for generations. With our support these projects bring much needed infrastructure improvements and additional community amenities for all to benefit from that may never happen waiting for city or county funding.

Our projects bring increased tax revenue to the TADs, which helps them pay off the TADs earlier or gives the opportunity to use the additional tax revenue for infrastructure within the TAD. Here’s one example that explains how this works.

BeltLine TAD

APS, the City of Atlanta and Fulton County entered into an agreement with the Atlanta BeltLine, Inc. (ABI) to freeze the City of Atlanta, Fulton County and APS tax at a baseline amount when the BeltLine TAD was created. Therefore, during the existence of the TAD, tax revenues for APS, Fulton County and the City of Atlanta do not increase, regardless of the amount of development in the TAD. This means that regardless of the size, scope, and number of projects facilitated by the DAFC that are located in the TAD, there is no tax impact on APS, Fulton County or the City of Atlanta prior to the expiration of the TAD. The additional increment above the baseline tax is paid directly to ABI for its use to build out the trail. DAFC projects bring affordable housing, retail, commercial, office and dining to the BeltLine and increase the tax base, so ABI will have additional funding to complete the trail. In addition, many of these economic development opportunities work closely with ABI and pay for portions of the trail themselves, grant easements or even donate land to ABI, as well as provide additional amenities such as outdoor park space, seating areas, art installations, among other things.