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Tax Allocation District
Understanding Tax Allocation Districts in Avondale Estates
In Georgia, a Tax Allocation District (TAD) is a financing tool that cities and counties use to encourage investment and redevelopment in areas that are underused, in decline or in need of improvement.
Here’s how it works:
- When a TAD is created, the property tax value within the district is “frozen” at its current level.
- As new development occurs and property values rise, the additional property tax revenue generated above that frozen level—called the “tax increment”—is set aside in a special fund.
- This fund is used to reinvest in the same area to support more improvements and attract additional development.
- Meanwhile, the taxes at or below the original “frozen” level continue to go to the general funds of the city, county, and school system.
- Each tax entity individually elects whether the taxes collected above the threshold will be included in the special TAD fund.
TADs are a smart growth tool. They help cities like Avondale Estates reinvest rising property tax revenues back into areas that need improvement. When used effectively, they can transform underused or aging areas into vibrant, thriving parts of the community—without raising taxes for existing residents.
TADs are a way for local governments to support redevelopment without raising taxes. By using the increased tax revenue that new development generates, cities and counties can:
- Invest in improvements that make an area more attractive to developers, residents, and businesses.
- Pay off the costs of improvements more quickly when paired with a new development that raises property values quickly.
- Encourage long-term growth in targeted areas.
When was Avondale’s TAD created, what tax entities participate in Avondale’s TAD, and who makes the decisions about how to allocate the funds?
- The Avondale was created in 2007 by the Board of Mayor and Commissioners who in turn gave the responsibility for determining how to use those funds to the Avondale Estates Downtown Development Authority (DDA).
- The City and DeKalb County both participate in the TAD, meaning both contribute their share of tax revenue above the baseline into the TAD fund.
- The DeKalb County School Board does not participate, so school taxes above the baseline go directly to the school system, not to the TAD fund.
- This means that when property values in the TAD go up, the City collects both its own and the County’s additional tax revenues above the baseline for reinvestment in the district.
TAD funds can only be used within the TAD boundaries and only for specific types of projects that support redevelopment.
Examples include:
- Public infrastructure improvements – like roads, sidewalks, utilities, and stormwater systems.
- Site preparation – such as demolition, grading, land cleanup, and property acquisition.
- Affordable or mixed-income housing – to help ensure housing options for a range of income levels.
- Historic preservation – restoring older or architecturally significant buildings for new use.
TAD funds CANNOT be used for:
- Day-to-day city or county operations
- Projects outside the TAD boundaries.
- Anything not directly related to redevelopment within the TAD boundaries.
- The boundaries of the TAD closely align with the downtown Central Business District with a couple significant deviations.
- The Willis and Jade apartment complexes are not within the TAD boundaries. As a result, 100% of the increased city tax revenue from those properties goes to the City’s general fund and not the TAD fund. And unlike those properties within the TAD district, the County taxes go directly to the county and not into the TAD fund.