The downtown Art Park is one of several projects funded through bonds issued to the Albany-Dougherty Inner City Authority. (Staff photo: Carlton Fletcher)
ALBANY — When Downtown Manager Aaron Blair talks about projects completed or in the works in the inner city’s historic district — the Art Park, Pine Avenue Streetscape, canoe/kayak launches, lighting in the historic Old Northside neighborhood, renovation of the Albany Theatre — he never fails to mention the bond funding that pays for the projects.
That’s because downtown improvements, facilitated through the Albany-Dougherty Inner City Authority, are being financed by a $3.44 million bond that was put in place shortly after Albany voters approved development of a Tax Allocation District in 2008. That development tool allows city officials to collect any new taxes generated within the geographic boundaries of the TAD and use the funds to spur new development.
The bonds, which were initially issued in 2009, have allowed Blair, ADICA and local developers to move forward with improvements within the TAD now rather than relying solely on private capital or funding from the city of Albany’s general fund. Some $2.165 million into the bond funding, officials are closely monitoring outcomes to determine whether the downtown gamble is paying off.
“I’m not in a position to say whether (issuing the bonds) is a good thing or a bad thing,” city of Albany interim Finance Director JoEllen Brophy said. “Only time will tell (if the bond issuance) yields the hoped-for results. The idea of using bond financing is to cause a ripple effect in the (downtown) district. If improvements made using the bond funding increases interest in downtown development, the district revitalizes itself (through new taxes).
“We need for that to happen so that we may create enough revenue to pay back the bond.”
The TAD, which encompasses the historic downtown district and stretches into a wide swath of East Albany, may, by state law, remain so designated for 30 years. At the end of that time, all funding from outside agencies must be repaid.
ADICA has used some $894,473.80 in bond funding on the aforementioned downtown development projects and others and has allocated an additional $1,270,089.22 on projects that are not yet complete or not yet in progress.
“The point of having bond financing is having the ability to do projects immediately that can jump-start growth in the district,” Blair said. “Growth in the tax base spurs more growth … that’s the concept. And while we’d like to see growth moving at a faster pace, we’ve had a number of smaller projects popping up. And there are other things in the works.”
Indeed, the construction of a Walmart within the TAD has been the primary contributor to new taxes that, since Fiscal Year 2009, have totalled $576,144.91. City Manager James Taylor said those new taxes have allowed the city to start paying down the debt service on the bonds, but he’d like to see revenue coming in at a faster clip.
“The TAD is working the way we thought it would, but not the way we hoped it would,” said Taylor, who as then assistant city manager was the architect of the city’s Tax Allocation District. “We’d hoped that the TAD would fund itself, but brokers would not sell bonds based on a TAD without a pledge of repayment from the city. It’s just not done that way.”
When Blair came on board as downtown manager in October of 2010, following in the scandal-laden footsteps of Don Buie, who served jail time for misappropriation of funds while in the office, around $6 million in bond money was available. He quickly cut that to $3.44 million.
“I saw right away that $6 million was extreme,” Blair said. “There was no need for ADICA to have that much money available.”
The quasi-government agency has since allocated funding for development of the downtown Art Park, renovation of the historic Albany Theatre, completion of an extensive streetscape project on Pine Avenue, development of three kayak/canoe launches along the Flint River, storefront beautification through a facade grant and decorative lighting in the historic Old Northside neighborhood.
ADICA has also put funds in place to facilitate loft conversion, mural and private sector development programs, although none of that $360,000 is currently in use.
Meanwhile, tax revenue generated within the TAD mostly through Walmart and the construction of three service station/convenience stores grew sharply over the first four years of the TAD: $6,879.67 in FY 2010, $20,957.33 in FY 2011, $101,133.30 in FY 2012 and $219,008.07 in FY 2013. Slightly more than halfway through FY 2014, TAD revenue is currently at $228,166.54.
There is hope, though, that more — much more — will be coming soon.
“It looks like we will have some opportunities with the old Albany Heights building,” Taylor said. “There are two developers I know of who are very interested in that building. They’re talking about some exciting things, like retail on the ground floor, hotel space on some of the intermediate floors and some condos.
“Bob Brooks is looking at bringing a restaurant and office space to the old Exchange Building; there’s interest in the (Holman) Mule Barn, and there’s a development coming to the sand dunes area that will fall within the TAD. And I could sell the old Heritage House property right now, but we have to hold off until we’re certain what we’ll do with the multimodal (transportation) site. Something may happen with the (city-financed) Job-Creation Fund sooner, but we’re about a year or so away from some really big things.”
Blair, too, says the downtown district could be getting an infusion of new tax money soon.
“A Dollar General and Waffle House are coming downtown, and we’re working on a master plan that will incorporate a new hotel into the district,” the downtown manager said. “We also opened up a prime retail spot and got rid of an eyesore with the demolition of the old China Palace restaurant (at Radium Springs Road and U.S. 82). There are some good things happening downtown, the kinds of things that can make the bond issuance a smart move.”
Taylor said he understands concerns expressed by taxpayers over the risk of financing projects based on projected future tax revenues. But he’s not apologizing for championing the TAD.
“If we don’t do anything, we’ll never have anything,” the city manager said. “There is a certain level of risk involved, but there are also opportunities to see significant development. Our only alternative was to do nothing.”