§ 58-239. Credit for property tax revenue.

(a)

O.C.G.A. § 36-71-4(r) requires that development impact fees shall be calculated on a basis which is net of credits for the present value of revenues that will be generated by new growth and development based on historic funding patterns and that are anticipated to be available to pay for system improvements, including taxes, assessments, user fees, and intergovernmental transfers.

(b)

The following sets out assumptions, analysis, and a draft calculation of a credit intended to meet the above requirements for a transportation impact fee.

(1)

Assumptions. The assumptions are as follows:

a.

Four funding sources have been explored for historically significant contributions to capital investment in transportation system improvements:

1.

General fund bonded debt retirement funds. Each year the county floats a $3,000,000.00 G.O. bond, a variable portion of which is devoted to transportation capital items each year. The history of monies paid each year for the past ten years to retire debt incurred for transportation items has been calculated. Additionally, the amount of money spent each year has been compared to the total county tax base and converted to an equivalent millage rate. For the purpose of calculating the required credit, it is assumed that:

i.

This history of payments is the best information available upon which to base future projections.

ii.

Payments made to retire debt associated with two large referendum bond issues, 1957 and 1963, have been excluded from the calculation on the notion that passage of a referendum bond issue in the foreseeable future is unlikely.

iii.

The use of a calculated equivalent millage rate fairly reflects the relative impact of transportation capital investment relative to the value of property.

iv.

The $3,000,000.00 cap on the annual bond issue will not increase and the portion historically devoted to transportation will not change, but the total assessment will grow at the historic trend.

v.

That the average life of a bond is 20 years and that is the time over which the credit should be calculated.

2.

Operating funds. Various operating funds are spent annually on transportation system items. For the purpose of calculating the required credit, it is assumed that:

i.

The majority of the funds so expended are spent on pure day-to-day operations and need not be considered in any tally of capital investment.

ii.

The remainder are spent on renewal and extension type items and should not be counted as transportation capital investment, especially for system improvements.

Therefore, it is assumed that no operating funds need be calculated into the credit.

3.

Capital improvement fund. From time to time the county transfers monies from various sources (e.g. general fund, state grants, etc.) for expenditure on capital projects. The history of such expenditures for transportation projects over the past ten years has been totaled, with discounts from the total of monies that did not originate from county taxpayers, e.g. state funds, exaction funds, etc. These funds have also been included in the equivalent millage rate calculation discussed in subsection (b)(1)a.1 of this section.

4.

Transfer payments from state and federal governments. Regarding state and federal expenditures on transportation system improvements in Fulton County, it is assumed that:

i.

Amounts of money from intergovernmental transfers are forecast for each project in the CIP. Therefore, "total cost to the county," the cost upon which a development impact fee is calculated, already contains a discount for all intergovernmental transfers.

ii.

Recent history indicates that fewer and fewer intergovernmental transfer dollars will be available in the future. Therefore, the CIP most likely overstates the "built-in" credit for this item.

In summary, for transportation system improvements, the required credit calculated here will be based only on debt retirement associated with the county's $3,000,000.00 annual bond issue with additional funds added based on expenditures from the capital improvement fund; so far as all such expenditures are for transportation projects.

b.

Credits to be given for tax payments should reflect tax payments spent on the same projects being funded by impact fees. Not all future tax payments associated with transportation improvements should be credited to each private development paying impact fees; only those taxes paying for transportation improvements in the same TSA should receive credit.

1.

It is assumed that tax payments used to fund transportation improvements are distributed in equal proportions to all transportation projects as they may be planned throughout the county.

2.

It is assumed that the transportation projects listed in the CIP represent the best estimate available of expenditures, and their distribution, for transportation projects.

3.

For analytic purposes, all planned transportation expenditures for the next ten years have been taken from the CIP and the proportion of such expenditures by TSA has been derived. This proportion is applied to the derived millage rate to estimate an equitable future tax credit. These proportions are:

i.	TSA 4101	56.61%
ii.	TSA 5001	16.17%
iii.	TSA 5003	17.64%
		90.42%

 

(2)

Analysis. The analysis is as follows:

a.

The combined expenditures for transportation from both the bond sinking fund and the capital improvement fund were plotted from 1981 through 1990.

b.

Expenditures were projected 20 years using least squares projection method (see attachment A).

c.

The ten-year history of the value of one mill against the unincorporated Fulton County tax base was plotted as in step one.

d.

The value of one mill was projected as in step two.

e.

The actual expenditures and projected expenditures were converted to mill equivalents by dividing expenditures by the value of one mill for each year.

f.

Results of the analysis are both:

1.

A projection of capital expenditures from normal revenue sources for transportation projects, based on a ten-year history.

2.

A projection of a millage equivalents applied to transportation capital projects based on a ten-year history.

See attachment B.

g.

All transportation projects for the period 1992—2002 were listed by TSA from the CIP along with total projected expenditures per year.

h.

Five-year expenditures per TSA were calculated as a percentage of total planned expenditures.

(3)

Application. The resultant millage equivalent multiplied by the TSA's proportional expenditure is applied to the average value of development types in the target area in which the finished project will be located to yield the credit. For instance, in TSA 4101, current Fulton County tax records indicate the average single-family home has a current market value of $163,930.00. This figure is used as the basis for tax credits for single-family homes in TSA 4101.

Note 1: The average millage rate over the projected period is 0.2045. A millage rate of 0.21 has been used to be conservative.

Note 2: The millage rate has been applied for a 20-year period to reflect life of bonds, even though some funds in the calculation basis are not used to pay bonds. This is done for the sake of being conservative.

Example 1: A sales house (assumed to be owner-occupied) in TSA 4101:

$163,930.00 (average in TSA 4101) × 40 percent = $65,572.00

$65,675.00 - $2,000.00 homestead exemption = $63,572.00

$63,572.00/1,000 = $63.57

0.21 mills × 55.50 percent = 0.1189 mills

$63.57 × 0.1189 mills = $7.56

$7.56 × 20 years (average bond life) = $151.20 credit

Example 2: A 100,000 square foot office building TSA 4101. Average value $154.11/square foot land and building; value = $15,411,000.00.

$15,411,000.00 × 40 percent = $6,164,400.00

$6,164,400.00/1,000 = $6,164,400.00

0.21 mills × 55.50 percent = 0.1189 mills

$6,614.40 × 0.1189 mills = $786.45

$786.45 × 20 years (average bond life) = $15,729.00

(94-RM-121, app. A, 5-18-94)