I was on the Peachtree City Planning Commission from 2015-2018.
Before that, I did senior level planning and budgeting for both industry and state/local government. I was also former chairman of a county commission near Atlanta and chair of the Tax Committee of ACCG (Association of County Commissioners of Georgia).
The recent article by Cal Beverly (2-27-19) addresses the issue of paying for repairing infrastructure in an aging city. The problem is complex and goes far beyond Peachtree City itself.
For many decades (with the notable exception of the Clinton years), there has been an unconscionable abandonment by our federal government of its fiscal responsibilities, resulting in a constantly growing deficit and “snow balling” cost-shifting.
Under the rather dubious guise of cost containment, more and more of the fiscal burden is being shifted to state governments, putting a strain on their budgets.
In turn, downward cost-shifting by state government (including Georgia) has caused their cities and counties to either raise their millage rates, charge user fees, rethink how they can more efficiently manage programs, or (usually as a last resort) cut services either entirely or in part.
This situation is exacerbated by local zoning decisions which do not specifically have as a key criterion short- and long-term economic impact on the community, including the decision’s effect on county and city budgets. It is a systemic planning and zoning problem virtually everywhere around the USA, including right here in Peachtree City.
The Wilksmoor rezoning example: In June 2018, there was a Planning Commission public hearing (PH-18-03) held to review the possible rezoning of 66 acres in Wilksmoor Village from light industrial and low density residential to medium density residential. There were various issues raised by staff and commissioners concerning the rezoning request, including excessive tree removal; lack of amenity specifics; increased traffic; and other quality of life factors.
Specifically, there was a much larger issue which was not addressed in this particular rezoning — or in general, other rezonings around the nation for that matter — namely, the effect of the rezoning on municipal and county budgets. As a nationwide planning and zoning study stated: “The analysis suggests that policymakers are not sufficiently informed about the impact of their land-use decisions on the long-term health of government finances.”
The Wilksmoor project is a good example of why we should be looking more closely at these economic factors as they affect local budgets. As stated above, the city was asked to rezone this area from industrial use and low density use to medium density use.
As is commonly known, industrial and commercial uses generate much more taxes than residential development. However, as was correctly pointed out by a commission member and staff, this particular area was not really a good fit for industry.
Of course, that does not automatically mean that it is then a good idea to move the 66 acres to medium density housing from low density.
The developer proposed to have 160 houses on 66 acres, maximizing his profits as do all logical business people. Each home would average $360,000 in price and be 1,600 square feet — $225 per sq. ft.; this is somewhat higher than the average home in Peachtree. It is also a very small lot size (6,000-7,000 square feet) for Peachtree City. It may well be that the actual selling prices are well below what is predicted by the applicant; that factor should have been analyzed but was not.
Based on a study done in 2015 by planning staff, the tax breakeven point in Peachtree City is $330,000 for a single-family home. In other words, houses selling under that amount are a drain on our taxes (costing more in services than they bring in via taxes) and houses selling over that amount contribute to lowering taxes for the rest of us by bringing in more taxes than are spent on those houses.
Analysis/conclusions: Using Wilksmoor as an example, the 160 homes (at medium density) will bring in an excess property value of 160 houses X $30,000 per home, for a total of $4.8 million. In other words, the millage rate times the $4.8 million (adjusted per a strange Georgia quirk, described below) gives you what these houses contribute to the tax rolls over the cost in services provided through local taxes.
On the other hand, if low density was retained, larger homes could be built on 1 acre lots on the 66 acres. Let’s say that there were 66 such homes that were 3,200 square feet each, costing $720,000 (using the same $225 per sq. ft. as the Wilksmoor developer utilized). Thus, there would be $25,740,000 in excess property value ($390,000 x 66). The millage rate times the $25.74 million gives you what these houses would contribute to the tax rolls over what it costs to provide services.
There was a difference of $20.94 million in taxable property value if fewer homes were built on larger lots. Said another way, the 66 more expensive homes would contribute over five times as much as the 160 homes in “excess” taxes (i.e., tax revenue in excess of what services are costing the city/county).
There is a strange quirk in the Georgia state law, apparently politics driven, although there seems to be no clear fiscal purpose. Under state statute, all real estate is to be assessed for tax purposes at 40 percent of its value. This calculation yields $8.376 million adjusted taxable value ($20.94 x .4).
Applying the Peachtree City 7.065 millage rate would give yield an additional $59,176 in annual taxes for the city with 66 larger, more expensive homes versus the 160 smaller homes as proposed by the applicant. Fayette County, Ga., millage is 26.237 (including schools), yielding $219,761 more in annual taxes for the county with the 66 more expensive homes versus the less expensive ones.
Obviously, city dwellers also live in the county and are affected by that tax burden as well. Therefore, combining them, there is a total of $278,937 in extra taxes paid to the city and county annually with the low-density option. Over a ten-year period, this would amount to nearly $2.8 million for the city and county.
Therefore, in a solely economic sense, clearly PTC should have left the 66 acres low density, rather than change it to medium density. In the future, the City Council must be more aware of economic factors in zoning, especially when they are strongly considering raising our taxes.
Jack Bernard
Peachtree City, Ga.
