ECONOMIC DEVELOPMENT: DESCRIPTION

Economic development and redevelopment are essential to the overall economic climate of any region. Municipalities and counties are continually looking to develop retail centers, mixed-use developments, office complexes and entertainment venues and to redevelop industrial and infill properties. McKenna Long & Aldridge has broad experience in navigating complex zoning, permitting, tax and bond issues and formulating public-private partnerships to tackle difficult development projects. MLA also understands how the private sector may be able to bring expertise and other benefits to city, county or state governments. Our lawyers have led efforts in the privatization of water and waste water services.

Land Use

All development projects begin with the ideal piece of land, but permitting and zoning laws can be complex. Our lawyers work with county, city planning and zoning officials, neighborhood representatives, and elected officials to obtain the appropriate land use and permitting approvals. MLA also provides assistance with public perception towards development projects and when necessary, drafts and proposes legislation to alter current laws and statutes. MLA understands the need that developers may have for economic incentives. Our lawyers have led the way in passing legislation and then utilizing tax allocation districts and tax allocation bonds to fund necessary infrastructure improvements when municipalities and counties would be unable to do so. We also obtain property tax abatements, tax-exempt financings and other economic incentives.

Public-Private Partnerships

The key to maximizing a public-private partnership is to understand the different incentives that governments offer and know how to obtain incentives for the private sector. As counties, municipalities and businesses consider development or redevelopment, they face diverse challenges and significant opportunities. To meet the challenges and capitalize upon the opportunities, MLA helps the public and private sector:

• Understand the county or municipality's priorities and goals
• Identify the interested public and private stakeholder constituencies and understand the interest and concerns of those constituencies
• Understand the concerns and motivations of the developer with which the municipality or county is negotiating
• Consider the scope and purpose of the project and whether the project will be used as a potential catalyst to develop associated amenities and to redevelop specific neighborhoods
• Select a site, which affords or maximizes the opportunity for creative synergies, which may further enhance revenue opportunities, associated amenity developments, provides favorable taxation and minimizes any adverse environmental impact upon the site and the surrounding area
• Understand the financial alternatives available to construct and maintain a suitable development and the risks associated with such alternatives
• Explore opportunities for regional cooperation to enable the burdens as well as the benefits to be shared
• Develop and negotiate creative strategies for public-private partnerships to establish joint investment in the project
• Establish and execute strategies to enhance public acceptance
• Communicate and negotiate with various constituencies to obtain support for project and set strategies for addressing concerns of project opponents

MLA possesses the experience and expertise to assist in negotiations for construction and financing of a development. The firm's lawyers have been intimately involved in counseling clients to develop insightful, effective and creative business and legal solutions for significant public, private and joint public-private projects.

Tax Allocations Districts (TAD)

One incentive for economic development is Tax Allocation Districts or "TADs". In 1985, the Georgia legislature enacted The Redevelopment Powers Law, which gave local governments the authority to create "tax allocation districts," encompassing "economically and socially depressed areas." This law is designed allow local governments to issue TAD bonds to fund infrastructure and other redevelopment costs. TAD financing is used to generate private sector investment, which causes property values to rise and creates the positive tax increment needed to pay the debt service on bonds. Tax increment financing is an attractive development tool for cities because the cities continue to receive the same tax revenue and the developers pay for the TAD financing through their property taxes.

MLA has taken the lead in Georgia in creating TADs. To create a tax allocation district, MLA helps:

• Identify the Redevelopment Area and list the tax parcel identification numbers
• Prepare the Redevelopment Plan
• Introduce local government resolution
• Hold public hearings
• Introduce and adopt resolutions of other governing bodies
• Apply to State Revenue Commissioner for a determination of the base taxable value for the TAD
• Issue tax allocation bonds secured by the tax allocation increment

Case Study - Atlantic Station

MLA lawyers currently represent the private developers of "Atlantic Station." The 135-acre site of the development, which was formerly the site of a steel manufacturing facility, is seen as the catalyst for joining the east and west districts of downtown Atlanta, creating a "walking" downtown and promoting sustainable growth in the downtown area. The development includes construction of a new bridge to be built across the I-85/I-75 interstate and construction of a mixed-use development to include retail/entertainment, office, residential and hotel uses.

One of many factors complicating the plan for the development is that at the time the development was proposed, the Atlanta region was barred from receiving federal highway funds for the bridge construction due to the region's non-compliance with federal air quality regulations. Working with the developers and the public sector, including city, county, state and federal governments, MLA played a key role in demonstrating that the new bridge and the proposed development would decrease auto emissions by creating a live-work-play environment and providing easy access to public transportation, thereby allowing a waiver of the federal rules.

Further, to finance the infrastructure for the proposed development, MLA lawyers were instrumental in creating a tax allocation district which permits the issuance of tax-exempt bonds payable from the "increment" between the amount of ad valorem taxes payable on the distressed property on the date of creation of the TAD district and the ad valorem taxes payable from the redeveloped property. This generated bond proceeds from the initial issue of TAD bonds of approximately $76,000,000. Although a popular financing technique in a number of other states, this financing vehicle had never been used in Georgia.

Case Study - Camp Creek Trade Center and North American's Camp Creek Market Place

Duke Realty Corporation, the largest mixed office/industrial real estate company in the U.S., is developing a business park on several hundred acres of land on Camp Creek Parkway in the City of East Point, GA. The development will include approximately five million square feet of office and distribution space in a series of buildings constructed over an eight-year period. The business park will also include new streets, utilities, greenspace and walking trails. In addition, North American Properties is constructing a 700,000 square foot retail center and several restaurants across the street.

Obstacles to the development are the challenging topography and the lack of useable infrastructure. Additionally, the property lies within the airport noise impact area, which makes it unsuitable for residential and other uses. Without some type of public financing to fund the infrastructure, projects would have been prohibiting expansion.

With our guidance, a Tax Allocation District (TAD) was created and TAD bonds were issued. By using TAD financing to fund construction of infrastructure, the City of East Point was able to leverage approximately $1,900,000 in positive property tax increments to provide the infrastructure necessary to generate over $250,000,000 in private sector investment in the TAD without tapping into the City's current tax revenues. This investment will generate five to ten thousand jobs, substantially increase electricity revenues, increase incomes for City residents and increase revenues for City businesses. As employees of the business park seek housing near their jobs, housing development in the surrounding area will increase, enhancing the property tax base. Once the TAD bonds are retired, the City will receive the full property tax increment from the development.

Case Study - The City of San Diego Padres Ballpark Development Project

Since December 1997, MLA has been engaged as one of the principal negotiators for the City of San Diego in this project. MLA came to the process at a time when the parties were looking at different potential locations. Ultimately, the parties agreed to go forward with a downtown site next to the Gaslamp Quarter of San Diego. Extensive negotiations took place over an eight-month period and a Memorandum of Understanding was executed by the City and the Padres in August 1998. In November 1998, the voters passed a referendum accepting the terms of the Memorandum of Agreement. We have continued to assist the City with implementation of the Memorandum including negotiation and drafting of all of the definitive documents.

The state-of-the-art, baseball-only complex is a unique facility, which includes a "Park in the Park." It seats approximately 42,000 fans with a vast array of premium seating and other amenities unique to this ballpark.

The City and its development agency committed $275 million to this project through a combination of growth in the TOT tax and use of tax increment financing. The Padres and the private sector committed $115 million to this project from an array of sources including naming rights, team equity as well as other traditional private revenue sources.

For more information, please contact Sharon Gay or Steve Labovitz