Mayor Girtz’s plan to build affordable housing while cutting property taxes

Mayor Kelly Girtz is developing a plan to spend $18 million every year on affordable housing, addressing homelessness and youth programs while cutting property taxes by an equal amount. These projects will be funded by a new 1% sales tax starting next year, if approved by the ACC Commission and the voters.

Mayor Kelly Girtz
Mayor Kelly Girtz

Girtz is considering this idea because Athens has a growing problem with housing affordability, homelessness and gang violence as many residents are aware. While the local government is taking steps to address these problems using an influx of federal money from the American Rescue Plan, these funds will soon be depleted.

That’s left the mayor and commission looking for creative ways to fill the funding gap. This year, the state legislature threw them a lifeline in the form of HB 581, the “Save Our Homes Act.”

The Save Our Homes Act

HB 581, championed by Lieutenant Governor Burt Jones, allows voters to cap the increase in the taxable value of their homes to the rate of inflation every year through an amendment to the Georgia Constitution. If approved in November, the amendment will provide significant tax relief for homeowners at the expense of some revenue for local governments.

The law lets local governments reclaim some of that lost revenue by levying a new sales tax up to 1% on purchases. The new tax, called FLOST for Flexible Local Option Sales Tax, would raise sales taxes in Athens to at most 9% if voters approve. 

Sales taxes in Athens are currently set at 8 percent. 4% goes to the state government, 1% to the school district (ESPLOST), 1% goes to general government expenses (LOST), 1% goes to special projects (SPLOST) and the last 1% is for transportation (TSPLOST). Sales taxes are used heavily in Athens because they are relatively painless for homeowners and thus more politically-palatable than property taxes.

This year, each 1% sales tax is estimated to bring in $33.7 million, the equivalent of 4.7 mils of property tax relief. Local government property taxes are currently set at 12.45 mils.

Athens’ sales tax base is growing rapidly, estimated to increase by 10.9% next year. This could make such a funding mechanism an even more tempting prospect for homeowners.

Affordable housing and Girtz’s recommended budget

Girtz, who has made affordable housing a priority as mayor, included $1 million in his recommended budget this year for a new affordable housing “strike” fund. If supported by the commission, the money would set up a revolving loan fund to help local nonprofits buy up older affordable properties around town that may not be in the best shape.

After some repairs, nonprofits such as the Athens Land Trust would work to ensure the long-term affordability of these properties. When the loans were paid off, the local government could loan the money out again to save another at-risk property.

This “strike” fund was recommended in the local government’s affordable housing investment strategy released last year. Yet, Girtz has not funded the strategy’s primary recommendation, which was for a $5 million investment every year to create a local housing fund. 

The idea behind the local housing fund is that it would be used to fill in financing gaps for housing projects making use of the federal low-income housing tax credit. This could help triple the creation of affordable housing in Athens, according to the authors of the report.

Nevertheless, the local housing fund hasn’t received much support so far from the commission during budget discussions. The main priority for some commissioners, including Commissioner John Culpepper, is to cut the property tax millage rate over most other alternatives.

It is possible that the $1 million “strike” fund will be removed from the budget as commissioners negotiate for tax relief. 

Girtz’s plan

Since some commissioners are strongly opposed to raising property taxes, it seems likely that Girtz will need to find another way to fund community priorities like affordable housing. As he explained to APN, his current plan is to make full use of the FLOST sales tax made possible by HB 581 on the following timeline:

  • Step 1: Pass the “Save Our Homes” Amendment on November 5

Voters statewide will need to approve the “Save Our Homes” amendment this November to make Girtz’s plan possible. The referendum is extremely likely to pass, given that it will probably be popular with taxpayers. It seems safe to assume that its passage is almost guaranteed.

  • Step 2: Pass the FLOST referendum in early 2025

Once voters approve the “Save Our Homes” amendment, Girtz will implement his plan by placing a FLOST referendum on the commission’s agenda. Girtz plans to tie passage of the FLOST sales tax to annual community investments including $12 million for affordable housing and homelessness prevention, $6 million for youth programming and roughly $18 million for property tax relief, the equivalent of a 2.5 mil reduction.

If the commission approves this plan, they would put it before the voters of Athens-Clarke County in the first or second quarter of 2025.

  • Step 3: Start FLOST collections in July 2025

If voters approve the FLOST referendum, collections could start as early as July 2025.

After five years, Athens’ state representatives would need to give their approval before the FLOST could be placed back before the voters in 2030.

If FLOST is approved, homeowners would see a significant reduction in their property tax bill for 2025 while funding affordable housing, homelessness prevention and youth programming at the same time. On the other hand, businesses and landlords would not see as much of a reduction in their property tax bill because the tax values of non-homestead properties are not capped by the “Save Our Homes” amendment.

Consumers would have to pay higher prices on all goods purchased in Athens, including food and clothing, if this plan is implemented.

Other paths forward

The only other ways to fund community needs like affordable housing would be to raise property taxes, to defund another community priority such as public safety or to dig ever deeper into the local government’s “rainy day” reserve.

About the latter option, readers should know that it’s extremely important for local governments to keep ample funds in reserve in case of an emergency like a natural disaster, but even in normal times to help maintain a good credit rating. Just as for individuals, having good credit helps governments secure lower borrowing costs and protect them against financial predation. Local government policy requires commissioners to keep two months of operating expenses in reserve at all times.

Currently, the local government has $12 million in reserve above and beyond the two month requirement. While ACC financial staff view this additional padding as necessary in the case of a sudden emergency, commissioners could choose to allocate it to an affordable housing fund, youth programs or tax relief if they desire.

Upcoming budget hearings

The commission will hold several upcoming meetings to hash out the details of this year’s budget. The community is invited to give public comment at two of the meetings, listed below:

  • Tuesday, May 14 (5:30 pm) at 595 Prince Avenue
  • Thursday, May 16 (5:30 pm) at 120 Dougherty Street
  • Wednesday, May 22 (6:00 pm) at 595 Prince Avenue. Public Comment allowed.
  • Thursday, May 23 (5:30 PM) at 120 Dougherty Street, but only if the commission has yet to come to an agreement.
  • Wednesday, June 5 (6:00 pm) for adoption at 595 Prince Avenue. Public Comment allowed.

You can view the mayor’s recommended budget here.

As a matter of strategy, APN recommends reaching out to commissioners as soon as possible if you have strong feelings about this year’s budget. Speaking at the June 5 meeting can be entertaining but it does virtually nothing to change the outcome since the decision has already been made. Speaking at the May 22 meeting is preferable. You can also send an email with your thoughts to commissioners using the addresses below:

patrick.davenport@accgov.com
melissa.link@accgov.com
tiffany.taylor@accgov.com
allison.wright@accgov.com
dexter.fisher@accgov.com
jesse.houle@accgov.com
john.culpepper@accgov.com
carol.myers@accgov.com
ovita.thornton@accgov.com
mike.hamby@accgov.com

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