Smyrna is hoping to refinance around $12.7 million of bonds related to development within the city’s tax allocation district, to save money on annual interest and pay the bonds seven years sooner.
This would mean over $178 million in new property value within the 140-acre TAD would be “back into service” sooner as well, city staff say.
Both the Smyrna City Council and Cobb County Board of Commissioners are considering meeting agenda items in regards to the bonds refinancing this week.
Smyrna needs the county’s approval to refinance its bonds, by way of a resolution affirming the county’s earlier pledge of its ad valorem, or assessed value, property taxes to the Smyrna TAD, which runs predominantly along the east of the Atlanta Road corridor between Windy Hill and Concord roads.
Cobb commissioners are due to vote Tuesday on a resolution accordingly, to authorize the inclusion of the county’s assessed value property taxes in the TAD so Smyrna can pay its bonds and other redevelopment costs.
The Smyrna City Council’s meeting Monday night also includes a resolution to approve the bond purchase agreement.
“Due to the success of the redevelopment of the former Belmont Hills Shopping Center at the intersection of Atlanta and Windy Hill roads, the city is able to refinance the original obligation at favorable terms,” a Smyrna staff report to council members states.
Smyrna’s new bonds, of $12.7 million, are subject to a 3.65% annual interest rate, compared to the 7% rate on the original bonds, a report to Cobb commissioners by the county’s community development director Jessica Guinn states.
“Applying the interest payment savings each year to early redemption of the 2019 bonds would result in a final payoff on Feb. 1, 2032, as opposed to the current payoff date of Dec. 31, 2039,” Guinn’s report states.
Smyrna staff said property within the TAD was valued at $73.6 million in 2003, when the tax district was first created.
Extensive redevelopment of the TAD property puts its current fair market value in excess of $252 million, staff said, even though a couple of buildings within the area, including a school building, have since come off the tax rolls for good.
“Refinancing and accelerating the repayment by seven years brings in excess of $178.4 million in fair market value back into service sooner – seven years earlier than would otherwise happen based on today’s numbers,” Smyrna community relations director Jennifer Bennett told the MDJ.
The Smyrna TAD was established as an incentive for developers to build in blighted areas in the city’s heart. It works by capping city and county property taxes at the yearly rate from when the TAD was implemented.
A developer continues paying city and county property taxes at the base rate, and revenue generated from a tax rate higher than the capped amount is used to reimburse the developer for TAD-eligible redevelopment costs.
The Cobb School District was not part of this TAD, Cobb economic development manager Michael Hughes told the MDJ.
In 2013, Smyrna was granted approval by the county to establish 2013 as the base year for its TAD, which set the base taxable value of the district at $23.9 million.
The Smyrna TAD includes the 48-acre Belmont mixed-use district developed by Atlanta-based real estate firm Halpern Enterprises, which comprises a 48,000-square-foot neighborhood retail center called The Shops at Belmont, a 156-home single-family residential subdivision called Village of Belmont, and a 274-unit luxury apartment community.
It also includes Belmont Physicians Center, a 30,000-square-foot medical office building anchored by Emory Healthcare, and Smyrna Elementary School.
Smyrna staff said $12.8 million went into infrastructure to achieve the redevelopment of the property, for which the city had original bonds issued.
The new bonds will be privately placed with Vinings Bank, Guinn’s report states.