Development Authorities

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• Development Authorities
• In Georgia

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• What are Authorities and Why do They Exist?
• How are They Created?
• How are They Structured?
• How Can You Use Them?

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What is an Authority?

• A governmental entity created by state or local
  government
• Empowered to carry out a special project or
  mission
• The mission must be in the public interest

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History of Authorities

• To understand why authorities were created, you
  have to look at their history
• Began in the late 1930s
• Debt restrictions of 1877 Constitution
• In 1937, General Assembly passed the Revenue
  Bond Law

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History of Authorities

• Revenue Bond Law gave power to local governments
  to issue revenue anticipation certificates or
  revenue bonds
• Originally set the maximum term at 30 years and
  no greater than 6 interest
• Current law allows for 40 year bonds and interest
  rate no greater than 9
• Law specifically states revenue bonds are not
  included in the constitutional debt limits

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History of Authorities

• The Revenue Bond Law granted local governments
  the power to issue revenue bonds, not local
  authorities
• Later general enabling statutes creating
  authorities gave cities and counties the ability
  to use authorities to issue revenue bonds
• Therefore, authorities were largely created as a
  mechanism for cities and counties to issue
  revenue bonds to finance needed projects

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History of Authorities

• Eligible projects were more narrowly defined in
  the 1937 law
• Examples of projects that were added to the
  current law since 1937 as eligible for revenue
  bond financing include

• jails
• libraries
• beach erosion protection systems
• purchase of land used for training soldiers
  during time of war

• solid waste facilities
• gas and electric utilities
• parks and other recreation facilities
• public parking

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History of Authorities

• First authorities created were Hospital
  Authorities
• In the late 1950s and 60s, Industrial
  Development Authorities were created
• In 1963, the Industrial Development Authorities
  Law passed

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History of Authorities

• The 1963 law gave power to Industrial Development
  Authorities to issue revenue bonds
• According to the 1963 law, before issuing revenue
  bonds the authority must
• Have a valid lease signed for the project and
• Receive approval from the Department of Industry
  and Trade based on the viability of the project

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History of Authorities

• The 1969 Development Law expressly repealed the
  1963 Industrial Development Law
• Gave development authorities the power to issue
  revenue bonds
• Removed any requirement to get approval from the
  Department of Industry and Trade before issuing
  revenue bonds

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History of Authorities

• Since the passage of the 1969 law, additional
  projects that may be undertaken by a development
  authority have been added
• Examples include
• sewer and solid waste facilities
• gas, electric, and water utilities
• sports, convention, and hotel facilities
• industrial parks and office building facilities
• cable television
• nursing home facilities

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Three Ways Authorities Created

• General Enabling Act
• Special piece of state legislation
• Constitutional Amendment

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Created by Local Act

• A local law is a special piece of legislation
  that creates a single, unique local government
  authority
• Any type of authority may be created through a
  local act
• Some authorities are created through this means
  even if there is a general enabling act available

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Created by Constitutional Amendment

• Constitutional Amendments have to be approved by
  the voters. Cant create authorities this way
  anymore, since the amendment of 1983.
• The majority of authorities created this way are
  development authorities.
• Many have unique powers, such as taxation and
  eminent domain.

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Development Authority Board of Directors

• Membership appointed by the governing authority
• Board members must generally reside in
  jurisdiction
• Size of board generally ranges between 7 and 9,
  usually an odd number

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Special Requirements of Joint Development
Authority

• Joint development authorities determine number to
  represent each jurisdiction by a joint resolution
• Could interpret the law to say that no less than
  7 and no more than 9 applies to joint authorities
  as well
• Of the 35 joint authorities registered with DCA,
  20(57) of them have less than 7 or more than 9
  directors

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Power of Authorities

• Authorities may
• Purchase, lease, sell, or retain property
• Improve/develop real and personal property
• Extend credit or make loans
• Borrow money and issue revenue bonds
• Enter into contracts with local government

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Dissolution of Authorities

• Development authorities law specifically stated
  that authorities shall have perpetual existence
• In 2000, a bill was introduced (HB 1205) that did
  the following
• qualified the language giving authorities
  perpetual existence and
• provided a means for the city or county to
  dissolve the authority provided there are no
  outstanding bonds

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Why Delegate to an Authority?

• Authorities focus on one purpose or mission
• Allows local officials to handle multiple tasks
• Activities are less touched by politicssometimes

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Development Authorities Funding

• Property taxes may be levied and collected to
  provide for financial assistance to County or
  Joint County and Municipal Development
  Authorities
• County taxes may be levied up to 1 mill
• The exception is Constitutional Development
  Authorities, which may be supported by a 2-mill
  property tax
• Municipal taxes may be levied for the purpose of
  developing trade, commerce, and industry for up
  to 3 mills
• The city, through a 2-mill property tax, may
  support a constitutional authority

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Special Powers

• Some local governments provide local tax breaks
• Chatham
• Early County and all municipalities
• Glascock
• Henry
• Jeff Davis County and all municipalities
• Richmond
• Screven County and all municipalities
• City of Macon
• All except Jeff Davis County, exempt
  manufacturing only, Jeff Davis exempts new
  industries and businesses
• 250,000 to 1,000,000 minimum investment required

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Authorities and Debt

• Debt issued by authorities is generally repaid
  from project funds
• Local governments not required or allowed to use
  its property taxes to repay bonds
• Not considered to be debt of local government
• Debt generally issued through Revenue Bonds

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Auditing Standards

• Auditing standards require local governments to
  include the finances of authority in their annual
  audit based on certain factors
• financial independence
• selection of governing authority
• designation of management
• ability to influence operations and
• accountability for fiscal matters

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Summary - Why Do they Exist?

• Public authorities exist as creatures of state
  and local governments
• To assist in accomplishing special projects or
  missions
• Were largely born out of a need to deal with
  restrictive debt limitations imposed by the State
  Constitution

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Summary - How Structured?

• Structure is dictated by the legislation creating
  them and vary by authority type
• Authorities are created through General Law,
  Local Law passed by the General Assembly, or
  through local Constitutional Amendments
• Authority directors are appointed by the city or
  county or some combination of the two

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Summary - Good or Bad Tools?

• Authorities can be an effective tool for local
  governments because they get around restrictive
  debt limitations and can effectively handle a
  focused mission
• The local governing authority must ensure that
  authorities remain accountable
• Must remain responsive to the public will or
  local governance

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• For more information, please visit
• www.dca.state.ga.us

or contact Saralyn Stafford at 912/393-3690 or
Jim Finch at [phone]
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