The following is an open letter emailed to the Alpharetta City Council and MACTEC Engineering regarding the proposed 2030 Comprehensive Plan.

Dear Council Members,

I write about Alpharetta and local issues in a blog called Roots in Alpharetta. I recently studied the 2030 Comprehensive Plan from MACTEC and attended the open house on March 22nd. I applaud the Council for being forward thinkers and for considering something like this. The plan does a good job identifying Alpharetta’s neighborhoods and their key features. However, I have some deep concerns.

The plan reclassifies large swaths of land into high density or mixed use development (which could support high density). In some cases low density areas are moved straight into the high density category. Recent zoning decisions by the Council suggest a willingness to approve densities up to the maximum allowed, even in mixed use. The proposed changes would encourage that to continue, adding many thousands of condominiums.

Secondly, many of the other concepts discussed in the plan seem to suggest an endorsement of the concept of New Urbanism. The plan would dramatically alter the character of this area. Most residents relocated here because of a safe suburban environment, robust economy and outstanding schools. An urban environment with high density housing is not the will of the people who live, work and play in Alpharetta. That belief has recently been reinforced in my mind. I’ve observed very few speaking publicly in favor of high density (with the exception of those in the political or business community).

The 2030 plan begs this question… Is it the will of the City Council to create a high density, urban environment for Alpharetta? If the answer is yes then let’s have a frank discussion with the community on this very topic. If the answer is no then wholesale changes need to be made to this comprehensive plan.

Thanks for considering what I have to say. I invite you to join the conversation already taking place online. These issues are discussed not only on my blog but on several others both pro and con. I’d be happy to share links on your request. And I offer kudos to Councilman Kennedy for his past participation.

Sincerely,

S. Lee Guy
www.rootsinalpharetta.com
lee@rootsinalpharetta.com

Last week I contrasted property tax across the various municipalities in the northern burbs. I anticipated it would be my most boring article to date, yet it triggered a decent little discussion. I thought I would follow-up that article with a second, my attempt to better quantify the differences. If you need a cure for insomnia, I’m sure this article will do the trick.

If you didn’t read my article last week, I’ll give you a review. For a home valued $300,000, the 2010 property tax  would be approximately $3,734 in north Fulton. That’s the average of the values for Alpharetta, Roswell, Milton and Johns Creek. They all were a little different but within a few bucks of each other. Let’s go with this figure today. In unincorporated Forsyth County, a $300,000 home would be taxed $2,881.

$853

That’s what we’re talking about today, the difference between tax in Forsyth and Fulton. What’s $853 dollars a year? I thought I could do a present value calculation, taking the present value of a yearly cashflow of $853 out for a few dozen years. That would give a good, hard number showing the savings someone would get by moving to Forsyth County. Did I mention a cure for insomnia? Yeah, exactly. So I came up with a better way of visualizing this number, something with the financial equations already cooked into the numbers. Follow along…

Imagine two neighborhoods that are identical in almost every single way. Homes in these neighborhoods sell for about $300k, plus or minus a few bucks depending on the home. But imagine one of these neighborhoods is in south Forsyth County and the other just into Fulton County. I don’t see this as a big stretch; there are neighborhoods that lay upon McGinnis Ferry Road kinda like this. But work with me here. As my Economics professor used to say, all things being equal, right?

Let’s say you’re in the market for a house and you like these two neighborhoods. You will finance a large portion of your purchase using a 30 year conventional mortgage. Let’s say you’ll get a loan at an interest rate of 4.5% fixed. You’re also aware that your mortgage company is going to escrow your property taxes. You stumble upon a terrific local blog that contrasts local property taxes, so you have a real good idea what it’s gonna cost you. You learn of the $853 yearly premium you’d have to pay to live in Fulton County. You divide that by 12 months of escrow payments, which gives you $71 per month.

You’re a smart buyer. You do a little math in a spreadsheet (or maybe ask your mortgage broker for help) and learn that for an extra $71 a month, you could borrow an additional $14,000 for the same monthly payment. Ah ha! If you pick the neighborhood in Forsyth County, you can buy $14,000 more house. I’m not a realtor, but I’d imagine that’ll get you some more bling on your new pad. Maybe it means the difference between a finished basement versus unfinished.

I know it isn’t as simple as this, every home and neighborhood is different. But I stand by my numbers. Given today’s interest rates and the differences in property taxes, Fulton’s tax represents a present value penalty of about $14,000 on a $300,000 home, or about 4.7%.

What do you think? Am I way off base here? Do you want what I’m smoking? Let me know! And for extra credit… do you think a new Milton County could substantially reduce property tax, down to Forsyth levels? What would that do to home values in north Fulton?

Tis the season for property tax! Are you excited? Me too. Most tax bills are due the first of December, plus or minus a few weeks. I thought I would completely bore my readers with a comparison of local property taxes in my reading area. The calculations seem like simple arithmetic but they get much more complicated once you get under the covers. Bust out your slide rule, here we go!

Most folks know the basic formula, which is

40% of Fair Market Value = Assessed Value

Millage Rate times Assessed Value = Tax

It all starts with the county assessor’s office. Strangely enough, the assessor doesn’t directly set your assessed value. Confused yet? The assessor determines your fair market value. This should be somewhat close to your home’s value, but more realistically the number is taken out of thin air. You can dispute this value, but that’s another article.

The general assembly sets the formula for determining assessed value, simply 40% of the market value. State, county and city lawmakers determine various millage rates, which are expressed in dollars per thousand of assessed value. Crafty lawmakers can manipulate your overall tax by fiddling with any of these three variables. And with three variables, it all might seem fairly simple, but oh contraire! Your tax calculation is much more complicated because of…

Homestead Exemptions

Ever go to Kohl’s when they’re having a sale? The price of the shirt you want is jacked up only to be knocked down by the sale discount. I view homestead exemptions like that. It’s especially true in the city of Alpharetta where they have both a higher millage rate and homestead exemption. Their overall tax is inline with their peers. More on that later.

Homestead exemption is enormously popular with voters. It’s available for property with owner occupants, aka the home you live in. There are also exemptions for blue hairs senior citizens and veterans, but I won’t go that deep into the math. The exemption simply knocks dollars off the assessed value of your property. Sounds simple, right? Well not so fast. The highest exemptions typically only apply to things like county and city operating costs. Schools tend to have much lower homestead exemptions, usually $2,000. Taxes going towards bond repayments are not eligible for exemptions. For example… Taxpayers in Alpharetta will see homestead exemptions vary from $35,000 for the city’s taxes, $25,000 for Fulton County, $2,000 for Fulton schools to no exemption for Alpharetta’s bonds. Confused yet? Asleep?

Here’s some raw numbers I put together. Imagine a home valued at $300,000. Let’s plop that guy down in each of north Fulton’s cities, and just for giggles let’s also put it in unincorporated Forsyth and Cherokee counties. After all is said and done with the millage rates and different exemptions, what do the taxes look like? Check out this table.

Property Tax Comparison

City	City Millage Rate	Total Millage	Tax on a $300k Home
Alpharetta	5.75	34.783	$3,731.91
Roswell	5.455	34.488	$3,844.03
Johns Creek	4.614	33.647	$3,673.90
Milton	4.731	33.764	$3,686.19
Mountain Park	11.78	40.813	$4,555.91
Unincorporated Forsyth	n/a	24.719	$2,881.32
Unincorporated Cherokee	n/a	28.398	$3,344.76

I’ve done my best to estimate these numbers based on information I’ve gathered and from looking at actual tax bills. It is possible I’ve made errors.

A few of my notes about each city…

Alpharetta

Alpahretta has an amazingly high $35,000 homestead exemption. Next year it will go to $40,000. Unfortunately that exemption doesn’t apply to their bonds, approx 1.5 mills. The city’s high exemption basically knocks down their slightly higher millage rate.

Roswell

As best I can tell, Roswell doesn’t offer homestead exemption for owner occupants. They have a handful of options of seniors and vets, but that’s it. Their overall tax suffers as a result.

Johns Creek and Milton

Both cities offer $15,000 in homestead exemptions and have managed to keep their millage rates low since incorporating. Johns Creek bills their city tax through Fulton County in a single bill. They are the only city I mention that does this.

Mountain Park

I mention this tiny city and their stratospheric 11.78 mills only to make an example out of them. Their asinine lawsuit is costing taxpayers dearly. Mountain Park’s overall millage rate is nearly that of the city of Atlanta. They offer only a $4,000 homestead exemption. I’d put up with a lot of lake silt before I paid 11.78 mills.

Fulton County

Fulton’s base millage rate is 29.033. They offer a $25,000 homestead exemption that will go to $30,000 next year.

Unincorporated Forsyth and Cherokee

Forsyth has amazingly cheap property tax. So low is their millage rate that the measly $8,000 homestead exemption they offer isn’t much of a factor. Forsyth also has a sales tax credit cooked into their overall millage rate. Taxpayers get a 2.644 mill reduction. Nice! Fulton offers something similar but is so puny it isn’t worth mentioning.

Cherokee county is also low but not nearly to the extent as Forsyth. I mention these two counties only to show how expensive living in Fulton is relative to its neighbors.

So there you have it. Do you think property taxes are reasonable in north Fulton’s cities? If we were to secede from Fulton, do you think a new Milton County could significantly reduce the 29.033 base millage rate?

Six years ago there were just two cities in north Fulton; Alpharetta and Roswell (we’ll ignore Mountain Park). They happily existed for a century, slowly annexing land from unincorporated Fulton from time to time.

Yet even though this area is politically conservative and embraces concepts of limited government, we decided to create three new governments out of thin air… and if we had our way, we’d make a forth (Milton County). So if you’re keeping score at home, that’s five cities… five mayors, five city councils, five city managers, five police departments, five fire departments, five zoning boards, five HR managers, five public works departments… you get the idea. Oh but wait, there’s only four IT departments. Congratulations, we’ve saved some money.

There are a handful of agreements between the various cities to share services. Johns Creek and Milton made a bit of news this week when they announced an agreement to share some IT staff. Don’t get me wrong, this is a positive thing and should be encouraged. I just can’t pass up the chance to point out the irony. The AJC’s journalist also couldn’t resist, mentioning it in her article’s very first sentence.

Allow me to wear my hindsight goggles and peer back in time to 2005. Rather than incorporate Sandy Springs, Milton and Johns Creek, why not just allow Roswell and Alpharetta to annex the rest of north Fulton? Sure, Milton and Johns Creek residents wouldn’t have their new identities. On the flip side, the cost savings would have been tremendous. Economies of scale are a beautiful thing.

Before my readers label me as a hater… let me say that I fully supported the political reasons behind the creation of the new cities. I also support the succession plans to create a new Milton County. I just want to point out our own contradiction. We want more cities AND limited government. We’re good at wanting it both ways.

I recently played poker with some buddies from work… can’t get the poker analogies out of my head.

Mountain Park, population 500, has a little lake silt problem. Maybe they’ve got a hand to play against the builders next door so here comes the lawsuit. This probably should have ended here with a settlement out of court. But oh no. The betting continues on both sides, with everyone re-raising each other. Before long, Mountain Park has two million bucks in the pot. Let’s see the flop.

Doh, the cards didn’t do their way. Turns out Mountain Park is holding a poor hand. They’re faced with a poker player’s dilemma. Some would say they are pot committed. There’s too much money already in the game for them not to keep calling, spending more and more until the end of the game. On the other hand, you could say their two million is a sunk cost. Any decision to continue from this point on should not take into account the funds already lost. My advice? Fold this hand.

Okay, my poker analogy might not be a good one, but you get the idea. This case has gone on way too long. If Mountain Park continues, they will almost be making an all-in wager against an opponent who is virtually bankrupt (and perhaps judgment-proof). This case is beyond stupid. Not only is this lawsuit absurd, it calls into question this town’s entire reason for being.