Mayor Keisha Lance Bottoms on Monday touted a deal to redevelop downtown's Gulch as a boon to both affordable housing and economic opportunity in the city, but some questioned whether a list of benefits her office released justify the potential public investment that could climb to $2 billion.
California developer CIM Group has committed to pay $28 million into a citywide affordable housing trust fund. It’s a new sweetener in the deal, adding to a previously disclosed minimum of 200 “affordable” rental units within the development site, a news release said.
Under the agreement, CIM would renovate two additional downtown office buildings and demolish a third for future parking, and the city would give land and a warehouse to the developer behind 2 City Plaza, the former downtown offices of The Atlanta Journal-Constitution.
Other commitments from the developer include: $12 million to an economic development fund; up to $12 million for a new fire station to service downtown and the Gulch area; reduced rent for economic development agency Invest Atlanta; $5 million for a reconstructed Nelson Street bridge connecting Castleberry Hill to downtown; and $2 million to a workforce development program.
The Gulch vote is the first major political test of Bottoms' political muscle, and will show whether she can persuade a skeptical City Council to get behind her. It's also a historic vote that could permanently reshape the city's skyline.
Gov. Nathan Deal also has encouraged City Council to support the project.
Several pieces of legislation related to the deal are expected to be considered by council committees Tuesday and Wednesday, with full council votes on the incentive package set as soon as Monday.
If it passes council, Fulton County and Atlanta Public Schools also will have their say on parts of the financing package.
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The AJC requested an interview with the mayor’s office and officials did not respond. In the release, Bottoms called the CIM deal “a once in a lifetime chance to bring much needed investment and redevelopment to the heart of downtown Atlanta.”
“The planned development will not only increase the city’s tax base and help to attract new employers,” Bottoms said, adding it aligns with her vision of an more equitable city she calls “One Atlanta.”
California developer CIM Group has proposed a mini-city downtown between the Five Points MARTA station and Mercedes-Benz Stadium over what is now lonely parking lots and rail beds. The project, which could climb to $5 billion in total development, comes with a record-breaking commitment of public money: potentially $1.75 billion in future sales and property taxes.
Projections by a former board member of the city’s economic development arm, Invest Atlanta, has the public commitment climbing to greater than $2 billion.
RELATED CONTENT: GULCH PROJECT
The Gulch is a complicated site – crisscrossed by freight and MARTA rail lines and 40-feet below street level. CIM said a $500 million platform to create a dozen or more new city blocks is needed to facilitate redevelopment.
But to make the project feasible, the developers say they need a substantial portion of three decades of expected sales taxes and property taxes created by the development to build the infrastructure necessary to serve the site and connect neighborhoods across downtown.
Several council members have voiced skepticism about the deal, and concerns about voting on such a massive project with so little time to vet the details.
Hearings Tuesday and Wednesday will be telling to see if Bottoms has lined up council support. Bottoms’ office provided more than 600 pages of documents related to the deal with council members Saturday night.
“We just received this information over the weekend and I know I have not been able to review each of the four pieces of legislation,” said Council President Felicia Moore, who would have a vote only in the event of a tie.
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Councilman Howard Shook said he doesn’t see the council’s Finance/Executive Committee, which he chairs, voting on Wednesday to send the Gulch legislation for full consideration at Monday’s meeting. Still, Shook said the legislation could still come before the full council on Monday if a majority of council members vote to bring it up.
Council members only received all the exhibits and attachments to the proposed ordinances over the weekend and the proposed ordinances have been substituted and amended.
“Unfortunately the material we got did not come in red-line fashion,” Shook said, which would make it easier to compare. “So, people who are interested in figuring all this out are going to have to go through this stuff side by side, page by page.”
J.C Bradbury, an economist at Kennesaw State University, said the Gulch is the latest project in a part of downtown in which officials have promised tax dollars will translate into revitalization. Bradbury cited Mercedes-Benz Stadium, which received $700 million in taxpayer support, and State Farm Arena, which included $142.5 million in public funds for its ongoing renovations, as two recent examples.
Each of these projects, he said, “were supposed to generate all this economic development and we’re doing it again.”
“You have no guarantee of this being successful,” he said. “This is Lucy telling Charlie Brown this time you’re going to kick the football.”
Jon Wiley, a Georgia State University real estate professor, said such complex and expense projects require public-private partnerships, and the goal is to find a win for the community and private sector.
The financing structure, using future expected sales and property taxes, Wiley said, “is not a taking from the public.”
“It’s a financing mechanism that pays for itself,” he said. “It borrows future revenue for itself and pays for itself.”
The developer’s commitment to affordable housing and economic development meet needs within the community, Wiley said, “and it does sound like an effort to align what the development could contribute to the infrastructure that the community needs.”
Julian Bene, a former Invest Atlanta board member and a critic of the deal, valued the new list of public benefits at between $57 million and $65 million. Bene, who has said the city and CIM are undervaluing the long-term cost of incentives, said the community commitments from CIM equates to about one year of the future tax income from the complete project.
“It’s being done to look like the public are getting something back and we’re not,” Bene said.
Gulch Redevelopment
Scope: Developer CIM Group outlined a project of $3.5 billion to $5 billion. The CIM proposal could grow to more than 9 million square feet of office space, 1,000 residences, 1,500 hotel rooms and 1 million square feet of retail space.
Partners: CIM Group and the Atlanta Hawks. CIM was co-found by Richard Ressler, whose brother is Tony Ressler, the lead owner of the Hawks.
Public investment: Documents obtained by the AJC project public financing of $900 million to $1.75 billion, though those figures could grow. It would be funded by sales taxes generated on site and bonds backed by expected future increases in property taxes.
What's next: Several pieces of legislation pertaining to Gulch redevelopment are pending and could be considered by Atlanta City Council in committee hearings Tuesday and Wednesday with a full council vote as soon as Monday.
Community benefits
Mayor Keisha Lance Bottoms’ office outlined the following community benefits from developer CIM Group for the proposed Gulch project:
- $28 million investment in a citywide affordable housing trust fund
- The greater of 200 residential units, or 20 percent of the total built, set aside as affordable for people making 80 percent of the area media income (or a 1 bedroom rent of about $1,100).
- $12 million toward an economic development fund.
- $2 million to a Atlanta Committee for Progress workforce program.
- A new Atlanta police mini-precinct leased to the city for $1 per year and security enhancements.
- $12 million for a new fire station.
- Office space for Invest Atlanta at 50 percent below market rate rent.
- 10-year commitment to hold the Peach Drop at no cost to event organizers.
- A new $5 million Nelson Street bridge.
- A marker commemorating Carrie Steele Logan and her creation of the first orphanage in Georgia for African-American children.
- 38 percent minority- and women-owned business participation and 10 percent equity in the project to minority and or women-owned businesses.
- Agreements to renovate two office buildings and demolish a third for future parking.
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