A luxury apartment complex, one to be built in Buckhead with healthy tax breaks, will have some "affordable" units worked into the mix. But that depends on your definition of affordable.
The development at 99 West Paces Ferry Road, across from swanky St. Regis Atlanta hotel, will set aside 10 percent of its 485 units for folks struggling along at $103,610 to $119,500 per annum.
This has caused some tut-tutting in news reports in recent weeks and shines a light on the Through the Looking Glass World of public funding for private entities. But, in a world where we subsidize baseball stadiums and football stadiums and shark tanks, then why can't fancy apartments — or offices, hotels and live/work/play complexes — get some public subsidy love, too?
JLB Partners, a developer with a national footprint, would get $271 million in bonds from the Development Authority of Fulton County (DAFC), saving the firm nearly $3.45 million in property taxes over 10 years.
Now, affordable housing is a pressing issue in Atlanta these days. But the Development Authority is not actually calling any of JLB Partners' apartments "affordable" because using that term would verge into absurdity. Instead, the 10 percent that'll be set aside as lower-priced units are called "workforce housing," which suggests that if you're working in Buckhead and not making $104K, then you ought to work harder.
Al Nash, the authority’s executive director, said the developer “was making an effort to do something. There was no requirement that they do that.”
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A few years ago, Atlanta City Councilman Andrew Dickens got an ordinance passed that said if a development got tax subsidies, then they have to include some affordable housing. His law took effect July 1, 2016. The developers of 99 West Paces Ferry Road — and other developers, too — pushed their applications in ahead of this and got grandfathered.
Dickens’ idea of “affordable” was setting aside 15 percent of the units to folks earning 80 percent of the area median income or 10 percent of the units for those making 60 percent.
The Development Authority is using $79,700 for a family of four as the median income here.
Nash said the tax break is not a giveaway. The property there now generates $335,000 a year in real estate taxes, but would increase to $2.4 million a year with the new development occupying the space, even at a lower tax rate.
Earlier this year, Atlanta Public Schools Superintendent Meria Carstarphen did a short stint on the Development Authority’s board and argued — repeatedly — that the tax rate cuts squeezed the schools of potential dollars. She said many of these projects getting subsidies were being built in already hot real estate markets like Midtown and Buckhead. These are places where tall people cannot walk without fear of being hit by a swinging crane.
Still, the developers find ways to get their projects funded.
JLB Partners calls the property “underperforming,” which makes sense because any property without a 12-story luxury tower built on it is not performing as well as it could be.
I reached out to Carstarphen on Thursday, and she said: “Incentives and abatements continue to put excessive pressure on the district’s budget, limiting our ability to help taxpayers or invest in underserved communities. For example, last year alone, the amount of APS taxes abated by the DAFC ballooned by 40 percent from $8 million to $11.3 million. This is not sustainable.”
Nash said a report showed that APS got $19 million more in taxes last year because of the incentives that were offered. He said the authority won’t give out tax breaks unless the new development brings in five times more in taxes.
But that’s totally a chicken or an egg argument. Many of these projects would have been built if they did not get incentives, said Fulton County Commissioner Lee Morris. How does he know? Developers told him.
“Yes, but I’d have to cut back on the facade on the parking deck that the neighbors want or the granite counters in the kitchen,” one told him.
Morris, who worries about the impact of abatements on the taxes that homeowners must pay, picked Carstarphen for the Development Authority board not long after she had been critical of the Gulch deal downtown, a giveaway that will offer up to $1.9 billion (with a B) in inducements to the developer near the CNN Center.
Carstarphen’s term on the development board ended, so Morris replaced her with Tom Tidwell, a lawyer and Buckhead leader who ran unsuccessfully for school board and has become the voice in the wilderness on the authority. That means he often votes against projects.
In June, he voted against the JLB project, along with one other member of the nine-person board. During the July meeting, he was the lone “no” vote four times against tax breaks for a mixed-use complex in Roswell, a Westin/Marriott hotel on Peachtree Street, the “Goat Farm” redevelopment in northwest Atlanta, and a hotel being built by Portman on the hottest stretch of the Beltline.
During the August meeting, three others joined him in a losing 5-4 vote against subsidizing a hotel on 374 East Paces Ferry Road, one where developers get a $3.8 million break over 10 years. In that project, developers will “reuse” an existing apartment building and turn it into a hotel.
I called Tidwell, but being the new guy, he said he didn’t want to comment publicly. He didn’t want to seem like he was on a soapbox showing off.
But Tidwell, “a firm believer in the free market,” passed on a letter he sent to colleagues a couple of months ago. In it, he noted the heated temps of Buckhead, Midtown and the Beltline, arguing, “It is not credible to argue all of this development would not occur but for taxpayer incentives.”
“If there is sufficient demand for a hotel or housing, then someone will build it regardless of whether they receive a tax incentive. If they can’t build it without a tax incentive, then the market is saying there isn’t sufficient demand for that product,” he wrote, quoting a passage from Free Market 101.
Hopefully, his fellow board members read it.
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