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Court hands big win to city, would-be developer in Atlanta’s Gulch

Maggie Lee
The below-street-level Gulch downtown is mainly parking lots now. Credit: Kelly Jordan

By Maggie Lee

The Supreme Court of Georgia says it would indeed be “sound, feasible and reasonable” for a city development authority to issue up to $1.25 billion in bonds and forego tax money to finance the construction of a private, mixed-use development downtown.

In a unanimous ruling except one justice not participating, the court OK’d a complex deal that would see a city authority borrow money in several steps to help pay for private reconstruction of up to 15 blocks in the Gulch as “Centennial Yards.” The bonds would be paid off with “infrastructure fees” paid by Gulch businesses, once they open, in lieu of sales taxes.

The idea is that the city, county and state forego sales taxes until as late as 2048, but after that, they would collect sales tax money that wouldn’t have come from a vacant Gulch.

“The record supports the trial court’s decision to defer to the City’s view that redevelopment of The Gulch serves a beneficial public purpose,” reads part of the ruling. “While not all Atlantans, including the Intervenors in this case, share the City’s vision for The Gulch, that does not mean that the project is illegal.”

The “intervenors” are four Atlanta residents involved with the “Redlight the Gulch” campaign. The campaigners have long said that between this bond deal and another one involving property taxes, the city is giving away more than it’s getting back in public goods like affordable housing and job training for young Atlantans; and that they doubt retail sales in the Gulch would make enough money to pay off the bonds.

The four joined together to go to court to stop the bond sales. The Redlight the Gulch campaign said in a Monday statement that they still believe deal violates the state constitution’s ban on direct public subsidies to private businesses.

“This is an unprecedented, results-oriented decision in Georgia, and clearly represents a level of judicial activism never seen before in this State,” reads part of their statement. “Any Georgia Supreme Court prior to 2010 would have unanimously reversed the trial court.”

The court said it found that the city is adequately protected from any liability if there are not enough “infrastructure fees” to pay off the bonds, and that the developer would be on the hook.

There are two other legal challenges from the four intervenors to another bond involving property taxes. The Supreme Court of Georgia sent those two cases to the Court of Appeals, where they’re awaiting review.

But Atlanta City Council approved this Gulch deal in a different world: back in 2018, before COVID-19, teleworking, empty hotels and fear of stores. Yet offices, stores and a hotel were supposed to all rise in the Gulch. And even then, the intervenors cast doubt on the idea that there was enough demand for new retail and office space to fill a development of the maximum size envisioned in the Gulch.

The developer is The CIM Group, through local company Spring Street, LLC. A spokesman for Centennial Yards did not immediately answer a request for a comment on the ruling. This space will be updated with anything that arrives.

After this story was published, the office of Mayor Keisha Lance Bottoms responded to a request for a Gulch update and comment with the following: “The city is pleased with the Georgia Supreme Court’s opinion and eager to move forward with the development of the Gulch, solidifying historic investments in affordable housing, workforce training, minority and female-owned business participation and public safety investments, which will benefit Atlanta residents and businesses for years to come.”

This story was Wednesday with a comment from Mayor Keisha Lance Bottoms’ office

Document:

Supreme Court of Georgia ruling in S20A0328

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Maggie Lee
Maggie Lee

Maggie Lee is a freelance reporter who's been covering Georgia and metro Atlanta government and politics since 2008.

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