Fulton judge considering part of public finance deal for Gulch construction
By Maggie Lee
A judge is starting to consider legal objections to a deal for the city, state and county to forego tax money that would instead subsidize a private development in Atlanta’s Gulch.
Fulton County Superior Court Chief Judge Robert McBurney said on Wednesday his job isn’t to second-guess the decisions of Atlanta City Council or the mayor.
But at the request of skeptics, McBurney is considering whether some public bonds that would be issued or modified for the deal are sound, feasible, reasonable and follow the law.
A quick recap of the deal: The CIM Group, a California-based developer, wants to build a new roughly 15-block mixed-use development in the Gulch, a mostly disused low spot Downtown. And the city, county and the state are willing to forego sales and property taxes in the Gulch tomorrow to help building happen today. Instead, the governments would channel a lot of money collected in the Gulch back to CIM to help it offset its costs — as much as $1.875 billion if the project hits its maximum proposed size of 12 million square feet.
Approval hasn’t been smooth at the city level, though a divided Atlanta City Council OK’d it in November. The city has represented Atlanta Public Schools as foregoing property taxes as well, but APS isn’t on the same page there. More on that below.
Meanwhile, a group of four city resident-activists have brought a lot of objections to court. In McBurney’s courtroom this week, the dominant question was the prospective sum of Gulch sales taxes that could be raised in one million square feet of retail shops.
For critics, Atlanta has signed up for a deal that’s based on overoptimistic estimates of how successful those shops would be. They’re not satisfied that it’s feasible to think that five cents on every dollar spent in Gulch shops through 2048 would generate enough cash to cover the bonds that city would promise to essentially reimburse CIM.
“Anything that big, it is speculative to believe you can fill it up,” said Julian Bene, a former board member of the city’s own development agency, and now one of the most prominent critics of the Gulch deal.
For comparison, Lenox Square’s shops and restaurants come to about 1.6 million square feet. And downtown, a renovation of Underground is already underway.
Boosters of the Gulch deal, most prominently Atlanta Mayor Keisha Lance Bottoms, have said the deal protects the city’s interests and will — down the line — be worth a lot in taxes in a place that’s worth pretty much nothing now.
Now, even the city’s director of strategic and alternative investments, Ralph Dickerson, agreed with one of the activists’ points: the revenue projection that the city used on sales taxes wouldn’t cover $1.25 billion in bonds if those bonds were issued today in 2018 dollars.
Instead, the city points to an agreement to issue the bonds in steps — as parts of the project come online and have passed a feasibility review. Dickerson and others at the city have also long said that the deal protects the city from liability if the “infrastructure fees” linked to sales tax income don’t amount to enough to pay off the bonds, in a multi-step transaction that sees CIM itself buy the bonds.
“We believe that all that we’ve done up to this point in time is very supportive, and very much conservative as it relates to developing on this 40 acres of undeveloped land,” said Dickerson on the stand Friday.
Bene and three other prominent Gulch critics are bringing the objections. Since details started becoming public this summer, they’ve been arguing as the “Redlight the Gulch” coalition that Atlanta is getting too little in exchange for the value that CIM gets out of the deal.
Closing the Friday session, McBurney said he expected to rule on a timeliness objection. He said he may make other orders or reach out to the parties for more filings or scheduling.
And he has yet more Gulch on his calendar anyway, relating to the property tax part of the deal. Atlanta Public Schools are disputing that they’re necessarily liable to forego their property taxes in the Gulch. And the Redlight team are objecting too. That court date is scheduled for Jan. 16.
A spokesperson for Mayor Bottoms declined comment, saying they don’t comment on pending litigation.