Divided Fulton board approves hotel tax breaks for Buckhead, O4W

By Maggie Lee

Hotels in Buckhead and Old Fourth Ward are on track for property tax discounts worth millions, but they divided the members of Fulton County’s economic development board.

By a 5-4 vote, the members of the board of the Development Authority of Fulton County gave the preliminary OK for  a property tax discount worth $3.8 million over 10 years to the developers of a planned 216-key hotel hotel on East Paces Ferry Road in Buckhead.

The Development Authority of Fulton County incentivizes deals all over the county, including in Atlanta. Credit: Maggie Lee

The Development Authority of Fulton County incentivizes deals all over the county, including in Atlanta. Credit: Maggie Lee

“I’m going to frame this as a reuse, not a redevelopment … trying to preserve what we have, said Al Nash, DAFC’s executive director.  He said there’s a lot of work that must be done on a building of that age.

At issue is a decades-old condo building at 374 East Paces Ferry. Reid Scott, representing Sobu Flats, LLC at the DAFC meeting, said the plan is to do demolition inside, but to preserve the building’s facade.

However, members of the board cross-examined Scott, inquiring in large part about the justification for an abatement in a robust part of Buckhead, during an economic boom.

Scott said that the company has been having trouble finding an equity partner.

“If we’re unsuccessful in getting incentives, we will have to do a project of a lesser quality … or leave it as a housing project and repurpose it,” Scott said.

In response to more questions, he also said that asbestos abatement will be necessary.

But he didn’t convince everyone. Just ahead of his “no” vote, Board Member Tom Tidwell said that the developers need to figure out their costs and work backward and pay a “feasable” price for property. “And if they’re not doing that, they shouldn’t be coming to us and asking us to bail them out,” he said.

Board Member Kyle Lamont also voted against. “It just concerns me when a developer says, ‘If we don’t get get the money from you, we’ll just do something on a smaller scale,'” Lamont said.

“OK, just do something on a smaller scale,” he said.

DAFC must vote one more time before approval is final.

In a separate 7-2 vote, the authority board gave final approval to a deal worth $3.5 million in property tax savings over 10 years to Portman Holdings, which is planning a boutique hotel on the BeltLine.

The usual argument for such tax breaks is that if a plot is vacant, or doesn’t have much on it, it’s not worth much in property taxes to the city, the county and schools. Therefore, it’s better to have a knocked-down property tax bill on a fancy development instead of a full tax bill on a property that’s not paying much.

Nash gave a regularly scheduled DAFC update to the Fulton County Commission earlier this month. One number he highlighted was $13.6 million. That’s how much in new taxes that 72 DAFC properties were worth to Fulton County’s coffers in 2018, compared to what the properties were worth before construction.

And there are always jobs numbers: pledges that some number of people will get jobs working in or on a building, they’ll spend money while at work, the building will be supplied by area companies and so on.

However, when companies are just moving from one part of Atlanta to another, and not considering leaving town, the jobs and spending aren’t “new.”

Indeed, there’s always suspicion among opponents that in places like Buckhead, Old Fourth Ward and Midtown, developers are going to develop anyway, or that a vintage building facade is not worth public money, or that new hotels cannibalize the business of existing hotels. So therefore, that sometimes the tax discounts amount to a giveaway that need not happen.

There are two economic development agencies that work in Atlanta. One is DAFC, which works all over the county. The other is Invest Atlanta, which covers only the city of Atlanta. The boards of each agency are picked in different ways, but city and county elected officials have the most input.

The two agencies together have given preliminary or final approval for 23 developments seeking property tax discounts this year within the city of Atlanta.  Over 10 years, those discounts will be worth about $170 million.

Check out SaportaReport’s property tax discount tracker for more info.

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

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