First Atlanta Gulch tax incentive case lands in Supreme Court of Georgia

A view of the Gulch. Credit: Kelly Jordan

By Maggie Lee

Back at the end of 2018, a divided Atlanta City Council voted to let the would-be developer of Downtown’s Gulch tap the value of something near $2 billion in sales and property taxes to incentivize its private project over more than three decades.

Now the Supreme Court of Georgia is deciding whether one part of that deal was done legally.

“The strongest argument is the violation of the intergovernmental contracts clause,” said John Woodham at the court Thursday, representing four Atlanta residents who objected to the Gulch deal.

In English: his side contends state law on this is vague and that constitutionally, the city can’t tap sales tax dollars for the use of a private developer anyway. Emphasis on the word “private.”

Technically, the incentives rely on the sale of bonds. That money raised would be available to The CIM Group’s Spring Street LLC, which is looking to build the mixed-use, 12-to-15-block “Centennial Yards” in the Gulch. The bonds would be paid off over time with “infrastructure fees” linked to sales taxes subsequently collected in the built-up Gulch.

A Fulton County Superior Court judge ruled last year that Atlanta acted within the bounds of the law.

Indeed, this kind of deal was specifically authorized by the state Legislature, said Matt Calvert, representing the Atlanta Downtown Development Authority and the city of Atlanta.

“What the intervenors are really disputing here is the wisdom of the state legislature in adopting” the state law on these bonds, Calvert told state Supreme Court justices. “And the wisdom of the city of Atlanta in invoking the rights it has.”

Indeed the four intervenors have campaigned to “Redlight the Gulch,” calling it a bad deal for the city of Atlanta on principle. But the four, Julian Bene, Vincent Fort, Tim Franzen and James Martin, also object to the deal on numerous legal grounds.

The high court usually rules on cases within about four months.

Meanwhile, the four Atlanta residents plan to be back at the state Supreme Court two more times on property tax questions.

Fulton Superior Court ruled last year that as a matter of law, the city did follow correct procedure for the issuance of new and restated bonds and that there’s adequate security for the payment of such bonds.

The Atlanta residents disagree and are appealing both rulings.