By Maggie Lee
The Development Authority of Fulton County approved property tax breaks worth $18.7 million over 10 years to five developments, including the final OK for one on one of Buckhead’s toniest streets.
By a 7-2 vote, the board gave final approval to a tax discount worth $3.4 million over 10 years for a luxury apartment planned for 99 West Paces Ferry Road, not a mile from the governor’s mansion.
The property tax funds would normally go to Atlanta, Atlanta Public Schools and Fulton County.
Nearly every month, the development authority board unanimously approves a handful of such abatements. Usually it’s mostly new warehouses in the cities south of Atlanta.
But it’s glitzy developments in expensive Atlanta neighborhoods that raise the occasional “no” vote.
“This project isn’t feasible without assistance from the development authority. There are are a lot of reasons for that, but the primary one has to do with the site,” and the need to cast parking deck components on site instead of using precast parts, according Dan McRae, a partner with Seyfarth Shaw, who spoke to the board Tuesday on behalf of the developer, JLB 99 West Paces Ferry LLC.
The building could have up to about 500 apartments plus about 13,500 square feet of retail. It will also have two parking decks with 750 spaces.
But the company’s arguments didn’t win over the full board, some of whom raised questions mainly around the apparent market demand and possible rental rates for address with cachet on a site that’s across from the swanky St. Regis Hotel and a Whole Foods.
JLB Partners’ Matt Hallman told the board that he hopes that by the time the development is done, market-rate rents will reach $3.30 per square foot, but that nothing in Atlanta is getting that now.
The company has agreed to “use its best efforts” to price 10 percent of the units below market rates. The conventional affordable housing formula suggests that will mean rent something a little over $3,000 per month for a family of four. (In technical terms, it’s units priced for folks at 130% to 150% of area median income, according to agency documents.)
In other business, the board also gave final approval to a property tax incentive worth $6.6 million over 10 years for the office-and-retail portion of a planned development at 1150 Spring Street in Midtown.
(Like the Buckhead development, 14th and Spring is also across the street from a Whole Foods.)
The rising cost of construction is a challenge, Harvey Rudy, a partner at Greenstone, the developer, told the board. It’s set to be an 11-story building with 283,000 square feet of office space and 5,500 square feet of ground-floor retail.
Those rising construction costs do hit all developers, but as is normal, the argument is that a new building, preferably with new tenants from out of town, will all add their two bits to the tax base.
So, the argument goes: a tax abatement in the short term contributes to a better tax base in the long term. And sometimes developers say there’s a site challenge: their property is too sloped, it has wetland on it, it’s too rocky, it’s polluted and requires cleanup. And sometimes they offer things that are valuable, like work on adjacent public roads.
But there’s always a contingent that suspects sometimes, some folks are asking for subsidies on developments that would happen anyway, or that some developers have paid too much for crummy land.
Three more Atlanta deals got preliminary approval for property tax breaks. Each one will need to return to the board at some point for a final vote, and each tax figure given is cumulative over 10 years:
– A planned 130,000 square foot, six-story commercial and retail project at 400 Bishop Street was approved for a $2.3 million tax savings. That’s on a wedge of land behind the Target at Atlantic Station.
– A planned hotel and office space in Old Fourth Ward was approved for a $3.6 million break. What’s being called “Waldo’s” will include a location of Hilton’s “Motto” micro-hotel brand. The retail, office and hotel together will come to about 190,000 square feet at 40 Boulevard. It’ll also have 10 townhouses that won’t be for sale, but will be for rent via Airbnb or similar platforms.
– Part of the the Goat Farm Arts Center redevelopment was approved for $2.8 million. The whole Blandtown site is about 12 acres and is all scheduled for redevelopment. But the DAFC agenda just spoke to a roughly 4-acre wedge of it, which is set to be rebuilt and offered at prices such that artists can afford to return to studio and living space after the redo.
All five of these deals are “lease-purchase” bonds: the development authority technically owns a property, and leases it to a developer, passing along its favorable tax treatment as a public entity.