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Maggie Lee

Georgia rolls out $1 million welcome mat for Macy’s Midtown tech hub

Maggie Lee
 The Gallery at South DeKalb, where Macy’s closed earlier this year. Credit: Kelly Jordan

By Maggie Lee

Months after Macy’s announced it would close its San Francisco tech office, Georgia revealed that it has granted $1 million to lure part of the struggling retailer’s tech team to Midtown Atlanta.

Georgia was competing with other states for the site where 630 folks will work on the future and new dynamics of Macy’s, said Bert Brantley, COO of the Georgia Department of Economic Development.

The state wouldn’t have offered a grant if they didn’t think it was necessary to close the deal, Brantley said.

“Just state income taxes alone, they’re going to more than pay the value of the grant in one year,” Brantley said. The average salary of a Macy’s new hire will be about $80,000 to $100,000, according to state documents.

Cities, counties and states regularly offer welcome gifts to marquee projects, though a grant of this kind is part of only maybe five to 10 percent of state deals, Brantley said; it’s a tool for luring companies when Georgia is in competition with other places.

County and city governments may offer things like property tax breaks.

Such subsidies often start with pleas from companies or developers that they just can’t make an investment work without a hand. Some requests are turned down before they appear before a public board.

But others get the OK. Indeed, Atlantic Station’s T3 West Midtown building, where Macy’s will occupy about 70,000 square feet, already enjoys a property tax break worth about $3.9 million over 10 years granted by the Development Authority of Fulton County in 2018.

Some of Macy’s San Francisco tech work is also moving to Macy’s in New York.

The gain to the tax bases of Georgia and New York are a loss to California’s. The San Francisco Chamber of Commerce lamented Macy’s departure, which came with 831 layoffs.  And that was even before the Covid Recession’s store closures resulted in Macy’s putting most of its 125,000 employees on furlough. (Some stores have since re-opened.)

In early February, the company had already announced plans to permanently close 125 stores, including the ones at The Gallery at South DeKalb and at the Macon Mall. A company press release at the time described a three-year plan to “stabilize profitability” and then grow it.

The financial press note that Macy’s is borrowing, probably against inventory and real estate, to get cash in hand. And that one bond rating agency has downgraded Macy’s grade to “junk.”

Georgia can claw back its money if Macy’s doesn’t deliver on the jobs. And Brantley said the grant offer was made about six months ago, before COVID-19.  Due to the economic shutdown from the virus, the state of Georgia is working on hacking about 14 percent of its already lean budget in the coming months. That’ll come to more than $3 billion in cuts, and lawmakers will scrap over pieces much smaller than $1 million.

Asked about what role the the $1 million grant played in its decision to move here, Macy’s media relations director answered via e-mail.

“We were delighted by the warm reception and enthusiastic support we received from civic and business leadership in Atlanta, and in particular we want to thank Governor Brian Kemp, Mayor Keisha Lance Bottoms, and the economic development officials from the city and state,” wrote Jacqueline King. “They were instrumental in our decision to select Atlanta as the site for this significant investment.”

The grant got unanimous approval from the board of Atlanta’s economic development agency, Invest Atlanta. IA documents describe the city agency a “conduit” for state money and say that Invest Atlanta does not have any authority on who receives a state grant.

Invest Atlanta has steered its own money lately toward work with small or local businesses, and edged away from six-figure subsidies for medium or large companies in booming neighborhoods.

The leader of the Atlanta University Center Consortium, Todd Greene, sits on the Invest Atlanta board. Previously, at the Atlanta fed, he oversaw research and policy development on inclusive economic growth.

Greene said he’s interested in seeing development all across the city, especially in areas that have experienced disinvestment. And he said he supports all companies wishing to grow jobs in Atlanta, including Macy’s.

“Yet, [I] believe that incentives under Invest Atlanta’s control should mainly be directed to support projects that would be unlikely to happen without such support,” he said.

The majority of new Macy’s staff would be working on software development, including engineers and architects, King wrote.

Other details about the move will come at a later time, she said.

Documents:

Feb. 3, 2020: Macy’s letter to California Employment Development Department detailing layoffs.

March 31, 2020: Macy’s REBA Grant fact sheet from Invest Atlanta

April 22, 2020: Georgia Project Development Financial Assistance MOU and Accountability Agreement

 

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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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