By Sonam Vashi
As the City Council weighs a vote to let the Gulch deal move forward, some councilmembers, advocates, and experts question whether the agreement’s affordable housing benefits are enough, given the size of the public investment.
The deal could commit up to $1.75 billion of public tax incentives — the most of any project in recent history — in order fill a longtime quandary for the city: an empty wasteland of parking lots in the heart of downtown that could become the largest development of its kind in the city. That money would come from the city and state giving up much of the taxes generated by the potential development.
In exchange, developer CIM would give the city benefits related to affordable housing:
- $28 million into a citywide trust fund for affordable housing
- CIM would rent 200 of its units (or 20 percent) at a price affordable to those making 80 percent of the area median income for 100 years. In 2018, that would be $1,100 per month for a one-bedroom apartment, or $1,350 for a two-bedroom. (This is slightly more than what the city policy requires for all other subsidized developments: that 15 percent of units need to be affordable at 80 percent of the area median income.)
- CIM would rent 10 percent of its units for people making very low incomes (30 percent of the area median income, or $520 for a two-bedroom) — if it’s paid for with housing vouchers from the city or federal government.
There are other benefits, ranging from $12 million in an economic development fund, a new fire station, and even a clause that the development will host the annual Peach Drop. CIM also doesn’t have to build the affordable housing: Just like in the city’s policy, the developer could instead pay a one-time fee to the city of about $29 million to get out of the affordable housing requirements.
Most agree that something needs to happen at the Gulch, but the benefits in the current deal aren’t enough to warrant the nearly $2 billion in public money, says Julian Bene, a former board member of Invest Atlanta and a vocal critic of the deal. He estimates that, if the value of the affordable housing perks and the other concrete benefits in the agreement were combined, the deal is worth about $115 million in total for the city.
“The benefits don’t even come to a fraction of what we’re giving up,” he said. “It’s clearly a ridiculous trade.”
Several city councilmembers have been bluntly frustrated with the deal, especially with how fast they were being asked to make the decision. (Update: This morning, the mayor issued a press release saying she would not press the council to make a decision about the deal this afternoon.)
Councilmember Matt Westmoreland said that the approximately $60 million for affordable housing in the deal — $28 million into the citywide affordable housing trust fund and about $30 million for construction of 200 affordable units — may not be enough.
“I think, for a $1.75 billion public investment over 30 years, we need to do better than that,” he said, adding that “$1,100 a month for these 200 units is definitely ‘workforce housing,’ but I think it’s a stretch to call it ‘affordable housing.’”
During a council committee meeting last week, councilmember Natalyn Archibong also noted that Atlanta’s affordable housing need isn’t at the level that CIM’s offering.
“$28 million is not going to get us that far,” she said, referring to the potential affordable housing trust fund.
Additionally, while the deal says that CIM will set aside 10 percent of its units for those with very low incomes, if it’s paid for with housing vouchers, Georgia State University housing professor Dan Immergluck says it may be misleading to count that as a gain for the city.
“It sounds like they’re touting an extra 10 percent when, in reality, it sounds like they’re trying to cap it,” he said. “It’s not a quid pro quo. It’s not costing [CIM] anything.” Housing vouchers represent guaranteed income for a landlord, since the difference between the affordable price and the market price is paid for by the government, and renters using housing vouchers tend to have low turnover.
“If any building gets subsidized, they should be able to take vouchers,” Immergluck added. “The least we could do is say, ‘if you’re taking public money, you should accept vouchers.’”
Last week, Mayor Keisha Lance Bottoms told SaportaReport that the city had negotiated an “amazing” deal with CIM.
“It’s far more than we asked for,” Bottoms said. “The only thing we’ve gotten from Council is, ‘it could be more.'”
A spokesperson for the mayor specifically addressed the affordability concerns: “80 percent affordability for 99 years is as a major if not historic advance in affordable housing policy… The additional 10 percent at 30 percent of AMI (with [Atlanta Housing’s] participation), together with the minimum 200 units or 20 percent, is likely the best affordable housing arrangement the City has been able to achieve for a major mixed-use economic development project. These commitments clearly exceed requirements in the City’s existing affordable housing legislation.”
During the past week, the mayor has appeared on several media outlets to campaign for the deal, pointing out that the “hole in the ground” known as the Gulch currently doesn’t generate any revenue for the city, and that the potential development will “pay for itself over the long term.”
“There is no risk to the city of Atlanta,” the mayor wrote in an op-ed for the AJC. “In this case, corporate relocations hang in the balance.”
Westmoreland hopes that the vote won’t take place this afternoon.
“This is the largest real estate deal in the city’s history,” he said. “It’s the largest public incentives project in the city’s history. I believe we need to make sure that we’ve got all of our questions answered and that we’ve negotiated the best deal for normal Atlanta residents that we can before voting one way or the other.”
Read a draft of the Gulch agreement here. This story has been updated to reflect that a City Council vote on the Gulch deal would not take place on Monday after the Mayor issued a press release, and to include comment from the Mayor’s office on the housing affordability aspects of the deal.