Publicly financed Gulch deal teed up for Atlanta City Council consideration, again
By Maggie Lee
Atlanta Mayor Keisha Lance Bottoms has sent a revised, and somewhat simpler proposal to City Council Council that still makes a big ask for future tax dollars to subsidize major new construction in the Gulch.
She’s still very much in favor of the Gulch deal, saying it would bring benefits to the whole city, where there’s now nothing going on. And its most prominent critics are still saying the deal doesn’t make good sense.
Council is set to have a work session on it Tuesday.
Much of the proposal is unchanged from what the mayor first pitched to Council in August. The CIM Group, a California-based developer, is buying up land in the low spot Downtown known as the Gulch. CIM wants to build up all that space as 12 to 15 blocks of shops, residences, and offices. The whole thing could come to as much as 12 million square feet of buildings. For context, the 55-story Bank of America Plaza is 1.3 million square feet. The Gulch development would cost as much as $5 billion.
CIM wants to receive tax money that would be collected in the Gulch to pay off its own construction bills.
How much and what money, you ask? Well, it depends who you ask and what you think will happen in the future.
Draft legislation and documents given by Bottoms’ office to Council specify two sources of would-be public money. One is up to $1.25 billion in sales taxes through 2048, which CIM could receive. (Otherwise, those taxes would go to the state of Georgia and to Fulton County, which would divvy them up among its cities.)
The other is a property tax refund of a sort, worth up to 12.5 percent of CIM’s cost in building up the Gulch (capped in the documents at $625 million) through 2038.
And a prominent critic says those numbers don’t depend on good assumptions. Management consultant and former Invest Atlanta board member Julian Bene said that he doesn’t see where a development of this size would generate as much as the city’s documents project in sales taxes. And on the other side, he thinks the developer would end up walking away with much more in property taxes — because all property taxes in the Gulch would be paid into a special fund that must be used for development in some way. Bene puts the taxes foregone at $1.6 billion.
(Review documents by Bene and other critics are here, though they refer to the earlier version of the deal.)
City documents (section 9.3 of the TAD Bond ordinance), appear to limit how much CIM can get from the special Gulch property tax fund to $625 million.
But Bene has long expressed great faith that “billionaires’ lawyers” can get a ton of future tax money spent on the development, if they set their minds to it.
So, the major difference between the October proposal and the August is a financial change that removes some serious political obstacles. Originally, the property tax subsidy would have lasted through 2048 and would have required more borrowing on the city’s part. That would have required buy-in from Fulton County and the Atlanta Public Schools. And APS Superintendent Meria Carstarphen has made it very clear that the system is not interested extending any of these special zones that use property taxes for development instead of schools and other public works, unless some other zones close.
The revised proposal before Council, therefore, saves some in borrowing costs and doesn’t need buy-in from other governments. But much of the rest is the same.
Critics like Bene still say that a subsidized development in the Gulch would undercut developments in parts of the city where building owners would pay taxes into the public purse, like at the new developments going up near Georgia Tech.
Bottoms has said the deal would transform 40 acres of underutilized land that’s worth almost nothing to the city into a development that would be worth jobs and, eventually, tax revenue.
She and her staff often refer back to the public benefits negotiated in the deal: $28 million for an affordable housing fund, at least 200 below-market-rate residential units, $2 million in workforce training, $12 million for a citywide economic development fund and more.
“With the inclusion of millions of dollars towards affordable and workforce housing, economic development, and job training, this historic agreement is vastly different than any other negotiated by our city,” she said in a press release earlier this week.
But critics don’t find that same list of benefits is worth all that CIM would get in return. Indeed, Bottoms’ statement came out on Tuesday morning, just as a small group of critics were having their own press conference outside City Hall.
And the sheer volume of the deal documents and the arcane financial points have provoked questions from Council and others from the day the first announcement came from the mayor, on a deal that’s been under negotiation since the administration of the previous mayor, Kasim Reed.
The Council work session is scheduled to start at 9:30 on Tuesday morning.