Reed: Atlanta is the dominant economy in the Southeast
By Maria Saporta and Amy Wenk
Published in the Atlanta Business Chronicle on Jan. 30, 2015
Atlanta is securing its spot as the “dominant player in the Southeast” — a position that Mayor Kasim Reed intends to solidify during his last three years in office.
This will be the theme of Reed’s “State of the City” breakfast speech, set for Feb. 4. During an hour-long editorial board meeting with Atlanta Business Chronicle on Jan. 27, the mayor unveiled several details about a number of current issues and developments impacting the city, including:
- the master plan for Hartsfield-Jackson International Airport;
- the bids for the sale and redevelopment of the Civic Center property;
- the possible annexation of the Druid Hills neighborhood and Emory University into the city limits;
- the trend of corporate relocation and business expansions to the city and near MARTA stations;
- the status of the sale of Underground Atlanta to a developer from South Carolina;
- the mayor’s commitment to not raise property taxes for the rest of his term as mayor; and
- what shape he wants to leave the city in for his successor.
- Mayor Reed taking firm stand in talks with APS
- Reed: “I’m going home” after term
The theme that tied all the topics together was Reed’s desire to make Atlanta the unquestioned economic center for the Southeast.
“All of this really is a message to the world, that if it’s the South, it’s us,” Reed said. “That really does have to be the message about Atlanta for us to compete the way I want us to compete.”
Reed said that compared to 2009, when he first took office, people are no longer comparing Atlanta to Charlotte, N.C., and Nashville, Tenn. “We have the fundamentals that can’t be replicated,” Reed said. “So you can’t create another Georgia Tech. You can’t create another Emory. And those two universities are in the top 100 universities in the world. You also can’t create another Atlanta University Center, which gives you a black population that’s as well educated as any black population in the United States.”
Hartsfield-Jackson Atlanta International Airport also can’t be replicated.
For starters, Reed said the airport will keep the world’s busiest title for five years, adding that the airport also is doing better than it has ever done financially.
The mayor also called the strong partnership between Delta Air Lines Inc. and the city as “unprecedented,” and said it is getting closer by the day.
“The reduction in the number of flights that Southwest [Airlines Co.] has had after acquiring AirTran really has been to Delta’s benefit,” Reed said. “They’ve absorbed eight additional gates.”
The city is making progress with the airport master plan. The question has been whether the city would recommend first building a new runway — to make it easier for more planes to fly in and out of the airport (most likely Delta’s preference); or whether the city should first build a new terminal with additional gates — making it possible to add more carriers to serve Hartsfield-Jackson.
“My sense is that a new terminal will preceed a new runway,” Reed said. “We have some idea where that will take place. But that will probably be the priority … more gate space.”
The airport has always been instrumental to the Atlanta region’s growth, and not just because of its connections to the rest of the world.
“We have a $6 billion capital program at Hartsfield-Jackson airport that is going to continue to power the region,” Reed said. “Part of our region’s secret sauce is that there is always a major capital project underway at Hartsfield-Jackson.”
Reed also said the airport would continue to promote international travel and its air cargo business, as well as improve the overall customer experience.
“We are really trying to make our airport one that is world class, literally, not just because we are the most successful in terms of traffic,” he said.
During the editorial board meeting, the mayor was quite upbeat about all the business announcements and corporate relocations moving the city’s way. He attributed the back-to-the-city movement to the investments that his administration had made in the police and fire departments, as well as not having raised property taxes and avoiding water rate increases. (The mayor had just left the press conference where Google had announced its plans to bring its super-fast Google fiber to Atlanta.)
He also ran through a list of recent moves: Coca-Cola’s move of 2,000 information technology jobs to downtown; Porsche’s North American headquarters; athenahealth; Cardalytics; PulteGroup; Carter’s; Prince; WorldPay; and NCR, which is moving to Midtown.
The mayor said his administration has not been able to identify another period in the past 30 years when there has been as much business activity. And he promised that more is coming.
When asked about the bids for the Civic Center, he acknowledged that the three bids submitted to the city were less than the appraised value of the property. “The plans are fantastic. What they are trying to do is to get the best price,” Reed said. “They just want the city to take a loss or to get a reduction from the appraised value that I probably won’t agree to.”
Meanwhile, the mayor said he has since received an offer for the property that equals the appraised value. He said he has asked the city’s law department to review whether the city can legally, once it has had an open bid process, accept another offer that is $10 million higher than the highest bid.
“I’ve got to believe there is a way legally and ethically for a city to take $10 million (more),” he said. “If the Council and if the public isn’t persuaded, then that’s just one I will take.”
Reed said the city received three bids, and the best bid was $10 million below the appraised value.
“It was $32 million, which is still a significant offer,” Reed said “The plans that are attached to that $32 million are very impressive. So they are plans that if you saw, you’d feel good about. (But) I think I can get $42 million.”
Reed also was upbeat about the Atlanta Streetcar and the sale of Underground . As he sees it, the streetcar will contribute to the trend of businesses wanting to locate near transit. MARTA also has been aggressively promoting transit-oriented development around its stations.
“The really exciting piece is even in areas outside of the city that are having big jobs announcements, they are near transit,” Reed said, mentioning State Farm’s new campus now under construction in Dunwoody and Mercedes-Benz’s future headquarters in Sandy Springs. “The decision was still driven by access to transit and connectivity to the city of Atlanta. All of that, we think, positions the city to be in the best health that it’s ever been.”
The proximity to MARTA helped in the city’s pending sale of Underground Atlanta to WRS Inc. for $25.75 million. T. Scott Smith, CEO of WRS Inc., has said the development will total about $150 million. “The Underground development is going to be one of the five most important things that happen during the next three years,” said Reed, who is confident the deal is going to close. “Nobody is going to believe what Underground looks like when it’s done. Because, you all haven’t seen what I saw.”
Reed credited Kevin Rogers, an associate of WRS, for having the vision for the redevelopment of Underground. “This guy saw something that nobody else saw and went and persuaded people,” Reed said. “Who would have ever thought that Underground Atlanta would attract $100-$200 million worth of new investment?”
When asked about the city’s possible annexation of the Druid Hills community, Emory University and the Centers for Disease Control and Prevention, the mayor chose his words carefully.
He has purposefully not been directly engaged in the effort unless he has been invited, but he said the city would be welcoming to the 26,000 new residents if they chose to join Atlanta.
“I want to be very clear that I am not going to be pulled into racial politics one way or the other. And that air needed to be clear, because in the beginning, there was some sense with folks in Druid Hills and other areas that because the communities were predominantly white and affluent, that I would have some unreadiness about welcoming them,” Reed said. “That’s just BS or crap.”
The mayor was excited when talking about the CDC. “I would like to see the CDC in the city of Atlanta,” he said. “I think that would say a lot about us. You have the largest concentration of PhDs in the United States of America.”
Then he added: “My sense is people are coming to the conclusion that Atlanta is the best bet rather than a new city or remaining where they are.”
The mayor also gave an update about the Atlanta Hawks, which are on the market. First, Reed said that he continues to be assured by National Basketball Association Commissioner Adam Silver that the team will not be moved out of Atlanta.
“The vetting process is going on for the ownership groups,” Reed said. “Since the Hawks have been winning, the number of groups that have decided to go through that process has increased … Everything that is happening right now is favorable.”
The mayor also said that having significant Atlanta ownership in the team was important to him. “That issue will be addressed once we are in the final stages of the sale,” he said. The city–through the Atlanta-Fulton County Recreation Authority–also is prepared to invest in the publicly owned Philips Arena, the home of the Atlanta Hawks.
“We will engage in a reasonable, fair conversation to keep them in the city of Atlanta,” Reed said. “But I’m not going to give away the store for anybody.”
Repeatedly, Reed mentioned the city’s healthy finances, its improved credit rating, its increase in population and construction permits. And several times he referred to his eventual successor–the next mayor of Atlanta–but he didn’t speculate on who that might be.
“We will not raise property taxes for the next three years based on what we are seeing,” Reed said, adding that he would continue to run a fiscally sound city that would leave the next mayor with $50 million to $70 million in “unencumbered” cash. “And that mayor is going to be able to do things that I think folks in this city have never imagined,” Reed continued. “I’m going to leave a cupboard that’s full. I think my successor is going to come in with the ability… to do some pretty amazing things.”
As he reflected on his five years in office, Reed spoke with a sense of pride at how the city has weathered the economic storm and now seems destined to be the economic capital of the Southeast.
“If you go sector by sector, space by space, and look at the city of Atlanta, we are stronger in almost every way that you can imagine,” Reed said.
“After going through the worst of it, which we went through at the beginning, we can make a pretty good case that people have a lot of reason to invest in Atlanta and believe in the Atlanta metro region.”