Developer seeks ‘pause’ for controversial tax break on Beltline

A rendering of the proposed mixed-use development by developer New City. The company has proposed a mix of office towers, apartments, a hotel and retail. The company sought $22.5 million in tax breaks that critics say is a giveaway for a coveted land that will be developed anyway. SPECIAL TO THE AJC

A rendering of the proposed mixed-use development by developer New City. The company has proposed a mix of office towers, apartments, a hotel and retail. The company sought $22.5 million in tax breaks that critics say is a giveaway for a coveted land that will be developed anyway. SPECIAL TO THE AJC

A developer requesting $22.5 million in tax breaks from the city of Atlanta for a posh project along the Beltline asked for a delay amid complaints from critics and as the project appeared to lack votes to win approval from a city board.

Atlanta-based New City Properties requested that the proposal be removed from the agenda before Thursday’s board meeting, said Eloisa Klementich, CEO of Invest Atlanta, the city’s development agency.

“It’s a big project and complicated and I think everyone wanted time to ensure questions were answered,” Klementich said after the meeting.

New City has proposed 1,100 residences, more than 1 million square feet of office space, 200,000 square feet of retail and a 75-room hotel on a former Georgia Power yard overlooking Historic Fourth Ward Park near Ponce City Market.

New City sought the tax break for the first phase of the project, which includes 350 apartments and about 475,000 square feet of office space.

Critics said the project’s public benefits, including a plaza connecting the project to the Beltline, pedestrian improvements and a new street grid, were not enough to justify the incentive.

“We seem to have a consensus that these kinds of handouts aren’t appropriate anymore,” said Bill Bozarth, an Invest Atlanta board member.

A rendering of the proposed mixed-use development by developer New City. The company has proposed a mix of office towers, apartments, a hotel and retail. The company sought $22.5 million in tax breaks that critics say is a giveaway for a coveted land that will be developed anyway. SPECIAL TO THE AJC

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Jim Irwin, New City’s president, said after discussions with the board that it was best to pause to provide officials with more information about the project.

“Basically, it became clear to us in the discussions leading up to the board meeting, because of the complexity of the project, there were still a lot of unanswered questions,” Irwin said. “It’s appropriate to allow for more time to sit and answer these questions and help everyone understand what we’re proposing today.”

Board members who spoke to The Atlanta Journal-Constitution said support for the deal evaporated Wednesday night, amid concerns raised by community members about the appropriateness of the tax break.

The requested incentive, known as an abatement, was a rare move for a project along the Beltline. Critics said it flies in the face of how the Beltline was envisioned. That’s because the Beltline is supposed to pay for itself using future tax revenue generated by new development and appreciating property values.

When the city started the Beltline, it created a special taxing district known as a tax allocation district, or TAD, that’s designed to take long-term gains in property values triggered by new development and invest those dollars into the trail, parks, future transit and affordable housing.

New City won a similar tax incentive from Invest Atlanta for 725 Ponce, an office tower and Kroger grocery store nearby, while the Development Authority of Fulton County provided a tax break for a luxury hotel on the Beltline.

Observers of Invest Atlanta said they could not recall the board rejecting a tax abatement.

“Along with many other residents, I’m grateful to the board who, for the first time ever, said no to a tax break in a hot real estate market,” said Julian Bene, a former Invest Atlanta board member who has been critical of incentives for many megawatt Atlanta projects.

A rendering of the proposed mixed-use development by developer New City. The company has proposed a mix of office towers, apartments, a hotel and retail. The company sought $22.5 million in tax breaks that critics say is a giveaway for a coveted land that will be developed anyway. SPECIAL TO THE AJC

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Infrastructure worth $20 million

The use of incentives — be it for professional sports arenas, Amazon's hunt for a second headquarters or major real estate developments — has come under increasing scrutiny by taxpayers who fear government officials dole out far more than the value of public benefits.

Many government leaders say incentives are a vital tool to create jobs and boost the tax base.

Irwin said he will return to Invest Atlanta in the months ahead, but he did not say if his request might change.

Irwin told the AJC on Wednesday that the incentives were designed to help recruit corporate tenants to the project and pay for infrastructure improvements that would benefit surrounding neighborhoods.

The property generates little tax revenue now, Irwin said. After development, the site will generate about $60 million in new tax revenue over 10 years, after factoring in the tax break.

Most of the incentive will go to office and retail tenants whom he said will create jobs.

In exchange for the tax breaks, New City has proposed building infrastructure it says is valued at $20 million, including a public plaza for tenants and the community. A grand staircase with water feature and dedicated bicycle bridge will connect the park and the Beltline through the development.

New City also proposed improvements to surrounding streets and converting Dallas Street into a bike and pedestrian path into the park. Per city code, 10% of first phase apartments, or 35 units, would be reserved for households who earn 60% of the area median income.

An aerial view of the former Georgia Power yard along the Beltline Eastside Trial in Old Fourth Ward where developer New City plans a massive mixed-use project including offices, retail, a hotel and apartments. PHOTO BY CHANNEL 2 ACTION NEWS.

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‘Beachfront property’

Experts who study government incentives questioned the need to provide a tax break for a luxury project in one of the city’s hottest neighborhoods. They also questioned the wisdom of providing such an incentive in a TAD, which relies on growth in the tax base to help fund the Beltline.

J. Mac Holladay, the former chief operating officer of the Governor’s Development Council under former Gov. Zell Miller, said incentives for the project should not immediately be rejected.

Holladay said Irwin helped make the Beltline’s Eastside Trail what it is today as an executive at Jamestown when it revitalized a hulking former Sears warehouse into Ponce City Market.

“If you have got somebody who will do an enormous and important project like this, way beyond what has been proposed for that property previously, it’s worth taking a look what they’re asking for and why they’re asking for it,” Holladay said.

Holladay, who runs Market Street Services, an economic and community development consultancy, said Invest Atlanta and New City should be able to tweak the proposal and find common ground.

Cathy Woolard, a former Atlanta City Council president who helped create the Beltline, said increased tax dollars from the project should stay within the TAD as intended.

“The money for the Beltline TAD is for buying land and building the trail and transit,” she said. “It is not for helping developers build on what amounts to beachfront property.”


Our reporting

On the eve of a crucial vote, the AJC reported Thursday that a $22.5 million tax break proposed for a major project on the Beltline faced opposition from critics who questioned its justification in an area already exploding with new development. On Thursday, Invest Atlanta did not vote on it after the developer asked for a delay.