Atlanta mayor, CIM alter Gulch financing deal

A photo of “The Gulch” that stretches from the Five Points MARTA station to Mercedes-Benz Stadium in Atlanta on Monday October 8th, 2018. (Photo by Phil Skinner)
A photo of “The Gulch” that stretches from the Five Points MARTA station to Mercedes-Benz Stadium in Atlanta on Monday October 8th, 2018. (Photo by Phil Skinner)

Atlanta Mayor Keisha Lance Bottoms on Monday said the city and developer CIM Group agreed to new terms on a public financing package for the $5 billion Gulch project, after the original deal appeared destined for failure before City Council.

Bottoms said the city and developer have agreed not to pursue a 10-year extension of the existing Westside Tax Allocation District (TAD), a controversial provision that had run into opposition not only with some members of council but also Atlanta Public Schools.

Bottoms scrapped a Monday council vote on the original proposal, and council members said they needed time to review the new terms.

VIDEO: Previous coverage of this issue

Atlanta's leaders will debate the future of a big piece of land where many of you tailgate before Atlanta Falcons games.

Gulch supporters have hailed the proposal as a skyline-altering project that could bring new vibrancy to downtown, and touted its affordable housing commitments and job creation potential. But the plan has come under fierce opposition from community groups that have labeled it a taxpayer-funded giveaway.

Bottoms office did not answer a list of emailed questions about the new agreement, including whether the changes will reduce the taxpayer contribution.

It’s unclear if any other terms in the proposal have changed, and if the city made any concessions to CIM. Previous estimates have taxpayers contributing up to $1.75 billion to the project over a 30-year period.

Ditching the TAD extension was said to be a nonstarter for CIM in discussions as late as last week.

“I commend the administration for hearing the public’s hesitation and skepticism and for continuing to work for a better deal,” said Councilman Amir Farokhi, who represents the Old Fourth Ward. “As council members, we’re still waiting to see the entirety of the proposed deal. We haven’t seen all the details.”

Farokhi said council members want to take the next few weeks to ensure commitments to affordable housing are firm with “no loopholes.” He also said he wants to make sure access is preserved for potential future commuter rail and that streets within the development are controlled by the public and not a private developer.

RELATED CONTENT: GULCH PROJECT

Councilman Andre Dickens, who serves citywide, said he was pleased the TAD extension is “off the table because that was one of the major concerns that I and other council members told CIM within the first week we wouldn’t support, ever.”

“We still have some ways to go,” he said.

It’s unclear when Gulch legislation will be ready for a vote. The next regular council meeting is Nov. 5, though a special meeting could be called sooner.

CIM and their partner, the Atlanta Hawks, have proposed what amounts to a mini-city with office towers, hotels, apartments and retail spanning 40 acres from the Five Points MARTA station to Mercedes-Benz Stadium. The $1.75 billion public financing package originally sought by CIM would help build infrastructure and fund a portion of development. The company has said it can't do the project without that level of public assistance.

The deal, as announced in August, relies on two sources of public funds. One source would be five cents of the 8.9-cent local sales tax collected within the confines of the development.

Four of those five pennies come from state dollars.

The other funding stream would come from the existing Westside TAD, which was created in the 1990s. A TAD is a zone where governments freeze property tax collections at current levels for a period of time and use future expected increases in property values over many years to fund infrastructure and other improvements in that zone.

A rendering of CIM Group’s proposed $5 billion redevelopment of downtown Atlanta’s Gulch.
A rendering of CIM Group’s proposed $5 billion redevelopment of downtown Atlanta’s Gulch.

Under the original proposal, the current TAD would be extended 10 years from 2038 until 2048.

But after lengthy negotiations last week and through the weekend, Bottoms and CIM retreated from the TAD extension, and its sunset will remain in 2038.

The project would continue to rely on the five pennies of sales taxes for 30 years and future property taxes created by the development via the TAD.

Troubles with TADs

Property owners in Atlanta pay taxes to the city, Fulton County and APS, with APS making up a little more than half of the bill.

As originally structured, the Gulch deal also requires approval by Atlanta Public Schools and Fulton County. If the existing TAD does not change its sunset of 2038, then those entities may have less or no say in the deal.

APS Superintendent Meria Carstarphen has come out in recent days against a Westside TAD extension, for fear of its impact on system finances. Carstarphen said in recent days she'd want to renegotiate or eliminate APS's participation in the Westside TAD and four others before approving the Gulch deal.

In her new release, Bottoms said the schools’ recent public remarks “reflected their unwillingness to reasonably partner with the city of Atlanta on the Gulch.”

In a statement, the schools said "APS has not received some of the promised benefits of these five TADs."

“Key agreements in some of these TADs have not been kept, making it even more important that we get these issues resolved prior to considering any new commitments,” the statement said.

A.J. Robinson, CEO of Central Atlanta Progress, the downtown business coalition, said the project’s momentum hasn’t been stalled and he expected the deal will pass.

“We have a private developer willing to go at-risk for hundreds of millions of dollars,” Robinson said. “We have no Plan B to fill up the Gulch and this is the best we’ve seen in 70 years. I think in the end the product will rule over the process, which unfortunately has not been perfect.”

Sharice Brown, a member of the opposition group Redlight the Gulch Coalition, said council members should not be persuaded by the changes, calling them “lipstick on a pig.”

“This is not the right deal, and this is not the right time,” she said. “By cutting the Westside TAD, this is still giving the billionaires a big welfare check.”

GULCH REDEVELOPMENT

Scope: Developer CIM Group has outlined a project of $3.5 billion to $5 billion. It could grow to more than 9 million square feet of office space, 1,000 residences, 1,500 hotel rooms and 1 million square feet of retail space.

Partners: CIM and the Atlanta Hawks. California-based CIM was co-founded by Richard Ressler. His brother Tony is the lead owner of the Hawks.

Incentives: The city and CIM originally proposed a public financing package of up to $1.75 billion. That figure might have been reduced after an agreement to remove one controversial provision of the incentive package. It would be funded by a portion of sales taxes generated on-site and bonds backed by expected future increases in property taxes.

Community benefits: CIM has agreed to a package of affordable housing commitments, jobs training and other community benefits.

Our Reporting

The AJC first reported the city and CIM Group’s talks on a potential 10-figure public financing package for the Gulch project. AJC reporters have also looked at the potential costs and community benefits of the up-to-$5 billion project that could remake a 40-acre site into a mix of offices, retail, hotels and residences. The matter could return for City Council consideration in the coming weeks.

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