Marietta voters this fall will decide whether to take a chance on real estate by approving $35 million in bonds mostly to buy and demolish blighted apartments in an area some say is ripe for redevelopment.
Last week, the City Council agreed to let voters decide the fate of Franklin Road, a strip that parallels I-75 and is currently occupied by run-down strip malls, 40-year-old apartment complexes and abandoned businesses. The city wants to spend about $31 million to clear as many as four apartment complexes to make room for future redevelopment.
The November vote has set the stage for months of debate over whether the city is overstepping its role by using taxpayer dollars to fund a real estate venture with no guaranteed payoff. City leaders say taxpayer support is needed to trigger changes in the area.
“If people are going to invest money, they want the best place with the least obstacles,” said Mayor Steve Tumlin. “A 40-year-old apartment is an obstacle. If that same property were empty, it would be no place for government.”
The $35 million in bonds could mean a tax increase of about 2 mills, or $160 annually for a $200,000 home, Tumlin said. The increase would be partially offset by a drop in education taxes expected to occur in 2014, when the school district pays off its bond debt.
But it’s not just the idea of a tax increase that has drawn the ire of some residents and taxpayer advocacy groups.
Brett C. Bittner, chairman of the Libertarian Party of Cobb County, said the city is asking taxpayers to invest in a losing proposition. Bittner also is a member of the Marietta school board but not speaking about this issue in that role.
No figures have been released, but according to officials, the city is expected to lose money on the resale because the value of the property will drop once the apartments are removed. The hope is to recoup the money through job creation, new businesses and additional tax revenue from increased property values. The city will use the money from the sales to buy additional properties or reinvest in the area.
City officials say redevelopers are interested in the area, but can’t afford to buy and demolish the buildings or don’t want to be the first one to take the risk.
Bittner and others are skeptical.
“I see a lot of “maybes” and “hopefullys,” but no guarantee of anything positive other than closing down a few affordable apartment complexes along Franklin Road,” he said. “This is a pretty big investment for the city of Marietta and for residents who pay property taxes to take on.”
About 12,000 people live in the 11 apartment complexes along Franklin Road, an area city officials believe is a prime location because of its easy access to the interstate, the airport and Atlanta. The hope is that the changes could spur new restaurants, grocery stores and upgrades to remaining apartments.
A portion of the $31 million would be spent on road improvements to the area. About $4 million would be spent to add new sidewalks and aesthetic upgrades to Whitlock Avenue, which feeds into the city’s downtown.
Just how involved government should be in economic development is a debate that plays out in cities and counties across the country. Many metro governments, including Atlanta, Marietta and Gwinnett, have tax allocation districts, or TADs, which typically help finance redevelopment costs through the pledge of future increases in property tax revenue generated by new development.
Many TADs have struggled to attract investors after the economic downturn or have scaled back plans and have drawn criticism for their lack of oversight.
At issue is how much risk taxpayers should be required to assume in development ventures, said Carolyn Bourdeaux, associate director of the fiscal research center at Georgia State University.
On one hand, it’s an attractive time to buy property because costs are low and municipalities are getting good interest rates on bonds, she said. On the other, there’s always a chance that the blighted area could improve without government intervention.
“If they fail or make a mistake, then the taxpayer ends up holding the bag,” Bourdeaux said. “However, if what you’ve got is bad enough, it’s easy to beat what’s in place now.”
Heath Garrett, co-founder of Revitalize Marietta, a nonprofit focused on bringing attention to blighted parts of the city, said the Franklin Road project is legitimate for government because in many ways, government created the problem.
The once-thriving area was annexed in the late ’80s as a way to bring in additional revenue to the city, a shortsighted decision in Garrett’s view. In addition, some of the apartments are backed by government loans and have gone into foreclosure in the past few years.
“The taxpayer in Marietta will absolutely benefit from this bond investment,” he said. “The cost of services related to public safety, crime, health care and all the other issues in the area will more than pay back the taxpayer.”
Data from the Marietta Police Department shows crime in the Franklin Road area typically makes up about 22 percent of crime in the city. Residents who live along the corridor said the area is safe and affordable for residents with limited options.
Moses Corley, 25, has lived off the Franklin Road area since 2007 and said the city could do more to make the existing area a better place to live.
“Instead of trying to destroy and rebuild, why don’t we try to uplift and rebuild,” he said. “There’s no sense in trying to kick us when we’re down.”
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