The board of Atlanta’s development arm on Thursday approved a tax incentive package for the second phase of Georgia Tech’s Technology Square, a project considered key to extending Midtown’s growth as a tech hub.
But approval came only after discussion about the duration of the incentive and the way it is calculated.
The tax break extends over 15 years, five years longer than for most of the agency’s economic development projects. Invest Atlanta also calculated its value differently than usual.
The new method valued the break at $15 million over 15 years. But one board member said the value would be about $23.5 million if the agency’s normal methods were used.
“That’s a great deal more than we’ve ever given,” said the board member, Julian Bene, who often is the sole ‘no’ vote on the board. “You’ve given an extremely strong case for doing something special (to aid the project), but I think it’s important that we look at the number the way we normally look at the numbers.”
Eloisa Klementich, Invest Atlanta’s business development chief, said the issue lies in the public-private structure behind the project. A Portman Holdings subsidiary will control the development, while Georgia Tech will be the anchor tenant in the more than $350 million, 25-story complex.
That structure and the mix of office, retail and research space in the complex prompted the change in the way the incentive is scheduled and valued, she said.
Atlanta Mayor Kasim Reed, chairman of Invest Atlanta’s board, favored the incentive package but said he wanted “an additional step taken” to assure its value is $15 million over 15 years. He asked for a letter from an agency lawyer putting that in writing.
“I want a legal opinion on what steps need to be taken to be sure the maximum amount of the incentive is in fact $15 million,” Reed said. “I don’t want it to float.”
Reed said Tech Square is one of the most important developments in the city in a generation.
“This will help continue Tech’s dominance certainly around (financial technology), certainly around cyber (security),” he said after the meeting.
Portman and Tech hope to draw a mix of startups and established companies that will work with the university on new technology businesses.
Klementich called the incentives package a “strategic move to help support the South’s first innovation neighborhood.” She said the project will compete with other East Coast innovation districts such as The Bridge on Roosevelt Island in New York.
The project is estimated to create 2,100 construction jobs, hold 2,400 workers on site and result in an estimated economic impact of $813.8 million, according to Invest Atlanta. It is expected to open in 2018.
The land currently isn’t taxed as it belongs to a Tech foundation, but Invest Atlanta documents said tax payments from the Portman subsidiary will total $17 million over 15 years, after the discount is applied.
Bene’s was the sole vote against the deal. Board member and Atlanta City Councilman Andre Dickens recused himself.
Bene said he supports the project, but the city should take a tough stance on incentives.
“It is a negotiation,” he said.
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