“The Gulch”stretches from the Five Points MARTA station to Mercedes-Benz Stadium in Atlanta. Developer CIM Group plans a massive $5 billion mix of offices, apartments, hotels and retail on the 40-acre site. (Photo by Phil Skinner)
Photo: The Atlanta Journal-Constitution
Photo: The Atlanta Journal-Constitution

Opinion: City should walk away from bad Gulch deal

It’s a bad deal. That’s the message the Atlanta City Council is hearing from residents.

Since August, Council members have been wrestling with a massive proposed public subsidy for a private Gulch development. Their constituents oppose a deal they see as “bucks for billionaires.” Young and older, comfortable and struggling, from every race and every district, residents have been calling, e-mailing and speaking out at Council meetings.

The Gulch scheme unites city residents in resistance because, even as revised, it would siphon off $1.6 billion of tax revenues. That’s money which would otherwise be available to pay teachers, cops, firefighters and street repair and help with affordable housing. Despite paying for one-third of this huge planned collection of office towers and hotels, citizens would own zero share of it. (Back-up for these numbers is posted at redlighthegulch.com.)

Four recognized, truly independent authorities generously agreed to review the deal for free: professors at Clark Atlanta University, Kennesaw State and Georgia State universities, and Georgia Tech. Their findings confirm that the scheme “shuffles economic activity from one part of the city to another.” Since that means, “diverting development away from taxpaying locations … it would cause a huge drop in revenues available to meet citywide and APS needs.” They also concurred that the Gulch development would create no new jobs, not benefit citizens most closely impacted, nor confer other benefits justifying subsidies. They were dismayed that the “faintest of promises” on affordable housing fail to support those most in need.

Some of the experts’ most damning assessments:

  • “A patent giveaway: fabulous riches in return for next to nothing”
  • “This is not an incentive. This should buy an equity position in the project”
  • “With a name like ‘The Gulch,’ this project has the potential to live on in infamy as the example of misguided development policy”
  • “The Gulch proposal is the latest in a long line where a very narrow group of people and interests decide the city’s priorities.”

Pushback from residents and the Atlanta Public Schools superintendent recently caused the Mayor and CIM Group to drop their demand for an extra 10 years of property tax subsidy. That reduced the public’s revenue loss by an estimated $900 million. But the new deal also shaved the allocation of funds to the Westside neighborhoods from $125 million to $8 million. And the public revenue loss is still an enormous $1.6 billion, which works out to around $14,000 for every family of four in the city. The AJC’s Scott Trubey, calculating differently, comes up with a total public cost of about $1.9 billion.

Naturally, if you’re selling as bad a deal as this, your only hope is to mislead the public. Boosters have spent a fortune on a misinformation campaign, and seemingly every lobbyist in town has been hired to promote the deal. Right in line, the Mayor’s office issued a press release on the revised deal last Tuesday that misled most news outlets into reporting that the Gulch public cost had fallen to a mere $40 million. The actual cost is 40 times as high as that. The deal covers 700 pages of impenetrable legalese and Council members privately admit that nobody except the billionaires’ lawyers knows exactly what is in it.

To those who ask, “What about the Gulch?” the experts’ answer is to start over. Proceed incrementally and transparently. See what the market can do without spending big public dollars. And, if necessary, wait until land values justify private investment in the Gulch.

Atlanta has very real needs and we have to focus all of our public revenues on addressing them. Crony developer deals fly in the face of that imperative. A history of diverting public resources to a favored few is one reason that Atlanta has so much inter-generational poverty; inadequate support for affordable housing and transit; high taxes; and teachers, cops and other public servants who can’t afford to live in the city.

Council members ran campaigns last year promising to put residents’ priorities first. They never mentioned a massive public subsidy for a billionaire development scheme in the Gulch. Council is understandably tired of hearing about the Gulch. So are their constituents.

Time to call “Enough!” We are not going to win reasonable terms from hedge-fund billionaires. Council has the authority to walk away before the city is badly burned. That’s what they need to do. Then the city can get on with doing business in the interests of our residents and communities.

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Julian Bene is a management consultant, a former member of Invest Atlanta’s board and a member of the Redlight the Gulch Coalition.