Despite the pandemic and underlying economic uncertainty, there seems to be an uptick in new development projects in Atlanta. How do we know that? Well, the Fulton County Development Authority is again busy doling out tax giveaways for stuff to get built, including choice parcels literally hugging the Beltline.
Now, people may argue — and they certainly do — whether a 10-year property tax abatement is a giveaway or a vital incentive. Potato or po-tah-to?
Fulton’s Development Authority is an especially friendly bunch quick to say “AYE!” when asked to serve up potatoes. In fact, they are so generous that Atlanta school and city officials complained about tax money they weren’t receiving because of the breaks, and Invest Atlanta asked its Fulton counterparts to stay the heck out of the city. Fulton officials considered Atlanta’s request and quickly shot back a letter saying, “Nah.”
On Tuesday, the Development Authority gave preliminary approval for three projects to get about $11.5 million in property tax breaks, including a hotel in Atlantic Station, a student housing tower downtown and an apartment complex at 1015 Boulevard, which is near Grant Park and smack dab on the Beltline.
The Beltline, of course, is to real estate what King Midas was to anything he touched.
Last month, Fulton’s Development Authority approved abatements for two Beltline properties. A massive office/retail/residential development called Echo Street, which is near the corner of Donald Lee Hollowell Parkway and Northside Drive in northwest Atlanta, will get about $10.3 million in breaks and an apartment complex close to the Boulevard project will get about $2.4 million in breaks.
On Thursday, I checked on the Boulevard site, a vacant storage facility two blocks south of Grant Park. The developers of the future 323-apartments complex say they need $3.3 million in breaks to build hidden parking on a steep grade.
Credit: Bill Torpy
Credit: Bill Torpy
David Sjoquist, a Georgia State University professor who specializes in state and local government taxation, said that the property owners are, in essence, receiving a subsidy. “The owner of the land says (to the developer), ’If you’re getting an abatement, then I’ll keep the price of the land up.’”
A fellow named Avi Gelfond was walking his dog, Frankie, along the still-unpaved section of the Beltline as I visited.
I told him about the plans for apartments and he seemed surprised at how many they were squeezing in. “This is a dream property,” said Gelfond, who lives nearby on the Beltline. When I mentioned the tax breaks, he shrugged, saying, “Why are they giving tax breaks for this property when our taxes are going up? It seems absurd.”
Gelfond bought his condo a couple of years back for $280,000 and says county assessors now tell him it’s worth more than $400,000. His dog seemed offended by that because he kept barking as we conversed.
The builders say they will invest $73 million and generate $580,000 in new property taxes in the first year, even with the break. Apartments down the block go for $1,350 a month for a one bedroom and $2,150 for two, although the new ones, which would be right ON the Beltline, will surely go for more. The developer’s fact sheet notes they will make 15% of the apartments “affordable,” although that’s already called for in Atlanta code.
“If you build on the Beltline, you’re required to provide affordability,” said Bill Bozarth, a member of the Invest Atlanta board. “Then they come back and say, ’Gimme a tax break to allow me to make it affordable.’”
Bozarth said he hates to see developer incentives offered on the Beltline “when it was already created by a huge public (tax) commitment.”
Fulton Development Authority board member Brandon Beach, a Republican state senator from North Fulton, said now is precisely the time to be giving incentives.
“We’re in a COVID pandemic, unemployment is 10.2%, we need to create jobs and help our tax base,” he said, adding that a Beltline representative was on the board’s Zoom meeting and “he was all for it.”
The Boulevard site, said Beach, “was in rough shape. This will help revitalize the area.”
As I noted, the two blocks south of the property is already filled with apartments costing $2,150 a month, so that revitalization is well on its way.
Beach said the mega live-work-play-and-eat Avalon development in Alpharetta happened because of Fulton Development Authority tax breaks.
And, he said, “there’s a big halo effect that came with it,” referring to all the other stuff built nearby.
“You have to look at the big picture. You have to look long term,” said Beach, who heads the North Fulton Community Improvement District. A CID pays extra taxes to help develop amenities in that specific area. So, sometimes extra taxes do work. It’s sort of a conundrum wrapped in a riddle, kind of like a tax policy turducken.
Fulton Development Authority member Kyle Lamont voted against giving the tax break to the Beltline apartment complex near Grant Park, telling me, “I did not see that project worthy of incentives because Grant Park is already one of the hottest neighborhoods.” He was on the losing end of a 6-3 vote.
Abatements were originally created to bring development to blighted areas where projects would otherwise not be built. Now such abatements are almost expected.
The hotel business is getting absolutely hammered by the pandemic and some may end up in bankruptcy. However, Lamont said he voted for a $3.8 million break for the 274-key hotel in Atlantic Station because of the “vitality” it would bring to that area. Likewise, he voted last month for the Echo Street project on Hollowell Parkway, a two-parcel plan that would create 278,000 square feet of office space, 51,000 square feet of “curated commercial” space, 285 apartments and more than 1,000 parking spaces. Developers say they will spend $227 million, so they need the breaks.
The pandemic has caused millions of us to work from home, which has business leaders rethinking how much office space they need. Studies are mixed on the future of the office-space market, but Lamont said the future Echo Street area — which is currently shabby and just west of Georgia Tech — is unique and needs the new capacity.
“Maybe it would be different if it was Midtown,” he said.
Midtown has seen a ton of office space get built, often with abatements. The fact that high-end places like Midtown and Buckhead weren’t on the handout list the last couple of months perhaps shows some progress.
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