OPINION: Hot Beltline projects sizzle with tax breaks that burn folks

Credit: Bill Torpy

Credit: Bill Torpy

The tattooed fellow smoking a cigarette on his door stoop in southwest Atlanta did a pretty fair job of boiling down the arcane development authority concepts of “bonds for title deals” and tax abatements for construction projects.

“I imagine they’re getting the break and we’re paying more taxes,” said Ryan Spence, a resident in the Capitol View neighborhood. “Each year, the property taxes around here go up exponentially. Our rent just went up $550 a month.”

Spence lives next door to a long-closed battery manufacturing plant situated on 8.5 acres of overgrown land. It is set to become a 323-unit apartment complex and will receive a $2.5 million property tax break over the next 10 years, doled out by the generous folks at the Fulton County Development Authority.

The developer, Atlanta-based RangeWater, argued that tax breaks were needed to demolish the old factory, clean up environmental issues, and add the 49 units of affordable housing that are called for in Atlanta law. But it’s not as dire as the developers are making it out to be. The property sits right on the new southern loop of the Beltline. As a developer, you couldn’t ask for a better setup.

It’s a now-common storyline: Developers will cry poor-mouth for handouts while situating their projects on the hottest terra firma in the city — Midtown, Buckhead, the Beltline. And as developers get breaks on their real estate taxes — which fund schools, as well as city and county services — residents and owners of existing commercial buildings ultimately pick up the tab by paying more.

Since the start of 2019, the Fulton County Development Authority has doled out $200 million in property tax cuts to construction projects within the city of Atlanta, according to a list compiled by former Saporta Report reporter Maggie Lee. They have been so generous that the Atlanta City Council and the city’s school board last year asked the Fulton authority to stop giving tax breaks within the city limits.

Credit: Bill Torpy

Credit: Bill Torpy

The Fulton Development Authority quickly told the city to get lost. In fact, one day after the City Council asked the Fulton board to stop giving breaks to projects in the city, the development authority made it known that they were going to give a $3.4 million tax break for a 340-unit apartment complex in the red-hot Blandtown area in northwest Atlanta.

Atlanta has its own development authority, called Invest Atlanta. Since early 2019, it has given out less than $50 million in tax breaks, about a quarter of what Fulton has distributed. City Councilman Matt Westmoreland, who also sits on the board of Invest Atlanta, said the Atlanta development authority wants to give tax breaks in parts of town that really need some help — areas that are poor, forgotten and neglected.

“But it’s hard to do that when you have another authority giving away the abatements (in hot areas) anyway,” said Westmoreland. “They’re incentivizing development in places where people are crawling over each other to be there.”

In essence, they are often helping to fund projects that would have been built anyway and are squeezing out potential money that could be used for areas in real need.

Michel “Marty” Turpeau IV, interim director of the Fulton Development Authority, sent an email saying the tax cuts (um, “economic development opportunities”) are a way to bring in new tax dollars.

Turpeau denied being a “rubber stamp” for tax breaks. He said the authority’s largesse doesn’t put more of the burden on residents, it actually helps projects get built, which increases tax revenue to the schools and local governments. If we don’t give the developers a tax break on big projects, then Charlotte, North Carolina, or some other enterprising city will do so, he said. And then we get nothing. Oh, and it adds more jobs.

On the competing-with-other-cities argument, there are some projects that are regional battles. Others, such as apartments along the Beltline, certainly are not that.

I bring up the old battery plant that will one day be fancy Beltline apartments because it and three other projects were part of a lawsuit in court last week. It was part of a lawsuit meant to slow down the runaway locomotive that is tax giveaways.

A former Invest Atlanta board member named Julian Bene has been waging a Don Quixotesque effort to halt the abatements, saying they have become an expected giveaway to the rich.

Bene’s attorney is John Woodham, who more than a decade ago won a court case against the use of school taxes to build the Beltline. The state Legislature was able to maneuver around Woodham’s legal victory to get the Beltline funded. Now we have the Beltline spurring growth and tax giveaways all along its path.

Bene lost his case in Fulton County Superior Court and is now before the state appeals court. Bene also unearthed a pile of Fulton Development Authority records that led to stories last week by The Atlanta Journal-Constitution and Channel 2 Action News showing tens of thousands of dollars in questionable per diem spending at the agency. Former board chairman Bob Shaw was paid nearly $91,000 in per diems since January 2019.

No other development authority comes anywhere close in such payments. In fact, the AJC and Channel 2 could not find another authority in Georgia that pays its board members a director’s fee.

Invest Atlanta board member Bill Bozarth said members of his board get their parking comped while attending meetings. And they get all the soda they can drink.

He noted that the development authorities collect fees when doing the tax deals.

“I was always wondering why they were so anxious to create these deals, but this explains it,” Bozarth told me. “It was an income source for them. It was a honey pot.”

Bene’s lawsuit argues that the apartments on the Beltline, as well as three other deals in popular areas, will cause the schools and local governments to lose $15.2 million in tax revenue over the next decade. His lawyer argued that the deals are created by “phantom” bond transactions between the developer and the development authority.

Attorney Cary Ichter, who was called in to defend the honor of the Fulton Development Authority, argued that Bene was simply looking at the glass half empty. Yes, there are large abatements, but he argued that the deals would create more than $300 million in new construction projects and hundreds of new jobs.

The argument of “new” jobs has always been a fungible matter. Usually, most of the projects would have been built without the tax break. And often, the “new” office jobs are simply those of a local company moving across town, or even down the street to the new buildings that were built with tax incentives. The landlords of the older buildings that are losing tenants to the newer, swankier digs no doubt question the beauty of those deals.

But, other than a Georgia court making a surprise ruling to change this system, they’ll just have to get used to it.