Atlanta City Council hit the pause button this week on Mayor Keisha Lance Bottoms’ push for up to $1.75 billion in public financing to redevelop the Gulch.
The move shook many City Hall observers. The council seldom asserted itself in the prior eight years under former Mayor Kasim Reed, and for some, the legislative branch’s new-found backbone is a welcomed change. But others worry the council’s emerging independence could bog down City Hall — at exactly the wrong time.
Eight council members, a majority of the district and citywide seats, have co-sponsored legislation seeking an independent review of the Gulch funding proposal to examine the public costs and benefits of the deal. Such an audit, if approved by council, could slow down the process by weeks or months.
Either way, negotiations between the city and a developer that wants to build an up to $5 billion mini-city downtown will soon enter a new, potentially unpredictable, phase.
Critics of the Gulch deal say the council must put the proposal to the strictest scrutiny and be prepared to walk away, while supporters say delays could scuttle a viable effort to revitalize downtown.
Bottoms appears up for a fight with City Council. She suggested in an interview there’s likely little flexibility in negotiations with developer CIM Group.
And any delay, Bottoms said, would be “a deal breaker” for a Fortune 500 company that’s looking to relocate its headquarters in Atlanta, depending on what happens with the Gulch. She wouldn’t name the company.
Asked if the developer is open to make changes to the proposal, Bottoms said, “This is the deal that’s been negotiated.”
The Atlanta Journal-Constitution has previously reported that Norfolk Southern is the Fortune 500 company that owns key pieces of the development site, and the railroad giant is also scouting Atlanta — in particular, Midtown — for a new headquarters location.
Norfolk Southern wants to sell its Gulch land as precondition for relocating from Virginia, Gov. Nathan Deal said Tuesday, urging council support.
Under Reed, the council often acted more like a rubber stamp than a check on public financing of marquee projects, such as Mercedes-Benz Stadium, political observers said. But with seven new members entering office in January, the council demanded more time to process an up to $5 billion development deal that could reshape downtown.
Michael Leo Owens, an Emory University political science professor, said the city needs council to serve as a check on the executive. Greater transparency in the deal is worthwhile for Bottoms, too, he said.
Developers stand to make “crazy money” off the deal, Owens said, and it’s appropriate to have a thorough vetting.
Angst in the city is real. Residents of intown neighborhoods are fearful of gentrification and being priced out by development.
“They’re committed to not being run over by progress,” he said. “They want to share the progress.”
But there’s also risk for the council.
“If the council is going to do this independent thing, it has to be good at what it’s doing,” he said.
Bottoms ran as Reed’s chosen successor, but most of the new council members did not rely on Bottoms’ coattails to win their seats. Some campaigned at least in part on changing the culture of City Hall.
“Some of them believe they’ve come in with a mandate from their constituents,” said Williams Boone, a political science professor at Clark Atlanta University.
Search for answers
At Monday’s council meeting, a parade of residents assailed the project, deriding the deal as a giveaway to developers.
Bottoms and CIM have pitched the project as one that will pay for itself, using future expected sales and property taxes to finance vital infrastructure needed to make the site feasible.
Critics like Julian Bene, a former board member of Invest Atlanta, the city’s development agency, said they are wrong.
The deal will hit the city’s budget because businesses that might have located in other areas of the city and contributed their full taxes to the general fund are likely to locate or expand in the Gulch where the tax dollars will stay there.
That means a heavier tax burden for everyone else, he said.
The council has not determined what an acceptable deal looks like.
Bottoms touts the public benefits.
CIM wants to build a mix of office towers, apartments, retail and hotels between the Five Points MARTA station and Mercedes-Benz Stadium.
It has made commitments for at least 200 units of affordable housing, a $28 million donation to a housing trust fund and other concessions.
“To say it’s not enough, that’s not accurate,” she said.
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Bottoms scheduled a Wednesday public hearing at City Hall to answer residents’ questions.
Councilman Amir Farokhi, who represents Old Fourth Ward, said no one wants talks to linger for months.
“I think we want to get some sharper answers in the coming weeks and hopefully come to an agreement — or not — and move forward,” he said.
Separately, Amazon has scouted the Gulch and CIM’s proposal for its second headquarters.
But if council approves tax incentives, the project will go forward either way, even if Amazon doesn’t bite, though likely on a smaller scale, the developers have said. No tenants have been announced.
Crisscrossed by freight and MARTA rail lines, the Gulch sits 40 feet below street level. CIM said a $500 million platform, funded by the future tax revenue, is needed to facilitate redevelopment.
A.J. Robinson, CEO of Central Atlanta Progress, a downtown business coalition, said he’s optimistic an agreement with CIM will emerge.
The property and sales tax dollars needed for the infrastructure only exist with if the project is built, Robinson said.
“The deal structure has been misunderstood as a public handout to the development team. It’s not — the city doesn’t have the public funds to do that,” he said.
Councilman Andre Dickens, who holds a citywide seat, said the deal has room for improvement.
He said the administration needs a formal community benefits agreement. Right now, under the proposal, there are minority hiring goals. But those need to be iron-clad requirements, he said.
With the city facing an affordable housing crunch, there should be a requirement for more units at a lower price.
Council members also want to know all investors, contractors, lawyers and lobbyists tied to the deal — to eliminate the risk of conflicts of interest.
Council President Felicia Moore said that, given the cloud of a federal corruption investigation at City Hall, and the project’s origins under the Reed administration, the deal warrants more scrutiny.
Before taking office as president, Moore represented District 9 for 20 years. She was often one of the few dissenters on council during the Reed administration.
She said Reed often had the votes he needed before legislation was ever filed, and votes sailed through without much council input.
“I think half the council being new and not sort of indoctrinated in the way things used to be certainly is a motivating factor, and has helped get some veteran members to come on line,” she said.
Five of the eight co-sponsors of the audit legislation are freshmen members.
Farokhi said affordable housing is one of his top concerns. He also wants assurances that space for future commuter rail is preserved.
Roads on the 40-acre site would be built in part with public money and owned by CIM. Farokhi said the public needs to know what that means for public access.
For instance, he said, would protesters be arrested for walking on the development’s streets?
“The size of the deal requires us to be prudent and thoughtful,” he said. “Most folks want to see something happen at the Gulch, but there’s public fatigue of public financing of mega-deals.”
Howard Shook, a city councilman who represents Buckhead, said he wants development in the Gulch, but he called the CIM proposal “too rich for my blood.”
He said he isn’t sure CIM will be very flexible. The company spent a lot time and effort negotiating with the city, state and Norfolk Southern.
“I think they walk before a couple more council votes get rounded up,” Shook said. “Which is ironic because you might have more council members who think the longer this goes the more valuable my vote is.”
He was also critical of the call for an audit.
“I don’t need a consultant to tell me how to vote,” Shook said.
The AJC first reported the city and CIM Group’s talks on a potential 10-figure public financing package for the Gulch project. AJC reporters have also looked at the potential costs and community benefits of the up to $5 billion project that could remake a 40-acre site into a mix of offices, retail, hotels and residences. Monday, Bottoms called off a potential vote on the deal in order to give City Council and the public more time to examine the proposal. Bottoms has called a public hearing Wednesday at 6 p.m. at City Hall.
- Scope: Developer CIM Group outlined a project of $3.5 billion to $5 billion. The CIM proposal could grow to more than 9 million square feet of office space, 1,000 residences, 1,500 hotel rooms and 1 million square feet of retail space.
- Partners: California-based CIM was co-founded by Richard Ressler, whose brother Tony is the lead owner of the Atlanta Hawks. The Hawks also are a Gulch partner.
- Incentives: Documents obtained by the AJC project public financing of $900 million to$1.75 billion, though those figures could grow. It would be funded by a portion of sales taxes generated on site and bonds backed by expected future increases in property taxes.
- Community benefits: Mayor Keisha Lance Bottoms’ office outlined a package of affordable housing commitments, jobs training and other community benefits, including: $28 million investment in a citywide affordable housing trust fund; the greater of 200 residential units, or 20 percent of the total built, set aside as affordable for people making 80 percent of the area median income (or a 1 bedroom rent of about $1,100); $12 million toward an economic development fund; $12 million for a new fire station; a new Atlanta police mini-precinct; $2 million to an Atlanta Committee for Progress workforce program; 38 percent minority-and women-owned business participation and 10 percent equity in the project to minority and or women-owned businesses.
Sources: City of Atlanta, CIM Group and AJC analysis