Some Atlanta City Councilmembers and residents of the Sweet Auburn neighborhood are questioning a proposal to shut down a taxpayer-funded redevelopment program for the city’s Eastside, saying the work to revitalize the community and provide affordable housing isn’t finished.
And some residents say they fear the city plans to end the program to provide the incentives elsewhere, including downtown’s Gulch.
The fight could pit neighbors and businesses surrounding the Martin Luther King Jr. National Historical Park against Mayor Keisha Lance Bottoms, whose office drafted legislation to end the Eastside Tax Allocation District. It also could revive a long-standing debate in Atlanta over perceptions of favoritism for big developments over smaller businesses.
District 2 Councilmember Amir Farokhi said he was told by the city’s interim chief financial officer, Jim Gaffney, that funding the city’s fiscal year 2019 budget was dependent in-part upon closing the TAD.
The City Council is set to debate its largest-ever budget in coming weeks, and Farokhi said he doesn’t believe filling a budget hole is the real reason for closing the Eastside TAD, which uses property tax dollars to fund community improvements.
Farokhi wrote a letter this week urging Bottoms not to close the Eastside TAD, which stretches from North Avenue to Memorial Drive and parts of downtown east to the Atlanta Beltline.
The Eastside TAD, established in 2003, has eight goals, including creating mixed-income housing and making downtown a more competitive jobs center. Though the TAD has contributed to hundreds of new affordable housing units in recent years, an Invest Atlanta study found it has not completed any of the goals.
“I don’t like the message it sends to some of our legacy communities, particularly the Sweet Auburn corridor, and some of our more impoverished areas on the Eastside of town,” Farokhi said in an interview.
Farokhi said he fears the closure could be used to direct badly needed incentives elsewhere, pointing to the proposed redevelopment of the Gulch, the stretch of underused parking lots near the Five Points MARTA.
California-based real estate firm CIM Group has proposed a 27-acre mini-city that real estate observers say is targeted at Amazon for the tech giant’s second headquarters project and 50,000 high-paying jobs.
Metro Atlanta is one of 20 short list communities for “HQ2”, and the Gulch is one of the sites the company scouted during a March visit.
“It would be in many ways a transformative project, and if we could have our cake and eat it too, we’d do all of this,” Farokhi said of the Gulch.
A spokesman for Bottoms did not respond to request for an interview. Bottoms told Atlanta Business Chronicle earlier this week that “a very solid case has been made to close [the Eastside TAD], but I’m open to having a conversation.”
A spokesman for CIM declined to comment.
‘You think we’re done’
A TAD is a zone where governments freeze property tax collections and use future expected increases in property values to fund infrastructure. In theory, as the area develops, increases in property taxes are diverted to repay bonds for roads, parks or even affordable housing. After the bonds are repaid, the city, county and schools receive the benefit of the new higher property values.
Former Mayor Kasim Reed wanted to shut down the Eastside TAD last year before he left office, but the effort stalled.
State law only allows for 10 percent of a city’s tax digest to be within a TAD, and Atlanta exceeds the cap, said Councilman Howard Shook, who represents Buckhead and chairs the finance committee.
TADs can’t be closed with outstanding debt and the Eastside TAD, unlike Atlantic Station, isn’t heavily indebted. The Eastside district can be closed with little trouble, he said.
“TADs should not go on forever,” Shook said, and closure would free up capacity in the city for additional TADs.
Shook introduced legislation from Bottoms’ office to end the Eastside TAD, but it was quickly withdrawn at the request of the mayor’s office.
Shook said the Eastside TAD has largely completed its mission of community redevelopment, and the matter will likely return for consideration after council approves the city budget.
Councilwoman Natalyn Archibong, who represents District 5, disagrees.
“The TAD has also been an essential tool to ensure that developments include a certain level of affordable housing,” Archibong said. “Moreover, we need the TAD to help us continue to improve Sweet Auburn and Old Fourth Ward neighborhoods, and the Memorial Drive corridor.”
Mtamanika Youngblood, who chairs Sweet Auburn Works and the Historic District Development Corp., said Old Fourth Ward has seen gentrification and displacement because of development. But much of the area still has high rates of poverty.
“All you have to do is walk down Edgewood or walk down Auburn Avenue and I don’t understand how you think we’re done,” she said.
Youngblood said the Eastside TAD is home to the city’s civil rights legacy, attracting visitors from around the globe, but the area around the King Center continues to struggle.
“People come from all over the world and say, ‘Y’all don’t care about this do you?’” she said.
Shook said he also has heard “a rumor” about creating new TAD capacity to aid the Gulch.
“I can tell you I was not privy to the pillow talk that went on between the prior administration and the proposed developers,” Shook said. “I don’t know who was promised what.”
Reed and the Hawks agreed in 2016 to a $192.5 million renovation of Philips Arena — including $142.5 million in public funds — that keeps the basketball team downtown through 2047. Reed said the Philips Arena deal would seed new development downtown.
Last year, CIM unveiled a plan to build more than 9 million square feet of office space, 1,000 residences, 1,500 hotel rooms and 1 million square feet of retail space.
CIM was co-founded by Richard Ressler, brother of Hawks lead owner Tony Ressler, who has said the team wants to contribute to downtown revitalization.
At-Large Councilman Michael Julian Bond called TAD support for the Gulch “speculation.”
He is backing a proposal to extend the life of the Westside TAD, which covers the Gulch, by about a decade. But he said the Eastside TAD doesn’t need to be closed to allow his plan to move forward.
Bond also said he is not in favor of closing the Eastside TAD.
He said he would favor reshaping the Eastside TAD to somehow include other parts of the city so Sweet Auburn and other neighborhoods can benefit while new areas of the city are added to TADs.
What is a TAD?
A tax allocation district, or TAD, is a zone where governments freeze property tax collections and use future expected increases in property values to fund infrastructure and other improvements. In theory, as the area develops, increases in property taxes are diverted to repay bonds for roads, parks or even affordable housing. After the bonds are repaid, the city, county and schools receive the benefit of the new higher property values.