The Gulch: Will Atlanta fund a billionaire?

Photo by Azam Lalani | The Signal

Atlanta may drop $5 billion, the largest real estate investment Atlanta has ever made, on a dilapidated parking lot—The Gulch.
The Gulch is a rackety stretch of rail and parking lots between the Five Points MARTA station and Mercedes-Benz Stadium.

The Los Angeles-based CIM Group, headed by Richard Ressler, brother of Atlanta Hawks owner Tony Ressler, touts a project revitalizing the concrete wasteland.

In the proposed development, a cluster of office buildings, apartments, retail space and hotels would overtake the existing area.

Additionally, CIM would invest $12 million into citywide economic development and provide $2 million towards vocational training for Atlanta Public School students.

“At roughly the equivalent of thirty football fields, this will be the largest development of its kind in Atlanta’s history and in the entire Southeast,” said Mayor Bottoms in a press release. “Our Administration is proud to help make this a reality.”
The Gulch revitalization would pump money into Atlanta’s economy, while The Gulch in its current standing generates almost none.

Most importantly, it baits Amazon’s attention for their second headquarters, which Atlanta has been shortlisted for.

Amazon moving their headquarters into Atlanta would burgeon Georgia’s capital to unprecedented highs.

The proposal also tags a $1.75 billion bill onto the public—and it opens up another debate on gentrification.

The CIM plans to address gentrification by funneling $28 million into a citywide trust fund for affordable housing. CIM also proposes renting 20 percent of their residential units at a price affordable to those making 80 percent of the area’s median, which is $1,100 per month for a one-bedroom apartment, or $1,350 for a two-bedroom. CIM plans to make 5 percent of their units more affordable than the city policy, which requires only 15 percent of units affordable at 80 percent.

“On the one hand, CIM using 80 percent is actually going above what the city requires, so a lot of this is on us. That said, I would always hope to push as hard as we can to seek a situation where as many [homes] are as affordable to as many people as possible,” said Matt Westmoreland, Post 2 Atlanta City Council member.

Some have criticized CIM’s proposal as a drop in the bucket considering the $1.75 billion bill hanging over the public’s head.

Julian Bene, a former board member of Invest Atlanta, has been one of those critics.

“The benefits don’t even come to a fraction of what we’re giving up,” Berne said in an interview with SaportaReport. “It’s clearly a ridiculous trade.”

CIM’s proposal considers the lower-income population, but it’s questionable if their consideration alone is enough.

“I think, for a $1.75 billion public investment over 30 years, we need to do better than that,” Berne said. “$1,100 a month for these 200 units is definitely ‘workforce housing,’ but I think it’s a stretch to call it ‘affordable housing.’”

Michael Bond, Post 1 At-Large member of the Atlanta City Council, denies the public will foot the $1.75 billion tax.
“The [$1.75 billion tax] is not really a tax on the public. But what happens is this developer to take advantage of the tax incentives has to build so many units, so many parts to develop, and phases, and if he doesn’t reach those goals he doesn’t get the benefit.”

And that would place a Tax Allocation District (TAD) on the property. This means property taxes generated by The Gulch in the upcoming decades would fund CIM’s project instead of Atlanta’s other infrastructural needs, like the surrounding schools and broken roads.

Though, indirectly, Atlanta citizens will still see their tax dollars feed The Gulch development.

Having Atlanta fund a private developer’s project calls into question their “above and beyond” approach with affordable housing for tax incentives.

“They’re trying to prepackage so they can get a sign-off from the local politicians, ‘Yeah, we like the idea of what you’re doing. It looks like you’re doing good things for the community,’ and the developer hopes that makes [the deal] go more smoothly,” Dr. Jon Wiley, associate professor in the department of real estate, said.

On Monday, Oct. 1, a proposed audit of The Gulch development failed to pass the Atlanta City Council. But The Gulch proposal itself was not voted down.

“It was a resolution for the city to hire someone to give us a third party. But the Georgia Municipal Association came forward yesterday and said they’re going to do it [instead],” Bond said.
The Georgia Municipal Association as an auditory may not allow for checks-and-balances that a third party could provide for Atlanta politicians.

Despite CIM’s tax incentives and public tax funding of the billion dollar developer, Bond believes the public supports The Gulch’s redevelopment.

“Generally, people favor The Gulch being redeveloped,” Bond said. “I think people are right to pause and [criticize] the nuances of what’s been negotiated thus far by the administration. So, it really kind of depends on where you are.”

Georgia State practically neighbors The Gulch. So if you think traffic is terrible now, wait until The Gulch development kicks in.

“At a micro level, the average student is probably going to see an increase in traffic and if the project is really successful and people move in and property values rise, then it might make it harder to find student apartments,” Wiley said.

With a $5 billion development next door to campus, Georgia State students won’t have to hunt for changes.

“You can have negative spillover like increased congestion, traffic issues, displacement of residents, increased property taxes. People who have lived there for a long time, they can’t afford their property tax, so they become displaced,” Wiley said. “It’s the gentrification part of the story.”

But with development comes some of the positives the developers have proposed.

“The possible positive spillover effect would have a positive impact on the city, then if the center of Atlanta does better, I would imagine that GSU would become a [richer] place to live. You might see increased private spending in the parks, places to shop, work and eat,” Wiley said.

“But, you have to pay for some of those benefits.”

2 Comments

  1. The Gulch development pumps precisely zilch into the economy. Jobs moving to Atlanta for our talent, universities and airport create demand for office towers that will be built somewhere in town, regardless. Without the Gulch scheme, those offices will pay property taxes and fund our schools, public services and, if there’s enough growth to leave cash to spare, into affordable housing funds. On the other hand, if Council approves the Gulch scheme, office buildings built there will not pay taxes to APS, city and county for 30 years. Same for part of the sales tax. In all, the billionaire bros want to siphon off $2.5Bn from taxpayers. With stakes that high, they are spending a lot trying to fool the public and reporters. Vigilance and logic are your friends. Billionaire developers are not.

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