Atlanta City Councilmember Michael Julian Bond defended the controversial public financing of downtown’s Gulch redevelopment from a school board member and skeptical residents at a Nov. 8 meeting of the Buckhead Council of Neighborhoods, whose chairman asked why the city didn’t directly spend funds to help “people who are struggling on Auburn Avenue” instead.

“I think because there has got to be something catalytic for south downtown,” said Bond, who holds the Post 1 At Large seat, when pressed about the reasoning for prioritizing the Gulch project. He also noted its hotel component, saying, “Conventions and tourism is to Atlanta what Wall Street is to New York… We’re basically a convention city, period. Without the convention business, we would be basically Macon.”

Atlanta City Councilmember Michael Julian Bond, center, discusses the Gulch deal at the Nov. 8 meeting of the Buckhead Council of Neighborhoods. (John Ruch)

Not swayed by Bond’s arguments was Nancy Meister, an Atlanta Board of Education member who, in her role as an Invest Atlanta board member, earlier that day was in the minority voting against the Gulch’s public financing deal. “I’m pretty fired up. I’m not fired up very often,” she said, complaining of the deal’s possible impact on Atlanta Public Schools tax revenue and uncertain public benefits.

Bond’s visit to the BCN came a month after APS Superintendent Meria Carstarphen’s appearance before the group, where she blasted a previous version of the Gulch’s public financing program and was warmly received. Bond said the Gulch funding proposal, which was approved by the City Council Nov. 5, was reduced in scope partly in response to APS concerns.

He also said he understands the widely criticized speed of the Gulch deal’s consideration was due to fears that leadership changes after the Nov. 6 election might alter the state’s part of the financing program.

The Gulch is a largely undeveloped 40-acre site downtown next to State Farm (formerly Philips) Arena. CIM Group, a California-based developer, is proposing a multibillion-dollar, mixed-use, speculative redevelopment there featuring various large buildings and towers.

CIM and its supporters – including Mayor Keisha Lance Bottoms and Gov. Nathan Deal – are seeking various public financing and tax abatements or exemption mechanisms valued at more than $1.5 billion, which so far have approval from the City Council and Invest Atlanta, the city’s economic development agency. Those include state bonds and inclusion in an existing Westside tax allocation district or TAD. In the TAD, the project would be funded by bonds, on the gamble that future development would pay off the debt. In the TAD’s area, property taxes would be frozen at the current low level, and further taxes from increased property value from the new development would go directly into its own infrastructure, not public coffers, for the life of the TAD.

Bond said that key to the council’s approval of the deal was a significant change in the TAD structure, reducing the bond issuance from over $500 million to $40 million – though he thinks the “fear wasn’t really justified” that CIM might default on the larger bond amount. The deal also means that CIM can get tax reimbursements on real estate it actually constructs – a so-called pay-as-you-go program that, Bond said, gives the developer incentive “to build as much as they can as quickly as they can” before the TAD’s expiration in 2038.

Bond listed various public benefits CIM has offered as part of the deal: $28 million to affordable housing funds and constructing 200 units of affordable housing; $12 million in “general fund gifting”; a new police precinct and 12-bay fire station; and room left free for a previous development idea, a “multi-modal transit station.”

APS complaints

The TAD funding and possible loss of revenue was the main concern raised by Carstarphen, which BCN Vice Chairman Jeff Clark noted to Bond.

“Well, I would respectfully disagree with our superintendent… When TADs happen, it’s generally to the public benefit,” said Bond, though he noted a proposed 10-year extension of the TAD was eliminated to be “sensitive” to her concerns.

Bond claimed that APS has a “bureaucracy” proportionally larger by far than other school system in Georgia and that the district could find money internally if needed. “For me, I think APS could probably find the resources they need in the resources they have,” he said, noting the city was able to scrounge money for police raises.

“… [T]hat’s not necessarily an indictment of the school system, but if you look twice, I think you can find [money],” Bond said, adding that the TAD deal “doesn’t necessarily mean APS is going to get its legs pulled out from under it.”

He also raised side issues, noting the city recently handed over long-disputed property deeds to APS, and saying he had many personal problems with the school system, though later acknowledging those happened under previous superintendent Beverly Hall.

Meister, the school board member, responded with exasperation.

“Truly, with all due respect, Michael, I don’t even know where to start,” Meiser said.

She noted the city is already over a legal cap on the percentage of the tax digest that can be subjected to a TAD, which Bond acknowledged. Meister also criticized CIM’s slate of public benefits as not “baked into the writing” of the deal, but rather “intents” that could go away later. And she echoed Carstarphen’s complaints of lack of APS input.

“It’s really hurtful, after all APS has gone through … to not have a seat at the table,” Meister said.

Public process and rationales

General public input was a major controversy as well. CIM’s concept was unveiled early this year, and Bottoms began pushing for council approval in September after a tightly controlled public meeting, leading to some backlash from the public and councilmembers. While the public financing program got some changes, the council approval came within about six weeks.

BCN Chairman Tom Tidwell why the vote had to come that quickly and why the public hadn’t heard about the financing earlier.

“I’m not going to defend the administration because I was caught off guard…,” said Bond, adding that he understands the details were kept secret for a time due to the state part of the subsidies and incentives. He said he understands “there was fear in the administration that if the project was not approved quickly by Fulton County and APS” that a new legislature could come in and alter the deal. However, delays in approval made the process less urgent, he said.

Tidwell questioned the need for the development in the first place. He said a couple of the rationales given in an explanatory handout from Bond – job creation and downtown “connectivity” – made no sense. Jobs would be temporary construction and low-wage retail work, Tidwell suggested, and connectivity is “nonsense” because “you would have to walk out of your way” to go the Gulch from the various landmarks cited.

“It’s more of a philosophic question,” said Bond. Part of the philosophy is a “catalytic” development like the one the city expects around the revamped Underground Atlanta mall. There is also hope of supporting and boosting the hospitality industry, especially after the Atlanta Braves moved from the city to Cobb County; Bond said that cost the city $5 million in ballpark soda sales taxes alone.

Tidwell was unconvinced, criticizing a “35 percent public subsidy” on a project for which there is no sign of private-market demand. He suggested the city could have better spent its funds directly “on people who are struggling on Auburn Avenue” or elsewhere.

Traffic was another BCN concern. Gordon Certain of the North Buckhead Civic Association asked what sort of infrastructure the city would have to build to handle the massive redevelopment’s traffic, “and who’s going to pay for it?”

Bond called the Gulch a “perfect location,” saying he believes connecting streets have enough existing capacity to handle future traffic, and noting several MARTA stations are nearby. He also praised another controversial element of CIM’s plan – privately owned streets within the development area.

Bond acknowledged that “some activists weren’t on board with that” privatization of public space, but argued, “That’s good for us, because we don’t have to maintain the streets.”

John Ruch is an Atlanta-based journalist. Previously, he was Managing Editor of Reporter Newspapers.