With the pandemic shutdowns squeezing the local economy, the Dunwoody Development Authority on April 15 debated what to do with its $800,000-plus bank account: give grants or loans to small businesses, buy out commercial properties as the market declines, or both.

The sometimes passionate discussion in a virtual meeting conducted on Zoom involved metaphors of forest fires, bleeding wounds and dancing on graves. The DDA is likely to hold a special called meeting next week to settle on a strategy.

The idea of helping small businesses came from DDA member Robert Miller, who said he owns office buildings with about 300 tenants. “We are going to lose a large number of these businesses,” he said, likening the pandemic’s local economic impacts to its healthcare consequences. “We either start reading obituaries or we start making ventilators.”

But DDA chair Jonathan Sangster, an economic strategy consultant, said that the authority should focus instead on buying property in such places as the Dunwoody Village shopping district, especially if businesses fail. “I love the concept of helping small businesses that are struggling during this time. They struggled in 2001 and 2008, and a lot of them will fail, beyond our control,” said Sangster. “…Those funds could be used for the Village or somewhere else in the city… not to save small businesses, but to grow our business through economic development.”

“Doesn’t anybody worry about us feeling like grave-dancers here?” asked DDA member Jeff Ackemann, an executive with the commercial real estate firm CBRE, about the idea of turning the pandemic into a property-buying advantage.

Michael Starling, the city’s economic development director, in the April 15 DDA meeting.

Underlying the discussion was an ongoing internal debate about the DDA’s role in the city. Michael Starling, the city’s economic development director, told the members that they could do some version of both ideas. But either way, he said, the crisis is an opportunity for the DDA to seize.

“We now have resources in the bank. It’s time for us to be proactive instead of reactive,” said Starling. “We’re seeing a downturn. … This is where [development authorities] get busy and make things happen.”

The DDA got those resources as fees from its normal work: acting as a conduit for major developers and corporations to get tax breaks on large-scale projects in exchange for promised jobs and levels of investment. The DDA heard updates on two such pending projects — High Street and Perimeter Marketplace — and how, while they are proceeding, the pandemic nonetheless may slow them and delay their jobs and investment goals.

Giving vs. buying

Miller’s concept was for the DDA to provide $100,000 or $200,000 to a small business grant or loan fund, then ask major corporations in the area to contribute $100,000 each. “My point is, to use a little bit of money to plant a seed and be a catalyst,” he said.

Besides helping businesses, Miller suggested, the program could offset recent “bad press” about development authorities, some of which have been criticized for impacts on school district budgets. Miller said the city is too often passive, asking for such amenities as independent restaurants, but failing to support them and ending up with large chains instead. “I think as a city, we are silent,” he said.

Dunwoody Development Authority member Robert Miller. (Special)

There was general agreement that the DDA and the city should not directly run such a program, and Dan McRea, the authority’s attorney, raised several legal objections: development authorities are barred from issuing grants and in most ways are restricted to funding physical “projects.”

But there was some interest, and DDA member Terri Polk, a Coca-Cola Company executive, pressed McRea for a way to say yes. “It’s a great idea. I think there’s room for it in the city,” said Polk.

McRea’s suggested model was a program providing loans, which could not be forgivable, to local companies that buy locally and have similar local economic impacts that can be documented. “I don’t feel uncomfortable with a well-documented and well-managed loan program,” he said.

McRea added that legal challenges to such programs are unlikely for now — but he also cautioned that, just as the pandemic eventually will pass, “cutting people slack legally isn’t going to last forever, either.”

Starling said the city of Decatur is working on a similar program combining city and development authority funds, the details of which he would investigate. He said his understanding is that program would be 45 to 60 days from becoming active.

Sangster and McRea raised the question of whether such a loan program could simply end up wasting money on businesses that would fail anyway. Sangster said the DDA was not set up to cover a company’s payroll or rent. “That’s just the hard truth,” he said. “I think, as a development authority, we are here to invest in long-term development and not short-term.”

“If you use the metaphor of something’s bleeding, this is a Band-Aid, not a cure,” added Sangster about the loan idea. “That may sound cynical… but I’d love to have those funds when — we’re going to come out of this and we’re going to have [the money] to create an economic development solution.”

Miller countered that Sangster’s argument came from a “privileged” position.

“You’re going to come out of it. I’m going to come out of it. Probably everyone on this Zoom is going to come out of it,” said Miller. But of his hundreds of business tenants, “a lot of them are not going to come out of it” without help and their failure would have a “compounded effect” on the local economy, he said.

“A forest fire is devastating and it springs new life, and I have no problem burning it all down… but I don’t think that is a charitable way to look at this,” added Miller. “…To me, $100,000 shows that Dunwoody cares.”

As for the alternative idea of buying out property with decreased values or from failed companies, Miller raised it himself — though somewhat sarcastically, saying that the DDA could afford little or nothing in Dunwoody Village.

But Starling and some DDA members said it is possible to leverage some type of purchase. Starling noted the city’s efforts to spark redevelopment of Dunwoody Village, which involves rezoning and other changes.

“I think there is a strong desire… for a new Village,” said Starling. “And this would be the time to do it.”

Sangster concluded with a call for more discussion at another meeting to be held soon.

“These are challenging days, and, you know, Rob has presented a great idea and we’ve had a lot of different opinions and philosophies on how we should use our funds,” he said. “I think it warrants further discussion.”

Major project updates

The DDA in recent months approved tax-break deals for High Street, which is slated for a $19 million abatement, and Perimeter Marketplace, which is slated for a $2.3 million abatement. But official legal agreements and the bond issuances that would follow are still pending.

McRea said the Perimeter Marketplace agreement with developer Branch Properties could be done this month. Starling said there is behind-the-scenes talk of a “summer kickoff” for main work on that project at Ashford-Dunwoody Road and Meadow Lane.

An illustration of the planned High Street central park area. (Special)

The agreement for High Street, GID Development Group’s long-delayed mega-development at Hammond Drive and Perimeter Center Parkway, could come at year’s end or later, McRea and Starling said.

McRea said the attorney for both developers is seeking to modify language in the legal agreements that lets the DDA decide as its “sole discretion” whether tax abatement contractual goals are met. The modification would add the word “reasonable,” a term that McRea said could set up court battles.

DDA member Bill McCahan asked about another legal issue: force majeure, which is the principle that a contract can be voided or delayed if an uncontrollable accident or disaster happens, such as a pandemic. McRea said that could indeed apply to the tax abatement contracts and delay the enforcement of its jobs and investment goals for around a year.

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