Last year, the authority’s board voted 29 times to give someone a tax break and December was its first “no.” Merry Christmas, taxpayers.
The developer that got Scrooged, the family-owned Loudermilk Cos., is a well-known name in the pantheon of Atlanta business.
The Loudermilk family made a fortune renting TVs and washing machines to those not good with money. Now they planned to erect a 12-story office tower on East Paces Ferry Road in Buckhead. All they wanted was a $2.2 million property tax abatement over the next 10 years — a comparative pittance in the local tax handout game — so they could build a $45 million project.
The Loudermilks told the board that Buckhead was in dire need of new office space, and said their building would bring in $5.7 million in property taxes over 10 years, a lot more than is coming in now.
Normally, such an argument would win the day because developers strongly hint that their deals can’t get done without the reduced taxes — even in red-hot areas such as Midtown, The Beltline and Buckhead. The board, worried about chasing away a good thing, usually rolls over and gives its approval.
But this time they didn’t, voting 5-3 against the plan.
And do you know what happened next? The Loudermilks last week announced they were going ahead anyway with the plan.
Photo: NICK ARROYO / AJC file
Maybe they didn’t really need the love, or they will cut back on some project niceties, or they won’t make as much cash, or they will charge higher rents.
The Loudermilks weren’t available to talk to me. But Robin Loudermilk, the CEO of the family biz, told the website Bisnow, “We just decided to move forward without it.”
Perhaps it’s a sign that things are changing. In November, developers seeking a $22.5 million tax break near the Ponce City Market on the Eastside Beltline quietly backed away from their request after determining that the board of Invest Atlanta (the city’s development authority) was probably going to turn them down.
Tax subsidies and breaks are nothing new in Atlanta, or America for that matter. In recent years, there have been huge subsidies for the Braves, the Falcons, the Hawks, and the sharks at the Georgia Aquarium. And let’s not forget the subsidies given to the downtown Gulch — $1.9 billion, with a B! More quietly, however, developers have routinely gotten large breaks to build offices, hotels, apartments and retail in Atlanta’s hottest and most tony neighborhoods.
Maggie Lee, a reporter for the Saporta Report, documented some $189 million in such abatements accorded last year, breaks that will be seen over the next decade. About 80% comes from Fulton’s authority.
It got so bad that Atlanta last summer asked Fulton to stop doling out tax breaks in the city. Fulton responded, “Nah!”
Fulton board member Michel Turpeau called it “a little turf war,” adding that developers “reach out (to Fulton) because our processes are streamlined.”
So, what, if anything, has changed to make the Fulton board suddenly stingy?
Lee Morris, a Fulton County commissioner and a board member on Invest Atlanta, has long opposed the two boards’ generosity for developers in popular areas. If the areas are in demand, he has asked, then why are subsidies needed? The subsidies potentially impact schools, police departments, road repairs and local governmental functions.
Photo: Phil Skinner / AJC
“I think there is more sunshine, more public awareness on the issue,” said Morris. “Let’s stop incentivizing hot real estate markets and focus on areas that really need them.”
In the Fulton authority’s December meeting, Morris said a developer at Atlantic Station sought and received a $9.7 million tax break to build a massive $205 million office tower.
“They said they needed the abatements to compete with Met Life and Selig,” he said, referring to two big projects in Midtown that got breaks of $57 million and $16 million respectively. “We are creating dominoes.”
Dominoes in corporate welfare.
Board members say the tax abatements will help clean up ground contamination at the Atlantic Station site.
Each project proposal claims it will “create” jobs. Selig’s project at 1105 West Peachtree will bring in 4,700 jobs, according to the fact sheet given to the board.
However, many of those bodies getting counted are simply office musical chairs. For instance, the law firm Smith, Gambrell & Russell is moving about a half-mile to the Selig office tower from its current location, where it now rents from Cousins Properties. I’m not sure Cousins is happy about tax dollars being used to steal its tenants.
Fulton development board members, even three of those who voted against the Loudermilk project, say the “incentive” tool is vital to creating new taxes.
“You can take the risk of not incentivizing and missing out on development,” said board member Turpeau. “If they don’t build, you get nothing.”
Board member Sam Bacote, who like Turpeau voted “no” on the Loudermilk project, said the authority can, through its tax breaks, help bring about the kind of developments the city and county want.
“We’re part of the equation in having a say in what the community wants to get done,” Bacote said. “It’s a trade-off; we’re not just giving it out willy-nilly.”
Buckhead resident Tom Tidwell joined the board last year and has lobbied fellow members to be tougher when vetting who gets incentives. He declined to comment for this story but earlier wrote the board a letter saying, “If they can’t build it without a tax incentive, then the market is saying there isn’t sufficient demand for that product.”
Kyle Lamont, who joined the board with Tidwell, also voted no. He said there are “fresh eyes and fresh voices on the board.”
Developers face many obstacles and risks and need help in making their projects come to fruition, Lamont said. But the board must weigh the incentives against the impact on schools and local governments — as well as on residents who must pick up the slack.
“And if (the proposals) don’t make sense, we on the board have to call it out,” he said.
The proposals haven’t changed much. Maybe the board has.
By Bill Torpy, The Atlanta Journal-Constitution