Bill Bozarth, the retired executive director of ethics watchdog group Common Cause Georgia, said the projects do not need the bonds and the tax breaks that go with them and should not qualify for them because they don’t add enough jobs or low-income housing.
The apartment projects, Elle of Buckhead and SkyHouse Buckhead, received bonds of $62 million in August and $71.5 million in December, respectively, from the Development Authority of Fulton County. Elle of Buckhead sold to MetLife Real Estate Investors for $100 million Dec. 26.
“The heart of the issue is that the Georgia code enables development authorities for certain specific functions within the political framework,” said Bozarth, who today is a Neighborhood Planning Unit B board member. “The intent of the [state’s] Development Authority Act is give local government the tool to incent development where it otherwise may not occur.
“The authority is giving a tax abatement to the development. No. 1, the project never could justify it based on Invest Atlanta’s denial. They awarded it to the developer after the project had already been completed. It reduces taxes 50 percent in the first year and gradually the abatement reduces to 100 percent. You’re taking money out of the treasury and the majority of the taxes go to Atlanta Public Schools, a slice goes to the Atlanta general budget and the county general budget. Those of us who are watching tax dollars have a problem with it.”
But Maceo Rogers, president of the development authority, said the government entity, formed in 1973 to create jobs, increase the tax base and spur economic development, was right to issue the apartments bonds.
“If a project furthers those goals, then the DAFC will likely provide incentives to support the project,” Rogers said, adding some top companies in the county would not be here without the bonds they received from the authority. “… Finally, some of the biggest corporate names in metropolitan Atlanta have been beneficiaries of DAFC bond financing, as corporations and developers tend [to] avail themselves of lower financing and development costs.
Elle of Buckhead opened in 2012 and was the previous year denied bonds from Invest Atlanta, the city’s development arm. Rogers said the authority was not aware of Invest Atlanta’s decision, but added it may not have kept the project from getting county bonds. He also said the fact that Elle of Buckhead was sold after it received the bonds “is immaterial to the goals of the DAFC.”
But Bozarth said the projects should not have qualified for the bonds, which gave each development millions in tax breaks.
“It’s a loss of revenue for no apparent reason,” he said. “It’s also unfair for others to not get the bonds and this advantage. It’s hard to see how they justify it.
“I believe there’s general community support for underwriting a development project when there is some obvious public benefit in doing so. The support I believe is appropriate when the development authority is generating good jobs in the community or providing affordable housing that would not otherwise be there. When all of those are absent, one has to ask the question: Why are we giving away tax money to build something that would probably be built anyway? The heart of Buckhead is one of the most desirable real estate locations in the state. In my opinion, it’s the last place you would want to give tax incentives for developers.”
Bozarth said he has talked to District 2 at-large Fulton County Commissioner Robb Pitts about the issue but has not heard a response yet. Email and phone messages left with Pitts’ office last week were not returned.
District 4 Commissioner Tom Lowe, who represents Buckhead, Sandy Springs and part of Roswell, said the board of commissioners has supported the authority in years past but added he would look into the issue.
“The development authority dances to a different tune,” Lowe said. “I don’t know whether everything should go through them or not. If it can be handed out in private practice, issuing bonds, it may be the best way to go.”
Click here for a related story on one apartment developer defending its project's bonds.