Chamblee, GA, February 21, 2017 – Contributed by Chamblee Downtown Development Authority Chair, David Carter – On February 7, 2017, the Chamblee Downtown Development Authority (“DDA”) approved a tax abatement in the amount of $3 million to a transit oriented development of Class-A office space known as Trackside. During public comment at that February 7, 2017, meeting one of our neighbors commented that the DDA does not have an established methodology for determining whether to grant a tax abatement or not.
I want to thank that neighbor for asserting his opinion, because it is a reminder to the DDA that it is our responsibility to ensure that we are transparent in our operations and decisions. I respectfully disagree with the assertion that the DDA acts without a process in place, but I also take the responsibility for informing the public seriously. With that in mind, this memorandum attempts to summarize the DDA vetting and underwriting process.
When any developer comes to us, we follow a standardized data gathering process.
- We task the City’s Economic Development Director, Adam Causey, with gathering materials presented to the City Council and the various city departments (variances requested and responses/results from the City).
- The developer submits an application packet which summarizes the project and its estimated costs.
- The developer must provide an actual dollar amount requested. The DDA does not, at this time,consider proposals for a percentage of taxes to be abated over time.
- The developer must pay for the cost of a financial impact analysis which is done on behalf of the DDA (not on behalf of the developer).
- The developer must assert an economic benefit to the city and the citizens
- The DDA has required that an engineer validate the costs provided in the developer’s application.
- Based on the information provided by the developer, the information considered by other city departments and the financial impact analysis, theCity’s Economic Development Director provides information on current tax revenues and costs to the city and county. A forecast of projected project growth, changes in property value, and impact of abatement is also provided to the DDA.
- The DDA board typically discusses each project at 2-3 meetings before voting on any abatement. Developers are typically asked to provide additional information and details for consideration.
The DDA’s mission is, generally, to undertake projects that promotes the economic viability of downtown Chamblee (the mission statement is fully set forth here: http://downtownchamblee.com/?page_id=2 ). The positive and negative aspects of any proposed project are considered, and thoroughly discussed in open meetings. These meetings are video recorded and made available to the public here: https://www.youtube.com/channel/UCeFBAV8SEwyeh7ETeqY_YdA . Minutes of DDA meetings are available here: http://downtownchamblee.com/?page_id=524 .
The question of methodology is, in many instances, a reference to a point-oriented analysis to determine entitlement to a benefit. In this sort of analysis, points are awarded on a checklist of items. If the number of items checked achieves a specified point value, then the benefit is awarded. On advice of our legal counsel, Dan McRae of Seyfarth Shaw, https://www.danmcrae.com/ , the DDA does not conduct a point-oriented analysis to determine whether a developer is entitled to an abatement because this type of process creates the appearance of an entitlement to the financial assistance of the DDA. The DDA’s sole responsibility lies with the citizens of Chamblee, and the DDA Board has determined that it will not create a lockstep checklist system that would produce the appearance of entitlement on any project.
The DDA reminds each applicant that there is not, in any way, an entitlement to any abatement or other financial benefit at any time. The DDA board members have determined that we want to maximize the flexibility of the DDA to address the many different and distinct projects that are available to Chamblee.
DDA Analysis of Trackside
The DDA reviewed the financial and economic impact data provided in the Fiscal Impact Analyses performed by Robert Lann Consulting, LLC. Trackside is a projected $24 million TOD. The proposal would bring 80,000 square feet of office space and 13,000 square feet of retail space to Chamblee. Trackside is a joint venture with Pattillo Industrial Real Estate, which will use Trackside as its headquarters. The space upon which Trackside is to be developed is MARTA-owned. The development comes at a time when sewer costs are extraordinary because of infrastructure issues in DeKalb County. Trackside will be Class A office space, establishing a real estate submarket that does not now exist in Downtown Chamblee. Trackside is limited in the number of floors which may be built, as it sits in the Federal Aviation Administration flights paths established for Peachtree DeKalb Airport – which means developers cannot simply add more units in order to offset costs. The Trackside site went through lengthy negotiations with MARTA, who retains ownership of the site, and there is no guarantee that a desirable project like Class A office would be built if this one fails to develop. The abatement sought by Trackside was $4 million. The DDA approved an abatement of $3 million.
Trackside is projected to produce over 375 jobs with an expected median income of over $70,000.00 (median household income in Chamblee is $47,000 as of 2015).The average economic development incentive awarded per job was $27,443 for 2015 A recent office project by Invest Atlanta – the city of Atlanta’s economic development arm – was $28,000 per job. The Assembly’s TAD incentive is $22,500 per job. At the applied-for abatement amount of $3 million, Trackside is $8,000 per job.
The DDA reviewed the Trackside application in November, December, January, and finally, on February 7, 2017. A review of the video of the January 2017 DDA meeting reflects vigorous discussion about whether Trackside had adequately established the costs it sought to offset with the abatement The developer was directed to provide additional information relating to these costs, which information was provided to the DDA. https://www.youtube.com/watch?v=7N05ANqDDX8
The DDA did not believe that Trackside was incurring $4million of extraordinary, unforeseen, or insurmountable expenses. However, the DDA balanced the expenses that were established with the benefits to the city. The property currently produces no revenue to the city, county, or school district. Upon completion, project is projected to be worth $24million, and is expected to produce revenue to the county, city, and school system of $412,000 per year. The project establishes a real estate submarket that does not currently exist in Chamblee, and is expected to produce 375 high-paying jobs in the downtown area. Some of the holders of these jobs will live in other projects in which the DDA is involved, and pay sales taxes on good purchased in those same projects – which will result in abatements on those properties concluding ahead of schedule. This project promotes Chamblee’s commitment to a live-work-play environment. Based on these benefits to the city in addition to the extraordinary, unforeseen, or insurmountable expenses that the DDA believed Trackside would incur, the DDA approved an abatement of $3million for this project, subject to negotiation of a Memorandum of Understanding.
The Trackside development is offered only as an example of the DDA’s analysis and the factors contributing to that analysis. There will be neighbors that agree with the DDA’s conclusion, and those that disagree, and the DDA appreciates healthy discussion of the issues. This memorandum is offered solely to offer insight into the DDA process for vetting and underwriting proposals, that the methodology has been adopted after extensive consultation with legal counsel, and that the DDA adheres to that process. The DDA considers the opinions of the public, and strongly encourages the public to attend its monthly meetings and to review all actions of the DDA, which are memorialized via video on the YouTube site above, and in the documents provided at http://downtownchamblee.com/ .