Chamblee, GA, April 3, 2017 – Contributed by Van Pappas, Chamblee DDA Vice-Chairman – About a month ago there was a published article on the Post about the process the Chamblee Downtown Development Authority (DDA) goes through to vet, analyze and discuss any project that has requested financial assistance using a tax abatement. You can see that article here.
The function of a DDA is to provide a mechanism for the public and private sectors to jointly pursue creation of economic development benefits. These benefits include the creation of new and better jobs, new investment, and an enhanced quality of life for local citizens. Since its inception in 2013, the Chamblee DDA has considered eight projects, and has participated in four of those projects and passed on the other four. This article is intended to educate the public and explain the four projects and their associated financial benefits.
The four projects that will be discussed are The Olmsted, Peachtree Crossing (Whole Foods), Chamblee Atlanta (Nissan location), and Trackside. Prior to these properties being developed, the valuation of all four totaled just over $15 million. Upon completion of all four projects they will have a combine valuation of over $175,000,000. Each project contained specific aspects and goals the DDA was trying to accomplish. And each deal was financially structured in a way to achieve those goals. Let’s look at each project individually.
Located on the corner of Peachtree Blvd and Chamblee-Tucker. This was the first project in which the DDA participated. The Olmsted was created at a time when there was no active development in Downtown Chamblee. Prior to construction the site was a vacant slab that was producing minimal city taxes (est. $4800/yr.). It was the site of the old farmer’s market that had closed during the recession and the property remained an eye sore for many years. The DDA participated to spark development throughout the Peachtree Boulevard corridor. This project announced that Chamblee was open to development.
Many developers and business owners have told the DDA that it was this project that made them look at Chamblee. The deal was benefit rich, providing our biggest abatement worth an estimated $14,800,000. But it was financially structured to provide an ongoing benefit to the city. The owner is required to pay an administrative payment each year to the DDA of 10% of the assessed new property value. The exact amount of the payment will depend on what the county values the property at. Depending on future City millage rates, the admin payment could be more than what the City would get in City taxes had the project been built without the abatement. The administrative payment will be used for other downtown city initiatives.
The DDA achieved the following with this project.
- Assisted in taking a property worth $650,000 and turned it into a property worth $42,000,000.
- Administrative payment of approximately $82,000
- Kick started the current development wave
- Followed the City’s LCI Study which focused on a Live, Work, Play environment in proximity to the Marta station.
This project is on the site of the old Oxford Chemical plant. Prior to redevelopment, the property was in the Brownfield program due to soil contamination. Without DDA involvement, it would have received about $3,000,000 in abatements from that state program. During the course of development, the project ran into issues including a high-water table, GDOT requirements, and requirements from GA Power that forced the moving of one of the high intensity power lines, at a cost over $1 million. With these significant additional expenses, they asked the DDA for help.
The DDA agreement overrode the Brownfield program to add the additional funds needed to keep this development going. The DDA abatement is roughly $4,700,000 greater than that provided through the Brownfield program, or $7,700,000 in total. Without the assistance from the DDA, the project would have been abandoned and the community would have been left with a vacant site or another car dealership. The project satisfies one of the DDA’s missions to bring new retail to the area, as well as the only traditional grocery store in the city limits. A clause was placed in the agreement that prohibits anything other than a Whole Foods in the project or the abatement is terminated.
The economic impact study documented the following of the project:
- Prior to development the property was worth $4,700,000, but at completion, it will be valued at $45,000,000
- Over 350 new jobs
- Approximate payroll from all retailers of $11,425,000
- Occupational taxes, franchise fees, alcohol license, permits, etc. will total about $101,000 annually to the city
- Cost of services provided from all city departments will be $8,369 annually
- Project will net the city over $93,000 per year
- No administrative payment with this agreement
- Upon completion of the abatement term, City taxes should total over $115,000
Located at the site of the old Capital City Nissan. Since the property was active and producing City taxes, it made this project different from the previous two. For years, the mid-city district community had been asking to get a different, better use from the property than a car dealership.
When Nissan left their lease, the property owner was planning to bring in a used car dealer. This was the first deal that was crafted to make sure the City, County and Schools, continued to get the same level of taxes they were getting with the existing car dealership building. Given the value of the use as a car dealership, an $11,000,000 incentive was needed to get the owner to make a change to the use of the property.
To satisfy the DDA’s mission of new investment and enhanced quality of life for the local citizens, the agreement states that the project must maintain specific high quality items throughout the term, or they lose the abatement.
The project includes the following:
- No reduction in taxes to the City, County and Schools.
- Currently the City receives about $38,400 in taxes
- Turning a $10,000,000 property into a $64,000,000 property
- Additional jobs expected at 125
- No net additional cost to the city to provide services based on the additional miscellaneous fees generated.
- An annual administrative payment of $233,000 will be made to the DDA.
- Upon completion of the abatement term, City taxes should total over $163,000
Located at the vacant Marta parking lot on the corner of Chamblee-Tucker and Peachtree Roads. Since Marta owns it, zero taxes are paid. The development team will lease the property from Marta with a 99-year ground lease. This project will be the first Class A office building in Chamblee. It will bring over 300+ higher paying jobs to the area, bringing more economic activity to the Downtown. Unfortunately, the project ran into a problem with DeKalb’s sewer issues.
The development will be forced to construct an expensive underground sewer detention tank that will release the sewer holdings at off hours. Due to the location of the site relative to the PDK runway, the FAA has placed a height restriction on the building. This restriction prevents the developer from increasing the height of the building to gain the extra space needed to make the project work without an abatement.
While the project owner’s original request was for $6,000,000. The DDA allocated only $3,000,000 to offset the added expenses. In order in ensure that the city got the benefits the project claimed, the DDA placed a requirement in the agreement allowing the DDA to reduce or end the abatement if the project did not provide the listed number of jobs.
The Economic impact study reveals the following:
- A property worth $0 will turn into a $24M valuation.
- Potential for as many as 375 new jobs in Chamblee
- City Fees collected will total $60,006 annually
- City Services from all departments will equal $6,763 annually
- Net positive for the City of over $53,000 per year
- Annual Administrative payment of $41,000 to the DDA.
- Upon completion of the abatement term, City taxes should total over $61,000
Over the last four years the Chamblee DDA has assisted in the development of property worth $15,350,000 and is creating property with an expected valuation over $175,000,000. The length of term for each project abatement varies based on an abatement value stated in the agreement. Depending on what the City and County do with their millage rates in the future, will determine when the abatement runs out. Assuming the City millage rate does not change, when the abatements end, the City will collect $448,000 in new city taxes.
In addition to their direct benefits, these projects are expected to increase the valuation (and taxes paid) for surrounding properties, and kick-start new developments in Chamblee.
While these four projects have gotten the greatest attention, the DDA is working on other initiatives including Façade Grants, Public Art, Downtown Parking needs, Sidewalks and planning for a town center development. The members of the DDA are citizens of Chamblee who have volunteered to serve. They do not receive any compensation, and provide hours of their time and expertise each month to help make the downtown community stronger.
The DDA hopes that this article will show how the authority is creating a net positive economic impact for the City of Chamblee. We encourage you to participate in the process, come to our monthly meetings or watch the recordings online. We welcome you to reach out to any of our members and give your thoughts on Chamblee’s Downtown corridor.