Why The Gulch Deal Matters

Ah, the Gulch. Caverns of parking lots and wasted land between CNN center and Five Points. Former home of the AJC, before they abandoned downtown Atlanta, physically and metaphysically, for the suburban joys of Dunwoody. I’m one of the few people around here who spends any real time in the Gulch, trying to make sure people with mental illness who are hiding from the world aren’t completely forgotten as I take stock of homelessness in this city.

I’m a progressive with lots of progressive friends, and my social media accounts have been awash in criticism of a redevelopment deal in play for the Gulch, with plans to build a cyberpunk arcology fit for our William Gibson age. The idea is new, the refrain is old: city hall is corrupt, developers get everything they want, the city is trying to run poor people out of town … and more.

I work for Central Atlanta Progress. My organization has been pushing for passage on the proposal to redevelop the Gulch. I say that to preface my personal view here. I’ve come to believe balance that the Gulch deal is better done than not. We can argue the details.

Reasonable people can look for issues to negotiate, and there needs to be more earnest discussion about the details. I’m not suggesting some panicked headlong rush into the agreement if it doesn’t satisfy people on the legal merits. (I think it does, but I’m not a lawyer.)

But people seem to be hung up on the “public” cost of the private development, and I think that seriously misreads what’s happening here. The government isn’t fronting money to the developers to build something. They’re offering to use the taxes on what gets built there to cover some of the construction costs so something can be built at all.

That’s called tax increment financing. It’s how Atlantic Station was redeveloped. It’s almost certainly how the old GM plant in Doraville along I-285 is going to be redeveloped. And it’s about the only way gigantic, expensive brownfields get cleaned up. The Gulch is unlikely to be developed without tax increment financing. No one is going to put up $500 million to build up the area to street level without government help, not when there’s cheaper land to be had. Neither the city nor the state is putting money at risk here: there’s no tax coming in on that land right now.

In the deal, the state is borrowing money, which will be paid by sales taxes from whatever gets built on the site. If the site goes undeveloped, there’s no tax money to pay off the bonds. Normally, the state would be on the hook for that debt. But in this case, the developer is buying all the bonds. If the developer wants its money paid back, it has to build something that generates economic activity. The developer has accepted greater risk than is usual under these conditions … which is why the deal is fairly unique and worth pursuing.

People have raised reasonable concerns about the development, of course. An argument about allowing the streets to be privatized is warranted, I think. Multimodal access there – an anxiety Central Atlanta Progress has been shouting about to the high heavens for a decade, I note – appears to be preserved in the plans. Lauren Welsh’s concern about a community benefits agreement is important – that principle has to be preserved – but … no one lives in the Gulch. The surrounding neighborhood is commercial property. We would be defining “community” as the whole city, I think, and at that point we’re just talking about the city council.

But here’s why I’m writing about this.

There’s $42 million for affordable housing and other housing initiatives baked into the deal. I want that money. We need that money, and more, and I don’t know another politically-feasible way to get it. And I don’t think people understand how important it is to be hyper-aggressive about getting affordable housing development money now, while there’s still time. 

The work I do here involves working with social services organizations, police, government and the business community to help alleviate homelessness. I advocate for beds to treat mental illness and substance abuse problems, permanently supportive housing, additional social services outreach, affordable housing, and more.

I took this job to be the progressive at the table, influencing policy. I’m inside. I’m hearing the arguments. I can say honestly that I would gleefully quit this job tomorrow if I thought I were on the wrong side of the moral ledger. I’d feel safe enough to do so; I suspect I’d be unemployed for about 72 hours.

Atlanta has an affordable housing crisis. That’s cliché to say at this point. Perhaps I should be blunter: if your household makes less than $100,000 a year, today, you will probably be priced out of the housing market here within five years. You are living in the last house you’ll be able to afford to own. Your children will not be able to afford to live here. Your economic mobility ends here. Ends today.

We should be completely panicked by the housing issue. We should all be screaming. Some people are screaming.

But the problem is unfolding in slow motion, and politically the public doesn’t know how to react to creeping threats. There was a point, say, 30 years ago when San Francisco or Los Angeles or Boston might have been able to arrest their slide into housing insanity. Maybe 20 years ago, Washington D.C. and Seattle might have had a shot.

About 90,000 people move to metro Atlanta every year. Last year, the region permitted for 30,000 units of construction. It’s not enough. It hasn’t been enough. And this gets worse.

I think we’re about 10 years past the tipping point – things are going to get much more expensive. But I think we’re still in a place where remedies will have a real impact. Leaders in Atlanta are trying to put together a billion dollars to address housing affordability, and this $42 million is a down payment on that effort. It can be leveraged to buy the city … six months of affordable housing inventory. A year, maybe, if we’re clever. It’s like trying to stave off a tidal wave, but we have to try.

This may be how Atlanta has to get this money; one real estate deal at a time.

In the absence of a deal, what’s the plan to get this money? What alternative scenario for drawing tens of millions in affordable housing funding do the critics of this deal have? Do they think they can get more affordability out of the Gulch deal? I suppose it’s worth having that conversation, but developers go where they can get return on investment – below a certain number, they’ll find another project. City leaders can negotiate, not instruct.

San Francisco would laugh at a billion-dollar initiative today … that’s, like, a thousand houses in a city of 900,000. A billion would matter here today. $42 million would matter here today.

It will matter a lot less in five years.

We need money for affordable housing, as fast as we can get it, because every dollar in hand today is worth more than a dollar later. If property appreciates at 10 percent a year for the next decade – which is what’s going to happen short of economic catastrophe or the mother of all public construction booms – then $42 million is going to be worth something like $24 million in five years and by then we’ll be completely screwed.

So, argue a bit more, I say. Talk – we’ve all been bad at that. No one should be steamrolled on this. But I urge a compromise, because the alternatives are ugly.