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What is ‘Project X’? New complex gets $13.5M tax break from Brookhaven

By J.D. Capelouto, The Atlanta Journal-Constitution #atlanta-ga

A tax break granted to a proposed apartment and retail complex in Brookhaven with a mysterious code name is coming under fire from some residents and a DeKalb County commissioner.

Last month, the city of Brookhaven’s Development Authority granted initial approval to a tax abatement worth up to $13.5 million for a mixed-use development on Dresden Drive.

On the agenda released before the meeting, though, the development was only called “Project X.” The meeting included a presentation, public comment on “Project X,” and a final vote on a bond and development agreement. The city plans to issue $43 million in bonds, backed by the city, to help finance the project.

During the public comment period, one resident expressed confusion over what exactly “Project X” was and what citizens were expected to comment on.

The real name of the project is “Dresden Village,” residents would learn. The tax break allows development companies Connolly and Gables Residential to save on their property taxes over the next 22 years. Those tax dollars would otherwise go to the city, county and school system.

Details about the project’s developer, bond amount and tax abatement were not released before the Aug. 12 development authority meeting, when the “Project X” agreement was voted on. The Brookhaven City Council, which operates separately from the development authority, approved the rezoning plan for the project in 2017 but does not have to vote on the tax break.

“The lack of transparency is concerning,” said Catherine Bernard, who has lived in the neighborhood just north of the proposed development for eight years. The secrecy of “Project X,” she said, looked “creepy and shady.”

Discussions about real estate transactions can be protected under state law, meaning details on the Dresden Village tax break and the sensitive negotiations surrounding it did not have to be made public ahead of time.

DeKalb County Commissioner Jeff Rader, whose district includes Brookhaven, agreed that the city could legally keep the deal under wraps, though he accused Brookhaven of being “needlessly” secretive to avoid public scrutiny.

“There was no imperative that this stay secret,” Rader said.

The commissioner has suggested that the property tax abatement is behind his decision to delay the release of $6.3 million in federal coronavirus-related CARES Act funds to Brookhaven. The county has already approved agreements for the rest of DeKalb’s cities to receive a portion of the county’s $125 million in federal money intended to cover costs cities have shouldered related to the pandemic. A vote on Brookhaven’s funds was delayed until Tuesday, Sept. 8.

Developers from Connolly plan to build more than 180 luxury apartments and seven condo townhomes, with 30,000 square feet of retail shops and restaurants. Development along the corridor — which is just east of Peachtree Road and the Brookhaven MARTA station — has boomed in recent years, mostly through similar multistory, mixed-used complexes.

The rezoning plan for the four-acre project was approved in 2017, despite some pushback from residents. It involves the relocation of an office for the DeKalb County Tax Commissioner.

The city said the development and tax abatement will ultimately be a boon to Brookhaven, DeKalb and the school district, citing an analysis written by an economic consulting firm. The analysis stated Dresden Village will still bring in millions in property and sales tax revenue over the next three decades. Connolly has also agreed to fund several infrastructure improvements that the city may have had to otherwise pay for, including a new pedestrian trail and the elimination of a traffic signal.

“Even with the abatement, the project would still be a positive net value for the community, as far as taxes are concerned,” said Shirlynn Brownell, the city’s economic development director, adding that the development “gives us the opportunity to really bring out the underutilized portions of Dresden Drive.”

The $61 million project will create 600 construction jobs during the two-year construction phase and 162 permanent positions, according to an analysis of the project released after the tax abatement was approved.

“The property tax abatement is extremely important for the project,” J.R. Connolly, the CEO of the development firm, said, adding that a project with this level of investment would not become reality without an abatement.

Rader and other critics have argued that a tax break should not be necessary for land that is already primed for redevelopment, and that the city is unfairly diverting tax revenue away from the county and school system.

The commissioner had previously announced that he was delaying the vote on the the release of CARES Act funding to Brookhaven in an attempt to bring them to the table to discuss issues of tax abatements and proposed annexations, two subjects that have caused tension between DeKalb and Brookhaven in the past.

That prompted a statement from Brookhaven Mayor John Ernst saying he was shocked Rader would “hold his own constituents hostage for political gain.”

In an email to mayors in DeKalb earlier this week, Rader said he would support the release of CARES funding to the city “if Brookhaven were to withdraw the $13 million tax abatement it plans to give to Dresden Village, but I doubt that action is forthcoming.”

In response, Ernst said in a statement to The Atlanta Journal-Constitution that he is “looking forward to the DeKalb commission’s upcoming vote on the release of the CARES Act funding to the cities in DeKalb.”

John Park, a Brookhaven city councilman who represents the Dresden Drive area, said he supports the abatement because it ensures the development will fit the character of the neighborhood.

Since the land includes several different parcels, “it would be very difficult for development to happen” otherwise, he said. “I don’t want (an) eyesore to stand out 20 years from now.”

He also understands the development authority’s decision to keep the agreement secret until it was voted on. As a councilman, Park works separately from the development board, though the mayor and council appoint its members.

“I just didn’t really feel like Jeff Rader would play fair,” he said. “I thought he would try to sabotage us.”

A validation hearing for the bond is set for Tuesday, Sept. 8 in DeKalb County Superior Court. Private citizens are able to legally challenge municipal bonds.

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