By Andy Peters, The Atlanta Journal-Constitution
(CNT) City News Talk #atlanta-ga
Microsoft affiliate bought property for $127M seven months later
A developer that planned to build a large mixed-use complex on Atlanta’s Westside abruptly ended two years of negotiations with the city about affordable housing, according to documents reviewed by The Atlanta Journal-Constitution.
Urban Creek Partners had been in talks with Invest Atlanta and Atlanta Beltline Inc. since at least April 2018 about the project, called Quarry Yards. The 70-acre development would have included housing, retail and office space. About 40% of housing would have been priced as affordable units.
The AJC and other media reported in September that Urban Creek sold the property for $127 million to a group affiliated with Microsoft, according to people familiar with the deal. Microsoft hasn’t confirmed its involvement and little is known about future development plans for the site.
The city says Urban Creek gave no reason for walking away from the negotiations in February before the surprise sale. But one sticking point was financial subsidies, according to emails between Urban Creek and the city that the AJC obtained through the Open Records Act.
The emails show a tug of war between city officials and developers like Urban Creek — whose investors include former Atlanta Braves slugger Mark Teixeira — over how to pay for affordable housing in intown neighborhoods that are rapidly gentrifying around the Beltline.
The city has been criticized for falling short of its goal to create 5,600 affordable houses and apartments in the Beltline corridor. Officials have tried to address the situation. Mayor Keisha Lance Bottoms campaigned on a goal to create a $1 billion fund for affordable housing, and the Westside Future Fund is renovating dozens of blighted properties into affordable apartments and homes.
Like many private developers, though, Urban Creek said it needed extra funds from the city to make it financially worthwhile to include affordable units among its mix of market-rate and luxury units. Quarry Yards is one of the largest contiguous, undeveloped tracts in the city and has direct access to both a MARTA rail line and the Beltline, a 22-mile paved walking path and greenspace located on former railroad rights-of-way.
“Would Invest Atlanta and the Beltline consider awarding a grant to help offset the lost cash flow from doing more affordable housing?” Colin Curlee, a development associate at Urban Creek, wrote in a Jan. 14 email.
Urban Creek asked for a grant of $2.2 million to $4.1 million to cover the cash-flow shortage, but city officials balked, according to emails.
“Beltline is amenable to funding but those amounts are a bit high for them,” Alan Ferguson, senior vice president of community development at Invest Atlanta, the city’s economic development authority, told Urban Creek in a Jan. 16 email.
Atlanta Beltline Inc., the city agency tasked with developing the Beltline, has provided grants for affordable-housing development. The grants, though, are capped at $2 million per project, said Beltline spokeswoman Jenny Odom.
The city requires new developments to set aside 15% of its housing supply for units priced at 80% of the area median income, or 10% of the units priced at 60% of the area median income.
Urban Creek and the city did not resolve the disagreement over financial subsidies, and communications ended in February, according to Invest Atlanta. Representatives from Urban Creek did not respond to requests for comment. A Microsoft spokeswoman declined to comment.
Urban Creek also sought an unusual type of municipal bond to finance affordable housing units. Called a lease-purchase bond, or a bond for title, the bond is issued by a government entity, then transferred to the private developer to make the bond payments. Property taxes are reduced for the developer under Georgia law.
“This property tax reduction is often the most valuable single incentive available to a company,” said John Gornall, an economic development attorney at Arnall Golden Gregory who has advised clients on bonds for title and was not involved in the Urban Creek project.
Urban Creek had sought a $100 million lease-purchase bond from the city, according to emails, which didn’t suggest that part of the agreement was under dispute. Still, the two sides did not finalize an agreement, said Invest Atlanta spokesman Matt Fogt.
Invest Atlanta has issued four lease-purchase bonds this year to help finance affordable-housing development, including a $44 million bond to finance the 230-unit Tama Glenwood complex in East Lake.