The following article appeared in the Atlanta Business Chronicle, Feb 16, 2021. Link to the original article:
By Michel M. Turpeau – Development Authority of Fulton County Board Chairman
The Development Authority of Fulton County (DAFC) is ushering in 2021 with a new board chairman and leadership, a soon to be announced new executive director and much optimism as we continue to bring quality economic development to communities throughout Fulton County during these challenging times.
While others continue to rehash their arguments against tax incentives and then lament about the need for more money for education, public safety and infrastructure, DAFC remains focused on supporting development projects that increase the tax base to actually provide for these essential government services and infrastructure improvements.
Atlanta Transportation Commissioner Josh Rowan recently told the Atlanta City Council that it would take 67 years and $2.6 billion, more than the whole annual budget, to get city roads, sidewalks and bridges into a good state of repair if they continued to rely only on general funds, impact fees and state and federal funding.
The needs are great. Yet, some people are still content to let properties sit for decades, empty and blighted, providing very minimal amounts of property taxes when incentives for redevelopment allow for an immediate increase in the tax rolls even in year one of the incentive period. The majority of these redevelopment projects also bring the much-needed infrastructure improvements that might eventually happen, years too late, with a special purpose tax or other tax increases for residents.
I want to highlight one such project, which was supported by both DAFC and InvestAtlanta, that provides significant economic benefits. Although we did not work together, our separate support did complement each Authority’s economic development goals and immediately added value to the local taxing jurisdictions.
At the end of 2020, the Invest Atlanta Board made the wise decision to approve a nearly $843,000 tax incentive over 10 years as part of a $33.75 million lease-purchase bond to keep Invesco Ltd. in the city. The city also awarded the global investment management firm $150,000 from its Economic Opportunity Fund for Business Retention and Expansion. In 2019, the DAFC Board had the foresight to approve a $57.5 million property tax incentive over 10 years to MetLife, the developers of Midtown Union, a mixed-use development which will include the future home of Invesco’s new global headquarters.
I’ve oftentimes found those who object to these incentives don’t always understand the overall impact they can have on the local economy, so let’s break down the Midtown Union project.
The total Midtown Union mixed-use development project provides significant economic and tax benefits.
- $1.1 billion of capital investment with an estimated jobs benefit of 2,600 construction jobs during active construction.
- 18,000 permanent jobs expected once the project is completed. Total permanent jobs supported by the project (direct and indirectly supported in other industries) is estimated to be 25,000 at an average labor income (wages and benefits) benefit for employees of $77,000.
- During the incentive period (i.e. the initial 10-year period once the project is complete), property taxes are expected to be 20 times greater than property taxes on the undeveloped property site. Property taxes collected on the site before the incentive period were only $717,000.
- Net new property taxes for the city of Atlanta, Atlanta Public Schools, Fulton County, and Midtown CID are $143 million during the initial 10-year incentive period (or $14.3 million annually).
The Invesco portion of the development is expected to provide 500 new jobs and retain nearly 600 jobs in Atlanta.
- The economic benefits of Invesco remaining in Atlanta and keeping 1,100 direct jobs in the city are the following:
- An additional 1,000 jobs supported in other industries (such as retail, food service, health care).
- $230 million in labor income ($150 million for Invesco employees and owners and $80 million in salaries and benefits for employees in other industries).
- $480 million in economic output.
- The economic benefits of Invesco adding 500 net new jobs to Atlanta are the following:
- An additional 500 jobs supported in other industries (such as retail, food service, health care).
- $105 million in labor income ($68 million for Invesco employees and $37 million in salaries and benefits for employees in other industries).
- Nearly $220 million in economic output.
The project provides new property tax revenue that supports education and essential government services.
- Additional tax revenue for Atlanta Public Schools during the 10-year incentive period is estimated at $64.8 million. This could support an average of 102 teacher salaries annually during the incentive period. (This is using the average wage of $63,000 for preschool, elementary, middle, and secondary teachers from Bureau of Labor Statistics occupation data for Atlanta).
- The City of Atlanta will receive $32.2 million in additional property tax revenue due to the project after subtracting incentives during the 10-year incentive period. This new tax revenue is equivalent to supporting 59 police officer salaries in the city annually. (This is using an average salary of $54,600 for police officers in the City of Atlanta from Bureau of Labor Statistics occupation data).
The total MetLife project is in an area that is currently underdeveloped, and the project will improve public infrastructure and community spaces.
- Topography and other challenges with the property prevented redevelopment of the site since 2006.
- MetLife has agreed to construct a new city street and public pedestrian space through the property. The estimated cost of the street, which was required by the city, is $43.8 million.
- MetLife will bury all utilities and powerlines that are on a public right of way around the site, which will likely be a $2.5 million cost to the company.
What if DAFC was not able to provide for such incentives within the City of Atlanta? Would the City of Atlanta have had a home for Invesco’s new global headquarters? Would the property have been developed anyway even though it has sat empty since 2006 and faced many expensive challenges and city requirements? Would Invesco have stayed in Atlanta without the additional incentives or left us for another large sunbelt city promising their own package of incentives? Neither development authority can predict the future, but we can use careful and comprehensive analysis to predict the long-term value of our decisions.
Imagine if both Authorities worked together more often, providing for economic opportunity within the business community and our underserved communities. One is not exclusive of the other. Our corporate partners not only benefit the local economy with their tax dollars, job creation and infrastructure improvements, but also with their vast philanthropic giving of time, talent and treasure. We all rise together, so in this new year let’s look for new ways to increase economic opportunities for the communities we serve together.