Monday, May 16, 2011
Guv'ment City Hall East deal could be derailed by feds
Posted by Scott Henry @ScottTheHenry on Mon, May 16, 2011 at 5:27 PM
Since signing a letter of intent with Atlanta-based Jamestown Properties last fall, city officials have been trying to close a deal to unload the landmark City Hall East property on Ponce de Leon Avenue.
There were negotiations over zoning, affordable housing requirements, environmental clean-up and hundreds of other details, big and small, having to do with the proposed redevelopment of the 2 million-square-foot building.
But now I'm told the negotiations between the city and Jamestown are over and both sides are ready to sign on the line that is dotted. And yet, the whole deal could still go kablooey this week if the federal government doesn't approve $15 million in tax credits that the city and the developer have already agreed to.
First off, let me restate an earlier disclaimer that the point man on City Hall East for Mayor Reed's office, David Bennett, is a longtime friend of mine. Bennett has spent more than a year hammering out various aspects of the deal with Jamestown and there have been times when he worried that the transaction would fall through. But tomorrow he and Reed head to Washington for a hearing that he says could be the make-or-break moment for the entire project.
Simply put (because I don't understand all the details myself), Jamestown applied for a number of tax credits relating to various changes that were considered essential to making the City Hall East redevelopment doable. For instance, Jamestown wants to tear down the property's unsightly parking deck along Glen Iris Boulevard and use parts of the massive building to park cars. To do that, it would need to tear out the 130,000-square-foot loading dock that later served as an exhibition hall for such events as the Southeastern Flower Show.
Currently, the loading zone behind CHE is a good 10-15 feet below street grade. Jamestown's original plans were to fill in that sunken area with underground parking, creating a street-level plaza and a grand entrance that would occupy the "U" formed by the back of the main building. I haven't seen these renderings, but while I hope these changes don't diminish the building's historic badass-ness, I can imagine how they would greatly enhance the curb appeal of the property and make it possible to have outside seating for restaurants.
But Bennett says the feds rejected the ambitious and expensive plan, denying tax credits that Jamestown argues would make the project profitable. (Remember that the upfront purchase price of the property is also in the neighborhood of $15 million.)
Tomorrow, Jamestown executives will make a last-ditch appeal before some bureaucrat with the U.S. Parks Department, which administers the tax credit program for historic properties on behalf of the Department of Interior. Mayor Reed is scheduled to deliver the closing arguments.
NOTE: Several minor revisions were made to this post after it first appeared.
And if it doesn't work? As Bennett says, "We'll have to start over."
Let's hope the mayor wears his lucky tie. If ever we needed a closer, this is the time.
Comments (18)
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The most interesting piece of this article is Scott Henry’s disclaimer, “...the point man on City Hall East for Mayor Reed's office, David Bennett [former AJC reporter who covered Atlanta’s sewer program], is a longtime friend of mine”.
It helps explain why neither the AJC nor the Loaf provide coverage about the violations of city, state, and federal law which are linked to the sale of CHE and the creation of the new park and pond on the south side of North Avenue across from CHE.
In September 2007, then Mayor Shirley Franklin signed Ordinance 07-O-1530 authorizing the Mayor to enter an agreement with Atlanta Beltline, Inc. (ABI) for the design and construction of the park on behalf of the Department of Watershed Management.
Cost? $30 million.
Source of funds? Water and Wastewater Bond Fund.
Reason? The sale of CHE means that the storm water vaults in the first floor of the structure would have to be vacated.
Problems? 1) The city charter does not allow the use of revenue from the water/wastewater fund to be used on storm water projects.
2) Managing storm water in the North Avenue/Glen Iris area is dependent on a sewer tunnel project which does not have proper state and federal permits.
Although the city, EPA, EPD, Upper Chat Riverkeeper, and many others deny that permits are required, they all depend on a lie of omission.
They say that, “...TUNNELS don’t need permits...”.
But they omit a 1997 decision from the 11th Circuit Court of Appeals which establishes that the SHAFT which is used to send fluids (such as sewage) into the subsurface (such as a tunnel) requires a permit.
So water/sewer ratepayers have already been “SHAFTED” to the tune of $30M plus the cost of a tunnel system which violates state and federal law.
Whether they’ll be shafted a second time if the “dirty” project is nixed by the Feds remains to be seen?
Explains alot on the "coverage" of the Mayor/City. AJC, Sunday Paper, & CL, and even ATL Business Chronicle...all part of the Mayor's posse"...nice!
Makes sense for his reelection. Southside vote is given; He just needs a few from the other side...to gain re-election
I did not even read Schreiber's comments...Wow I had the same reaction. Tis interesting indeed.
Some honest questions,
Is the water/wastewater fund under funded after the construction of the park?
Why don't the tunnels have the proper permits?
So the purchase price is roughly $15million and the city agreed to give the developer roughly $15million in tax credits, as well as zoning and other variances?
Interesting.
If I recall Jamestown properties offered to pony up 17million for Highline improvements (a park on an old elevated rail in NYC), just for expansion rights in Chelsea. How about they offer up a few million for the Beltline as well....or does Atlanta not negotiate as well?
Jamestown can get 1500+ per square foot for residential alongside the High Line in Chelsea...so the profit pool to negotiate for is quite a bit larger. Not quite the same deal here.
I guess I am late to the party. I was headed over to what I thought was the Old Sears to buy me some Craftsman tools and some tighty whities. When did things change?
Schreiber’s Response to “pstone on May 17, 2011 at 12:10 PM”
Q1) Is the water/wastewater fund under funded after the construction of the park?
A1) Short Answer – No. Underfunding is not an option and $30M is a drop in the bucket of a $4.1B program.
The Department of Watershed Management (DWM) has informed EPA/EPD and Judge Thrash (responsible for overseeing both of the city’s consent decrees) that unless it receives a 15 year extension of the deadline to complete all projects associated with one of the decree’s, the city will have to raise water/sewer rates again.
At present, the city’s position is that the current rates impose a “high burden” on ratepayers (a technical term with sources in formulas that the federal government created for its Financial Capability Assessment of water/sewer rate structures).
Documents from a Freedom of Information Act request indicate that EPA will recommend a 10 year extension.
Problem: Atlanta’s request for the 15 year time extension, submitted by former DWM Commissioner Rob Hunter, was not true accurate and complete and therefore it violated the terms of the consent decree. In the request, Hunter failed to disclose the costs of compliance with applicable law which apply to four projects which require permits for SHAFTS and failed to disclose costs associated with three newly proposed projects which will be dependent on SHAFTS.
Q2) Why don't the tunnels have the proper permits?
A2) TUNNELS don’t need permits. The SHAFTS that fill the tunnels DO NEED permits. The fact that EPA says, “...TUNNELS that convey wastewater to tunnels do not need permits...” is the word game that EPA uses to mislead the public and the Courts. The SHAFTS that fill Atlanta’s existing projects meet the federal (and Georgia) definition of SHAFTS that require permits.
Problem: Atlanta, its consultants, and private legal counsel have so flagrantly defied the law that the projects which are dependent on SHAFTS are not eligible for permits.
Problem: The fact that EPA has determined that permits are not required does not relieve Atlanta from compliance with the law. The 11th Circuit Court of Appeals has already determined (paraphrasing), “An agency decision issued without adherence to its own regulations must be overturned as arbitrary and capricious”.
BIG PROBLEM: Mayor Reed might have inherited the violations of state and federal law which were first created as far back as 1984. But inheriting problems is different than perpetuating problems. Will Mayor Reed collude with EPA/EPD and Upper Chattahoochee Riverkeeper as did former Mayor Shirley Franklin and defy the law? Or will he acknowledge that the problems exist and seek a lawful resolution?
For a comprehensive article about the permit issue go to:
http://atlantaprogressivenews.com/news/068… -- Advocates Claim Atlanta Violating Safe Drinking Water Act
Robert Scheiber has made these charges over the years. The city's Clean Water Program is closely monitored by the Justice Dept., federal court, state EPD and EPA. Why isn't he persuaded the oversight would not allow the infractions he lists?
sf: Don't you think Bob Shreiber makes some very good points? Even though there is oversight of the agreement, what are your views on his arguments?
@nyatl
"Jamestown can get 1500+ per square foot for residential alongside the High Line in Chelsea...so the profit pool to negotiate for is quite a bit larger. Not quite the same deal here."
OK presuming that the space in Atlanta is worth 1/10th that of Chelsea would you think them contributing 1.7 million towards the Beltline would be fair? From what I understand it currently stands at ZERO.
To Scott Henry – We’ve come full circle with the ball now in your court. Comments from sfranklin, Question Man, and Maynard indicate that an article about the topics of 1) permits for SHAFTS that jeopardize public health by sending sewage into Atlanta’s subsurface (aquifer) and 2) misappropriation of Atlanta’s water/sewer funds is appropriate. Are you and the LOAF simply serving as a shield for Franklin/Reed (Bennett) or will you pick up your racket and hit the ball?
I think I saw LaChandra Butler Burks heading down into the SHAFT with a miner's helmet and some pimento cheese sandwiches.
why does the phrase, "closely monitored by the justice dept, fed court, state EPD and EPA" make me feel as safe as "the fox is guarding the henhouse"?
Weren't Atlanta's affordable housing rules changed for this project because the deal had to close by Dec. 31, 2010 or it would collapse? Since it hasn't yet closed, was that just a ruse to take care of the developer and screw those with few resources? Or did the City and Jamestown decide to postpone the closing to evade the Open Records laws and keep the deal secret all this time?
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