Partners (Number 3, 2004)

Live, Work, Play: an Urban Innovation

True to its motto “Live, Work, Play,” the ATLANTIC STATION® redevelopment includes affordable housing and a host of new jobs in its comprehensive approach to community development. But this kind of development doesn’t just happen on its own. It takes vision and cooperation among many partners.

After years of planning, ATLANTIC STATION, LLC® is finally becoming a reality: a formerly contaminated steel mill site near downtown Atlanta is now being transformed into what some would refer to as a new “mini-city.” Currently in various stages of completion, the former site of Atlantic Steel is becoming home to office towers, a major shopping and entertainment district, a hotel, and housing in an area that saw little hope a decade ago.

The steel years
Set on 138 acres, Atlantic Steel was founded in 1901 as Atlanta Hoop Company to make cotton bale ties and barrel hoops. In 1915 the company reorganized into Atlantic Steel Company with the expansion of its product lines. By the 1980s operations had declined significantly, and the site closed in 1997. That year, Jacoby Development Inc. and AIG Global Real Estate initiated a plan to transform the blighted steel property into a mixed-use, mixed-income development.

Opportunities for clean-up helped to offset the inherent disadvantages of brownfield conditions. The site’s prime location, large size that allowed for scale, and the creation of a comprehensive master plan suggested significant redevelopment potential, and this made clean-up costs feasible.

Live
The initial plan calls for 1,600 homes consisting of apartments, condominiums, townhouses, and single family dwellings. Ultimately, the master plan calls for 10,000 residences including student housing. Currently nearing completion in the “Park District” are 231 apartments for mixed-income families.

According to Brian Leary, vice president of design and development of the ATLANTIC STATION® project, “We have long been committed to providing a full range of housing options at ATLANTIC STATION®. This includes a commitment that no less than 25 percent of the total number of housing units within the community will be targeted for families at 80 percent of area median income.”

Leary adds, “We feel that it is important to provide housing options for each and every employee who works at ATLANTIC STATION®. This includes entry-level workers as well as the corporate executive overseeing thousands of employees. The diversity of the residential product offered on-site gives the residents of ATLANTIC STATION® the opportunity to get out of their cars and enhances their quality of life.”

Work
The economic benefits of the ATLANTIC STATION® project will be significant. The project is expected to generate approximately 20,000 new jobs as part of the plan, which calls for over 1 million square feet of retail space and over 5 million square feet of office space. While some of these projected jobs will be transferred from other communities, opportunities for employment growth are still significant because the mixed-use characteristics of the development will create its own economic engine.

 
 
 
 

The retail component will include department stores and specialty shops, a grocery store, multiplex theater, restaurants, nightclubs, a hotel, and other such establishments. While these businesses typically emphasize service sector jobs, the entire job spectrum will be represented. Likewise, a wide variety of jobs will exist in the project’s office space.

Play
Some people will approach the retail and entertainment components of the ATLANTIC STATION® redevelopment as “play” rather than “work.” But either way, the development will provide new opportunities for recreation. In addition to retail venues, the community includes a pedestrian plaza and park for leisure activities.

Transportation planning will benefit both those who commute into the ATLANTIC STATION® development for work or leisure activities and residents who commute elsewhere. Public bus service provides an easy link to the local MARTA train line, and the new 17th Street bridge offers access via a pedestrian walkway and bicycle lane. The landmark yellow bridge connects the community to the Midtown Atlanta neighborhood on the other side of the I-75/I-85 “Downtown Connector.”

Getting things off the ground
Calling for a total investment of over $2 billion, the ATLANTIC STATION® was clearly an ambitious endeavor to launch. A key element was the establishment of a tax allocation district (TAD). Environmental concerns and under-utilization of the site qualified it as a redevelopment area, thus making the site eligible for special taxation financing programs.

In Georgia, the Redevelopment Powers Act (Chapter 44, Title 36) allows for Tax Incremental Financing to provide public finance for redevelopment activities in underdeveloped or blighted areas. Revenues are derived from the increase in the redevelopment area’s ad valorem and/or sales tax levied by the city, county and school system. These revenues are then placed in a special fund that finances redevelopment costs or services bonds issued to finance the project.

Economic impact
Prior to redevelopment, the 138 acres that are now the ATLANTIC STATION® contributed $300,000 a year in property taxes to the city’s coffers. Once fully constructed, the ATLANTIC STATION® development will contribute $30 million a year in property taxes. Additionally, the numerous retailers on site will contribute $10 to $20 million a year in Special Interest Local Option Sales Tax, which helps fund local education and transportation initiatives. New jobs are expected to generate more than $619 million in salaries.

Funding
After acquiring the land in 1999 for $76 million, Jacoby Development Inc. spent $25 million for site clean-up. The development of office, hotel, retail, and residential spaces is being funded by the private sector. The TAD contributed up to $170 million to assist with both site clean-up and required infrastructural costs such as utilities and streets. Additionally, matching funds will free up some TAD funding to finance corridor improvements. The City of Atlanta has contracted the Atlanta Development Authority to serve as its designated “Redevelopment Agency.”

Corridor improvements are being funded by Congestion Management and Air Quality (CMAC), federal transportation program STP 33 (C), and U.S. Department of Transportation TEA–21 to provide and/or improve sidewalks, streetscape, and traffic flow. If existing businesses move to the area, their relocation expenses may be provided under all applicable federal, state, and local guidelines if public funds are used to acquire property. While no historic properties are located within the ATLANTIC STATION® boundaries, some exist near the TAD. These properties, which are either listed in the National Register of Historic Places or are City of Atlanta Designated Properties, will be unaffected.

In the redevelopment plan, the Tax Allocation Bond issue will be between $100 and $250 million depending on the evaluation of the bond issuer, federal transportation program STP 33 (C). In accordance with redevelopment proposals, the bond term will be no greater than 25 years or the maximum term permitted by law, and the rate will be determined at the time of issue based on the conditions of the bond market, anticipated development within the redevelopment area, and assessed taxable property value.

Partnerships, partnerships, partnerships
The ATLANTIC STATION® community attributes its success to public-private partnerships. Partners ranged from developers, bankers, architects and engineers, accountants, planners, and environmental scientists to federal, state, and local government, grassroots organizations, a local university, and the local transit authority. The partnerships and strategic vision of the ATLANTIC STATION® demonstrate how redevelopment can have a positive effect on the region’s environmental, social, and economic health while encouraging smart growth.

Primary sources:
Atlantic Steel Redevelopment Plan
www.atlanticstation.com
U.S. Environmental Protection Agency

By Sibyl Howell, regional community development manager, and Wayne Smith, community affairs director at the Atlanta Fed.

From “Steel” to “Station”—a Model Development?

Transforming an old industrial facility into a vibrant mix of office, retail, and residential uses is the dream of many cities. Still, Atlanta’s experience with Atlantic Steel may not be easy to reproduce. Even if it can be replicated—the Gates Rubber project in the center of Denver is comparable—a number of concerns warrant the attention of affected communities.

Many of the positive outcomes of this kind of development are more attainable if the size of the project is sufficient to generate revenue. Without revenues from retail, office, and market housing, it may be hard to build affordable housing. Similarly, scale can result in project efficiencies that are not available for small brownfields. Off-site impacts on neighborhoods are also greater in the case of large projects, so that benefits are spread to many people and properties.

None of these benefits, however, requires that a project exceed 100 acres as did Atlanta’s venture. Depending on degrees of contamination and land values, sites less than one-fifth the size of the Atlantic Steel mill might also be reclaimed and designed to include affordable housing. In addition to being appropriate for smaller parcels of land, the Atlanta experience has viability for replication in smaller cities as well.

But we should not exaggerate the potential of ATLANTIC STATION® or the odds on reproducing it:

  • The property market has to be “hot enough” to offer a high reurn on investment to attract redevelopers. Pittsburgh and other steel cities have similar properties, but none of those areas have grown like Atlanta, and none have a project like the ATLANTIC STATION® community.
  • The employment created in developments like this is not all new jobs for the metro area. Some jobs will be moved from elsewhere. Some office space will be occupied by businesses that are relocating. And new retail activity may take place at the expense of business and jobs in other areas. A key to true success is whether the development promotes jobs and businesses that create new incomes, and this is always difficult to measure or predict.
  • If this “displacement” of jobs does occur, then the same tradeoffs may occur for the local property values and taxes generated by the development. In other words, taxes may fall elsewhere and thus offset the new revenues. “Greyfields,” such as abandoned shopping centers, are created by development that just moves retail activity from one location to another. Such activity creates new problems while solving old ones.
  • The hotter the real estate market, the harder it will be to divert any of the property to community uses such as affordable housing, parks, or other public facilities. Yes, developers may have excess profits they can afford to give up, but the costs involved in addressing community uses may raise their resistance to such neighborhood demands. ATLANTIC STATION’s® neighbors were highly involved and should benefit, but that is not always true in redevelopment.

On balance, mega-redevelopments such as the ATLANTIC STATION® community can make major contributions to their neighborhoods and potentially to whole metropolitan areas. But one can’t assume that they always will. Community involvement from the beginning is essential to maximizing the public—not just private—returns from the redevelopment of large abandoned sites. That involvement is the key to smart growth on inner city lands.

Peter B. Meyer Professor of Urban Policy and Economics Director, Center for Environmental Policy and Management Director, US EPA Region 4 Environmental Finance Center University of Louisville

 

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