Why I will vote for Redevelopment Powers for Brookhaven

by Jack Honderd
 

Recently, a few Brookhaven citizens have articulately made the case against Redevelopment Powers for the City of Brookhaven, and I share some of their concerns.  It’s always dangerous, however, to let dedicated opponents define what Redevelopment Powers are and what they can do because one can end up with half the picture.

 

By way of full disclosure, I am a Brookhaven resident, and an architect and developer.  I am familiar with development economics and obstacles, as well as how public rules and incentives can mold development.  I own no commercial property in Brookhaven, nor do I have any plans to do so.  This is written from the viewpoint of a Brookhaven citizen with a keen interest in good urban planning and making Brookhaven a better place to live.

 

First, I agree with opponents’ assertion that we do not need to incent redevelopment in Brookhaven.  Brookhaven’s demographics and location make this one of the most desirable places to develop in the Atlanta metro area and, in fact, in the Southeast.  Developers are lining up for a shot at the MARTA station parking lot, and Buford Highway redevelopment is just a matter of time.

 

Why then Redevelopment Powers?  Because popularity, commerce and a growing tax digest don’t make a city a great place to live—it’s a city’s public realm that truly makes the difference.  It’s the streets, plazas, parks, trails, sidewalks, meeting places, public art, playgrounds, and neighborhoods that make a city a great place to live.  Well, it’s the people, of course.  But to realize that, people need myriad ways to interact, and it turns out that “incidental interactions”—ie. the kind that happen on the sidewalk or playground, at a local restaurant, in the dog park, during a neighborhood fun run or at a concert on the square—are the essential glue that creates a great community.  Yes, online forums, public meetings, schools, churches, and HOA’s also contribute significantly to this social fabric, and most communities have those.  What the most memorable communities have, though, is a great public realm.  Think about the towns and cities you like to visit or consider special.  What’s special about them?  Is it the flagship companies located there?  The convenient airport?  The low housing costs?  The smooth 5 lane commercial strip lined with restaurants and auto dealerships leading into town? These are all useful characteristics, but likely it is the public spaces and public life of a place that makes us want to spend time there.

 

To create this for Brookhaven, we have to provide healthy attractive ways for people to get out of their cars and experience Brookhaven and Brookhaven-ites face-to-face and on foot.  This requires some serious public investment.

 

Private development is good at doing several things.  It can build buildings and fill them with businesses which provide jobs and tax revenue for Brookhaven.  It can attract additional private development.  It can provide a return for its investors, thereby keeping the wheels of commerce turning.  Sometimes, it will provide public improvements such as sidewalks, turn lanes and rebuilt utility lines across the public frontage of its site.

 

But certain things, private development is NOT good at doing.  Private development has little interest in planning beyond its particular site boundary or investing more than what can be shown generating a clear-cut return on a proforma—it’s not a big picture enterprise.  It’s not interested in larger public investment per se.  This isn’t a knock on private development—it’s a micro-economic creature not designed to tackle macro-economic goals.

 

Let’s consider Buford Highway.  If our vision is to have new buildings and businesses line Buford Highway much as it is now, but spiffy and taller, private development can do that without City of Brookhaven investment.  If, however, our vision is of a transformed Buford Highway, a street vibrant with cars AND walkers and bicycles, with storefronts pulled up close to the sidewalks, offices above and parking behind, and with a linear park and bike/jogging path lining the North Fork of Peachtree Creek, then only City government has the vision and resources to make this public realm a reality.

 

The kicker on this kind of thinking/planning is that the redesign of Buford Highway and addition of a new linear park along North Fork of Peachtree Creek has the potential to transform the area in ways we can barely conceive. Much like along the Atlanta Beltline, new development may want to orient buildings toward the new park as much as to the street, thereby doubling the potential property value.  This, in turn, would generate a larger tax base for Brookhaven than a conventional redevelopment approach would.  More importantly, it would enhance Brookhaven’s public realm, the public spaces where we meet and enjoy activites and nature and build community—the realm that makes Brookhaven memorable and special.

 

And therein lies the great value of the Redeveloment Powers Act.  Private enterprise isn’t going to do this.  Only Brookhaven citizens can accomplish a vision and project on this scale.  The City staff and City Commission is the action arm of Brookhaven citizens, and Redevelopment Powers are the tool that can allow Brookhaven to do this at no incremental cost to Brookhaven citizens.  Good planning can pay for itself.

 

This scenario is perfectly laid out for a TAD (Tax Allocation District) under The Redevelopment Powers Act.  The City issues TAD bonds to finance the building of the linear park and redesign of Buford Highway; private development rejuvenates the corridor with new buildings and businesses built to meet the City’s design guidelines; the increased property value generates increased taxes which pay the interest and principal on the bonds.  We Brookhaven citizens get a new restaurant-shop-business district plus a 2 mile long park and multi-use path along a creek without paying higher property taxes.  How can this be bad for Brookhaven citizens?

 

In essence, when we talk Redevelopment Powers, we are talking the business principle of investment.  If we invest borrowed money (bonds), and receive a return higher than the cost of borrowing, that is generally perceived to be a good return on investment (ROI).  Why don’t we wait for surplus funds (savings) to accrue and invest then?  Because we would be foregoing years of ROI while we wait for enough funds to accrue.  Building through savings would be a safe financial route, but discouragingly slow.

 

We can give more examples of how Redevelopment Powers could be leveraged to enhance Brookhaven—the Peachtree Road corridor, a Brookhaven Beltline, a completely redesigned and rebuilt Ashford Road/Johnson Ferry commercial node. But utility doesn’t appear to be the heart of the opponents objections.  The objections seem rooted in fear of what can go wrong.

 

TAD bonds are issued and backed solely by the income stream generated in the TAD district (additional property taxes due to additional property values created).  By law, Brookhaven citizens and Brookhaven’s general fund have no obligation to make good should the income stream not meet projections.  Bondholders are at risk.  Opponents point out that in such a scenario, Brookhaven may feel the need to make good in order to protect Brookhaven’s general creditworthiness.  That’s possible, but the point made by TAD expert Sharon Gay at her recent presentation is that no TADs in Georgia (that she is aware of) have been supported by a government’s general funds.  The worst case scenario is that TAD bondholders’ payout term is extended a couple years–and that is rar, even after our recent Great Recession.  Most TAD bonds have been paid off early due to higher revenues than expected. This is testimony to the strict and conservative underwriting rules governing a TAD bond issue.

 

The bigger objection seems to be unnecessary use of redevelopment tools and unwarranted payouts to private enterprise.  Redevelopment tools such as TAD districts can only be activated by a vote of our elected representatives (City Council) and only after an extensive public review process.  At heart, then, this testifies to distrust of those we’ve chosen to lead us, fear of cronyism between government and developers, and, ultimately, a lack of confidence in our own ability to choose leaders and govern our city.  What can I say?  The newspapers are full of stories of political cronyism and corruption.  It happens.  Cynicism of government is widespread.  And yet, if we aspire to anything greater than a just-let-it-happen Brookhaven, government is our best tool to get there.  Only government—the voice and arm of Brookhaven voters—can have the vision, authority and fundability to accomplish large-scale projects of  public benefit.

 

If we want to create a better Brookhaven, then, we will need to do so through our City Council and City staff.  Talk more with your leaders if you don’t trust them.  Change them if you must.  If you believe government by nature is corrupt, I can’t influence your opinion.  But if you believe Brookhaven can be a great place to live, and you understand how public investment and the public realm make it so, then give our elected leaders the tools they need—Redevelopment Powers–to fufill that vision.

Comments

  1. Jack,

    Very well done. Thank you for the obvious effort put forth in preparing this piece.

    I am glad to see someone has come to the forefront to speak clearly, factually, and logically about this issue.

    You did not comment on the scrutiny each bond investor brings to the evaluation process. They don’t want to invest in a wild idea with little long term gain. They want to see a sound, practical project that is well thought out and maximizes the opportunity for profit. This is the primary reason no TAD in GA has gone bankrupt. As stated in the presentation at City Hall by Sharon Gray (available on line), the only TAD that did not meet its goal was the 2007 / 2008 Beltline project. The turn down in the economy did not allow them to bring their project on as forecasted. Did this obligate any taxpayers or any City to pay up? The answer is NO. The bond holders were just forced to have to wait a longer period of time to receive their return.

    Regarding visionary capabilities and the trust factor: To date the Brookhaven City Council has proven it’s ability to incorporate sound visionary policies in our Long Term Comprehensive Plans with extensive efforts to include citizen participation. This is the exact same process that will be utilized when the City is considering using The Redevelopment Act. We have an extremely dedicated staff that has earned us numerous recognitions: Atlanta Business Chronicle’s “Fastest Growing Zip Code in the Atlanta Region – 30319”, and Movoto Real Estate’s title as “The Most Exciting City in GA”.

    As far as your comments on trust, I would like to add that Brookhaven has been declared a City of Ethics as pronounced by the Georgia Municipal Association (GMA), and I can assure everyone that I, and my fellow Council members are committed to maintaining this reputation and enhancing our image as a model city in Georgia.

    The City of Brookhaven is a “hot commodity” right now and it is my prediction things will be getting hotter in the near future. But they won’t always be this way. It not unusual for a TAD to take years before it comes to fruition, so the ability to have this tool for our use in the near is essential. The GA State Legislature understood this and passed a law during the last session allowing Brookhaven to put The Redevelopment Powers Act on the ballot for citizen’s approval this November.

    Jack, you also described very well how the developer marketplace works. With the use of TADs, we as a City will be well positioned to ensure these projects work to maximize a more livable Brookhaven for generations to come.

    Thank you once again for your input.

    Joe Gebbia, Councilman District 4 (Buford Highway)

  2. “If, however, our vision is of a transformed Buford Highway, a street vibrant with cars AND walkers and bicycles, with storefronts pulled up close to the sidewalks, offices above and parking behind, and with a linear park and bike/jogging path lining the North Fork of Peachtree Creek, then only City government has the vision and resources to make this public realm a reality.”

    I don’t think that anybody would dispute that public spaces, amenities, and infrastructure require public funding.

    But, Brookhaven already has access to funding through General Obligation bonds (commonly referred to as G.O. bonds). In Georgia, G.O. bonds are available up to 10% of the assessed value of all taxable property within the city.

    With a value of over $2 billion, Brookhaven has the ability to issue over $200MM in G.O. bonds; this should be more than enough to “make this public realm a reality.”

    Why would Brookhaven want to use TADs instead of G.O. bonds?

    • Thanks for the comment, Drew. The answer to your question is that all Brookhaven taxpayers pay the debt (interest + principle) on G.O. bonds. Only taxpayers in the designated TAD district pay the debt on a TAD issue. While all Brookhaven residents benefit from TAD improvements, residents of the TAD district presumably receive the greatest benefit, both in use of the public amenity and increased property value, and therefore they carry the ball.

  3. Jack – there may be some merit to what you say… but only after a long and studied approach and consensus building among all citizens who understand not just the pretty pictures that people like you and I create, but the risks as well.

    You mention with brevity that sure there is risk to a city’s credit rating but no responsibility for repayment, but that is exactly why cities will do anything, including the payment of “bond holders risk” to insure their credit rating remains strong. I was told the story of Cobb County’s new Braves Stadium the other day, Redevelopment Powers was passed in 1993 and there were pretty picture promises of hotels, shops, pedestrian areas which laid dormant until just recently when it became the new home of the Braves… Nobody anticipated that! Nobody was even told about it until it was a done deal.

    How much less support of the Brookhaven-Peachtree Overlay could our current City administration have provided despite the fact that it is part of the ordinances? The current elected leadership (and those hired by them) have sneered at it too many times to count, yet, the Overlay was authored in great part by the BPCA, this forum. You cannot just shrug your shoulders and say “Oh well” about governmental mistrust, it is the unfortunate foundation of this City.

    Our city doesn’t even have our basic services running smoothly yet, why this great rush? Maybe some day soon-ish Redevelopment Powers will be appropriate for Brookhaven, certainly not right now, and not until our leaders learn to listen to their citizens.

    • Thanks for your perspective, Thomas. I hear your point about mistrust of Brookhaven’s leadership. There have clearly been missteps (as well as successes), which I assume is true of all start-ups. I’ve been encouraged by the recent Comprehensive Plan process–the Council has been listening to public comments and seems determined that the final plan will reflect our input.

      Ultimately, it’s up to us to ride herd on the Council’s major decisions. If you trust the public review process that is part of a TAD, it will be our control point over rash action or overreach by the Council. If not, then maybe it’s wise to wait a couple years.

      Waiting a couple more years until Brookhaven is more established would be an attractive option for me. I have a concern though: developers are knocking on the door right now, and significant development is going to go forward under whatever rules and planning is in place, without a bigger vision or plan for the public realm. I’m not sure we have the luxury of waiting.

      • That’s the rationale behind the Beltline… until they had to say “well, we can’t be held to the promises we made in a good economy” to Atlanta Public Schools.

        As someone knowledgable told me recently, if your financial advisor doesn’t tell you there will about 3 upturns and 2 downturns every 15 years, then get a new financial advisor. Let’s wait.

  4. Tax Payer says:

    “it’s a city’s public realm that truly makes the difference”

    NONSENSE! It’s a lower cost-of-living and business-friendly environment that encourages demand. Demand will naturally have a side-effect of raising property values, increasing revenues, and improve the culture as welfare moms cash out and move out and cultured people move in.

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