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Hope For Amazon HQ2 Lives In Embattled, $1.75B Deal To Develop The Gulch

Even as CIM Group courts Norfolk Southern to its massive Downtown Atlanta development project, its incentive agreement with city officials has an Amazon-sized hole hoping to be filled.

A bird's-eye view of the proposed redevelopment of the Gulch in Downtown Atlanta.

Atlanta City Councilman Howard Shook confirmed to Bisnow Thursday that CIM Group is in talks with Norfolk Southern to potentially develop a headquarters for the Virginia-based railroad giant at the development site next to Mercedes-Benz Stadium. It was reported earlier this month that Norfolk Southern was eyeing a possible headquarters move from Virginia to Atlanta.

That possible economic development coup is the reason city officials have been urgently attempting to pass the agreement, Shook said.

“It seems all of the parties are [increasingly] frustrated and skittish, and I'm told that's because Norfolk Southern is saying, 'you need to figure out what you're going to do or we're going to take the ever-sweetening offer the state of Virginia is offering,'” Shook said.

Atlanta City Council members Howard Shook and Amir Farokhi

Shook spoke after a council work session Thursday that involved officials from Invest Atlanta, the city's economic development arm; the city's finance department; MARTA; and CIM Group, focused on the development agreement Mayor Keisha Lance Bottoms announced Monday.

The city council could vote on the deal as soon as Sept. 17. The deal, which gives CIM the opportunity to reap up to $1.75B in incentives if it fully realizes a $5B mixed-use project on the Downtown Atlanta parcel, still needs green lights from both Atlanta Public Schools and the Fulton County Commission.

A clause in the agreement, posted online by freelance journalist Maggie Lee, would allow CIM Group to seek even more incentives from other agencies only if it can secure a "second headquarters" of a company that earned at least $50B in revenue last year and promises to create at least 40,000 full-time jobs. No company was specifically cited, but Norfolk Southern does not match that description.

More than 50 companies could potentially fit that description in terms of 2017 revenues, according to the Fortune 500 list. But only one company — Amazon — is known to be scouting locations in the U.S. for a second headquarters, one that would offer 50,000 high-paying jobs to the winning region.

Atlanta is among 20 contenders for the project and a winner is expected to be announced by year's end, CEO Jeff Bezos affirmed Thursday night. City officials have been pushing the CIM agreement as integral to grabbing Norfolk Southern's headquarters from Virginia.

Bottoms pushed the city council to pass the agreement, and a host of related legislation integral to the deal, this past Monday, making a rare appearance before council despite being under the weather, The Atlanta Journal-Constitution reported. Bottoms told council members that an unnamed Fortune 500 company wanted a land deal done by last quarter. The Gulch land involves five different owners, including Norfolk Southern, who have all tentatively agreed to sell their parcels to CIM Group.

Still, resistance to the incentives remains.

“Where we are utterly fracturing over is: How much is too much?” Shook told Bisnow in a phone call following the meeting. “It would help if there was an announced anchor tenant, but we don't have that.”

Shook's primary concern is how much more property tax revenue the incentive package would take off the city's tax digest. He said 16% of the properties in Atlanta's borders are receiving a tax break, or some $25M annually. This deal could push that amount to 20%.

Council member Cleta Winslow, whose district is home to the Gulch, said she is supporting the incentive measure.

“I think it's a good deal,” Winslow said to Bisnow. “My goal is to clean [the Gulch] up. It was infested with drugs and homeless [people]. When you start to clean up an area, that starts to attract development. And I'm a strong proponent of development.”