Atlanta's Incentive War

March 24, 2019

Incentives, Development And Politics: Bisnow Poll Finds Many See A Connection


The perception that a select cadre of developers have little trouble securing public incentives for private development came out strongly in a recent opinion poll conducted for Bisnow's Incentive War story series.

Of nearly four dozen respondents to Bisnow's poll, 76% believe that some developers have an unfair advantage of achieving public incentives for private development, while another 63% feel that the amount of campaign contributions directly influences the ease with which a developer can obtain public incentives.

While the poll is far from scientific or conclusive, the results illustrate a growing sentiment across the country as to how politics, public money and commercial real estate may commingle in ways that could give some developers an unfair advantage.

For years, money has flowed easily between developers and local politicians’ election campaigns, and in many cases was sent right back in the form of real estate deals, as Bisnow recently reported. But a new public focus on incentives was highlighted when regions and communities throughout the country chased Amazon's second headquarters project with the promise of billions of dollars of public money and tax breaks.

“The local, political and public response to tax incentives and other inducements to private developers has changed very significantly across the country," New York University's Schack Institute of Real Estate Dean Sam Chandan recently told Bisnow. “What may be characterized in the political discourse as a donation will strike at the community’s perception of fairness.”

For Atlanta, eyebrows were raised when the Atlanta City Council — after a contentious fight — passed a sweeping $1.9B incentive package to CIM Group to redevelop the Gulch. Forty-six percent of respondents felt that the incentive package for the Gulch was fair, while 28% believed it to be excessive.

Tax break pushback has rarely been heard in the Metro Atlanta region, where incentives have been rubber-stamped with little public awareness.

Of course, incentives that go to new projects have their proponents who maintain their benefit outweighs any cost. Tax abatements offered through Invest Atlanta generated more than $310M in revenue in 2018 along with the creation of 205 jobs and 860 housing units, according to Atlanta’s annual financial report.

Respondents to Bisnow's survey were split on whether incentives were even necessary for private development, with 54% saying they were. Seventy percent responded that rising construction costs were a primary reason developers needed help on projects.