Should DeKalb Give Sembler $52 Million?
May 18, 2009 | 8:52 amLots of in-depth articles in this Sunday’s AJC, including a look at the influence of Georgia’s largest road builder on State transportation legislation and a closer look at Georgia’s generous movie tax credit.
But none left me as unsettled as Ty Tagami’s report about Sembler’s request that DeKalb County fork over $52 million to help them “finish” the 54 acre mixed-use project near the Brookhaven MARTA station.
Why unsettled?
Because on the one hand, I have serious issues with Sember’s prior perversions of “mixed-use”, not to mention watching a cash-strapped county hand over a briefcase or six full of 100s to said developer (that’s how it works right?) Also, as Burrell Ellis has stated, it sets a bad precedent in the dark world of money-starved developers.
But at the same time, it’s mixed-use near a MARTA station. Can the project survive if Sembler walks away from the project and leaves a big hole in the ground? Will someone else pick it up? Also, how is it different from the federal government borrowing up to its ears to provide a cushion of employment during an economic squeeze?
I wasn’t born yesterday. I recognize that there has always been a special back-scratching relationship between government and developers. In this specific case though, I think there are enough concrete reasons to justify my unstated desire to watch Sembler squirm.
So, for right now…I’m coming down in favor of the hole. Once the recession ends, let another developer, who doesn’t want $54 million, have a go.
As for the county, we’ll see what they decide next month.
Plus, as anyone who watches “Parks and Recreation” can attest, a giant dirt pit presents never-ending comedic possibilities…
The number one reason to get creative in terms of developer incentive is municipal competition (i.e. if there’s a potential economic opportunity, better your city get it than the one next door). No one likes the idea of investment going elsewhere.
However, right now, no one’s going elsewhere. No one’s going anywhere to build anything. So I agree, DM. Dekalb should sit tight. Sembler’s not holding the kind of cards they need for that level of incentive.
I agree with both Scott and DM.
Also: Just imagine the short cuts and shoddy construction techniques being used at that Brookhaven site as they run out of money.
i vote big hole
Yep, we could use it for four-wheelin’.
If real estate investment professionals are now unwilling to put (huge amounts of) money into the project, why should the taxpayers of DeKalb county?
As the article notes, Sembler has no choice but to threaten to walk away because they have nothing else to bargain with. But it’s a good piece of real estate, and if they walk away someone else will do something with it when it makes economic sense. Because the two things DeKalb and metro Atlanta do not need at this time are more condos and retail space.
Agree that we should let Sembler deal with it on their own. There is no reason for us to subsidize this. Someone’s got to learn some lessons from the crazy credit fiesta that has now ended. It would set a terrible precedent to bail them out of this. Sorry Jeff Fuqua, better luck next time. If you and your investors end up broke without jobs, well, welcome to the Real World: 2009. And you’re right DM, it’s a prime spot, someone will swoop in to finish it – eventually.
“I think it would be a crime if this thing was left like it is,” Fuqua said, gesturing at the mostly brown picture. “It wouldn’t be nice to live in something that looks like that.”
I agree with Fuqua on this point. Let’s charge him with a crime(blackmail) if he doesn’t complete the project. It’d be a lot cheaper than caving to his demands.
Sembler must be hurting if it’s making a threat it obviously cannot afford to back up. From what I hear, Sembler has too much $$ invested already to just walk away from it. On the one hand, I just can’t see Fuqua letting that property go, where it would eventually be snapped up for a song compared to what he paid for it. On the other, he might decide filing for bankruptcy and cutting his losses would be worth it to avoid the hassle going forward. For darned sure, though, I don’t want the County giving Sembler this kind of break- Eillis is right that other developers would start lining up at the trough, and in no time, we’d have the mother of all hot messes on our hands.
For what it’s worth, I think it’s very interesting that the Semblers are some of the biggest Republican political contributors in the state of Florida. In fact, they run what is known as the Sembler Political Machine http://www.thestraights.com/news/charlie-crist.htm .
Isn’t it convenient that their belief in laissez faire government has disappeared now that that the free market is about to bite them hard in the behind.
Well, I’m not sure how I feel about this one either. But to be fair (and allowing for hyperbole in your post) I don’t believe that Sembler is asking anyone to deliver a briefcase or six of 100s. They currently have an agreement for a 10 year graduated tax abatement, where the amount of property taxes they will pay will increase over that period until reaching the full assessed value. They are asking for a full abatement for 20 years. I assume that the $52 million is the nominal difference in property taxes paid added up over the 20 years. So would it sway your opinion to view this as $2.6 million per year over 20 years? Or, even more precise, less in the early years and more over years 11 through 20?
From what Sembler says, the investors have sunk a certain amount of money into the project so far, but think that they will be unable to fully recover the additional amounts they would need to invest in order to complete the project if the annual operating expenses include the full property taxes. They are therefore unwilling to invest any more. However, if the project is not completed they are likely to lose all or a portion of what they have already invested. I think Sembler is asserting that with the additional property tax abatement they project they will recover their current and future investment amounts, though perhaps with little or no profit.
First question – do you believe Sembler? Will the investors still take a bath with the abatement, or do they end up with substantial profits on the deal?
Next question – if they get the abatement and go forward, how many corners do they cut in order to try to maximize profits? What kind of project do you end up with?
There is no way for a governmental body to answer these questions.
While in general I think property taxes are a reasonable component of government funding, I think property tax abatements and developer’s manipulations to get them are one of the strongest arguments against property taxes in general. And I’m particularly irritated by the Dekalb Development Authority’s position that this would just amend an existing agreement and therefore the new state law requiring the approval of the school board and County Commission doesn’t apply.
I think my general leaning would be to let this project go, and see where the market takes it. But I might feel differently if I lived next door.
BRB, good points, but at the end of the day the County’s interest in getting this development completed is in increasing its tax revenues. The development is going to cost the County certain amounts in services and operations, and so a 20 year tax abatement basically kills that interest.
I’m sure neighbors don’t want the eyesore around, but unfortunately that’s their problem, not the County’s.
As a income earner in the development business, it is heartening to see municipalities use tax incentives to subsidize construction and development. As a tax payer and citizen with some working knowledge of development financing, these tax subsidies should be seen for what they are: tax payer bailouts of poorly capitalized developments.
Fuqua’s threat of a big hole is an empty threat (no pun intended) and a bluff. Bailing out Sembler’s investors is an absurd request.
Let the bankruptcy and foreclosure process run its course. There will be scads of ready-willing-and-able investors ready to swoop on Sembler’s carion.
A tax-payer funded bailouts of this development and the other high-end developments in Atlanta are stupid, stupid, stupid.
Oh yeah. I’m for the big hole (wink).
The irony is just too delicious.
I vote hole in the ground.
I also vote for a huge prop tax increase on holes in the ground.
Big problem here is that the Development Authoity is not controlled by Ellis or any other elected official. The current Board was appointed by Vernon Jones. Their funding comes from bond fees, so it is within the Authority’s selfish best interest to sell bonds. This is an autonamous organization that doesn’t directly answer to voters or taxpayers. Ellis missed a major opportunity earlier this year when he didn’t replace Gene Walker, the chair of the authority, when his term expired. He should have installed someone with sound judgement or at least someone Ellis could influence. Moreover, many of the decisions and meetings are not open to the public.
DM – I think how it works in the real world is that the money is actually handed over in big sacks marked with a ‘$.’ Also, after the Dekalb Development Authority hands over the sackfuls of money, Fuqua is supposed to give an evil belly laugh, light his cigar with a 100 dollar bill, and speed off in his Range Rover with bills of all denominations fluttering out the windows.
The hole is better than what was there. Thank you, Sembler, for clearing the site and navigating the permit process. No doubt Vulture Fund VI, LLC will appreciate your effort when they buy the site cheap, and then build something that actually makes sense there and can be financed. Your investors are terrified? And well they should be, having entrusted their money to this ill-conceived project in the first place.
Does anyone know the specifics of this plan? It sounds like more real mixed-use and less big-box than other Sembler iterations. Is that true?
Park under ground at Edgewood- few cars, smooth driving until you pop out. Then I agree, bumber car city.
The politics of this situation make my stomach roll. Here are a few fact that the AJC didn’t provide:
Gene Walker – chair of the Development Authority, is a key decision-maker in whether or not to grant this enormous tax relief to Sembler. Most of the unpaid taxes will be school taxes, since your tax bill is nearly 75% school tax. Gee – guess what – Gene Walker is also a newly-elected member of the DeKalb County Board of Education – and there’s more – Sembler & Co contributed at least $18,000 to his campaign (not to mention $20,000 to Elaine Boyers Lakeside cheerleaders). And for a bit of icing on the cake – Gene Walker was DCSS Superintendent Crawford Lewis’ sponsor into the Commerce Club.
I vote for the hole.
Sembler also donated over $100,000 for a gleaming computer lab at Ashford Park ES.
Sembler is [edited: no name calling]. They need to assume the risk and deal with it.
Um. Bad News.
These are entries from Burrell Ellis’ March 08 Campaign Contribution Disclosure Statement
Betty Sembler $2300
R. Shereen Fuqua $2300
Eliz Sembler $2300
Jeff Fuqua $1300
Greg Sembler $1300
To download all reports – go here
https://dklbweb.dekalbga.org/voter/reports.asp
Sorry about the name calling.
We can only hope that the Sembler et al donations to Ellis and county commissioners are so small that they don’t really have that much influence. But $18,000 to a BOE member’s campaign made a huge impact. Dr. Walker had two expensive mailings that boosted his campaign.
The hole doesn’t have to be left as a bare hole. The unfinished land is
required to be hydroseeded ( grass planted) to control soil erosion.
Whether they enforce the county ordinances or allow Sembler to play Thug and hold an area’s appearance hostage is up for grabs.
In South Tucker 45 acres of dirt stayed in that condition for over a year,
silting up adjacent Peachtree Creek. The county eventually required the land to be hydroseeded after the fact. The land in question was owned by developer and
former County Comissioner Robert Lanier. Whether who owned the land gave them a longer time frame then Joe Shmoe? We’ll leave that up to your imagination.
don’t seed the dirt. the hole will be a good reminder of the dangers of unbridled development, developer’s unfunded promises and sembler’s shame.
it will be sember’s scarlet hole.
If you combine the Brookhaven hole with the Buckhead hole, we will have two whole holes.
But their belief in self-interest first, philosophy second remains rock-solid.
What’s good for Sembler is good for YOU.
Indeed, it is a 20 year 100 percent abatement, instead of a 10 year gradual abatement. But the visual image of guys with briefcases is just more fun.
And no, it doesn’t really change my opinion. DeKalb is by no means in a position to be doing huge financial favors for anyone…right now or for the next twenty years.
With great profit comes great risk. Sembler knows that and should suck it up.
BTW…good points about the quality of the project if money is already tight. Hadn’t thought about that, but it definitely should be a concern to all involved.
Real Estate investment professionals and the taxpayers of Dekalb county have much different interests, so it’s not inconceivable that the taxpayers might want to step in where private funders don’t in some cases.
That said, I don’t think this is one of those cases.
Bo-I’ve stated above that I’m not in favor of supporting Sembler on this, but just curious- what do think should be built that actually makes sense?
Personal attack alert!
lol…
A newer, better Waffle House
Um, there used to be an awesome Original Pancake House with cool ’50s architecture on that spot. Ate breakfast there often… pretty much the definition of a newer, better Waffle House. (The Waffle House is just down the road next to the Brookhaven station.
However, I also vote for hole in the ground.
http://sembler.com/pdfs/Town%20Brookhaven.pdf
Thanks GAK. You guys are better than Google!
Not as much big-box, but it still looks like a traffic nightmare. What is it about Edgewood that not only makes me drive at a snail’s pace but also makes me feel like I’m always about to be T-boned?
Good call — I feel exactly the same way in that parking lot. People coming from all directions. It’s like a bumper car ride.
I agree that driving through the Edgewood shopping center can be a hassle. But I’m still glad it’s there. I’m not a huge fan of big-box shops, but it’s still nice to have a Target, Lowe’s, Best Buy, etc. nearby. It was a real hassle having to drive from Oakhurst all the way up past Emory on the occasions I wanted to pick something up at a Target–I vaguely remember it taking 20 or 30 minutes, depending on traffic.
I too have my head on a swivel in that complex, but I think that’s a good thing. This is the most effective way to have traffic calming and walkable spaces – make drivers cautious and fearful.
But E, doesn’t there come a point when the layout goes from causing drivers to be cautious to being down right dangerous?
Maybe there isn’t. Maybe what I’m feeling is how freaking dangerous I am in my car everyday…I just don’t really notice it until I hit 2 way stop/brick-paver/parking lot hell. Interesting.
Good digging Cerebration!
Not sure that approx. $10,000 will sway Ellis’ opinion though. We’ll have to see what Dev Authority decides and how Ellis reacts. We’ll make a big deal out of it if we have to.
And we know the AJC is watching.