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Georgia Square Mall Developers Seek $189 Million in Tax Funding

To replace the dying Georgia Square Mall, developers say they need $189 million in future tax revenue. Credit: Lee Shearer/file

Taxpayer dollars will fund nearly a third of the Georgia Square Mall redevelopment, if approved, with developers requesting almost $200 million in public funds for what is likely the largest such project in Athens history.

The Leaven Group, headed by local homebuilder Mark Jennings, wants $189 million in future property tax revenue from the development plowed back into the project for up to 30 years, which would make up 29% of the total financing. The typical tax allocation district provides 15% of the funding for such a project.

Without the TAD funding, the project won’t happen, according to Jon Williams, president and CEO of Athens-based W&A Engineering. “The plan that was created with all the input from the community costs X dollars. We need $189 million over the course of that time period in order to make this project financially viable,” he told the Mall Redevelopment Committee (MARC) last week. The committee includes Mayor Kelly Girtz, Commissioner Jesse Houle, and school board members Linda Davis and Mumbi Anderson.

The Athens-Clarke County Commission created a TAD for the Atlanta Highway property in 2021, anticipating a redevelopment proposal for the aging and increasingly vacant mall as indoor malls all across the country die out. Under a TAD, also known as tax increment financing, the ACC government and Clarke County School District will continue to receive the current level of tax revenue from the property. Additional revenue generated by the development will go toward “horizontal infrastructure” for the project, like roads and stormwater drainage. It will take an estimated 26–29 years to raise $189 million. In the meantime, both ACC and CCSD will benefit from a “halo effect” of more redevelopment on parcels surrounding the mall, as well as additional sales tax revenue, Williams said.

In return for TAD funding, the developer will have to sign a “community benefits agreement.” Under the proposed agreement, 10% of the 1,000 apartments and 200 townhouses proposed would be set aside as below-market-rate affordable housing for 40 years. Developers have also agreed to build an Athens Transit transfer station on the property, as well as include a 6,000 square-foot space for a Boys & Girls Club “youth force” initiative.

“We know we are a housing stressed community,” Mayor Kelly Girtz said at the MARC meeting. “We know we’ve been leaning into youth development opportunities because we want the next generation [to be] better supported, and we want better land use and environmental functionality, too.”

But Girtz said he wants the affordable housing to remain affordable for longer than 40 years (which is already longer than the typical 20–30 years for such agreements). He also said he wants assurances that the project will be built as planned and that the developer won’t come back asking for more public funding.

Williams said there is no risk to ACC because, instead of the county issuing bonds, the project will use a pay-as-you-go model, where the developer finds a lender to front the money, and eligible expenses are then reimbursed by the county over a 30-year time frame. But to get a loan, the developer first needs approval for the TAD funding.

In addition, the project is a planned development, which means the developer is bound to build what’s shown in the plan.

“I built a pretty wide moat between the developer and the money,” said Dan McRae, an Atlanta lawyer and TAD specialist hired by ACC. If the Leaven Group spends money inappropriately or doesn’t build what’s been promised, the agreement can be terminated, he said.

Although questions remain about the exact details of the TAD and community benefits agreement, the alternative is to let the mall continue to deteriorate and possibly become something like a storage facility until another developer comes along, Girtz said. And without public subsidies, the redevelopment would most likely resemble the previously rejected “Lego approach,” with apartment buildings simply plopped down in the parking lot, he added. 

If it’s approved, the project “will ultimately transform this side of town for many, many years to come,” Williams said.

In addition to the much-needed housing—which includes 140 units set aside for seniors—the development will have about 300,000 square feet of commercial space and 70,000 square feet of office space. The plans also call for planting about 1,000 trees and creating a central greenspace through the middle of the property. Two wings of the mall would be demolished, but the central area surrounding the food court and Belk—the last anchor store after Sears, JCPenney and Macy’s all closed—would remain.

“We’re going to get rid of the old infrastructure, which is auto-oriented, and make this a pedestrian-friendly destination,” said Ken Neighbors, an Atlanta lawyer working for the Leaven Group who also specializes in this type of redevelopment. “You heard about the 16-foot multi-use trail. If you build trails, people do come. This is really the story of economic development since, I’d say, the Beltline is in its 17th year.” The Beltline is a popular trail along abandoned railroads encircling Atlanta that’s spurred development in the neighborhoods it passes through. 

After a year of slowly moving through the ACC Planning Department—with an initial plan withdrawn and the second, current one recommended for approval—the process moved into warp speed over the past week. The MARC and a TAD advisory committee met almost daily to vet the proposal. Now the commission is scheduled to vote on Feb. 7, with the Clarke County Board of Education following on Feb. 9. (The BOE is involved because the TAD affects school taxes, and the development will bring an estimated 221 new students into the district.)

“We are in a crunch,” Williams told commissioners, because the developers are facing a deadline to close on the property by the end of the month. The current owner, the Herndon Group, set the deadline after the Leaven Group held onto an option to buy the mall for two years without exercising it. 

Despite questions and details that had yet to be worked out, any reluctance to embrace the plan mainly centered around a sense of loss that the mall is no longer at its peak. “Some people my age might be a little bit nostalgic,” Davis said, but “every time I hear this, it sounds better and better.” 

Girtz recalled seeing Rocky II at a mall in his native Norfolk, VA, drinking Orange Juliuses and working at a record store there. “The nature of malls has been that they’re on a long and dramatic decline,” he said.

Commissioner Dexter Fisher compared the mall redevelopment to Selig Enterprise’s failed Walmart project, which later became the student housing complex The Mark. “We let the opportunity slide through,” he said. “That was jobs, that was economic development… We have an opportunity to really bring something to life for this community.” 

The jobs, though, will mostly be low-paying ones, and there is no consensus on how many of them the development will create. Two analyses of the economic benefits yielded widely differing results, Caitlin Dye, the business development and incentives coordinator for the ACC Economic Development Department, told commissioners at a work session last week. One predicted that it would create 1,050 jobs, another 350. The jobs would mainly be retail and restaurant positions paying an average of $35,000 a year.