Centennial Yards Takes Advantage of Atlanta Incentives to Fund New Construction

The scope of the project, as reported Thursday, has changed. The developers have outlined a nearly 6 million square foot project, with residential and hotel uses being the largest future uses in terms of square footage. Office towers were not included in the project presentation, a reflection of the difficult post-pandemic office sector – although the development team said offices are not excluded and potential office tenants are research.

Still, Centennial Yards remains one of the largest projects in Atlanta history and one that could transform a 50-acre tangle of railroad tracks and grassy parking lots located 40 feet beneath the viaducts between Five Points and State Farm Arena .

Ben Vera, vice president of CIM Group, said the bond issues will allow the developer to tap capital markets to raise funds to quickly begin construction of the project’s 8-acre main entertainment district, the heart of Centennial Yards, which was first reported by The Journal-Constitution of Atlanta. He said the long-awaited project was gaining momentum, including two towers currently under construction.

“It is very useful to be able to show two construction cranes to all investors,” said Vera. “It’s no longer a pipe dream. This is happening today, and with the proceeds of these bonds, it will continue to happen.

Credit: Miguel Martínez

Credit: Miguel Martínez

Centennial Yards had to meet certain benchmarks before the developer would have access to bond issues and public financing, according to the 2018 agreement approved by the Atlanta City Council.

Credit: Chantiers du Centenaire

Credit: Chantiers du Centenaire

The developer has already built the Steele Bridge, replaced 1,300 linear square feet of century-old sewer pipes and converted the former Southern Railway freight depot and office building into 162 apartments that are mostly rented. An attached shopping area called Canyon has also opened with Wild Leap Brewery and other dining options coming soon.

Vera said the influx of capital contributes to the developer’s goal of delivering the entertainment district exterior by 2026, when Atlanta will host eight World Cup matches. The entertainment center will include four new buildings and a plaza for fan events. The neighborhood’s building interiors and most tenants likely won’t be ready to open until early 2027.

Invest Atlanta CEO Eloisa Klementich said the bond issues do not commit any new funds or incentives beyond what has already been approved by the city.

“No new funds,” she said. “There is no more money coming from the general fund. More money from the city and no increase in incentives. It’s just monetization.

Klementich declared changes to the project were not significant enough to impact the city’s incentive agreement.

The current plan includes 2.8 million square feet of residential space, 1.7 million square feet of hospitality space, 900,000 square feet of retail and 6,000 parking spaces. A 300,000 square foot data center is also in the works.

The bonds will be sold to investors, who will be managed and underwritten by JPMorgan Chase, DA Davidson & Co. and Truist Securities. The developer will repay the bonds through future sources of tax revenue generated in Centennial Yards.

Credit: Miguel Martínez

Credit: Miguel Martínez

“In a tough market in general, having a situation where bond funds are receiving liquidity from their investors creates an opportunity for us to enter the market and be well received,” Vera said.

The bonds will be issued from two sources: an “enterprise zone” created by the city under state law for Gulch Redevelopment and the Westside Tax Allocation District. The Enterprise Zone allows the developer to collect 5 cents of the 8.9-cent sales tax on retail sales to reimburse bond investors. The TAD uses future property taxes created by new developments to repay the bonds.

The issuances approved Thursday do not exhaust the amount of taxpayer-backed bonds the developer can access for the project, meaning the Centennial Yards team can make further requests during later phases of development.

Brian McGowan, president of Centennial Yards Co., said the project would not be feasible without these government partnerships and financing tools.

“Today was a really good day for the continued revitalization of downtown,” McGowan said. “Without (these public-private partnerships), it would be impossible to transform these 50 vacant acres in the heart of our region – which currently generate little or no value for anyone – into a vibrant mixed-use project that will create jobs and housing affordable. , tax revenue and new opportunities for Atlantans.

The future of downtown

This story is part of an occasional AJC series examining the future of downtown Atlanta. Several high-profile developments are poised to bring billions of dollars to the city’s heart as it continues to grapple with the fallout from the COVID-19 pandemic and a tough real estate financing market. Downtown will also soon attract international attention when the World Cup comes to Atlanta in 2026, providing a deadline for the city and downtown stakeholders to make promised improvements.