Monday, June 29, 2009

525 Moreland

Jeanne Bonner at Atlanta Unsheltered drew my attention to the 525 Moreland Ave development. This piece of property is an old Masonic lodge that Cartel properties had plans to convert a while back. I think they were planning on some loft office and maybe even some music space.

Jeanne is concerned that the 525 property could be indicative of an Inman Park Properties situation. This is property owned by Cartel Properties, which actually reminds me of IPP a little bit because they both have invested in many vacant, semi-historic properties in "transitioning" neighborhoods. You can find some older renderings of the 525 development, as well as the plans showing the above rendering, on their website by scrolling through the 'properties' section. (Boo for unlinkable java!)

Cartel owns a considerable amount of property in the city, including quite a few interesting buildings. Cartel is owned by George Rohrig, who is one of the money guys behind lots of Novare deals (he is the Rohrig of the Rohrig-Loudermilk venture). Unlike IPP, Cartel has a history of successful deals - one of their earlier developments was the 805 Peachtree building at Fifth Street, a former Social Security administrative building. I have a few friends who live in the building, and I think it is one of the best buildings in town. Great location, good quality renovation work, ground floor retail, covered parking - but it doesn't try and do too much.

Still, Cartel owns a decent amount of vacant property. Their townhome/live-work development down Moreland at Ormewood has gone through quite a few selling agents, but still hasn't sold well. They successfully redeveloped a commercial lot across the street, where Little Azio and the new location for Spoon are. I know they have vacant property in Kirkwood, as well.

Cartel owns quite a lot of very valuable retail space, however, much of which is doing quite well. This includes property in Buckhead, as well as the Taqueria del Sol in Decatur, and the Zocalo/Nickimoto's plot in Midtown. If they didn't have as much income-producing property, I'd be more worried about their less-than-successful development work. I wonder how their investments with Novare is going these days (although I bet they made a ton of money during the boom).

I think 525 Moreland is a good location, but I'm not sure about the current timing. I'm also not sure if East Atlanta can support the rent levels that kind of new development needs to be successful. I'd personally want to start off with a lower priced offering, like a conversion of the Gordon school into cheap loft apartments with surface parking. I also think being right on Moreland can be a tough sell for the residential units in the plan. Again, I like the location, I'm just not sure it is ready for what they are proposing yet.

Media round up on Inman Park Properties

Creative Loafing and the AJC both have in depth articles on Jeff Notrica and Inman Park Properties collapse, something I speculated on when the Clermont went up for sale in April. Creative Loafing did the hard work of cataloguing all the foreclosures last week, though. Both make the connection between Notrica's habit of collecting rare coins and seemingly collecting old buildings. They make it seem almost pathological.

h/t A is for Atlanta for drawing my attention to the CL article as I went through my rss feeds this morning.

Wednesday, June 24, 2009

Inman Park Properties collapsing

This doesn't particularly surprise me, but Creative Loafing has the run-down on the many properties once owned by Inman Park Properties that have since gone into foreclosure. I had actually been meaning to say something about this, since I noticed the former offices of IPP had "bank owned" posted on the for sale sign outside it.

Anyway, if you are looking for some interesting property, IPP used to own a bit. In particular, I have always thought that the John B. Gordon school in East Atlanta would make excellent lofts.

While I am a bit conflicted about how I should feel, part of me takes a certain piece of satisfaction in seeing these properties foreclose. A lot of these properties are very marketable, and should have been making money. In fact, IPP often bought them at decent prices. But they just sat on them. I presume their "business plan" was to flip them down the road for more money, because they sure weren't doing anything else with the buildings.

In the mean time, areas like East Atlanta had to deal with vacant and neglected properties. IPP has literally let the Gordon school sit and rot. I have had reason to walk by the school every week for the last four or five years, and it makes me sick to see it in the condition it is in. There are little trees poking out of the second story windows.

Why didn't IPP sell these properties when the market was hot? Everything I knew and heard about them was that they weren't willing to part with the property for reasonable prices. So big surprise that everything falls apart. As one of my real estate professors liked to say, "you don't go broke taking a profit."

Still... I have to remind myself that there is a real person behind these foreclosures who is going broke. Watching your real estate fiefdom collapse has to be depressing, and I should probably strive for a bit more sympathy. But what did they think was gonna happen?

When will it end?

The drama continues - the city cut off the Peachtree-Pine homeless shelter's water again, the shelter got a court to force the city to turn it back on. I understand that in the short term, you can't have a shelter with hundreds of homeless folks in it have no running water - it is unsanitary and a health hazard, etc.

But.... they haven't paid their water bill in at least two months, and they owed money before that! They owe the city $180,000. What do all the folks protesting the "unfair" actions of the city suggest be done? The shelter has repeatedly missed court-mandated deadlines for payment. If they can't pay their bills, the water has to get shut off eventually. I'm sure there are plenty of cash-strapped organizations who would love to get a free pass on their water bill, but that's not how things work.

I don't see why the Peachtree and Pine shelter is special. They have good intentions, I'll give them that, but they clearly do not have the functional ability to operate a shelter and even break even. They don't have reliable funding sources and policy experts say their service model doesn't work. Why should they get to leech money from city coffers? Good intentions simply aren't enough when we are talking about $180,000.

Tuesday, June 16, 2009

A rant about greenspace

Of all the issues facing the city, I would not put a need for more greenspace in the top five. Off the top of my head, my top five issues would be:
  1. Police Department and Crime
  2. Transit
  3. Finances and operations management
  4. Public school system
  5. Affordable housing
Nevertheless, some folks think it is important. A new civic organization, the Parks Atlanta Rescue Coalition, wants to devote one mill of property taxes to almost double the budget for parks operations. They like to point out that compared to other cities, Atlanta has a minuscule amount of parkspace. They would be correct, but whenever I hear that fact I like to point out that the vast majority of the city is made up of single family homes, and that many of these homes have back yards. Trying to compare us to cities like Chicago or New York isn't particularly fair, since we have far less density.

One of my biggest pet peeves is that the BeltLine kind of got hijacked by the parkspace brigade. I have always felt that the transit portion of the BeltLine was the most important piece for the city's long term future. The associated park space was an added benefit, but the transit was more important. However, when the Mayor finally got on board with the BeltLine, all we heard about was the "emerald necklace" of parks we'd be getting. All the money and time went to buying parks and designing parks. The transit, we are told, will take decades. Thats great - we'll add some new greenspace while the infrastructure of the city rots.

My list above are what I see as necessities for a well-functioning city. Without these things, it doesn't really matter how many parks you have, because no one will want to live in your city. They either won't feel safe, can't get around, can't depend on the city to provide basic services, won't raise their family here, or simply cannot afford to live here. AFTER all those things, I'm concerned with things like greenspace.

Well done, City Council

Kudos are necessary when the City Council is willing to stand up to the Police Department and the Mayor's office. The Council has subpoenaed police records on behalf of the Citizen Review Board. The CRB absolutely has to have the ability to actually investigate the APD, which means they must have access to records.

I have previously blogged on this subject, and generally speaking the City Council has stood by the CRB. The APD clearly doesn't like the CRB, which in my mind is a reason it is needed.

Saturday, June 13, 2009

I say something good about Mary Norwood, and more thoughts on the APD

Scott Henry has a pretty good post about Mary Norwood's response to Kasim Reed's call to scale back the city's tax increase from 3 mils to 1 mil. Reed has suggested Norwood didn't have any ways to pay for ending police furloughs. Norwood's response is basically, "cut other departments," but she also points to a 12-point plan she put out in March. I missed it then, so I thought I'd comment on it now.

First, I suggest you go read her plan. It is too long to copy, but not so long that you can't read it real quick and then come back here. Considering this is one one of the most important issues facing the city, and she is one of the three legitimate candidates, you should really take five minutes to know what she has to say.

Okay. First, Scott is right that she still doesn't have a plan to pay for it all. However, I like a lot of the ideas. More cops are good, pay raises and competitive benefits are good, and you probably need to do the second to do the first. I also like the broken-windows theory stuff - when I dated someone over on the west side of town this was something I thought about often. Simple code enforcement and street clean up goes a long way to making people feel safer and deterring an atmosphere which allows crime to perpetuate.

I am curious about her "move cops from behind the desk onto the street" idea. I don't know enough about the police department to know if you can realistically do that - are there cops that COULD be working the street that are stuck at City Hall East behind a desk, where you could replace them with an administrative assistant-type person? Would that be cheaper to train and easier to keep, allowing us to free up resources for on-the-street cops?

I think the"'get Atlanta cops to buy Atlanta homes" idea is good on paper, but will run into problems. First, the kind of homes Atlanta cops can buy would be crappy homes and/or in the rough parts of town. Most cops would prefer to live in the 'burbs, as much as I think that sucks. Second, helping that many cops live in the city would be VERY expensive. I'd really want to know how she intends to help - it sounds like she wants to use vacant/foreclosed homes. Not sure how many cops are going to jump at that offer.

Still, this is more than I've heard from the other candidates in terms of concrete ideas beyond "more cops" and "end the furloughs". I'm actually a little inclined to give Norwood a pass on the "how do you pay for it" stuff. Until you get into office it is hard to know ... wait a minute. How long has she been on the city council? Since 2001? How many budgets has she voted on? WTF? She should know what she is going to cut.

Things I'd like to see added to her 12-point plan (which sounds juuust a bit to campaign-gimmicky for my tastes):
  • Reform the police department - do a thorough analysis of their organizational structure and culture to determine why morale is so low. Replace senior management, i.e. Pennington. Analyze their business processes to determine where cuts can be made, how to improve operations to help make officers' work easier. By "business processes" I mean the things that the police do to conduct their business - how do they go about booking people? Filing reports? How are shift changes managed?

    I got a ticket the other day for rolling through a stop sign, and it took the officer FOREVER to write up the ticket. First, this was an officer that could have been doing something WAY more useful than waiting for folks to roll through stop signs on the way to the gym (he had two more folks pulled over in the same parking lot when I left the gym an hour later). Couldn't we have traffic officers who aren't "full" cops doing this? Second, why did writing a ticket take ten minutes? Figure out what is taking him so long to write down my name and the fine, so that he can get back out on patrol.
  • Work with state and county legislators to find ways to reduce recidivism. One of Mark Kleiman's ideas is to reform the parole system so that penalties are smaller, swifter and more reliable. He writes:
    ... the criminally active population overrepresents not only those with poor noncriminal opportunities, but also the strongly present-oriented, reckless, and impulsive. This latter group has exaggerated versions of the normal human tendencies ... to give undue weight to the immediate future over the even slightly longer term, and to underweight small risks of large disasters by comparison with high probabilities of small gains. Thus, efforts to control crime by increasing the severity of punishment will quickly hit the point of diminishing returns.
    Maybe put together a metro-wide group to look into our criminal justice system, because Gwinnett and DeKalb are having crime issues, too.
  • Get the police better gear. This is something that I've heard (second-hand) is a constant complaint among officers. Officers are using older, heavier equipment. Get 'em new, reliable equipment so they don't have to carry around as much weight all day, and so they can move faster in emergencies.
  • Think big - I'd like someone to explore the idea of using that 3-mill tax increase to transform the APD into a "best in class" type of department. I think you could sell the city on a tax increase if you said, "Listen, the APD is fucked. So let's spend as much as we have to in order to get it right. We are going to get new equipment, hire world-class consultants to restructure the department, re-configure the business processes, make it a goal to have the best police department in the country." Do for the APD what we did for public housing - develop a model that the rest of the country wants to copy.

Friday, June 12, 2009

Eon going into foreclosure

I don't have much to say about this particular development going belly up, but I wanted to highlight it for one main reason. Some legislators have criticized MARTA for entering partnership deals like this one (particularly this deal, I think). I don't particularly like the AJC's framing of the situation:
One half of the residential component of MARTA’s transit-oriented development at the Lindbergh station may be in jeopardy of foreclosure.

A published legal notice says the condominium project Eon at Lindbergh —- a key piece in MARTA’s strategy to win more riders through hassle-free commutes —- will be sold to the highest bidder July 7 on the steps of the Fulton County Courthouse...

Though MARTA officials say the real estate implosion was beyond the transit agency’s control, the failure may represent a crack in its strategy for growth.
I don't think Eon's failure really has that much to do with MARTA. MARTA didn't design the building, manage the marketing, or put any money into the deal. MARTA sold the developers the land, helped come up with the master plan for the area around the MARTA station 10 years ago. They also put in at least $80 in infrastructure for the early phases of the development with Carter for the Bell South office components (although I have no idea how much of this was improvements to the station, etc.)

Lindbergh City Center has okay retail going right now (Taco Mac, Longhorns, Chili's), large Bell South offices, and an apartment complex that is 97% occupied. The overall development probably helped spur much of what is going on right now nearby - Lindbergh Vista apartments, the redevelopment of Lindbergh Plaza, and Lane's Lindmont redevelopment. I think MARTA also gets leasing revenue from the Bell South building.

My point is that the big picture for the City Center project has been good for the city, and in my opinion is far preferable to what Piedmont Road used to be. It isn't just about MARTA's plan to grow ridership, but it is about transforming the city and spurring smart growth. City Center certainly could have been done better on many levels, and it didn't always spur exemplary growth (ahem, Sembler's Lindbergh Plaza), but it was a big step in the right direction and shouldn't be used as an opportunity to pile on MARTA.

Tuesday, June 9, 2009

New DOT commish will probably suck

I am catching up after taking a bit of a break, so this news is a week or two old. Maria Saporta reported that Vance Smith is the most likely person to become a new DOT commissioner. That'd be a big disappointment, but not much of a surprise.

I generally see Vance Smith as part of the problem - he is from rural Georgia and owns a construction and earth grading business. I haven't been able to verify if the earth moving business means "road building," since the only number I can find for the company is disconnected. It is possible, however. He was also a big player the House's gutting of Perdue's DOT restructuring that I was ultimately not a fan of.

As chair of the House Transportation Committee he's largely responsible for what gets through that committee, which is to say not much that is worthwhile. I was pleased when Gina Evans nee Abraham was named commissioner instead of Smith. I suspect that Smith will simply continue DOT's history of politically motivated decision making, although I have been wrong before.

DeKalb: Don't give in to Sembler

I haven't yet commented on Sembler's recent request to the DeKalb Development Authority for help with the Town:Brookhaven. Sembler wants the DDA to give them a 20-year property tax abatement via a lease-purchase agreement. Sembler's argument is pretty much the same argument that developers always use for these sorts of subsidies:
We simply and realistically put on the table the possible consequences of not proceeding with this project as initially envisioned. As we laid out the financial benefits of our proposal, we also emphasized that Sembler’s proposed abatement would not take away any taxes that the county or the school board presently collect. We seek an abatement of future taxes; taxes that do not exist today because the property is not developed; taxes that will not exist if the project is not built.
I have in the past generally supported development incentives like TADs, because they have proven to be rather useful tools to spur investment in undeveloped areas like downtown. Is this Sembler deal the same sort of situation?

Not really. Town:Brookhaven is not the sort of project where public involvement should have been necessary for the development to happen. Typically, these sorts of subsidies are given out along a "but for" criteria - the developments would not get built but for the public subsidy. Sometimes this criteria is more of an unwritten rule, but the general idea is to preserve subsidies for projects that serve a public good and are really needed. Affordable housing developments, for example, often have difficulty making the numbers work, so a subsidy like this can help make the project possible.

Town:Brookhaven was underwritten and construction began a long time ago, in a nice part of town. Sembler's problems are a result of not forseeing the real estate crash. Generally speaking, Town:Brookhaven isn't the kind of development you expect to get a subsidy like this.

Still, Sembler is correct that as an investment, DeKalb won't see the tax revenues for Town:Brookhaven as soon without the subsidy. I doubt it will take 20 years for them to build out the project though, and their argument doesn't necessarily separate Town:Brookhaven from any other development deal - if their logic holds, then ANY development should qualify for public subsidies. Basically, Sembler is trying to assume that DeKalb will see Town:Brookhaven as being too big to fail (have we heard that before?).

For the most part, I agree with the neighborhood opposition in this case. However, what about an alternative? Sembler could let the DDA take a look at their books, and make them a development partner. Make them an equity partner or get a low-interest construction loan. If Sembler really needs the extra money to keep the deal afloat, they'll be interested. This way, DeKalb would prevent a large development site from sitting empty, without feeling like they are giving the farm away.

If, and this is more likely, the issue is that Sembler is trying to boost their IRR because they made a bad investment decision... well, DeKalb would be setting a pretty awful precadent if they helped them out. The project won't tank, and Sembler will build it out over 5-8 years instead of 3-5 years (these numbers are purely conjection on my part). It probably isn't worth giving up 20 years of tax revenue to jump start the project a few years.