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Politics & Government

Development Official Decries Hilton Hotel Tax Break

Planned location for dual-branded Hilton doesn't need development incentives, official says.

Atlanta Development Authority board member Julian Bene has a few qualms with a dual-branded Hilton Hotel being built in Midtown.

He wants developers to fork over what he calls their fair share in taxes. And he’s not alone in his displeasure.          

At issue is a proposed $44 million hotel at the corner of 10th and Williams streets, currently home to a surface parking lot. Plans call for an 11-story tower carrying two Hilton brands – The Hilton Garden Inn and Homewood Suites By Hilton – under one roof. The idea is to draw two distinct customer bases to the same location.

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The ADA, a group chaired by Atlanta Mayor Kasim Reed, voted Thursday morning to grant the project a $1.8 million tax abatement over 10 years. Bene cast the only dissenting vote on the nine-member board, he said. 

The hotel is projected to bring about 100 jobs. The abatement had support from non-voting, but influential politicians, such as District 2 Atlanta City Councilman Kwanza Hall, Bene said. Hall does not serve on the board of the Atlanta Development Authority.       

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But in a time when funding for the arts and parks operations faces major cuts, and the city in general is “terribly budget restrained,” Bene argues the money could be better spent. He thinks that the project or another like it would eventually sprout on such prime real estate anyway.

“If a hotel developer believes there’s a market for a new hotel on that spot … then I’d say God bless them. It’s a good use of land,” Bene said. “But I don’t see why an abatement is needed to get it to happen. My belief is we’re giving away money unnecessarily. This is money that the three taxing jurisdictions won’t see.”

Officials with North Point Hospitality Group, which owns the property, could not be reached for comment regarding the abatement Wednesday. They have repeatedly declined Midtown Patch’s requests for specific information about the project itself.

Brad Carmony, Hilton Garden Inn spokesman, told Patch construction on the 190-room project is slated to begin in the third quarter this year, with completion sometime in 2012.

“Atlanta continues to be a strong-performing market and desirable location for Hilton Worldwide,” Carmony told Patch.

Bene believes the $1.8 in tax abatements could be put to better use if channeled to the ADA itself, the city’s economic development arm.  

“The ADA does tremendously good work to bring jobs to the city and keep them in the city. That work needs to be funded,” he said. “Unfortunately, because the city is so strapped, we’re not getting adequate funding, and we’re losing the tiny staff that we have.”

The development authority has struggled with funding the last three years after breaking away from the city’s payroll. ADA leaders recently asked the City Council’s Finance Committee for $1.9 million in the 2012 budget, according to an article in the Atlanta Journal Constitution

As the city has bypassed the authority with financing to trim its budget, the ADA has been funded by its TAD and housing units, as well as loans, which are coming due, the AJC reported.

Bene isn’t the only public official to be critical of the recent ADA tax abatements.

District 7 Councilman Howard Shook, who represents Buckhead, was irked to hear the board had approved a “troubling” tax abatement in March for a 375-unit, luxury apartment complex on Pharr Road near the stalled Streets of Buckhead project. That move could save the developer 25 percent in taxes over a decade, Shook said.

In a statement, Shook said he learned of the arrangement months later, as the ADA can approve abatements internally without notifying the city council. Abatements were created to jump-start activity in under-invested areas, and Buckhead hardly qualifies as that, Shook argued.

“We needn’t resort to costly gimmicks to lure projects that would end up here naturally,” the councilman wrote. 

Bene said the Midtown hotel and Buckhead apartment developments are the only two projects to request ADA tax abatements since his tenure on the board began in September. His was the lone nay vote both times.  

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