OFS project on hold after court ruling

LAWRENCEVILLE - A Monday court decision invalidating part of the funding for a popular redevelopment mechanism is a "significant blow" for a proposed mixed-use development near Norcross, the developer's attorney said.

Michael Sullivan said following a Monday Supreme Court decision that ruled school funds cannot be used for non-educational purposes, the mixed-use OFS project at Interstate 85 and Jimmy Carter Boulevard is on hold.

"It's something that took the wind out of revitalization's sails, I'll tell you that," Gwinnett Village Community Improvement District Director Chuck Warbington said. "I'm trying to see through black clouds right now."

The ruling concerned the Atlanta Beltline project and other so-called tax allocation districts, which would use increased property taxes for schools, cities and counties gained by redevelopment to pay for infrastructure improvements in the areas.

But because property taxes paid to the county school system account for 60 percent of all property taxes in Gwinnett, the decision would significantly increase the amount of time it would take to pay back infrastructure improvements on the land occupied by fiber optics company OFS and at all similar projects.

Sullivan said prior to the decision, developer Mallory and Evans was "very close" to filing a rezoning application with the county.

"At this point, the project is on hold," Sullivan said. "There may be other ways to fund the massive infrastructure improvements that would be necessary. We're open to exploring any viable options in that regard."

Voting in November, nine Gwinnett cities, including Norcross, approved referendum that would allow them to create tax allocation districts. The first time the measure was voted on in the county, it failed.

Despite the wrench the Supreme Court ruling threw into the mechanism's usefulness, County Administrator Jock Connell said Gwinnett officials will still push to have voters decide whether the districts should exist countywide on the July ballot.

Still, Connell said the court decision makes tax allocation districts less viable.

Sen. Curt Thompson, D-Norcross, said he and other legislators are working to write a constitutional amendment that would carve out an exception to the school tax problem and allow school boards to make the decision about the taxes themselves.

The amendment could be drafted today and be filed by the end of this week, Thompson said. It would have to go on the November ballot before becoming law.

"Everyone recognizes it's a problem," Thompson said of the ruling.

Louise Radloff, a longtime member of the Gwinnett County Board of Education who represents schools in the Gwinnett Village CID, said she thinks tax allocation districts have merit.

The districts would allow the school system to freeze taxes in areas that were spiraling downward, she said, letting the schools recoup the money in areas that are deteriorating in value.

Radloff said allowing school tax funds to go toward redevelopment would pay off for the school district in the long run.

"We would make the money back, then more," she said. "We've got to go back to the drawing board and rethink how we're going to turn this community around."

The 129-acre OFS project has been compared to downtown's Atlantic Station, and is considered a catalyst project for redeveloping the Gwinnett Village CID. It would have as much retail space as the Mall of Georgia and about 1,000 residential units.

Sherry Salyer, an OFS spokeswoman, said the company had no comment about how the Supreme Court ruling would affect the mixed-use project.

This is the second mixed-use proposal on the land. In 2006, OFS sued Preferred Real Estate Investments, a Pennsylvania firm that planned to buy and develop the property.

OFS claimed the real estate developer did not pay $5 million it owed for the purchase. The case was settled last year.

Warbington, with the Gwinnett Village CID, said he was told after a Monday night meeting with Mallory and Evans that the developer was not walking away from the project just yet. If the law does not change to allow increased funding, though, he said the company probably will.

"It's a huge disappointment," Warbington said. "This was a real project. It's devastating for revitalization efforts in the southern part of Gwinnett. Without a (tax allocation district), they cannot redevelop the OFS property, period."

Warbington said his concern was not only for OFS, but for all other projects in the county impacted by the decision.

In Suwanee, City Manager Marty Allen said he still plans to continue seeking a tax allocation district for the Suwanee Gateway, an area near Interstate 85 and Lawrenceville-Suwanee Road.

While there is not one developer for that project, Allen said the 500-acre area could still benefit from becoming a district, even if there was a 60 percent reduction from the $35 million the city expected to reap after the redevelopment was complete.

Allen said he is still evaluating the impact that reduction would have on the Suwanee Gateway. But he said the city still considers the districts to be "very valuable" tools.

"We will be studying it and seeing how to best use it moving forward," Allen said. "It just happened 24 hours ago. We'll evaluate all the potential impacts. It certainly will impact us."