How Atlanta Real Estate Leads the Way on Big Infrastructure

In many American downtown areas and commercial centers, improvement districts are used as tools for revitalization and economic development. But what if they could tackle larger needs? Better yet, what if commercial real estate owners could attract billions of public dollars and, in the process, create a new way to build infrastructure??

Commercial Real Estate Gets in the Game

Commercial real estate owners and developers play a major role in shaping urban landscapes. Many consider their investments extending beyond their property lines since the adjacent public realm significantly impacts them. It was that belief that led to the creation of the first improvement districts in the U.S. in the 1970s.

Over the following decades, improvement districts were adopted and adapted throughout the country. They had different names like business improvement districts (BID), community improvement districts (CID), and special services areas (SSA), each with distinct abilities. However, they shared similarities in that districts consisted of concentrated commercial centers; they were enabled through legislative action; and they functioned as mechanisms for property owners to collectively raise money through self-taxation.

The pooled funds were spent on projects and services important to the property owners. The funds enabled businesses to improve street conditions, provide security, and much more. In many cases, the money leveraged municipal and government funds. This stretched local dollars further, enabling capital improvements like sidewalks and streetscapes. With this, commercial real estate had gotten into the game of attracting and influencing public investments.

Doing It Differently

The idea of commercial real estate owners pooling funds to advance otherwise public projects took hold in Atlanta in the mid-1980s. Soon, state legislation was passed enabling CIDs and the first was launched in 1988. From the start, this CID was different. The submarket it served was not a downtown with public safety and redevelopment needs. It was a suburban submarket still growing into its own. Its needs were proactive, not reactive. The car was king and the area needed roads—lots of them—to make sure it was accessible to the greater region.

The CID was the mechanism to assemble the people, money, and political will needed to do just that.

Creating a New Model

From the start, the CID saw itself as the means to expedite projects, specifically, paying for pre-construction activities such as engineering and environmental work. This emphasis on “first-in” funding to jump-start projects that did not yet have money for right-of-way acquisition nor construction was a gamble that the commercial real estate owners took on.

Preparing the projects proved to be the secret sauce as it gave public agencies a valuable partner who brought financial, technical, and political resources to the table. Together, they got things built. Over time, real estate values grew and with that so did the CID’s revenues. The district was deploying millions, which attracted 10 times that in public sources, putting the submarket at an advantage due to its organized approach.

Imitation Is the Sincerest Form of Flattery

It was not long before other submarkets around Atlanta took note and created their own CIDs. Although the projects varied, the approach was the same—advance infrastructure by funding plans and designs in order to attract construction funds.

The Council for Quality Growth estimates that since the 1980s, $1.5B in CID assessments have leveraged $5B in public infrastructure funding in metro Atlanta.

These efforts paid off handsomely. CIDs around metro Atlanta built interchanges and expanded major commuter corridors. In-town commercial submarkets addressed more urbanized needs such as capital-intensive streetscapes and parks. Those areas with CIDs found eager public partners to help position, maneuver, and fund projects through these effective public/private partnerships.

Changing the Paradigm of Public Investment

In the early days, commercial submarkets with CIDs were at the forefront of attracting public investments. Their local commitments advanced the CIDs’ projects to the front of the line and created mutually beneficial public/private partnerships.

This successful formula changed the paradigm of infrastructure development. These public/private partnerships became part of the fabric, with CIDs claiming an important role in the infrastructure development funding structure and pipeline.

In the early years, those submarkets with CIDs had a competitive advantage, but with 31 now operating in the Alanta region, that opportunity has given way to necessity. Now, emerging commercial centers need CIDs in order to effectively compete for public funds.

What’s Next?

Like the real estate submarkets they serve, CIDs evolve their projects around their local communities’ needs. Throughout the 1980s–2000s, those needs were focused on vehicular mobility. Since then, however, metro Atlanta’s CIDs have evolved their project investments to emphasize more multimodal and placemaking projects. Pedestrians, cyclists, transit riders, and others deservedly receive just as much attention as those who drive cars. Along with broader project types, their organizational structures have evolved as well. These welcome trends demonstrate the flexibility of these improvement districts as powerful mechanisms responsive to commercial real estate needs.

What started as a means to help build a singular submarket in metro Atlanta changed more than that; metro Atlanta’s commercial real estate interests have found a tool to help them build big.

About the Author: Malaika Rivers specializes in building commercial real estate portfolios and communities through strategic public-private partnerships between CRE owners, developers, and governments. She is a leading expert in Community Improvement Districts (CIDs) and advises on their best use as powerful tools for real estate and economic development.

This article originally appeared in full in the Urban Land Institute's online publication, 'UrbanLand'. For more information, please visit ULI to read the full article.