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How does Beltline grow?
Cousins network helps Developer's associates cultivate project
DAVID PENDERED
2132 words
July 18 2005
The Atlanta Journal - Constitution
Copyright (c) 2005 The Atlanta Journal-Constitution, All Rights Reserved

The Beltline --- Atlanta's biggest proposed project in recent history --- is being steered by a political and business network closely connected to one of the city's premier developers, Tom Cousins, the founder of Cousins Properties Inc.

Cousins' son-in-law, for example, is president of the Atlanta Development Authority, the agency that Mayor Shirley Franklin put in the driver's seat of the campaign for the proposed Beltline and the creation of a special tax district to pay for it.

Lisa Borders is a senior vice president in Cousins' marketing and government affairs office and also president of the Atlanta City Council. The City Council would have to approve the tax district.

Franklin, who's making economic development a cornerstone of both her mayoral legacy and her bid this year for a second term, won office the first time with Cousins as co-chair of her campaign. Franklin once worked for Cousins' nonprofit family foundation on a project in east Atlanta.

Industrial developer A. Ray Weeks was named by Franklin to lead the Beltline Partnership, a steering committee with the mission of making the Beltline a reality. Weeks is a joint venture business partner of Cousins in developing industrial distribution space in Henry County.

Just last month, Cousins Properties acquired a condominium development company, Gellerstedt Development, which has long held an undeveloped tract of property on the Beltline site.

Cousins and Gellerstedt have done projects together for years. Larry Gellerstedt III and his father ran Beers Construction for more than three decades and built several of Cousins' key developments in Atlanta, including the Bank of America Plaza and 191 Peachtree Tower in downtown Atlanta, and the Pinnacle in Buckhead.

A financial analyst who tracks Cousins Properties said the combination of Gellerstedt's condo experience with Cousins' retail and office development operation sets the stage for Cousins' dramatic entrance into Atlanta's booming market for intown mixed-use projects.

"This acquisition clearly signals Cousins' intention to be more active in mixed-use," said Cedrik Lachance, a senior associate with California-based Green Street Advisors. "It seems Atlanta is where they would start because of the expertise they have in that market."

There's no indication that Cousins' relationship with Atlanta's leadership has influenced planning or the outcome for the Beltline. Nor have the city officials sought to hide their past or present dealings with a company whose stock is valued at about $1.5 billion. Nor is there an indication Cousins is acquiring land along the Beltline or eyeing partnerships for Beltline projects.

But lots of people are talking.

"It just begs the question of whether or not the business community is the power behind the throne for the Beltline," said state Sen. Vincent Fort (D-Atlanta), who's never been bashful in describing his view of the city's political machinery. "More importantly, it begs the question of who City Hall is being run for."

Borders' only comment on the question of her executive role with Cousins and development in the city: "I was elected by the citizens of Atlanta and I answer to them and to them alone. Period."

Several smallish Atlanta developers said they would not comment publicly on a company that has as much influence in Atlanta as Cousins. Several members of the Atlanta City Council were equally circumspect.

"People do have relationships," said Councilwoman Felecia Moore.

Councilman C.T. Martin, who has represented southwest Atlanta since 1990, doesn't pull any punches.

"It's not the developers who are running the show, it's one developer --- and it seems to be Cousins," Martin said. "The influence may not be direct, but there are so many ways for the tentacles to be out there."

For example, Martin said, Franklin staffers have told him they're not going to study the feasibility of four other possible special tax districts, despite the council's nonbinding resolution requesting the study. That means the proposed Beltline district won't have competition from districts in other parts of the city.

The Beltline district would eat up most of the city's remaining tax digest that's eligible under state guidelines to be included in a tax allocation district.

"That's unfortunate, because we have an opportunity to promote balanced growth in our city," Martin said. "But the deal makers are the real estate people and the developers, and at the rate they're going, they're going to do all the development in the northeast and just promise the rest."

Cousins' son-in-law, Greg Giornelli, asked the city's ethics board in 2003 to consider whether he had a conflict of interest if he took the job --- at least partly at the behest of Franklin --- as president of the Atlanta Development Authority.

Giornelli was Franklin's chief policy officer working on big-picture issues such as writing the city's ethics code. Ethics was a big deal when Franklin took office in 2002, as allegations of influence peddling swirled around City Hall during the two terms of her predecessor, Bill Campbell.

The specific question to the ethics board was whether a conflict existed "based on his personal and financial interests in a real estate development company that may seek funding from a city tax allocation district."

The ethics board ruled there was no inherent conflict for Giornelli. The development authority serves as the city's economic development arm and dispenses an array of financial incentives.

Giornelli is married to Cousin's daughter, Lillian Cousins Giornelli. She serves on the board of directors of Cousins Properties and is chairman and CEO of Cousins Foundation Inc.

In Giornelli's current position, his main task is to manage the mayor's campaign to create the Beltline and its special tax district.

"Everything about the Beltline and the way ADA does business is transparent and ethical and with full integrity," Giornelli said.

He said this would be his only comment on his relationship with Cousins and the Beltline.

And Weeks, Cousins' joint venture partner, said, "Under some unusual circumstance, which is not in the plans, which is Cousins' doing [industrial] buildings along the Beltline, I would not participate. I am committed to my pledge to not acquire properties along the Beltline."

Condos cause disquiet

The Beltline is the biggest urban redevelopment proposal in Atlanta in decades.

Not even the construction projects in advance of the 1996 Summer Olympic Games promised the transformative effects, or carried the price tag, of the Beltline.

A projected $20 billion in new homes, shops and offices are expected to flank the Beltline's network of green space and transit. The Beltline itself has an estimated cost of up to $3 billion, funds that city leaders intend to raise through the proceeds of the special Beltline tax district.

This concept was laid out in a report produced in March by the mayor's Beltline Steering Committee. Its 12 members were appointed by Franklin, and its work was closely monitored by the development authority.

The committee's favorable findings were no surprise, given that Franklin had come out in support in December. That's when the mayor released her "New Century Economic Development Plan," which embraced both the Beltline and a special tax district to pay for it.

The mayor's plan put the development authority in control of seven of nine action items regarding the Beltline.

Today, the mayor said, "I expect this to be a real highlight of the city's work over the next decade, so I am very, very excited about the Beltline."

The premise of the Beltline is that the public pieces can be created with the property taxes spun off by dense new developments. The concept sounded so good that few concerns arose over the past year.

Public sentiment changed abruptly in June, when two high-rise condo towers were proposed alongside a corner of Piedmont Park. Trammell Crow Residential said it would build towers of 38 and 39 stories on about 7.4 acres it intends to buy from Wayne Mason, a Gwinnett County real estate investor who bought nearly 5 miles of Beltline property last year.

Trammell Crow Residential is no stranger to the Beltline. Its executive managing director, Michael McGwier, served on the mayor's Beltline Steering Committee.

The potential profits of such a large-scale urban redevelopment have attracted the interest of many national developers. Another of Cousins' development partners is among them. In a joint venture, Cousins and the Related Group, of Florida, recently broke ground for a 54-story residential tower facing Miami's famed Biscayne Boulevard. The Related Group has talked with Mason's group about buying land along the Beltline.

Future projects possible

Cousins' chief executive, Tom Bell, is an influential thinker on shaping metro Atlanta's growth. Bell chairs the executive committee of the Metro Atlanta Chamber of Commerce's board of directors. A task force that Bell chaired last year approved a set of sweeping guidelines to address the region's growth that could be a guidebook for the Beltline.

The chamber's recommendations encourage local governments to voluntarily increase density in some areas. The greater density would allow governments to get more bang for bucks spent on roads, water and sewage. And the density would allow more people to live closer to their jobs and check suburban sprawl, the chamber's task force concluded.

When the task force was completing its report, Bell said, "We need to make some changes, because if we don't we'll overwhelm our infrastructure. ... Fortunately for us, there's a lot of market momentum moving in this direction."

When asked about his role with the chamber and Cousins' interest in the Beltline, Bell said in a prepared statement, "For over 40 years, Cousins' employees have supported the metro Atlanta community through their volunteer involvement in civic affairs. We continue to do so today. This commitment to our community is part of a great Atlanta tradition of public-private partnership. It should not, and will not, in any way adversely affect our ability to successfully run our business, serve our shareholders or support our city."

Cousins' business --- joining forces with condo builder Gellerstedt, who launched his own construction company for multifamily housing in 2003 --- now is capable of building the very kind of dense residential and mixed-use developments endorsed by the chamber's task force.

Gellerstedt, now president of Cousins' Office/Multi-Family Division, is leading a new chamber task force to encourage local governments and developers to implement the recommendations crafted by Bell's task force.

Cousins and Gellerstedt, meanwhile, are collaborating on a condo project in Midtown called 905 Juniper. At eight stories, the project is a virtual prototype for the type of development Beltline advocates have expected to line the route.

Gellerstedt said Cousins had no plans to develop his property on the Beltline path at North Avenue, and added, "We are not pursuing any office or multifamily projects along the proposed Beltline at this time --- but we cannot preclude the possibility of future developments in the proposed Beltline districts."

When asked if Cousins did pursue Beltline development, and would seek funds from the tax allocation district, Gellerstedt said: "Cousins Properties has never pursued a TAD and has no TAD applications with the city of Atlanta at this time, but we cannot rule out the possibility of pursuing TAD projects in the future.

"TADs are programs with strict boundaries and qualifications and involve oversight and approval from both the Atlanta Development Authority and Atlanta City Council... We assume Lisa Borders and Greg Giornelli, given their professional and family relationships with our company, would recuse themselves from the approval process."

For Reprints in the Original Format: http://www.ajc.com/info/content/services/info/reprint2.html

ID: 0000899678 Type: Photo Name: COUSINS.JPG_962540.JP_1867963 Date: 07/18/2005 Page: E5 Edition: Home Pub: AJC Caption: T. LEVETTE BAGWELL / Staff Tom Bell (left, beside Cousins) is Tom Cousins' chief executive and a power in the Chamber of Commerce. Growth guidelines he helped write last year could be a guidebook for the Beltline. | ID: 0003567707 Type: Photo Name: Cousins 04.JPG_1867940 Date: 07/18/2005 Page: E5 Edition: Home Pub: AJC Caption: KIMBERLY SMITH / Staff Tom Bell (left) discusses Cousins Properties' acquisition of the firm of Larry Gellerstedt (right), which owned a Beltline tract. | ID: 0001700759 Type: Graphic Name: 0003623073CousinsTree_1868195 Date: 07/18/2005 Page: E1 Edition: Home Pub: AJC Caption: DALE E. DODSON / Staff Illustration of a tree features depictions of Tom Bell and Tom Cousins on the tree trunk. The branches of the tree feature depictions of Ray Weeks, Larry Gellerstedt, Greg Giornelli, Shirley Franklin and Lisa Borders.

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