The Dunwoody Development Authority approved Nov. 9 $34 million in tax abatements to the developers of the State Farm complex in the Perimeter Center to cover costs to construct two new office towers.
Dallas-based KDC had asked for an additional $15 million tax abatement for the building that is nearly completed on Hammond Drive across the street from the Dunwoody MARTA station, but pulled back that request after some Development Authority members raised concerns about approving tax breaks for a building already under construction; typically, tax abatements are awarded for new construction only.
The $34 million in property tax abatements approved this week to build new two Class A officer towers to be built on Perimeter Center Parkway will extend over about 17 years.
Dallas-based KDC, developer for the Phase 1 $650 million, 21-story State Farm regional center on Hammond Drive across the street from the Dunwoody MARTA station, sought the $34 million in tax abatements for its second phase to be able to start construction of the new buildings in 2017 rather than the originally proposed 2019.
“In addition to the thousands of jobs State Farm’s growth is bringing to the area, approximately $50 million will be invested during the development of the project for improvements benefiting the community,” said State Farm spokesperson Justin Tomczak.
“These improvements include: MARTA Connector and pedestrian bridge to maximize MARTA ridership, construction of east-west connector, Perimeter Center Parkway right-of-way dedication to increase use of under-utilized I-285 flyover bridge, right-of-way dedication for widening of Hammond Drive, multi-use trail and public spaces to connect to the surrounding trail and park systems,” he added.
The “east-west connector” is planned to be located on the southern edge of State Farm property that would nearly connect with the proposed Westside Connector, except for a short jog on Perimeter Center Parkway.
The east-west connector will extend to Peachtree-Dunwoody Road in Sandy Springs, where a major mixed-use development has been announced at the Palisades office park at 5901 Peachtree-Dunwoody Road.
Total cost of constructing the two new Class A office buildings is approximately $410 million and will include the construction of Building A, an approximate 14-story building and 680,000 square feet. Building B will stand approximately 10 stories with 460,000 square feet of space.
State Farm received the highest available tax abatement at a 95 percent, meaning it only pays 5 percent of property taxes its first year with the amount it pays gradually increasing to 100 percent over 17 years.
Property tax revenue generated during this time to the city is estimated at $8.1 million and the abatement at $3.3 million, for a net payment of more than $5 million.
While there is no official date of constructing the two new State Farm buildings, the demolition process wouldn’t begin until the end of next year at the earliest. There are still meetings planned through the end of this year to move forward with the process.
There was talk during the meeting of focusing on one building at a time. For instance, if the goal was to finish construction on Building A in 2023, it could be 2024 to complete Building B.
“The key is locking in and getting the deal done,” said Alex Chambers, Regional Vice President for KDC, at the Nov. 9 meeting
Dunwoody Development Authority Executive Director Michael Starling said he likes the location of the where the buildings will be because it will be close to I-85 and I-285, so it shouldn’t create too much added traffic within the Dunwoody community. He also mentioned that a deal like this isn’t out of the ordinary.
“We’re not doing something that’s outside the box,” Starling said. “These deals are done all over metro Atlanta.”
While it will likely be a few years before the construction process begins, Starling said getting the complex built and people into the building should be a 30-plus month process.
“We’re going to get people in there as fast as we can,” Starling said.
— Justin Fedich contributed.