The Atlanta Hawks is refinancing the $35 million construction loan for its Brookhaven practice facility and sports medicine complex through Black-owned banks in a groundbreaking deal the basketball team’s owner says shows it can be “a positive agent of change.”
The refinancing does not change an $11 million tax break the Hawks got for the facility through the city development authority. That deal has been controversial for its impact on another majority-Black constituency — public schools — and a DeKalb County commissioner says the team should give up the tax break if it is “serious about equity.”
The Emory Sports Medicine Complex, jointly operated by the Hawks and Emory Healthcare, opened in 2017 at 1968 Hawks Lane in Executive Park, an area that Emory intends to remake into a billion-dollar, mixed-use center.
According to a Dec. 10 press release announcing the refinancing, the deal was facilitated by the newly formed, Atlanta-based National Black Bank Foundation, which operates the Black Bank Fund, and involves a syndicate of banks led by Savannah-based Carver State Bank. The deal “marks the first time a professional sports franchise has had a significant loan underwritten exclusively by Black banks,” the release said.
The NBBF says that Black communities are underserved by banks, leaving many people vulnerable to high-fee lenders and services, discriminatory lending and other serious equity problems, which contribute to racial disparities in wealth and other financial troubles. At the same time, the NBBF says, Black-owned banks are dwindling, with only 18 left in the nation.
“Today’s announcement reflects our commitment to putting our values into action — by choosing to work with Black banks and drawing attention to the need for Black banks to thrive as they work toward addressing the lack of access to capital in Black communities,” said Tony Ressler, the principal owner of the Hawks, in the release. “We always strive to ask ourselves how the Hawks can best help those in the community that are already helping others, and today’s announcement is another step in our commitment to use the Hawks as a positive agent of change. This is both good for the community and good business to empower new and existing Black businesses.”
Robert E. James II, a Carver State Bank executive and chairman-election of the National Bankers Association, praised the deal in the release.
“What we earn from this loan strengthens our collective ability to provide even more loans and financial services to Black small businesses and consumers, and we are able to show our ability to pull off a large, sophisticated loan transaction,” James said. “Tony and his team are real allies in the movement for racial equity.”
The banking deal follows months of nationwide dialogues about race and racism in the wake of the police killing of George Floyd in Minnesota. That discussion has come to Brookhaven’s city government as well, which recently formed a Social Justice, Race and Equity Commission that is scheduled to begin meeting next week. Commission Chair John Funny is praising the Hawks’ move as a “tremendous act of providing economic opportunities.”
“Securing funding with Black-owned banks will have a significant impact on improving the fortunes of these financial institutions and provide for better economic mobility. The Atlanta Hawks is truly a trailblazer,” Funny said in a written statement. “And, with them having their Emory Sports Medicine Complex practice and training facility in Brookhaven, I’m proud to call them neighbor and a community business partner. It is essential to the progress and the sustainability of our united fabric to recognize diversity, equity and inclusion as a strength and not a mandate as we build the Beloved Community, especially here in the city of Brookhaven.”
Tax abatement controversy
The Emory and Hawks facility came to Brookhaven in a deal secretly crafted with government leaders, including the tax abatement approved by the Brookhaven Development Authority under the code name “Operation Windmill Dunk.” The development authority acted as a pass-through for the construction financing, using its tax-free status to offer a discount on property taxes worth an estimated $11 million. The Hawks agreed to make an annual payment in lieu of taxes, or PILOT, of $302,900 for 15 years, but only to the city and not to the county and state coffers that otherwise would have gotten a share. The city so far has used that money to buy a property on Buford Highway for a DeKalb County ambulance station.
According to city and Hawks spokespeople, the refinancing of the construction loan will not alter the abatement or the PILOT. “There have been no changes or restructuring from this financing,” said Garin Narain, the Hawks senior vice president of public relations, in an email.
Tax abatements granted through development authorities have become intensely controversial in recent years, especially in DeKalb and Fulton counties. The deals are intended to spur development by offering a short-term reduction in taxes on the hope that the development will lead to overall increased taxes later. Critics say that many of the abatements go to developments that would happen anyway, unnecessarily cutting into budgets, particularly for public schools. Last month, Brookhaven and a developer withdrew from a previously announced tax abatement deal for a project on Dresden Drive amid controversy from neighbors and DeKalb County officials.
The Hawks’ tax break was controversial, too. Shortly after its 2016 announcement, some county and state officials called for reforms that would require all local governments to be informed about and involved in such tax-break deals. One of those critics, DeKalb County Commissioner Jeff Rader, said in an email that the Hawks and the development authority should consider giving up the tax-break deal that they are “enjoying at our expense.”
“It is particularly appropriate that the Hawks not only seek to benefit Black capitalists by doing business with their banks, but also the children of our majority-Black school system, who are struggling as never before under the pedagogical and financial challenges of the pandemic,” Rader said in an email. “These are the least powerful but most needy of the stakeholders in this deal, and they certainly are a higher priority for me than tax abatement to rich team owners, and BDA consultants, advertising, professional staff, and ‘promotional’ budgets. If the Hawks (and BDA) are serious about equity, they will pay the taxes necessary to give these kids a future.”
Narain, the Hawks spokesperson, did not respond to a question about whether the team would consider ending or modifying the tax abatement.