Guarding Against Blight

Forsyth County, Ga., is a booming, affluent soccer-mom suburb of Atlanta, where BMWs crowd the community's bustling Wal-Mart parking lots.

Forsyth County's planning department, facing a 30% increase in commercial development since 2000, became one of a few jurisdictions around the U.S. this year to propose controversial requirements for developers called demolition bonds.

Governments in Wisconsin and North Carolina have debated such bonds, which are upfront deposits local governments demand from developers to cover the cost of tearing down and clearing a retail project, if it goes dark.

Such a measure in Forsyth County would have applied to retail projects larger than 75,000 sq. ft. and required developers to post a bond of more than 110% of the estimated demolition cost before the county would issue a land disturbance permit. The county could have recouped the bond and razed the development, if it went unused for a full year.

But local developers balked at the idea, claiming the policy would stifle development. “There were some very upset folks,” says Ted Sandler, an Atlanta attorney and the Southeast government relations chairman for the International Council of Shopping Centers. Local attorneys wondered aloud if the measure — applied only to retail projects and not industrial or office properties — would pass constitutional muster. Members of the local lending community questioned whether they could back new retail projects, if their collateral assets could one day be razed by the county, Sandler says.

Other Atlanta suburbs with comparable growth in past years have been coping with the blight caused by miles of empty shopping strips, says Michelle Beesten, a senior planner for Forsyth County.

Nearby Gwinnett County has 500,000 sq. ft. of darkened or under-used retail along one of its main drags. In Roswell, Ga., a few exits south of Forsyth, a quarter of the commercial space along its primary traffic artery is empty.

Forsyth wanted to make choices about its development on the front end, before the county was left with empty projects, Beesten says. Demolition bonds were simply a means of enforcement.

Before the county voted to approve the demolition bond requirements, Beesten and her department hosted work sessions and invited local developers and retailers. There was give and take between both sides, and “attitudes modified,” Sandler says. Ultimately, planners decided to drop the demolition bond proposal.

Across the country, other such measures have similarly petered out before becoming official policy. Charlotte, N.C., debated, but later dropped the idea. And even the town that Forsyth used as a model — Wauwatosa, Wis., near Milwaukee — discussed, but then backed away from, enforcing demolition bonds.

“I don't know of any that have passed. There have been some proposals, all of which we've opposed,” says Herb Tyson, vice president of state and local government relations at ICSC in Washington, D.C. Governments wouldn't require business such as banks or airlines to post such a bond, Tyson says. “They're wholly unfair and don't make a lot of sense.”

But the issue of how communities around the country cope with maturing retail sites is not going away. Gwinnett County's business and civic leaders, and those in other metro Atlanta districts, are trying to come up with ways to encourage the redevelopment of vacant space.

Retailers have joined the trend as well. Wal-Mart, the biggest of the big- box retailers, has implemented a re-use program that finds new tenants for the spaces the company leaves behind.

And Forsyth County's compromise with developers may become an acceptable model for other jurisdictions trying to balance growth, Sandler says. “Nobody likes blighted areas.”

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