But the price inflation is not expected to derail the redevelopment of the Franklin Road corridor, said Mayor Steve Tumlin.
Thursday’s vote marks the first deal reached since voters passed a $68 million bond referendum Nov. 5, with most of the money going toward buying up and bulldozing apartment complexes city officials say are past their prime.
The council’s vote was to enter into a contract to purchase the 348-unit, 24.32-acre Flagstone Village Apartments, 849 Franklin Road, from Atlanta-based TriTex Real Estate Advisors Inc. at a cost of $12 million.
The deal is expected to close before Dec. 19.
Marietta now owns 50 acres of contiguous land on Franklin Road that backs up to Interstate 75, but “too much good news” has caused a stunning jump in prices, said Tumlin.
In late September, the council put the 386-unit, 25.2-acre Woodlands Park complex under contract for $7.9 million.
Flagstone Village has about 38 fewer units than Woodlands Park and comes with one less acre of land, but the city has agreed to pay $4.1 million or 52 percent more for it.
The purchases come after Marietta voters approved raising their property taxes by up to 2 mills so the city could issue its $68 million in general obligation bonds, with the majority going to fund the redevelopment of Franklin Road and the rest for new sidewalks along Whitlock Avenue.
Passage of the bond and the announcement of the Atlanta Braves intention to move to the Cumberland area of Cobb inflated prices, Tumlin said.
“If we could have had another month from the Braves you wouldn’t have seen it,” Tumlin said. “There’s a lot of excitement out there.”
Tumlin says the higher prices means the city will buy “maybe half a complex less.” Still, he thinks the city will see a higher return on its investment.
“The future probably is brighter because of that (Braves announcement),” Tumlin said.
Council voted 6-1 Thursday to place Flagstone Village under contract. Councilman Anthony Coleman cast the lone dissenting vote during a special meeting held after the deal was discussed in a closed session.
Coleman said after the meeting he thinks some property owners were “licking their chops” after the bond passed and hiked their asking prices.
“The cost of what we’re paying for some of these properties might be too much,” Coleman said.
Though neither sale is official yet, the city is gearing up for what to do when it takes ownership of the aging apartment complexes, most of them built in the mid to late 1970s.
The council also voted on Thursday to pay the Marietta Housing Authority for maintaining the apartment complexes after the city buys them. The authority will manage the apartments until they are emptied of residents and razed.
The city will pay the authority $4,000 per month or 10 percent of the authority’s expenses, whichever is higher for each complex it manages, said Ray Buday, director of the Housing Authority. Expenses will go down as the occupancy of the apartments falls.
“Things don’t run themselves,” Tumlin said. “We do not have an apartment management division in our city.”
Buday said the authority will make sure the apartments remain a safe place to live but may forego some repairs.
“They have a right to live there if they choose and while they’re there if their refrigerator breaks, we’re going to fix it.” Buday said. “If they get a minor hole in the wall, we might not fix that. We’re going to tear it down.”
A similar agreement was formed after the city purchased Preston Chase apartments in 2010. That was a smaller complex with fewer residents, but Buday said the Housing Authority is ready to take on the project.
“There’s a level of confidence that comes from ‘we have done this with Preston Chase,’” Buday said. “We dealt with the same population and the same circumstances.”
No monetary assistance will be given to residents who need to relocate, but authority staff will help residents look for new apartments.