A controversial Brookhaven development and its tax break are a no-go at this point, the city has announced.

The city announced Nov. 18 that it is withdrawing a court petition for a tax break involving Dresden Village, a mixed-use plan on a 4-acre lot on Dresden Drive near Caldwell Road. The project is no longer “viable” for Connolly Investment & Development, according to a statement from city spokesperson Burke Brennan.

J.R. Connolly II, the CEO of Connolly Investment, said the company intends to make unspecified changes to the plan and reintroduce it later. The company could not amend the current tax abatement application and so had to withdraw entirely, he said.

A site plan of the 4-acre, mixed-use Dresden Village development. (Special)

“The city of Brookhaven and the Development Authority are disappointed about the loss of a quality redevelopment that augments and completes the Dresden corridor,” Brennan said in the statement. “The future revenues from this project would have positively benefited the city, county, and school board, while enhancing the corridor’s walkability, connection to transit at the Brookhaven-Oglethorpe MARTA Station, and ultimately the City Centre master plan area.”

“To clarify the city’s comments, we wanted to retool the project to really reflect what is going on in the world today,” Connolly said in a phone interview. “In order to make the project changes that we wanted to make, there was a technicality, if you will, that we can’t amend our request for validation. We basically have to withdraw the validation without precedent. … Once we are ready, we will come back.”

Asked whether political opposition to the project’s tax break from DeKalb County government and local residents played a role in the decision to withdraw, Connolly said, “You know, no, it really doesn’t.”

The project would have been a mix of more than 180 luxury apartments and seven condo townhomes, with 30,000 square feet of retail shops and restaurants.

Connolly would not specify what types of changes the company wants to make to the plan, but indicated that the pandemic’s impacts on construction, retail stores and the apartment market are factors. “2020 has been a very interesting year with a lot of changes, a lot of them accelerated by COVID,” he said. There is no specific timeline for changing and refiling the project, he said.

The original proposal, which won approval in August from the Brookhaven Development Authority for a property tax break worth up to $13.5 million under the code name “Project X,” had strained the city’s relationship with DeKalb County, and drew criticism from at least one county commissioner who said the 22-year abatement was going to be an unnecessary drain on county and school system finances. Local neighborhood associations recently joined the opposition as well.

The development was valued at about $61 million, according to the development’s project documents. The Brookhaven City Council, which operates separately from the development authority, approved a rezoning plan for the project in 2017 but did not have to vote on the tax break.

The site, currently occupied by a DeKalb County Tax Commissioner Office and a barbecue restaurant, spurred a 2018 lawsuit from a neighboring resident regarding possible zoning violations, which was settled with the developer. At the time, critics said more development in the area would create more traffic.

Development along the Dresden Road corridor — which is just east of Peachtree Road and the Brookhaven MARTA station — has boomed in recent years, mostly through similar multistory, mixed-used complexes.

The tax break had to be approved by the court before it went into effect and a date had been set for Dec. 1. The county and the DeKalb County School District had won approval to intervene in the hearing  to “make their case against the development, which also drew criticism from some residents as unnecessary and lacking transparency. The developer said the tax break was needed because the development would include streetscape and traffic changes.

The county and the school district claimed the development authority’s valuation of the development is invalid because it was done without consulting the county Board of Assessors. Because of that, they claimed, the court also couldn’t approve the bonds because confirming such a valuation is an overstep of its power.

The county and school district also claimed the development authority violated the state Open Meetings Act because it passed the tax break “under a veil of secrecy,” according to the county’s brief. The county called the Aug. 12 development authority meeting agenda “grossly deficient” because it only referred to the development as “Project X.”

Attorney Chris Balch, who represents the city and the development authority, argued that the county and school district couldn’t intervene because they were not residents of the city.

–By Holly R. Price and John Ruch

Update: This story has been updated with comment from the developer.