The AJC’s Katie Leslie has been following the disputed $19 million debt owed by the Beltline project to the Atlanta Public Schools from the perspective of the Mayors office and the City Council. As she notes in her article titled “A Beltline primer: History of creation and current conflict“, the issue is complex and has a convoluted history.
While negotiations on the issue have been ongoing for over a year, a resolution has yet to be found. As a result, retiring Superintendent Davis indicated that all options were on the table – including a lawsuit – and Mayor Reed responded with some challenging remarks (see here).
In an effort to move the negotiations forward, the City Council was briefed on the issue (see here and here) and will meet with the APS Board of Education on Tuesday at 10 a.m. for further discussions. Reed will be the lead negotiator for the City and Davis will represent APS in further discussions (see here).
The AJC provides further background on the issue,
The Beltline’s relationship with Atlanta Public Schools began in 2005, when then-Mayor Shirley Franklin led the charge to create the Beltline tax allocation district, or TAD.To do that, she needed buy-in from the school system and Fulton County.
Under the Beltline TAD, schools, the county and city agreed to freeze the amount of property tax revenue they receive for the life of the tax district. Any new property tax revenue, or increment, is reinvested into the project.
The idea is that after the Beltline’s 22-mile loop is complete by 2030, the payments will stop and all parties will reap the rewards of better communities and higher property tax revenue. But the Beltline TAD is different. For a variety of reasons, Franklin’s administration agreed to make fixed payments to APS through 2030. It also agreed to make fixed payments to Fulton County through the TAD. It’s current on those payments, which are lower than the APS agreement.
The use of school property tax revenues to fund the project was challenged in court and the court ruled against the use of the funds for the Beltline. The state legislature stepped in and,
… with the assistance of then-State Sen. Kasim Reed — to take the question to Georgia voters in a referendum in 2008. Voters ultimately approved the measure, ratifying the state constitution to allow the use of school taxes for tax allocation districts. The Beltline was back in business, but then faced the wrath of the recession.
The result? The Beltline TAD hasn’t made as much money as once projected. When Franklin and former Superintendent Beverly Hall brokered the deal, the TAD was expected to fund 60 percent of the Beltline. It now accounts for just a third of the project’s funding.
The lower than expected property tax revenues placed the Beltline in a bind – they needed to fund development and pay the promised amounts to APS. Per the contractual commitments made,
- The Beltline TAD is on the hook for fixed payments to APS totaling $162 million through 2030.
- The Beltline’s first payment of $1.95 million was paid late last year. It’s now behind on a $6.75 million payment.
- The same contracts gives APS nearly $10 million and land for recreational purposes, neither of which have been fulfilled.
- APS says the Beltline is currently behind on nearly $19 million total when including other debts. Atlanta Mayor Kasim Reed disputes that figure.
However, the Beltline project does not have the financial capacity to make the payments due and the City, that was a party to the original contract, is now responsible for the outstanding amounts. In addition,
During the time of the legal challenge, property tax revenue that would’ve gone to the Beltline was held in escrow and not invested in the project….about $26 million, a mix of escrowed and 2009 TAD dollars. According to that agreement, the money wasn’t credited toward the Beltline’s debt.
APS has offered a series of alternatives that the City can use as payment on the debt, including some use of the Civic Center, city water service, school resource officer services (police), pension obligation relief and land for bus yard in the industrial corridor (see APS’s entire presentation here). The City replied with an offer of school resource officer services (police) and wide-area network connectivity.
The school district found the offer to be inadequate and that’s when the issue went front and center in the newspapers.