From complex tax deals, legal challenges to the great recession, the history of the Beltline is a complicated story even those in power are still studying.
“I think people are still trying to understand why this is an issue,” said APS Chief Financial Officer Chuck Burbridge. “It’s in the bowels of finance that people aren’t used to looking into.”
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.
Former school board chair Mike Holiman said APS insisted on fixed payments to ensure it could meet the financial impacts of increased development. It’s less clear why Atlanta leaders agreed to those terms.
Those payments weren’t set to begin for several years into the project to allow the Beltline to get off the ground.
Here’s where the conflict begins.
The Beltline says it’s unable to pay because of two major setbacks: a lawsuit, which for a time derailed the project until the state legislature amended the law, and the recession, which largely stalled the development it needed to thrive.
John Woodham, an Atlanta attorney known for crusading against property tax abatement deals and who is recently challenging the use of hotel-motel taxes for the new Atlanta Falcons stadium, initially won his court battle against the use of school taxes to build the Beltline.
That led the state legislature — 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.
That’s left Atlanta Beltline Inc. — created in the years following the agreement — scrambling to find new funding sources. ABI also uses a mix of private funds and grant dollars to build out its $4.3 billion vision.
Katy Barksdale, who sat on the APS board when the deal was signed, said no one could have predicted the devastating impacts of the recession.
“Our thinking at the time the deal was struck was it was a fair deal for everyone,” she said. “I don’t think anyone anticipated the bottom would drop out and the tax revenues would be so much less coming in.”
Now the city and APS are clashing over a few key elements of the agreement, which was signed in 2005 and amended twice in 2009 following the litigation.
- The Beltline TAD is on the hook for fixed payments to APS totaling $162 million through 2030. The obligation is higher than the original 2005 agreement, which based the fixed payments on 5 percent of anticipated revenue, and totaled $150 million.
- 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. The Atlanta City Council authorized giving APS land in recent years, but the school withdrew its acceptance because it didn’t want the offered property.
- APS says the Beltline is currently behind on nearly $19 million total when including other debts. Atlanta Mayor Kasim Reed disputes that figure.
It gets even messier. 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.
Some say those funds were pledged to be returned to the Beltline. The state legislature, when amending the constitution to allow the use of school taxes for TADs, made it possible for those funds to be applied retroactively.
Still, APS and city officials ultimately signed a new contract in 2009 agreeing to let APS keep the funds — 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.
City and APS officials have been negotiating for the past few years over amending the deal, but talks have so far been unsuccessful.