Beltline dispute worsens as attorneys swap threats, documents show

Atlanta Mayor Kasim Reed and former schools superintendent Erroll Davis have traded barbs and legal threats over millions owed by the Atlanta Beltline, a verbal spar coupled with pledges from the men to reach a compromise.

But letters sent between APS and city attorneys, obtained through an open records request, reveal those talks have worsened and may be heading to litigation — a move that could hinder the city’s efforts to build out the green space project.

A law firm hired by APS sent a scathing letter to Reed’s administration last week accusing city leaders of a breach of contract over the Beltline agreement.

Troutman Sanders partner Daniel Reinhardt demanded the city and Invest Atlanta, the economic development agency overseeing funds to the Beltline, submit millions in late payments to avoid the “trouble and expense” of a “protracted legal action.”

City Attorney Cathy Hampton countered this week with accusations APS is falsely portraying the Reed administration as uncooperative and said the school system has ignored its own role in the financial fiasco. Describing the missive as “threatening,” Hampton said while the administration would prefer to “work toward resolution,” it “always stands ready and willing to litigate.”

In the letter, the city’s top attorney took shots at APS’s internal struggles. A lawsuit, she said, would divert the system’s attention away from fixing its low graduation rates, budget woes, underfunded pension and reputation as more than a dozen former district employees now face trial in connection with test cheating.

The exchange reflects the ongoing tension between city and APS officials, and comes amid heated and public debate over how to resolve the problem. At stake is the future of Atlanta’s wildly popular green space project, which aims to turn a 22-mile loop of dilapidated rail lines into a necklace of parks, trails and transit.

For more than a year, Atlanta and APS leaders have been in talks over a multi-million contract to fund the Beltline that all parties agree is now —- in a post-recession world —- unsustainable.

Under the deal struck in 2005 and amended twice in 2009, the Beltline uses a portion of property tax revenue that would have gone to Fulton County and to APS. In exchange, city officials agreed to make fixed payments from the Beltline’s tax allocation district, or TAD, to the school system and Fulton County that rise over time, peaking at $16 million a year and totaling $162 million.

The long-term goal is that after the Beltline’s is complete by 2030, those payments will stop and APS will reap the rewards of better communities and higher property tax revenue.

But the Beltline’s revenue projections were decimated by the recession, and city leaders say it’s unable to meet the terms of the deal.

APS — facing its own financial constraints — says the city’s failure to live up to its end of the Beltline bargain harms the school district. School leaders say they’re owed as much as $19 million in late payments and fees, a figure Atlanta officials refute.

The behind-the-scenes talks went public earlier this year when then-superintendent Davis told The AJC that “all options” are on the table to enforce the contract, including a lawsuit. Reed then compared Davis’s stance to a hostage situation and later openly criticized Davis and APS board chairman Courtney English for their leadership.

This story is developing. For more, return to

UPDATE: A fuller version of this story is now available at MYAJC.COM.

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