Atlanta Public Schools superintendent Meria Carstarphen. (CASEY SYKES, CASEY.SYKES@AJC.COM)
Photo: Casey Sykes/Casey Sykes
Photo: Casey Sykes/Casey Sykes

APS says city 3 months late to pay $10 million from Gulch pact

Atlanta Public Schools is still looking for $10 million the city promised in January as part of an incentive deal to develop downtown’s Gulch. APS also wants reassurances the city will pay millions more it agreed to give the district in coming years.

The city payments would help replenish money the school system has used in recent years to balance its budget and could be used to pay for larger teacher raises and support early childhood programs.  

The city agreed to give APS $10 million as part of a pact the two sides approved Jan. 7. The agreement resolved a dispute over the use of future school property taxes to fund development projects, including the massive downtown Gulch project, and restructured the school district’s participation in several special taxing districts.  

The deal called for the city to pay the money on the 10th business day after the agreement was inked, but the school district has yet to get it. 

APS officials said the $10 million would go a long way to restore funds that the district has had to dip into in recent years to balance its budget. 

Superintendent Meria Carstarphen told school board members that the city has made it clear “for the last three months” that it is “not prepared to pay it.” 

“We have not seen an explanation that would justify no payment. They’ve made it clear that they have the money. They’ve made it clear that the money is available to go,” she told board members last week. “We’re still working with them every day in hopes that the money comes.”  

APS has a general fund budget this year of $818 million. 

Michael Smith, spokesman for Mayor Keisha Lance Bottoms, said the city is in the process of placing the $10 million into an escrow account and has been in “constant communication” with APS attorneys. 

He blamed the delay on a Jan. 14 lawsuit filed in Fulton County Superior Court that alleges problems in how the city and Atlanta school board went about approving the agreement. Claims against APS were later dropped, but Smith said the lawsuit against the city is pending.  

The city and school district “are working together on a solution if the litigation is protracted,” Smith said, in a written statement.  

“In contemplation of the successful outcome of the litigation, the city immediately set aside the $10 million in a designated account, where it remains today to be paid out under the agreement,” he said. 

The payment delay and concerns that the city won’t meet other financial promises is the latest wrinkle in years of conflict between APS and the city. Several years ago, they fought over Beltline tax funding after the city missed payments during the recession that it was supposed to make in exchange for using school property taxes to support the trail. 

In 2016, under former Mayor Kasim Reed, the city and APS reached a deal that paid the school district significantly less money that was first promised but gave APS more guarantees it would receive some money. 

The January agreement between APS and the city also called for the city to pay the school district an estimated $12 million on Jan. 5, 2020, from an Eastside tax-allocation district. That would be a recurring annual payment until the special-taxing district is closed. 

The money could be critical in helping APS pay for key items in its next budget, for the fiscal year that begins July 1. Those could include more generous raises for teachers and other employees; bigger stipends for teachers who take on extra duties; and the cost of converting dozens of bus monitors, who help out on buses ridden by special education students, to full-time employees who receive benefits. 

Though the Georgia Legislature approved a $3,000 pay increase for teachers in next year’s state budget, the amount APS stands to receive is not enough to pass along the full raise to all of its teachers unless the district kicks in additional money. 

The school board is considering a more conservative budget unless it receives clear signs from the city that the payment will be made early next year. 

The school district wants the city to set up a trustee to capture the money from the Eastside taxing district and automatically pay it to APS, an arrangement similar to how APS receives payments from the Beltline taxing district. Carstarphen said the city needs to work to set that up. 

“What would be great to know is that the settlement agreement is working, is being honored, is on its way so that you can plan appropriately,” she told board members. 

Smith did not respond to questions about the recurring payment from the Eastside tax-allocation district. 

The January agreement between APS and the city ended what had been a tumultuous few months in negotiating the Gulch deal. The massive mixed-use development includes up to $1.9 billion in public money, including potentially more than $300 million in future school taxes. 

The future of the $5 billion downtown development, supported by Bottoms, had been uncertain as APS officials objected to the use of the school tax money for it. APS wanted the city to renegotiate the school district’s participation in multiple tax-allocation districts, TADs, before agreeing to Gulch incentives. 

TADs are areas where property taxes are frozen for a period of time and future increases in tax collections, generated from rising property values as the area redevelops, are diverted to help pay for that development.  

The January agreement restructured how Atlanta school taxes are used to pay for development projects throughout the city and cleared the way for APS tax money to help pay for the Gulch. 

Members of the group Redlight the Gulch have filed a separate objection to public financing for the Gulch project. That objection is pending.

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