The city of Atlanta owes the Atlanta Public Schools millions in connection with the Atlanta Beltline project. And APS Superintendent Erroll Davis says by the end of this month, he wants a plan to collect.
Davis says all options for ensuring APS gets what it’s owed are on the table, including a lawsuit.
It's unclear if the long-running, complex negotiations over the Beltline debt can be resolved so quickly. But Davis, who will retire this summer, told the Atlanta Journal-Constitution he wants to resolve the issue before new APS superintendent Meria Carstarphen takes office in early July.
Davis said “all options are on the table” for APS, including continuing negotiations, litigation, and alternative dispute resolutions such as mediation.
On Monday, the APS school board met in a session closed to the public to discuss potential litigation in regard to the Beltline.
APS Board Member Cynthia Briscoe Brown, who also sits on the Beltline board, said she believed there is "a strong appetite" on the APS board for resolving the issue quickly.
“We feel like we were elected to clean up a lot of messes like this one,” she said.
The city of Atlanta declined to answer questions about the Beltline debt or discussions with APS.
“The City continues to engage in good faith negotiations with APS and we are hopeful that we can reach resolution in the near future,” Melissa Mullinax, a spokeswoman for Mayor Kasim Reed, said in a written statement.
The city and APS agree that the school district is owed money in connection with the Beltline. But they disagree on how much is owed and how the district should be paid.
Here’s how that debt to APS came about:
To pay for its parks, trails, transit and development, the Beltline uses a portion of property tax revenue that otherwise would have gone to Fulton County, APS and Atlanta. It’s an arrangement called a tax allocation district, or TAD. The original Beltline TAD was created in 2005 under former Mayor Shirley Franklin’s administration.
In exchange for the Beltline receiving a portion of property tax revenue throughout the life of the TAD, which expires in 2030, city officials agreed to make fixed payments to the school system and Fulton County that rise over time, peaking at $16 million a year.
In addition to those fixed payments, city officials also agreed to make other payments to APS and to give the school district land to be used for recreation.
The idea is that after the Beltline’s 22-mile loop is complete by 2030, the payments will stop and APS will reap the rewards of better communities and higher property tax revenue.
But then the recession happened.
The recession devastated the Beltline’s revenue model. Today, the Beltline’s TAD revenue projection is about a third of what was originally expected. That means the tax allocation district hasn’t generated as much money as anticipated. But the city still owes APS.
The payments are set amounts — and the current agreement doesn’t allow them to be changed if Beltline development falls short of projections.
Payments are scheduled to stretch out over 17 years and total $162 million. Officials from APS, City Hall, Atlanta Beltline Inc. and Invest Atlanta, the city agency that oversees each of Atlanta’s 10 tax allocation districts, have been meeting for several years to renegotiate payment terms.
The city has paid APS some of the money owed. But APS says it's owed about $19 million. That's more than the Beltline TAD is expected to bring in over the next year.
"The Great Recession created a significantly contracted economic reality, less than half of what was envisioned in 2005, which prompted the commencement of renegotiations in early 2012," Atlanta BeltLine, Inc. spokesman Ethan Davidson said in a written statement. "Because the BeltLine TAD increment projection for FY 2015 is $17.86 million, there quite simply aren't $19 million available in the BeltLine TAD."
Still, APS says the city could meet its obligation through other city funding sources or through property and service concessions — like supplying APS with school police officers or water service or land for a bus yard.
The city and the school district have traded lists of possible concessions.
But Davis said he was “not optimistic” about the negotiations. And Davis said he was frustrated that the city’s latest offer — in May — was so far away from the school district’s initial offer.
The city’s May offer “did not contain most of the things that we wanted. It contained things that we did not want particularly,” he said.
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