The head of the Atlanta Beltline says the ongoing contract dispute between the city and Atlanta Public Schools is hindering the greenspace project’s growth.
Paul Morris, CEO of Atlanta Beltline Inc., told Beltline board members that the conflict has already had a “material impact” on the organization, because its future financial obligations are uncertain.
“It has made it virtually, physically and legally impossible for us to get loans, to sell bonds, to interact with investors and go to our banks with opportunities,” Morris said on Wednesday, when the board met and approved the nonprofit’s annual budget.
Mayor Kasim Reed's administration and APS officials have largely been in a stalemate over funding of the greenspace project for two years, publicly trading barbs while working to sway public opinion. Per a 2009 agreement, the city receives a portion of the school's property tax revenue for Beltline development. In exchange, it agreed to make $162 million in fixed annual payments from the Beltline tax allocation district, or TAD, to APS.
But, citing the effects of the economic downturn, the city has withheld two payments worth $13.5 million from the Beltline TAD. Another $7.5 million is due in January, but the budget submitted last week once again does not include that expense.
Beltline officials say they can’t make the payments without effectively halting the project’s development. For context, about a third of the Beltline’s $62 million annual budget is expected to come from the tax allocation district. Beltline officials said most of that money goes to cover bond debt, leaving little left over for Beltline growth.
School leaders note that APS is the largest contributor to the Beltline TAD and say the city is shirking its financial obligations, affecting the school district’s bottom line. They’ve asked to be paid what is currently owed.
Beltline board members Cynthia Briscoe Brown, who represents APS, and Atlanta Councilman Andre Dickens voted against the budget because it omitted another payment to the school system.
“We sat here a year ago and said exactly the same thing,” Dickens said. “If we are to be honest about it, ongoing negotiations for something of this scale, for something of this importance, should be complete.”
Morris, and Beltline board chairman John Somerhalder — the CEO of AGL Resources — both said they, too, are frustrated. Atlanta Beltine Inc. manages the Beltline’s daily operations, but isn’t a party to ongoing negotiations.
“Everybody agrees this needs to move forward and we need to continue the success,” said Somerhalder, who voted in favor of the budget, pending ongoing talks. “I have the same frustrations. I just come to different conclusions.”
Somerhalder has publicly stated that APS should receive annual payments equal to 5 percent of Beltline revenue, which he says was the basis of the original agreement.
APS officials have not yet agreed to that, as it could mean the school district would give up around $100 million over the life of the contract, which expires in 2030.
“While we recognize the fact that the Beltline’s economic condition has changed, so has ours,” said APS Board Chairman Courtney English, noting the district has dealt with its own budget constraints due to the recession, austerity cuts and rising costs.
APS leaders say the city, which oversees the Beltline, isn’t prioritizing payments to the school system as required, noting that the Beltline TAD is current on its obligations to Fulton County.
In an interview with The Atlanta Journal-Constitution on Wednesday, Reed said he believes the city and school district are nearing a make-or-break moment for negotiations.
Reed said the city and schools had reached a tentative compromise in December, but that the deal fell through. English, for his part, said that he and Reed agreed on parts of a deal last winter, but hadn’t ironed out all of the issues.
“We’ve been very close a couple of times and I’m hopeful we may be able to resolve it,” Reed said.
If not, the issue could ultimately lead to litigation — a move that could halt the Beltline in its tracks.
Reed has touted the Beltline, an internationally renowned urban revitalization project, as yielding $2.4 billion in private investment — a success that boosts both the city and APS’s bottom line through increased property tax revenues and improved communities.
“It seems to me that to the extent that the Atlanta Beltline continues to boost and support and inflate the city’s property tax digest, that is better for the Atlanta Public School system,” he said.
English expressed willingness to establish a timetable for completing negotiations with the mayor.
“We’ve got to find a way, and I think we can find a way, that makes sense for the Beltline, the city of Atlanta, and especially for the kids of the city,” he said.
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