An Atlanta council member stepped up her questioning Wednesday of whether Mayor Kasim Reed’s administration violated the law when it authorized a nearly $9.1 million payment to the Atlanta Public Schools last month without council approval.
In a tense finance committee hearing, District 9 Councilwoman Felicia Moore made her case for why she believes Reed’s office overstepped its bounds by quietly dipping into the general fund to help settle the Atlanta Beltline dispute.
The city council previously authorized $4 million to help bring an end to the long-running conflict. But, in late December, the city’s chief financial officer pulled another $5 million from the city’s coffers to make what Reed has called a “good faith payment.” Moore believes the administration, which remains in negotiations with schools officials, was required by city law to first ask the council for the additional money. She first raised her concerns last week.
“There is a reason we have a charter. There is a reason we have code sections,” Moore said. “And if we don’t follow them, then we don’t follow our procedure, and then we don’t follow the law we are supposed to be governed by and that we swore to uphold.”
City Attorney Cathy Hampton, who faced tough questioning by Moore over the payment, pushed back against accusations of wrongdoing. Hampton believes the 2009 agreement that established the Beltline tax allocation district, which the council approved, gave the city all the clearance it needed.
“The charter has not been breached. No illegal activity has taken place,” she said.
All council members say they are eager for the city and schools to reach a resolution. The existing agreement requires the city — in exchange for using a portion of school taxes to build its parks and trails — to make $162 million in a series of fixed payments back to APS. The payments were intended to be made using the taxes collected with the Beltline tax allocation district, or TAD.
The city has withheld the past two years of payments — saying the Beltline TAD can’t afford it — and was facing another $7.5 million payment on January 1.
If it hadn’t paid, it would have exceeded a $15 million debt threshold and been in default of the contract, a move that would have had financial ramifications for the Beltline’s ability to expand its network of parks, trails and transit.
Reed has previously said the city has four years to resolve such a default. But earlier this week, he told council members that making the $9.1 million payment was critical to avoiding it.
“All we’re trying to do is prevent the Atlanta Beltline from becoming insolvent,” Reed said on Monday. “Council has expressed its judgment that you all want this matter resolved. We were in an environment where we were trying to reach a resolution and it was during a holiday period. The city attorney said we were within our rights.”
Reed has argued that the city is doing the same thing it has done in the past, when he said it fronted the money to make its last Beltline payment — $1.95 million in late 2013 — and was reimbursed by the Beltline tax increment fund. He contends that the $9.1 million payment is similar, and added that the city will be repaid by the Beltline fund in 30 to 60 days.
The mayor’s office did not draft any formal paperwork or legislation, however, outlining the terms of that repayment.
Moore said the mayor is incorrect. She said the recent payment is different because it used general fund dollars, and not tax increment outlined and approved in the 2009 contract. What’s more, she presented evidence on Wednesday that the previous Beltline payment had been approved by Invest Atlanta and wired directly from the Beltline tax increment fund.
Reed’s staff maintained the administration was not in error.
So far, only Moore and Councilwoman Mary Norwood have openly criticized the mayor’s office over the issue. Council members Alex Wan and Yolanda Adrean have asked pointed questions about the transaction, but stopped short of declaring it a violation.
Councilman C.T. Martin, a Reed ally, called for some leniency as the mayor continues to negotiate what all describe as a high-stakes deal.
“I think the options are to spank his hand or let him continue to negotiate until it’s resolved,” he said.
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