Two years after being absolved of more than $100,000 in taxes and late charges on 13 properties, a nonprofit co-founded by the Rev. Martin Luther King Jr.’s widow and sister still isn’t paying its city and county tax bills.
The Historic District Development Corporation says it’s still recovering from the recession. It now owes $32,000 on the same 13 properties, according to the county tax commissioner’s database. Most are vacant lots and empty buildings that the organization acquired in Atlanta’s Old Fourth Ward neighborhood before the real estate market crash.
Unless the debts are settled, the properties could end up on the auction block.
HDDC officials would not consent to interviews and would answer only limited questions in writing. Executive Director Jesse Clark said in a January email that the bills would be paid that month. In a later written statement, he and board chairwoman Mtamanika Youngblood said the group will pay all its overdue taxes by the year’s end.
“We are working through our financial issues brought about by the recession, as are businesses and organizations all over the country,” the statement said.
Meanwhile, despite the organization’s financial struggles, the City of Atlanta plans to give HDDC up to $540,000 in federal funds to refurbish an empty apartment building, one of the properties with delinquent taxes.
The money will be given as a deferred loan, which won’t have to be repaid so long as the building provides affordable housing for low- to moderate-income residents for 20 years, according to the city’s Planning and Community Development Department. The funds can’t be used to pay taxes.
“The agency will be monitored to ensure compliance with all requirements including tax payments,” Office of Housing interim Director Derrick Jordan said in an email.
The situation frustrates some Old Fourth Ward residents, who say the auction process should have taken place years ago so that developers could have acquired the properties and built houses, doing away with empty lots that attract vagrants, trash and crime. The tax clearing kept that from happening.
“The Beltline is exploding,” Fourth Ward Neighbors president Matt Garbett said. “There’s a demand for property here.”
HDDC did much to create that demand. The nonprofit was founded in 1980 to help preserve the Sweet Auburn Historic District, a one-time center of black wealth where the Rev. Martin Luther King Jr. grew up and preached. HDDC, credited with helping to save the neighborhood from decay, is no longer affiliated with the King family.
“I have respect for their original mission, but they seem to think it’s OK for them to be held to a different standard than everyone else,” said Scott West, a former neighborhood association president who lives next door to the Irwin Street apartment building, where he says homeless people have slept and trash accumulates in the yard.
HDDC did not respond when asked to address neighbors’ concerns about the vacant properties.
The latest tax troubles raise questions about the wisdom of giving property tax breaks to a delinquent taxpayer, as well as how far the city is willing to go in bailing out the organization, said Jim Honkisz, interim president of the Fulton County Taxpayers Foundation.
Had the county sold liens against the properties or taken them to auction, he said, it would have generated money for schools, police, fire protection, libraries and courts, among other things.
The Fulton County/City of Atlanta Land Bank Authority, which forgave the taxes, should have placed requirements on the nonprofit to develop the properties within a certain time period, Honkisz said.
“I can understand why they didn’t necessarily want to take the property away from a nonprofit that has the legacy of Martin Luther King Jr.,” Honkisz said. “But that seems to me to be poor management, as far as the land bank is concerned. It winds up costing every other taxpayer in the city and Fulton County because of it.”
The land bank wanted to help out a nonprofit that provides affordable housing, Executive Director Chris Norman said, and some of those lots had been bought with federal grants that HDDC got from the city.
According to Clark, HDDC has redeveloped and preserved more than 110 single-family homes, built almost 500 units of multi-family housing and added more than 40,000 square feet of commercial space. It helped develop Studioplex, a former cotton warehouse converted into lofts and commercial and retail space.
“We hope they’re able to clear that up,” Norman said of the delinquent taxes. “But there’s no additional relief to be provided by us.”
Under state law, land banks can “extinguish” unpaid taxes to help spark redevelopment in downtrodden areas, and the Fulton/Atlanta land bank wiped out more than $83,000 in HDDC’s back taxes from 2008 to 2010. It also timed the transaction in a way that kept the nonprofit from having to pay another $19,000 in 2011 taxes, since the land bank owned the properties on Jan. 1 of that year before quickly returning them to HDDC.
It was one of only two times that the agency has ever forgiven taxes while allowing a delinquent taxpayer to keep their property, Norman said.
While it wasn’t illegal, land bank expert Frank Alexander, an Emory University law professor, called it a questionable use of power. The law was designed to allow land banks to clear past debts before passing properties on to new owners, he said.
According to tax documents, HDDC — which owns another 17 parcels in the area, including the historic Atlanta Life Insurance building — lost hundreds of thousands of dollars between 2008 and 2010. A financial report posted on its web site says it became profitable again in 2011 and 2012.
The statement from Clark and Youngblood said that during the past year, the nonprofit paid more than $28,000 toward overdue taxes, but that was apparently on other properties with unpaid bills. The county's tax database shows no payments have been made by HDDC against the $32,000 owed on the 13 properties in the tax-clearing deal.
“Several new development projects will break ground in 2013 as the market is recovering and we plan on continuing this development trajectory over the years ahead,” the statement from Clark and Youngblood said.
Garbett and other residents believe the city is propping up HDDC because of its legacy and its political connections. Atlanta City Councilman Kwanza Hall is a former HDDC board member, and County Commissioner Joan Garner is a former president.
Hall, who has lived in the Old Fourth Ward for more than a decade, said the people complaining wouldn’t be there if not for the work of HDDC, because the neighborhood wouldn’t be desirable. He said he sees nothing wrong with helping an organization with a track record of community improvement.
David Patton, a former HDDC board chairman who has lived in the neighborhood since 1995, said vacant property and two empty schools owned by Atlanta Public Schools are more detrimental than anything the nonprofit controls.
“So what?” Patton said of the unpaid taxes. “They may be late, but they are not the problem in this neighborhood. The reason that HDDC is treated differently is because it has a much greater mission than someone who is just trying to flip a property.”
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