Expensive meals at swanky restaurants around Atlanta. Cakes and desserts for birthday celebrations for staffers. And payments to lobbying firms to help secure federal grants — all funded, in part, by taxpayers.
The Beltline, whose mission is to encircle the city of Atlanta with a necklace of new parks and light rail, has for at least a year used taxpayer dollars to pay for gifts and services — pricey meals and lobbyists — that raise concerns about the agency's oversight.
An Atlanta Journal-Constitution review of the Beltline's financial documents, in advance of a July 31 transportation referendum that could give it $600 million, shows a questionable pattern of spending on items like gifts and food. A city auditor who pored over similar documents said some expenses weren't "prudent." Beltline officials acknowledge that some of the bills should not have been footed by taxpayers, and say new policies have led to greater accountability.
State law allows Atlanta to use property taxes generated through special zones, called tax allocation districts, to fund redevelopment costs, and the Beltline was reimbursed more than $12.8 million for those costs in fiscal year 2011.
Most of the spending went to pay for staff salaries and benefits, land purchases and the extensive planning that's needed to develop such an ambitious project. But other expenses have a more tenuous link to redevelopment.
The spending pattern prompted a policy shift from Invest Atlanta, the city's economic development arm, and led the auditor to question the agency's oversight.
Brian McGowan, who has headed Invest Atlanta for about a year, said that in August he suspended repayments of the Beltline's credit card bills and that he ordered a review of the organization's spending. So far, he said, he's asked the Beltline to reimburse the city about $800 in expenses. The final figure, though, could be far greater.
"It was an issue and we needed to tighten up our policy," said McGowan.
Beltline chief executive Brian Leary said the problems are part of the growing pains the agency has endured as it swelled from three staffers to about 25. He said new guidelines will lead to stricter oversight.
"When I got here, I made one promise: We're going to make mistakes," said Leary. "My second promise was that we wouldn't do it twice. We can take care of things like that when we need to without using TAD dollars."
Using an Open Records Act request, the AJC reviewed hundreds of documents for costs submitted by the Beltline to the city for reimbursement for two months, September 2010 and March 2011. Along with construction and planning fees, state law also allows funds from the tax districts to repay "reasonable" administrative costs linked to redevelopment projects. But the review found that some costs don't easily fit into any of the categories established by Georgia lawmakers.
Those include pricey meals at Strip, Miller Union and Bocado paid at taxpayer expense, and cakes and desserts from area bakeries for staff birthday celebrations. The Beltline also billed the city about $12,500 a month to pay a lobbying firm to advocate on its behalf to lawmakers in Atlanta and Washington.
The March 2011 reimbursement request, for instance, included almost $10,000 in credit card charges. They ranged from big-ticket items, like a $224 bill for food from Parish, to smaller payouts such as a $22 floral arrangement. The city was billed $2,500 for a retreat for senior executives, and hundreds of dollars more for food from restaurants around town.
A city audit released in June raised similar questions about expenses. It suggested more oversight of the Beltline is needed because the agency's contract with the city is "too vague to control costs" and questioned whether some of the expenses submitted to the city "are reasonable or prudent."
City lawmakers are conducting their own review of Atlanta's TAD program, and they have scheduled a meeting on Monday to discuss their next steps.
McGowan said that expenses such as lobbyist fees and the management retreat are redevelopment costs eligible under the state law, since they help the agency compete for grants and develop staff. And he said certain restaurant expenses are also eligible under the law, noting that these meals are often crucial to develop business ties.
But he said he was concerned that other costs involving meals, gifts and staff parties may not pass muster, including some meals that include alcohol and expenses that went to paying meals for spouses. He declined to elaborate and the submitted receipts included few details about each expense.
He's now requiring Beltline officials to meet a "reasonability" threshold for meals and expenses, meaning there's a crackdown on meals at expensive steakhouses on the public dime. And he's ordered the Beltline, which also receives private donations, to spell out the participants and the purpose of each taxpayer-funded expense request. Previously some reimbursement requests involved little more than a receipt.
"The Beltline is conducting its own review of things, looking for cakes and gifts and going away parties that shouldn't have been expensed," said McGowan. "It's going to be a long slog, but we're driving a hard line."
Leary, the Beltline's leader, said he agrees with the changes. And city officials express confidence that new oversight will add another layer of accountability to the agency's spending as it faces more scrutiny.
"Any time you're dealing with public dollars, there's a question of judgment," said Sonji Jacobs, a spokeswoman for Mayor Kasim Reed. "When Brian McGowan came in he talked to the administration about looking at its policies, and there's been a recognition that you have to be very careful when administering TAD dollars."
The review highlights an ongoing concern about the murky definition of "administrative costs" that can be reimbursed under state redevelopment law. Lawmakers have resisted spelling out what those costs should include, and experts said even the most questionable of the agency's expenses would be difficult to challenge in the absence of a clear definition.
But Steve Labovitz, a McKenna Long & Aldridge attorney who is an expert on tax districts, said the agency is smart to take a "better to be safe than sorry" approach.
"Do they smell a little? Potentially. But I'd argue that under the law they are still administrative expenses," said Labovitz, who was former Mayor Bill Campbell's chief of staff. "I think Invest Atlanta wants to have a clean, clear policy so nobody could ever say the city potentially wasted money."
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