Almost a year after getting a $47.6 million federal gift to build a streetcar system downtown, Atlanta is scrambling to find its share of $5.6 million needed to fund the massive project — while also trying to balance a budget, settle pension reform and maintain city services.
This week an internal audit is expected to confirm that when the Atlanta City Council voted 11-2 last December to spend parts of $8.5 million to help fund the Atlanta Streetcar Project, they voted based on faulty information provided to them by city Chief Financial Officer Joya De Foor.
Essentially, the bucket the council thought the money was in was empty; that money had been spent two years ago to close the 2009 budget gap.
“You can’t spend the same money twice. I knew that the money was not there,” said council member Felicia Moore. “The fact is we have stated to the federal government that we have this money set aside for matching funds. So we need to identify $5.6 million somewhere.”
City spokeswoman Sonji Jacobs Dade said the streetcar project was never in jeopardy and Chief Operating Officer Peter Aman has identified where the $5.6 million will come from. She said the city will announce the finding sometime next week, after the results of the audit.
The money for the project —which is supposed to revitalize downtown and spur economic, residential and commercial growth — was to come from a $7.75 million settlement in February 2009 between Atlanta and College Park over car rental fees.
News of the city trying to find money it thought it already had comes at a critical time. Atlanta has until the end of the month to ratify a $545 million budget that assumes a $17 million shortfall and includes laying off 130 employees and cutting back several basic city services.
Coupled with that, Atlanta Mayor Kasim Reed also is trying to push through pension reform, which would overhaul the way retired employees are compensated and possibly save the city millions annually. But unions and members of the City Council are pushing back on the reform, which Reed said is needed to free up more money.
“The $5.6 million expenditure should be reconsidered, because money is scarce in this economy and we should all tighten our belts. These are hard times,” said John Sherman, president of the Fulton County Taxpayers Foundation. “We have always felt that the trolley car is redundant to the MARTA bus service, and I am surprised that the grant was even given. What we need are jobs now.”
Atlanta City Auditor Leslie Ward is expected to release an audit this week that examines the parameters of the Dec. 6, 2010, vote to fund the streetcars and the thinking behind De Foor pitching it.
“Were the funds cited ... available when the legislation was adopted in December 2010?” Ward wrote in a May 9 letter to De Foor. “If not, what factors contributed to the finance department providing inaccurate information upon which the legislation was based, and what actions can prevent this from recurring?”
Dade said Reed “will carefully review the findings of the audit. “But the administration believes it was an honest mistake.”
“I know that the first action that happened on this happened before she got there, and she was operating off information she was told,” council member C.T. Martin said. “Somebody told her that the money was there.”
Moore and Martin were the only two council members to vote no on the original resolution, and at the May 16 council meeting they submitted a resolution to rescind it.
“What this means is that we want to get the legislative record straight,” Moore said.
Last October, the U.S. Department of Transportation awarded Atlanta $47.6 million to build a streetcar project that would run from the King Historic District to Centennial Olympic Park area. That was less than the $56 million Atlanta initially applied for.
To make up the difference, the city was asked to approve $5.6 million more toward the project, with the remaining $2.8 million being shifted in the city budget from other transportation-related projects within the same corridor.
In promoting the project, Atlanta officials argued the streetcars would draw more tourists who will shop, eat and party at new restaurants, clubs and stores along the route. More than 2,330 riders — tourists, students and locals — are expected to use the streetcars daily, spending $2 a ride.
Critics of the project doubt that commerce will come, especially along Auburn Avenue on the south end of the route.
“The gains of getting the streetcars far outweigh the negatives. Whatever technical flaws there were will be corrected and we can move on,” council member Lamar Willis said. “Until I see something that contradicts what I have been told, I believe we are meeting the letter of the law.”
De Foor came to Atlanta last June from Los Angeles, where she had served as city treasurer since 2001; advised the mayor and City Council on matters including financial risk management, budgets and regulatory requirements; and oversaw a $6 billion investment program.
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