Dec. 11, 2013 - Atlanta - Keri Tuten, from Atlanta, jogs along the Beltline with her dog, Eddie. She said she uses it "a ton". The Atlanta Beltline Eastside trail, south of Ponce de Leon. If there’s going to be comprehensive transit along the Beltline, the city’s going to need about $4 billion of private investment Mayor Kasim Reed said at a recent community meeting. BOB ANDRES / BANDRES@AJC.COM
Photo: Bob Andres
Photo: Bob Andres

Beltline misses another payment to schools

By many measures, the Atlanta Beltline is a huge success. Just ask the thousands who flock to its bustling Eastside trail on a sunny day.

But financially, the project is having trouble meeting one of its major obligations.

City officials, who oversee the Beltline’s complex financial structure, did not make a $6.75 million payment owed to Atlanta Public Schools in January, the second missed payment since the beginning of last year.

That’s the equivalent, APS’s top financial executive said, of more than 80 teachers’ pay and benefits.

To pay for parks, trails, transit and development, the Beltline uses a portion of property tax revenue that would have gone to Fulton County and APS.

In exchange, city officials agreed to make fixed payments from the Beltline’s tax allocation district, or TAD, to the school system and Fulton County that rise over time, peaking at $16 million a year.

The long-term goal is that after the Beltline’s 22-mile loop is complete by 2030, those payments will stop and APS will reap the rewards of better communities and higher property tax revenue.

The city’s failure last month to meet its annual financial obligation to APS reflects how tax collections for the urban revitalization project haven’t yet met expectations, with the result being less money going toward education in the short-term.

Beltline backers blame bad timing for the failure to live up to the deal so far. The project began just before the recession took hold, chilling development and cutting property values.

Officials from City Hall, Atlanta Beltline Inc. and Invest Atlanta — the city agency that oversees each of Atlanta’s 10 tax districts — have been meeting with the school system since last year to renegotiate payment terms. Payments are scheduled to stretch out over 17 years and total $162 million.

No one is saying when those talks will be complete. In the meantime, all that’s changed is the size of the IOU to the school system.

“All parties continue to negotiate in good faith. We will work together to find a resolution that is beneficial for all sides,” Invest Atlanta CEO Brian McGowan said in a statement. “The Great Recession created economic challenges that were never anticipated at the time of the original agreement and we all recognize that this renegotiation is vital to all of our continued success.”

The Beltline TAD did eventually make its first missed payment, of $1.95 million, to Atlanta Public Schools in December that had been due Jan. 1, 2013, said Chuck Burbridge, the school system’s chief financial officer. The payment lacked $119,000 in interest.

“We’ll entertain reasonable offers. It’s not our goal to cripple the Beltline initiative,” Burbridge said. “There’s always a need for more resources.”

The $6.75 million is barely more than 1 percent of the school system’s $600 million budget. By comparison, it’s nearly one-third of Atlanta Beltline Inc.’s $22 million annual budget. ABI is the nonprofit that oversees the greenspace project, which recently earned a “smart growth” award from the U.S. Environmental Protection Agency.

Officials from both sides aren’t talking about specifics of negotiations to re-do the payment schedule. But emails obtained by The Atlanta Journal-Constitution through an open records request show APS has proposed a number of possible moves. They include giving APS the Atlanta Civic Center for use as an educational facility; paying for broadband Internet service in schools; or cutting school water bills or police costs for several years.

Atlanta officials declined to comment on those options, though a spokeswoman for Mayor Kasim Reed said giving the Civic Center to APS isn’t in line with the city’s goals. It’s unlikely that subsidizing water payments would be legally feasible, as water revenue is separate from the city’s general funds.

Courtney English, chairman of the Atlanta Board of Education, said the system needs to recoup what it is owed.

“I don’t think it would be wise to pay such a substantial increment of our tax base into the Beltline without getting any value for it, especially when it’s money we could be doing something else with,” English said.

City officials expected money from the special tax district would fund nearly 60 percent of the $4.3 billion Beltline project, which started in 2005. A recent report from Atlanta Beltline Inc. indicates only about one-third of the funding will come from the district.

That financial outlook will only improve, they say, as the Beltline continues its build-out, which spurs development and entices new residents to formerly dilapidated areas.

More than $360 million has been spent on the Beltline to date, with $41 million coming from private sources through the nonprofit Atlanta Beltline Partnership. The project snagged an $18 million federal transportation grant last fall, and it’s generated nearly $1 billion in private development, officials say.

The Beltline TAD is current on its annual payment of $1.35 million to Fulton County, as well as all bond payments funding the popular greenspace project. Payments to Atlanta Public schools are less affordable — they began at $1.95 million last year and grow to more than $7 million in annual payments by 2016.

The Beltline wouldn’t be considered to be in breach of contract with APS until six years with no payments, Burbridge said.

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