The Fulton County and Atlanta school systems get the biggest chunk of property tax revenue, so they stand to lose the most when the Fulton County development authority doles out tax abatements to planned construction projects.
Last fiscal year, abatements approved by the development authority reduced the revenue to Fulton County Schools by $4.8 million, according to school officials. That’s enough to pay 55 teachers.
The year before, Fulton schools saw a reduction of $3.98 million. Tax revenue to Atlanta Public Schools in the past two fiscal years was reduced by $15.2 million because of county abatements.
Tax abatements from the Fulton development authority exempt developers from paying some property taxes for a decade, with the expectation that the losses will be offset by higher tax revenue later. The idea is that development will increase property values in the long term, but some projects wouldn’t happen without an initial tax break. In the first year, the owner pays taxes on only half of an abated property’s value. The incentive diminishes each year.
School districts have gotten a sharper idea of how much such abatements cost them since accounting standards changed a couple of years ago, requiring those numbers be tracked.
“The concern that the school district has with the current process is we do not get any opportunity to determine if we can fund the incentive or how it is going to affect our budget in advance,” said Robert Morales, Fulton County Schools chief financial officer.
That uncertainty, and seeing the cost in black and white on financial statements, prompted a keener interest in abatements. In addition to county abatements, both districts’ taxes are impacted by city-level development incentives.
Although, the amount of tax revenue abated is a small slice of the schools' total budgets - the Fulton's general fund budget this year is $1.05 billion; APS' is $818 million - school officials say every penny is needed.
Atlanta Public Schools Superintendent Meria Carstarphen was appointed to the Fulton County development authority five months ago and since then, has repeatedly made the case that school systems should have more of a say.
“The most important thing for us is understanding the financial impact,” she said. “I’m not just looking out for APS.”
Some developments help
Not everyone agrees that development incentives deprive schools of revenue. While school districts cite reductions, Al Nash, the CEO of the development authority, said there’s a big upside for the districts if it prompts development of under-used properties. If a piece of land is generating very little tax revenue, he said, an incentive that abates half the value of improvements in the first year still amounts to a windfall for the school system.
“It’s a tremendous increase,” he said. “We’re not really taking anything away from APS.”
Development authority figures estimate property tax gains as a result of abated projects were $28.8 million for APS between 2016 and 2017 and $14.8 million for the Fulton County Schools over the same period.
Carstarphen contends that not all incentives make sense. Some do enable projects in areas that were not generating much tax revenue. But others are simply tax giveaways to developments that were already planned in desirable areas. She said she wants the authority to avoid the latter.
The Atlanta school board has backed her quest to give the district more of a say in abatements. Board chairman Jason Esteves believes public incentives played a more crucial role after the recession when the economy was still slow.
“Buckhead does not need any jump start,” he said.
Fulton County Commissioner Liz Hausmann said she thinks the school systems’ interest in the development authority is positive, but she said the benefits to their tax rolls have been clear. She said that questions about the appropriateness of abatements seem to treat the discussion as if the money already exists — which it does not.
“One hundred percent of nothing is less than 50 percent of something,” Hausmann said.
Still, Hausmann and other commissioners recognize the need for school districts to be more involved in decision-making than they had been.
Last month, they agreed to put a representative from both Fulton and Atlanta schools on the nine-person development authority board. But that change won’t happen until 2021.
‘Mindful of every dollar’
In the meantime, Carstarphen's appointment — to fill an unexpired term — will end this month. And the new rules that call for school system representation prohibit school board officials and employees from serving, so she can't be reappointed.
“The change isn’t ideal,” Carstarphen said.
While she still has a voice on the board, Carstarphen has sought to amplify it. She has asked for interim Fulton County Schools superintendent Cindy Loe’s input on projects that impact the Fulton district’s tax dollars. Their regular exchanges show their desire for a bigger voice in the abatement process.
In February, Loe wrote to Carstarphen: “As you are aware school districts traditionally have been left out of the loop until the vote has been cast.”
The next month, Loe wrote: “We are mindful that every dollar abated to development incentive represents an immediate dollar taken from our schools and students.”
The emails were obtained by The Atlanta Journal-Constitution through an open-records request.
At the beginning of Carstarphen’s tenure on the development authority board, she voted no to projects as often as she voted for them. She said she’s been able to support more incentive requests recently because of increased communication with Loe about the financial impacts.
Lee Morris, the vice chairman of the Fulton County Commission, appointed Carstarphen to the development authority. He said its multimillion-dollar decisions have huge financial implications and should be scrutinized by those who will be impacted.
“The discussion on these projects now is so much more involved and detailed than it had ever been before,” he said. “It’s really, really important for there to be as much input in these huge public decisions as possible.”
Fulton County and Atlanta school leaders say tax incentives given by the Fulton County development authority have reduced their tax revenue by millions each year. They want a greater say in how those decisions are made. Two school representatives will be joining the county development board, but not until 2021.