Solution Still Unclear As Atlanta City Council And APS Discuss BeltLine Contract Dispute

Jul 8, 2014

Members of the Atlanta City Council and APS board met Tuesday to discuss the contract dispute over BeltLine debt.

A joint meeting Tuesday between the Atlanta City Council and board members of Atlanta Public Schools ended with both sides acknowledging the need to solve a contract dispute over Atlanta BeltLine debt.

The solution, however, remains unclear.

APS says it’s due millions for giving up a portion of its property tax money for the BeltLine, but the city disputes the school system's figures. 

At the meeting, former APS superintendent Erroll Davis called for a greater sense of urgency, saying the city must find a way to make the school system whole. Davis last week ended his tenure as superintendent but was retained to help settle the dispute.

“We are not a bit player in the BeltLine. We have been the largest investor to date. Our investment is larger than that of the city, larger than that of Fulton County,” said Davis. “We are looking at these issues from the perspective as the major investor in the project and as you might expect, major investors like to be listened to.”

APS says the city currently owes about $19 million in cash and land.

To understand why, some background. In 2005, to get the BeltLine off the ground, then Mayor Shirley Franklin reached an agreement with Fulton County and APS to create a tax allocation district. Under the TAD, APS would give up a portion of its property tax money along the BeltLine in exchange for fixed annual payments from the city totaling $162 million. The payments would end in 2030 upon completion of the BeltLine. 

The current dispute is over the payment amounts, which were determined based on an assumption that real estate prices would always rise. Instead, during the financial crisis, real estate prices plummeted. The city and the BeltLine TAD brought in far less revenue than expected and were unable to make the payments to APS. Since the recession, the city and APS have re-negotiated the contract twice, but the city argues the contract remains unsustainable. For more than a year, the two sides have been working to reach a new deal, in part by substituting cash payments for land and other forms of compensation.

The dispute took a tense turn last month when an increasingly impatient Davis said APS was considering legal action and a defiant Mayor Kasim Reed dared the school system to follow through on its tough talk

Shortly after, Council President Ceasar Mitchell said the Council would begin playing a more significant role in the discussions.

At Tuesday's meeting, Mitchell vowed to make sure talks between the city and APS stay constructive.

“The school system feels as if Fulton County has been respected and paid while they have not and so the issue of this feeling of disrespect is something we’ve got to work through,” said Mitchell.

In lieu of cash, APS officials reiterated interest in police services, water use, and the newly for-sale Atlanta Civic Center in midtown Atlanta.

“We will need a new midtown high school at some point,” said APS board chair Courtney English. “The population is booming in large part probably due to the BeltLine. The issue we will run into is that we don’t have enough space to accommodate the kids and the families that will move into that area.”

But Reed has said the Civic Center is not on the table. And some Council members at the meeting said APS should be focused on retrieving the owed money from the BeltLine itself, not the city.

“The general fund is the general fund. We have to operate the city,” said Councilwoman Felicia Moore. “I don’t think there’s any reason why we should be tapping into our general fund reserves to satisfy that debt.”

If that means slowing the progress of the BeltLine, Moore said, “so be it.”

Councilwoman Yolanda Adrean told APS officials she also didn’t feel city resources should be part of the conversation at this stage.  

“Until the discussion with the BeltLine - the party with whom you have your agreements - is exhausted, I think that all this general fund stuff is off the table from this Council member’s point of view and I’m not convinced you guys have really scrubbed those numbers.”

Reed and Davis are expected to pick up direct negotiations later this month.

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