Mayor Keisha Lance Bottoms’ office had a furious response Friday to the Atlanta school board’s vote to restrict further use of school property taxes to pay for future development on the city’s Westside.
The board's 7-2 vote came a month after Atlanta City Council approved a public financing package worth up to $1.9 billion for a proposed 40-acre mini-city to be built in the Gulch, near Mercedes-Benz Stadium. The public funding includes school tax dollars collected in the Westside Tax Allocation District, or TAD.
“APS’ 11th-hour proposed action to unwind existing commitments to the Westside TAD are misguided and potentially unlawful, as they will impair existing legal commitments made in reliance on promises made by the board of education,” Bottoms’ office said in a statement.
MORE ON PROPOSED GULCH REDEVELOPMENT
School leaders want to renegotiate terms of the district’s participation in five TADs — areas where a portion of property tax revenue, including school taxes, is used to support development projects. They’ve expressed concerns about diverting money that could be used to help schools and students.
The board-approved resolution calls for its written approval before school property tax dollars can be used to fund future development in the Westside TAD.
The two board members who voted against the measure feared it would escalate tensions with the city, and Bottoms’ Friday afternoon statement seemed to confirm their worries.
APS agreed in 1998 and again in 2005 to give up future tax dollars collected in the Westside TAD area until 2038 to help pay for redevelopment. As a result, it’s unclear what the resolution will accomplish.
An initial public financing package Bottoms proposed would have lengthened the life of the TAD by 10 years for the Gulch project, but the deal was revised after objections from the school district and City Council.
The city and the California-based developer, CIM Group, say the deal City Council approved does not extend the TAD’s timeline or require approval from the school system.
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The board resolution implied the city created a new “Gulch TAD” within the Westside TAD, but the city says that isn’t so, that the Gulch is a part of the existing Westside TAD.
The issue, potentially, is more than just one of semantics. A new TAD would require approvals by the city, Fulton County and the schools.
Plus, state law says no new TADs can be created within a city if more than 10 percent of its tax base is in existing TADs. Atlanta is over that cap and as a result can’t create any TADs until others expire.
“The contention that the city has created a new TAD in contravention of state law is false,” the mayor’s office said. “Gulch TAD is a way to describe the Gulch project which is within the Westside TAD — the same TAD APS approved in 2005 … No new TAD has been created. In fact, when the Westside TAD was created, this project was contemplated in the redevelopment plan that was the basis of the creation of the Westside TAD that APS supported by voting to create the TAD,” its statement read.
There could be some legal distinctions for the school district to explore.
In a typical TAD, developers across the taxing district can tap into newly created property taxes from surrounding properties to help finance projects.
Some City Hall observers have referred to the Gulch deal as a “TAD within a TAD.” It lets CIM Group tap into its own future property taxes, but other developers in the Westside TAD would not have access to those funds.
Bottoms said in a text message to school superintendent Meria Carstarphen earlier this year that the city’s goal was to “‘synthetically’ create a Gulch TAD within the Westside TAD.”
School board Chairman Jason Esteves said the board has instructed APS administrators to negotiate with the city and wants the talks to be collaborative. The district did not announce what it will do now that the board has taken an official policy stance.
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Carstarphen told board members, “It’s meant to help us decide, not today but in the next few days, over the coming weeks, what we are actually going to do. So it doesn’t determine a path today. No final decisions have been made, but it does explain to the public how we got here and … why we have to take a little more time to ensure that we are being responsible with our taxpayer dollars.”
Board members Byron Amos and Erika Mitchell opposed the resolution. In interviews after the vote, both said they are concerned it will fray the relationship between the school district and city.
“We didn’t take the time to really try to be diplomatic with our communication regarding the Gulch,” said Mitchell. “I think the conversation never really happened the correct way.”
Mitchell said talks between APS and the city broke down after Carstarphen made public comments in October calling for renegotiation of all five TADs before the school district discussed Gulch funding. After that, the mayor cited the school district's "unwillingness to reasonably partner with the city" and announced revised terms for the public financing package.
“I think it took a turn for the worse,” Mitchell said. “It creates a barrier and going down that road with this behavior I don’t think develops a healthy relationship between Atlanta Public Schools and City Hall.”
Amos cited a "missed opportunity" to work with the city. He also questioned what legal weight the board's action carries.
“It’s almost with this resolution we’re using a hammer to kill a fly,” he said.
The only resident who addressed the school board Friday supported its action. James Martin of Berkeley Park said there are too many ways tax dollars intended for education are diverted for other purposes, “and I think that this is a good and necessary first step toward seeing to it that those are overseen better by our elected officials.”
The next step in the Gulch process is a bond validation hearing, expected to take place Monday before a Fulton County judge. State law requires a hearing before a government body can issue bonds.
ORIGINAL DOCUMENT: ATLANTA BOARD OF EDUCATION RESOLUTION
The Story So Far
The Atlanta City Council in November approved up to $1.9 billion in public funding for the downtown Gulch redevelopment. City officials have said the deal did not require approval by Atlanta Public Schools, which will forgo tax revenue from the project, because the package did not change the structure of a long-standing special taxing district. On Friday, the Atlanta school board approved a resolution to require its written consent to use school tax dollars for developments within the district. On Monday, a bond validation hearing — needed before a government entity can issue bonds — is scheduled.
The Gulch deal
Developer CIM Group has proposed a mix of apartments, office towers, hotels and retail worth up to $5 billion. To help fund the project, CIM could recoup up to $625 million in property taxes through a special taxing district through 2038, and five pennies of the local 8.9-cent sales tax generated on site through 2048. Those incentives combined could generate up to $1.9 billion in revenue for CIM and its partners, not including financing costs.
