As time expired on Atlanta Mayor Kasim Reed’s term in December, the City Council voted to donate $77,000 to three charities, including two that were near and dear to Reed’s heart — a scholarship fund at his alma mater Howard University and an Atlanta charity for troubled youth.
Some $40,000 went to a dormant non-profit created to raise money for affordable housing and job creation.
The expenditures of taxpayer money raised few questions and included a parting gesture from the mayor himself: the source of the funds was a raise Reed turned down and left with the city for charity.
But the $40,000 donation has now been returned to the city for a different purpose: to cover some of the expenses of a controversial trip Reed and staff members took to South Africa in the spring of 2017.
On March 5, the nonprofit Partners For Prosperity wrote a $40,000 check back to Atlanta to cover pricey business-class airfare for Reed and seven city employees.
The maneuver was an apparent attempt by Reed to fulfill a promise he made to have private donations reimburse taxpayers for the difference between business-class airfare and the amount that would have been spent on tickets in coach. The transaction raises questions about the appropriateness of the expenditure and the transparency with which it occurred.
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“That wasn’t what the council thought it was approving,” said City Council President Felicia Moore, a district council member at the time. “We thought the funds were going to charitable organizations — not for reimbursing the city for expenses that shouldn’t have been incurred in the first place.”
Jeff Dickerson, a spokesman for Reed, said the donations fulfilled the mayor's promise to use non-governmental funds to cover costs of the South Africa trip, and fell within his rights. The total cost of the trip was $90,000.
“These were not ‘city tax dollars,’” Dickerson said, “but income the mayor earned but deferred for the purpose of advancing economic development and helping Atlanta students attend college.”
Cathy Woolard, a former Atlanta City Council president who ran for mayor last year on platform to clean up city ethics, said “it’s clear that taxpayers paid” for the airfare.
“Just because there’s a middle organization doesn’t mean there wasn’t tax money that paid it,” Woolard said.
Purpose of donation not explained
City Council passed pay increases for themselves and the mayor that took affect in 2014. Reed pledged the incremental increase in his salary to charity and an account was created within the city’s human resources department to manage the funds.
In November, a month before Reed left office, the City Council’s Finance Committee approved three grants from the mayor’s forgone salary: $18,514 to Howard University, $18,514 to the mayor’s youth scholarship fund, and $40,000 to Partners For Prosperity.
Former Human Resources Commissioner Yvonne Yancy initially told Finance Committee members that the $40,000 was going to Invest Atlanta. Councilwoman Yolanda Adrean then told Yancy that Invest Atlanta wasn’t a charity, to which Yancy said there was a mistake on the ordinance and that the legislation would have to be corrected to reflect the money was actually going to Partners For Prosperity.
The council was not told that Partners For Prosperity would turn around and return the money to compensate taxpayers for the South African trip, a video of the proceeding shows.
“Wow,” Adrean said Wednesday. “That’s big. It reminds me of that game where you put the ball under the cup and keep moving the cup.”
Partners for Prosperity was created in 2015 by the city’s economic development agency, Invest Atlanta, to “promote economic development and financial sustainability in distressed areas through job training and recruitment and financial literacy programs,” and to help create affordable housing.
Eloisa Klementich, president and CEO of Invest Atlanta, who is also chief financial officer for Partners For Prosperity, initially told the AJC and Channel 2 that she was not aware that the city would ask for the donation to be repaid. She later appeared to contradict herself and would not answer the question clearly.
“Did I know that? No, the ordinance said it was a donation to us,” Klementich said.
Later, she said: “We knew that they (the city) were going to ask us for partnership opportunities. That is part of our mandate.”
Asked repeated yes or no questions about if she knew the donation would be returned to the city for airfare costs, she again referred to knowing about “partnership opportunities.”
On Monday, a month after the check is dated, the Partners for Progress board voted to approve the payment to the city.
It was the first check the organization had ever written.
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A constitutional question
Spending taxpayer money on donations to nonprofits made headlines in 2015 when former state Attorney General Mike Bowers and investigator Richard Hyde blasted DeKalb County commissioners for donating tens of thousands of dollars of taxpayer money to favored charities in their districts.
Their rebuke of DeKalb’s spending found that the donations fell outside the commissioners’ legally delegated powers and were prohibited by the gratuities clause in the state Constitution, which bars public officials from making gifts of taxpayer money or property.
“There is no authority for a member of the (board of commissioners), or a county employee, to make charitable contributions using government funds,” the two men wrote.
Bowers, who served as attorney general from 1981 to 1997, noted that the gratuities clause has been in the state Constitution since 1877 and that successive court rulings and opinions of the attorney general have strictly interpreted the statute.
“Regardless of the charitable or worthwhile nature of the recipients or their undertakings, Georgia courts have strictly construed laws that prohibit gifts of government property,” the report said.
It’s unclear how the gratuity clause might apply when the City Council approved the expenditure.
“They absolutely do not go against the gratuities clause, because the income was earned and donated as a gift to nonprofit organizations consistent with the ordinance,” Dickerson said. “Instead of personally accepting the money as salary, as was his right, the mayor instead invested it in an economic development opportunity for the City of Atlanta.”
AJC Staff Writer Stephen Deere contributed to this report.
How we got the story
The AJC requested proof that taxpayers were refunded for costs associated with business-class airfare to South Africa for former Mayor Kasim Reed and city employees. The city produced a $40,000 check from a nonprofit. Digging deeper, the AJC learned the money originated from the city.
