Atlanta Allows Beltline, TAD Funds to be Squandered

facebooktwittergoogle_pluslinkedinmailfacebooktwittergoogle_pluslinkedinmail

(APN) ATLANTA — A recent audit report reveals that the City of Atlanta has failed to exercise sufficient oversight over various Tax Allocation District (TAD) funds, meaning that taxpayer dollars from the City of Atlanta, Fulton County, and the Atlanta Independent School System have been diverted from the operating budgets of these entities, towards purposes for which they were never intended.

The report was first revealed by the Atlanta Journal-Constitution newspaper.

The City of Atlanta recently cut workers’ pensions; Fulton County is pondering a property tax increase; Atlanta Public Schools is closing schools.  Yet, millions of dollars in tax revenue is being diverted to ten TADs throughout the City of Atlanta, nine of which are run by the Atlanta Development Authority and one which is run by the Atlanta Beltline Inc, a non-profit entity created by the ADA to manage the Beltline TAD.

[The ADA recently rebranded itself as Invest Atlanta; however, that is just a marketing scheme.  Its legal name continues to be the ADA; it is merely doing business as Invest Atlanta.]

The ADA is an independent development agency whose authority derives from state law, which provides for development authorities; however, the ADA had to be triggered by the City of Atlanta  through legislation, and the City has further contracted with the ADA to manage its TADs.

John Woodham, an attorney who successfully defeated the first Beltline TAD in the Supreme Court of Georgia, told Atlanta Progressive News that other cities and counties in Georgia manage their own TADs in-house through their Planning Departments.

The City of Atlanta has chosen to delegate its oversight responsibilities to the ADA.  The City could–if it so chooses–modify its agreements with the ADA to ensure greater oversight, or could take back control of its TADs in-house.

A TAD, as previously reported by APN, is a funding mechanism to make investments in a particular neighborhood or limited geographical area.  When the TAD is enacted, the amount of property taxes collected from that neighborhood at that time is called the base; any property taxes collected in future years that are greater than the base, are called the increment.  

For the lifetime of each TAD, when taxes are collected each year from those areas, the increments in tax proceeds are diverted from the General Funds of the City of Atlanta, Fulton County, and the AISS, where applicable, to the Atlanta Development Authority, or in the case of the Beltline TAD, to Beltline Inc.

Each TAD has its own redevelopment plan that identifies projects that are supposed to be completed as part of the TAD.

In previous years, it was common to take out bonds to finance these projects.  In those instances, the bonds would allow the ADA to access large amounts of money to jump-start projects in the areas; and the increments resulting from those investments would be used to repay the bonds with interest.  More recently, TADs have become pay-as-you-go, where bonds are not used.

What an audit report dated May 2012, prepared by Leslie Ward, City Auditor, found, is that increments are continuing to be diverted to the ADA for TADs even long after the projects associated with the TADs have been completed.

“Neither the city nor its redevelopment agent, Invest Atlanta, systematically tracks progress toward meeting redevelopment plan goals,” the Auditor’s Office wrote.

“Without systematic tracking of progress compared to the redevelopment plan, the city lacks a mechanism to tell when a redevelopment plan is substantially complete and no more public subsidy is needed,” the Auditor’s Office wrote.

“Planned redevelopment projects in Atlantic Station, Eastside, Westside, and Princeton Lakes are substantially complete and the city has collected more increment than needed to pay annual debt service.  Intergovernmental agreements specific to individual tax allocation districts and individual bond provisions define excess increment differently but generally provide for paying down debt or returning the excess to the taxing jurisdictions,” the report states.

These TADs are four out the five that have bond obligations associated with them.

“The city has no policy for handling this accumulated surplus increment.  In the absence of a
policy, the city could spend more than is necessary on soft costs, continue to subsidize development when public support is no longer needed, or let resources sit idle,” the report states.

In the case of Atlantic Station, for example, the report notes that the ADA staff told the Auditor’s Office that Atlantic Station is less than half-way complete.  However, the report notes that all approved projects have been completed, all bond proceeds have been spent, and the area no longer qualifies for TAD funding.

The report notes that an area only qualifies for TAD funding if it is unlikely that development would ever occur in the area without government investment.

“It’s not clear that additional public investment in Atlantic Station is necessary to spur development because the barrier to private investment has been eliminated,” the report notes.

“From 2001 through 2011, increment in the five districts exceeded debt service payments by more than $46 million,” the report notes.

“We undertook this audit because the city’s use of tax allocation districts to finance redevelopment has grown to encompass 20% of the city’s land area and 15% of total assessed property value,” the Auditor’s Office wrote.

The report also notes that ADA exercises little oversight over ABI, which manages the Beltline TAD.

“In fiscal year 2011, the city reimbursed Atlanta Beltline $12.8 million for redevelopment costs that included staff payroll, benefits, and bonuses; credit card charges for travel, meals, and entertainment; a monthly retainer for a lobbyist; land acquisition; construction; and fees and rent paid to Invest Atlanta,” the report states.

“It’s not clear that all Atlanta BeltLine operating costs submitted for reimbursement are reasonable or prudent,” the report states.

According to documents reviewed by the AJC, Beltline TAD funds were used to cover fancy meals for Atlanta Beltline Inc. (ABI) employees at restaurants including Bocado, Miller Union, and Strip, and to buy cakes and desserts from bakeries around town, among other luxuries like staff retreats.

Brian McGowan, who heads the ADA, told the AJC that he suspended credit card reimbursements to ABI in August 2011 and ordered a review of ABI expenditures, already requesting that ABI return 800 dollars in payments.

Ben Howard, a senior advocate who regularly attends meetings of the City Council, noted that when ADA made its most recent presentation to the Community Development/Human Resources (CD/HR) Committee, that it said nothing about putting stricter controls on reimbursements to ABI.

Two Council Committees, CD/HR and Finance/Executive, have oversight over the TADs.

Councilwoman Joyce Sheperd (District 12), Chair of CD/HR, sits on the Boards of Directors of both the ADA and the ABI, meaning that she has three layers of responsibility for oversight of the TADs.

Mayor Kasim Reed chairs the ADA.  Board Members include Sheperd, as well as Joseph Brown, Anna Foote, Constance Barkley-Lewis, Julian Bene, JC Love, Fulton County Commissioner Emma Darnell, and APS Board of Education Member Brenda Muhammad.

ABI’s Board includes Reed, John Somerhalder, Elisabeth Chandler, Brown, APS BOE Member LaChandra Butler Burks, Darnell, Sheperd, Clara Axam, and former Council President Cathy Woolard.

The CD/HR and Finance/Executive Committees will hold a Work Session on TADs today, Monday, July 09, 2012, at 3pm.

(END/2012)

Leave a Reply

Your email address will not be published. Required fields are marked *


+ 5 = nine