Atlanta Progressive News

(APN) ATLANTA — Fulton County and Atlanta Public Schools are concerned about the recent performance audit by Leslie Ward, City of Atlanta auditor, regarding the ten City of Atlanta Tax Allocation Districts (TADs).

TADs are systems where governments agree to divert from their General Funds the property tax revenues above a certain base amount collected from certain neighborhoods.  For the Atlanta TADs, the Atlanta Development Authority [rebranded as Invest Atlanta, but still legally the ADA] and Beltline Inc., manage those dollars.

The TADs are intended to invest those dollars into those specific communities, sometimes accomplished by taking out bonds, resulting in development that is ultimately supposed to result in increased revenue for those governments.  

However, as previously reported by Atlanta Progressive News, instead of the TADs ever coming to a close, there are four TADs where the ADA continues to collect diverted tax dollars from the City of Atlanta, Fulton County, and sometimes APS, even though enough money is already set aside to pay any bonds, and all the items on the project lists have been completed.

Thus, the ADA is continuing to collect millions of dollars that are simply accumulating in ADA accounts.

There ten TADs in the City of Atlanta, where Fulton County participates as partners on all ten, while APS participates in some TADs but not others.

The ten TADs are Westside, Atlantic Station, Princeton Lakes, Perry Bolton, Eastside, Beltline, Stadium, Campbellton Road, Metropolitan, and Hollowell.

Fulton County has contributed a total of over 116 million dollars since 1999.

APS participates in five TADs: Westside, Atlantic Station, Perry Bolton, Eastside, and the Beltline, contributing a total of over 208 million dollars since 1999.

FULTON COUNTY RESPONSE

Anthony Nicks, Director of Internal Auditing, made a report to the Board of Commissioners of Fulton County regarding the City of Atlanta audit, on June 20, 2012.

Nicks identified four main findings in the report that were of concern to the County.

First, “the auditor determined that Invest Atlanta does not have a mechanism in place to track the progress of meeting their redevelopment plan goals… does not have a means of determining when a project is substantially complete.  Until a project has been determined to be substantially complete, there will be no refunds of the dollars that have been invested in that project.”  

“Currently there are 210 million dollars of fund balances on the TADs.  If substantially complete, then those dollars are supposed to be returned to the taxing jurisdictions,” Nicks said.

Second, “four of the five bond-funded TADs are complete, there are no additional projects that are on board that they are planning to complete.  However, the dollars for those projects continue to accumulate because the increments are still being sent over to Invest Atlanta.”

Third, “there are several districts called the corridor districts, where there has been limited or no work begun.  Invest Atlanta has implemented a requirement on developers that unless their project meets a five million dollar minimum, then they will not accept that project as being part of the TAD.  We believe this has a significant impact on developers and whether or not they wish to develop in the specific area.”  

The corridor districts are Stadium, Hollowell, Campbellton Road, and Metropolitan Parkway.

Fourth, “Invest Atlanta does not have a means of clearly defining and monitoring their administrative costs… They have no mechanism to control what their administrative costs are…  In those four districts, the corridor districts, 90 percent of the expenditures relating to those particular developments were for staff costs.  Clearly they have no means for monitoring or determining what in fact administrative cost limits should be in place.”

“Just a shade under 30 percent that had been invested in the TADs came from Fulton County,” Nicks said.  “So of the 388 million dollars that have been invested, we’ve invested 111 million as of April 30, 2012.”

“The current fund balance is 210 million dollars.  We have not been able to determine what portion of that fund balance relates back to Fulton County because of specific information we need from Invest Atlanta and we are making those requests this week,” Nicks said.

“I think that’s a shame.  What I’m hearing is these folks are sitting on our money,” Commissioner Bill Edwards (District 7) said.

“If I’m invested in a project that says we’re gonna do X, Y, and Z, and Invest Atlanta has done X, Y, and Z, they can still say they are not finished?” Edwards said.

Edwards asked for the salaries of the ADA officials and whether the accumulated fund balances have been drawing interest.

“This is ridiculous… We have people who need stuff, we have to put the increments in and it’s sitting there doing nothing.  We need the money to offset the fact that we’re having issues over here in Fulton County,” Edwards said.

“I don’t care if it’s a dime.  I want our money.  I don’t want them sitting on a nickel of the taxpayers’ money.  Whatever it is, it goes to the bottom line the 70 million dollars the County Manager talked about this morning when they talked about raising our millage rate affecting people’s jobs, but you sitting over there on the money,” Edwards said.

Fulton County did not approve a millage rate increase; however, it will have to make significant cuts to deal with its current deficit, even while the TAD increments are being diverted from the General Fund of the County.

“I don’t think this is what we intended when we went into the TAD business,” Edwards said.

Emma Darnell (District 5), who sits on the Boards of the ADA and Beltline Inc., said that the monthly financial reports circulated to Board Members “really did not reveal the information that the audit did, whether intentionally or unintentionally.”

“For example at the Beltline meeting we were told the fund balance was 68 million.  It turned out to be twice more than that, but we were reading the monthly reports,” Darnell said.

“One of the problems that have been identified has been transparency,” Darnell said.

Darnell also raised the concern that the audit showed that TAD funds have been spent outside of the blighted areas in the Westside TAD, even though all the expenditures were supposed to be in blighted areas only.

Darnell, gave a second report at the July 17, 2012 meeting of the Board.

“Whether express or implied, our IGA agreement assumed that when the project ended and the bonds had been paid, any excess increment would be returned to the stakeholders, which with respect to the Atlanta TADs is County government and the Atlanta Public Schools,” Darnell said.

In an email to constituents dated July 27, 2012, Darnell was more specific.

“Resolutions of the Board of Commissioners consenting to participate in each of the four bond – funded TADS: Westside, Eastside, Princeton Lakes, and Atlantic Station contain a provision stating that any funds remaining in the TAD fund ‘after all re-development costs and tax allocation bonds of the district have been paid or provided for shall be paid over to Fulton County based on the County’s contribution,'” Darnell wrote.

At the meeting, Darnell told Commissioners, “Even if this were not a recession, due diligence and sound financial management would place upon this Board the responsibility of determining whether or not excess revenues were available to this government.”

Fulton County held a meeting with Invest Atlanta, in which they requested more documents and information from the authority.

“As it relates to the fund balances that accumulated, our conversation with Invest Atlanta involved exactly what those balances were,” Nicks said.

He said that according to Invest Atlanta, much of the 210 million dollars in fund balances were restricted for bond covenants, debt service, debt restructuring, and specific projects, and that there was 61 million dollars yet to be determined.

“We questioned the amounts that Invest Atlanta claimed were reserved for bond covenants and the amount being held for debt structuring.  After holding discussions with our Finance Department, we determined that it appears that the amounts that they are actually holding for those bond covenants appear to be unusual and high for government bond transactions,” Nicks said.

“As a result, we have asked them for the bond covenants,” Nicks said.

“We had significant conversations with them about the expenditures for those four TADs, where 90 percent have used for basic salaries.  During this conversation, Vice Chairman Darnell made it clear it was her belief the amounts accumulated for TADs should be used for blighted areas and less for salaries and administrative costs,” Nicks said.

Nicks also said that the County asked the ADA to come up with clear redevelopment goals for the corridor TADs that can help determine whether those TADs are complete.

Nicks told the Commission that the County had asked for several items, including financial statements, bond covenants, and salary information from the ADA.

APS RESPONSE

APS Board of Education Member Brenda Muhammad, who for the last several months has served as APS’s representative to the ADA, told APN she is concerned about the audit and that she circulated it to Board Members, but “we haven’t had a chance to come together to discuss it yet.”

“Not only are we closing schools, we’re laying people off.  We’ve got millions of dollars sitting in a pot somewhere, I understand,” Muhammad said.

“I think that’s significant and needs to be addressed.  I want to hear from my colleagues, if they see this is an item of concern.  I personally think it’s something we need to address – we need a plan to understand what Invest Atlanta is going to do with those funds.  We don’t need money to be sitting in a pot somewhere,” she said.

ADA BOARD MEMBER RESPONSE

Anna Foote, a Board Member of the ADA, told APN that she believed the issue regarding the 90 percent expenditure on ADA staff costs on the four corridor TADs was blown out of proportion because the total amount of money was not high.  “90 percent of not a lot of money is still not a lot of money,” she said.

According to information provided by Darnell in her email, the City of Atlanta and Fulton County have contributed over 6.7 million dollars to those four TADs since their enactment in 2007.

CITY OF ATLANTA RESPONSE

At a recent meeting of the Community Development/Human Resources Cmte of the City Council of Atlanta, Chairwoman Joyce Sheperd (District 12) said the Council and Invest Atlanta accept responsibility and that they would be addressing the TADs when they return from recess.

Sheperd called the audit and a recent Work Session on the audit as the beginning of a process, and said they would be looking at policy reforms, including, among other things, “whether we want to keep all our TADs.”

(END/2012)