Archibong Introduces Ordinance to Pay Beltline Debt to APS
(APN) ATLANTA — At the Full Council Meeting of the City Council of Atlanta, on yesterday, January 06, 2015, Councilwoman Natalyn Archibong (District 5) introduced an ordinance–drafted by Council President Ceasar Mitchell–to make payments to the Atlanta Independent School System (APS) for the amounts–over 13.5 million dollars–owed by the Atlanta Beltline, Inc.
The legislation would seek to have the City make the payments on behalf of the Beltline, to APS, and then seek to be reimbursed by the Beltline.
The ordinance states: “That the Chief Financial Officer is hereby directed to create an account, the balance of which shall not exceed Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00), for the purpose of appropriating funds received by the City from the sale of real estate and other funds identified by the Chief Financial Officer, for the sole purpose of funding any payments to APS arising from the Intergovernmental Agreement.”
The ordinance does not authorize payments of the interest that are also due under the agreement, however. But Archibong tells Atlanta Progressive News that the final amount is still a moving target among the Councilmembers and is still under discussion.
The legislation was marked up during Executive Session, and was referred to the Finance/Executive Committee, with no co-sponsors.
The Beltline missed a third annual payment to APS–pursuant to the intergovernmental agreement (IGA) between the Atlanta Development Authority, City of Atlanta, APS, and Fulton County–at the beginning of this year.
As previously reported by Atlanta Progressive News, APS allowed the diversion of educational dollars intended for the education of Atlanta school children to the Atlanta Beltline project, in hopes that increased property tax revenue as a result of Beltline-related development would spur more long-term revenue for APS.
However, the City and Beltline have failed to make the payments that are due for 2014 and 2015, even while the Beltline has continued to pursue and fund development-related projects, in violation of the agreement.
In addition, the City and Beltline have failed to make interest payments, amounting to at least 117,000 dollars, on the amount that was due, and paid late, in 2013.
“[A]s evidenced by your clients’ own financial statements, the City and Invest Atlanta have unilaterally decided to place BeltLine development expenses ahead of their contractually required annual payments to APS,” attorney Daniel Reinhardt, of the law firm Troutman Sanders, on behalf of APS, wrote in a letter to City of Atlanta Attorney Cathy Hampton and ADA Attorney Rosalind Newell, dated August 12, 2014.
“This decision is in direct violation of Section 1 of the Agreement, which provides that ‘in all events’ the PILOTs [payments] ‘shall be senior to any other redevelopment costs incurred by the City of ADA for the BeltLline TAD,’” Reinhardt wrote.
“Or to state this provision another way, after making the annual bond payments, the City and Invest Atlanta are obligated to make the PILOTs to APS and Fulton County before paying for any redevelopment costs, regardless of the amount of the increment,” Reinhardt wrote.
“Please let this demand also serve as a reminder that, pursuant to Section 2 of the Agreement, your clients may not issue any new ‘tax allocation bonds, notes, or other obligations for which
educational tax allocation increment is pledged with respect to the BeltLine TAD, unless all PILOT payments scheduled to have been paid on such date, together with the applicable interest
accrued thereon shall have been fully paid to APS,” Reinhardt added.
Archibong told Atlanta Progressive News that she wants more information about the Beltline’s finances, saying she wants to know that the Beltline “has skin in the game,” adding that the City should not just “swoop in like Superman or Superwoman.”
Archibong and Councilman Andre Dickens told APN that it was their understanding that the ordinance would require the Beltline to repay the money to APS. But the version of the ordinance introduced, which was a marked-up version, does not include such a requirement.
It would seem, but APN cannot be sure, that such a requirement might have been removed during Executive Session.
Councilman Dickens, who also sits on the Beltline Board as an ex officio member, issued a letter to a group of concerned parents called the Neighborhood Collaborative Group (NCG) on December 30, 2014.
“I understand discussions between the City and APS regarding the Beltline Tax Allocation District (TAD) payments are ongoing. I urge discussions to continue and be resolved so that we can combine our energy toward other pressing challenges,” Dickens wrote.
“It is a false choice to say that we must choose between making our payments to APS or preserving the Beltline. We can do both and we will. We cannot risk damaging our bond rating or the reputation of the City,” Dickens wrote.
“Thus, I call for the City to make the required payment of $6.75 million that was due on January 1, 2014,” Dickens wrote. Since then, the 2015 payment became due, and Dickens tells APN that he wants that payment made immediately as well.
“Upon completion of this payment owed, I request the Mayor and City Council members and representatives of the Atlanta Public School Board to come together with formal discussions on forging a path forward on future payments that will be fair to our kids and our schools while also not hindering the development of the Beltline,” Dickens wrote.
The NCG is a group of concerned parents from high schools across the city, who are working together on a number of educational policy issues, of which the APS Beltline payments are just one. On or around December 11, 2014, NCG sent letters to all Councilmembers concerning the issue.
“As parents, it seems pretty clear there was a contract, there was an obligation, we know what the amount is. It’s time to make the school system whole,” Erica Long, who represents the Carver Cluster in the group, told APN.
“APS needs to be made whole with its portion of the investment,” Long said, noting that Fulton County has received their portion of the payments due per the IGA.
“We’ve been having one of one conversations with Councilmembers. I was excited Andre and Ceasar said let’s start with coming current. I can’t see a scenario where the City of Atlanta would prevail in court. Whether the City has the money, whether the Beltline has the money, all of those are red herrings,” Long said.
True to form, City of Atlanta Mayor Kasim Reed responded to NCG by attacking and blaming, including by attacking APS for not enacting pension reform – an issue that seems irrelevant.
“The timing of The Neighborhood Collaborative Group letter is questionable, at best,” Reed said in a statement.
“The letter does not advance the ongoing work of APS and the BeltLine, but rather distracts from the greatest threat to APS – its unfunded pension liability. Unlike APS, the City of Atlanta prioritized fiscal responsibility by achieving comprehensive pension reform to ensure the City sustains its positive financial trajectory,” Reed said.
But APS pensions are the distraction, not the issue, here; notwithstanding the fact that Atlanta’s pension reform was a harmful extraction from current and future Atlanta workers in terms of their current payments and their retirement security.
“While the letter perpetuates a manufactured controversy, BeltLine and APS will continue to work toward what is best for the City of Atlanta – both its students and its prosperity,” Reed said.
“We need to take care of this thing. I think it’s crazy, you got some people on the Mayor’s side, and they’re just like we need to negotiate the contract. Basically [they’re saying that] we should work a deal without payments exchanged first, and that doesn’t happen,” Councilman Dickens told APN.
“The Mayor is in the negotiation, we could influence him to do this sooner more than later,” Dickens said.
When asked if his view of negotiation could include in a reduction in payments amounts to APS, Dickens said he was open to anything. “If the school system will take less, that’s their decision, like any other creditor,” Dickens said.