Atlanta Schoolchildren Lose $63.6 Million In APS/Beltline Deal (UPDATE 2)
UPDATE 1: Title and article updated with new total numbers (see below for full editorial comment).
(APN) ATLANTA — The Atlanta Board of Education has conceded to recouping tens of millions dollars less than the original 162 million dollars promised to the Atlanta Public School system (APS) for its participation in the Beltline Tax Allocation District (TAD).
In a unanimous vote on January 29, 2015, Board Members agreed to put a dispute with the City of Atlanta and the Atlanta Development Authority (d/b/a “Invest Atlanta”), to rest by adopting a payment plan that will channel only 98.4 dollars––63.6 million dollars less than was originally agreed upon––to the struggling school system.
APS will receive several million dollars right away, including one payment authorized by Mayor Kasim Reed without Council approval, an issue that has raised concerns regarding his authority to do so, on the part of Councilwoman Felicia Moore (District 9).
“We all think this is a good deal for all concerned. We need to put this behind us. We get money that we need right now for our schools,” APS Board Member Cynthia Briscoe Brown (At-large Seat 8) told Atlanta Progressive News.
APS has been embroiled in conflict with the city for more than two years, as board members have demanded the city’s development authority, Invest Atlanta, get current on a payment plan that was, at one point, more than 20 million dollars behind.
The problem stems from a 2005 agreement between APS, the City of Atlanta, and Invest Atlanta.
APS agreed to divert education tax revenue to fund the development of the Atlanta Beltline, the development (and purported transit) project that is fueling intentional gentrification in Atlanta’s intown neighborhoods.
APS made a bet the project would boost property values and yield higher tax revenue in the future. In place of the forgone tax revenue, APS agreed to accept annual fixed payments.
Those were originally set to kick in in 2011, but in 2009, the Supreme Court of Georgia ruled it was unconstitutional to use education dollars for anything other than education.
State lawmakers quickly responded with a state constitutional amendment to nullify the Court’s decision. In 2010, APS renegotiated the deal, pushing back the payment start date to 2013.
The city made the first payment, but then stopped delivering. Mayor Kasim Reed argued that because of the Recession, funding for the Beltline had dried up.
At the height of the sparring last year, Reed defended his position by declaring that the Beltline was “more popular” than the city’s public schools.
Now, through backroom deals with APS Board Chairman Courtney English (At-large Seat 7), Reed has smoothed things over and struck a deal, which the two announced at a press conference at the Beltline trailhead in Atlanta’s Midtown neighborhood, prior to the Board vote.
Here are the details of the plan:
- The original agreement stipulated that APS would receive 162,436,302 dollars by 2030. That timeline remains the same, but APS will only receive 73.5 million dollars.
- The City will immediately pay the amount past due, plus interest, a total of $14,767,577. The City already paid a portion of that on December 31, 2015. A payment of $5,708,168 in February will settle the arrears.
- APS will receive a one-time payment of ten million dollars in 2017.
- The new annual payment schedule is as follows:
Year $ Amount
2016 1.5 million
2017 1.5 million
2018 2.0 million
2019 2.0 million
2020 2.0 million
2021 2.0 million
2022 2.0 million
2023 4.5 million
2024 6.0 million
2025 6.5 million
2026 7.5 million
2027 8.5 million
2028 8.5 million
2029 9.5 million
2030 9.5 million
A trustee will handle the payments, so that APS is second in line to receive payments, after the City’s bond obligations are paid.
If payments are not made, the original agreement will be reinstated.
The City is seeking approval from the U.S. Department Housing and Urban Development (HUD) to give APS the property where Bankhead Courts used to be.
If HUD does not approve the transfer, the City and APS will have 60 days to agree to another property transfer, or the City can pay APS the current appraisal price of the Bankhead Courts property.
The City will also pay APS 593,155 dollars for an outstanding debt related to the Eastside Tax Allocation District.
“What we’ve been saying for some time is that the health of the Beltline is essential to the health of Atlanta, and essential to the Atlanta school board,” Reed said at the press conference.
“The [original] payment level would have crippled the Beltline staff and made it harder to get credit for large projects in the future,” he added.
As for schools crippled by lack of funds, English asserted that having some money is better than nothing.
“What this agreement actually allows us to do is to realize some of the growth from that [TAD] right here, right now,” he said.
City Council President Ceasar Mitchell and Atlanta Beltline Inc. CEO Paul Morris also praised the deal. Morris said the Beltline project will positively impact students by raising tax revenue for the school system.
No one mentioned that as Beltline speculation renders higher rents and property taxes, many low-income families are being displaced from the City of Atlanta. So the students who ultimately benefit from the Beltline will mostly be those from middle and high income families: not exactly an outcome that squares with APS’s mission to educate all of Atlanta’s children.
The Atlanta City Council will vote on the plan on Monday, February 01, 2016.
Councilmember Felicia Moore (District 9) was the only member not present at the press conference. She says she will raise concerns when the agreement comes up for a vote.
“The question is, where is the money coming from?” Moore told APN.
Earlier this month, Moore suggested that Reed may have violated city code when he approved a payment to APS in December 2015. The money was paid from the General Fund, instead of the Beltline TAD fund, and was not approved by the City Council.
Another concern, Moore said, is the transfer of the Bankhead Court property, which is in her district. She said APS intends to use the property for a bus terminal and said that the location is “not suitable” for that.
“It’s not acceptable to me. Even beyond the approval that’s imminent, I will keep fighting,” Moore said.
Pushback from parents and teachers in Atlanta public schools may also be on the horizon.
“From anger, to frustration, to stress, to disillusionment, I can’t begin to describe the mentality of not only the teachers, but their families and the parents in their neighborhoods,” Verdaillia Turner, President of the Georgia Federation of Teachers, told APN.
Even bigger than the Beltline news is a recent announcement by APS Superintendent Meria Carstarphen that she plans to “turn around” struggling schools by turning several over to charter operators, merging some, and closing others.
Teachers at Thomasville Heights elementary school protested by calling in sick en masse the morning after the turnaround announcement.
Atlanta Progressive News will have more on that plan shortly, so please stay tuned.
CORRECTION AND UPDATE 1: This article originally stated that APS was losing 88.5 million dollars, but the correct number, according to figures sent to APS by BOE Member Matt Westmoreland (District 3), is 63.6 million. This figure does not include the value of the AHA property sought by APS, seeing as how it is not yet clear whether APS will receive the property, and even if it does, the neighborhood has expressed opposition, raising further questions about the transaction.
CORRECTION AND UPDATE 2: A previous version of this article stated that the parties renegotiated in 2010; however, the renegotiation occurred in 2009, according to Jenna Garland, spokesperson for the City of Atlanta.
Why are APS being forced to underwrite the losses from the beltway boondoggle? This was just a land speculator’s deal based on the Bush presidency housing bubble that resulted from deregulation of financial institutions.
If I were in charge of Atlanta Public Schools, I’d go to court demanding immediate payment and force the beltway into bankruptcy and liquidation. Absent a renewed real estate bubble, the beltway project is not viable. Even today’s somewhat recovered property values are unlikely to hold once the economy abandons 2%-3% mortgage interest rates.
Basically, a project like this will only shift property tax income from one neighborhood to another. Real estate speculators profit by buying land at today’s prices in depressed areas that tomorrow will be worth many times as much, just as long as the character of the neighborhood changes. The way they change the character of entire neighborhoods is to come up with some grandiose scheme and get the government to pay for it.
Why threaten bankruptcy and liquidation? Because that will force land-grabbing real estate speculators (so-called “developers”) to choose between living up to the Beltway’s commitments to Atlanta Schools or losing their investments.
The idea that in this new agreement paying the APS would become a senior obligation to all others is absurd. Either that is *already* in the agreements with creditors or it cannot be added retroactively. If debt payments to the APS are already senior to bond payments, all the more reason to insist on liquidation and leave the bondholders holding the bag. If not, the inclusion of a commitment like this in this new agreement is meaningless unless backed by the full faith and credit of the state, county or city government and all its agencies.
Basically, Atlanta Public Schools got pulled into real estate speculative mania during Bush’s second term. It is time to recognize the foolishness of that action and liquidate the Beltline project unless it pays all its debts –with interest– to the Atlanta Public Schools.
The original agreement included a fixed dollar amount payment to APS. Because the recession happened, the expected increase in property taxes didn’t happen. So the city never collected the extra $63.6 million.
APS has plenty of problems, but a lack of funding isn’t one of them.
My progressive values include public transit for all people, including the ones in my neighborhood who need the Beltline transit to happen so they can access jobs in parts of the city where MARTA service is barebones.