Atlanta Schools, ADA strike deal over TAD funds
June 9, 2009 at 3:08 pm by Thomas Wheatley in NewsAfter several months of negotiations, the Atlanta Public Schools board yesterday approved a deal with the Atlanta Development Authority that will return $18 million to the cash-strapped school system.
At issue was $18 million the ADA had already collected from the Beltline and Perry/Bolton tax allocation districts, or TADs. TADs are complex — and controversial — redevelopment tools which use property tax increases to pay for roads, sewers and other infrastructure fixes in traditionally blighted areas. (Atlantic Station and downtown’s Ivan Allen Plaza are examples of TADs.) In February 2008, the Georgia Supreme Court banned school boards from participating in the projects. In November 2008, Georgia voters approved a state Constitutional amendment that would allow school boards to participate. In April, state lawmakers passed — and Gov. Sonny Perdue signed — a bill that fine-tuned TADs and allowed schools the option not to participate in the projects.
Under yesterday’s agreement, ADA will return $12 million to the school system, but will still have access to $6 million. It will pay that chunk of change back to APS — at 3 percent interest — over the next 10 years. Doesn’t that sound like a loan, which, under APS’ charter, the school board is not allowed to make? Officials stress it’s not. An APS spokesman tells CL that the deal is simply repayment of money that ADA had retained prior to the Supreme Court ruling.
“We are pleased a resolution has been reached on this matter, which will benefit both the BeltLine and Atlanta Public Schools,” a Beltline spokesperson wrote in an e-mail to stakeholders. “Educational achievement and economically vibrant neighborhoods go hand-in-hand. We look forward to continuing to partner with APS in ways that improve the quality of life in Atlanta’s communities.”
You can view a copy of the school board’s resolution here (PDF). Warning: It’s one of the most confusing documents in the world.
June 9th, 2009 at 4:03 pm
These TADs are one reason why our city millage is going up.
The city’s property tax revenue has been flat since 2002 despite enormous construction growth. Nobody points that out. Why? Because mayor and council seem to have given away the new revenue that all this growth should have generated. TADs, developer abatements and perhaps $70 million of uncollected tax annually. That leaves the ordinary resident to pick up a millage increase this year on top of past increases resulting from higher assessments. Isn’t it time the local pols worked in the interest of the residents?
June 9th, 2009 at 4:53 pm
Last night, the Atlanta Board of Education approved a resolution affirming its participation in two City of Atlanta tax allocation districts (TAD); the BeltLine TAD and the Perry-Bolton TAD. We are pleased a resolution has been reached on this matter, which will benefit all the citizens of Atlanta and Atlanta Public Schools (APS). Educational achievement and economically vibrant neighborhoods go hand-in-hand. We look forward to continuing to partner with APS in ways that improve the quality of life in Atlanta’s communities.
The resolution was the result of nearly two months of negotiations among The Atlanta Development Authority, Atlanta BeltLine, Inc. and APS. While the issue of school district participation in TADs was considered by the courts and voter referendum, property taxes assessed by APS were collected amounting to $6 million in the Perry-Bolton TAD and $12 million in the BeltLine TAD. In response to the February 2008 Georgia Supreme Court decision that the existing constitution did not permit school districts to participate in TADs, the voter referendum in November 2008 amended the state constitution to allow school districts to participate in TADs. On April 22, Governor Purdue signed House Bill 63, affirming the will of the voters to reenact the Redevelopment Powers Law and grant school districts the ability to participate in TADs. As a result, APS has once again chosen to participate in the BeltLine and Perry-Bolton TADs.
Under the resolution approved yesterday by the Board of Education, all of the retroactive school district tax increment collected in the BeltLine and Perry-Bolton TADs will be released to APS, and the BeltLine may have access to $6 million. This agreement will help APS meet its needs in the short term and preserve momentum for the BeltLine project and the Perry-Bolton area in NW Atlanta.
ADA now turns its focus on the city’s final four TADs. Having suffered decades of disinvestment, ADA hopes that investment by the City, Fulton County and Atlanta Public Schools can lay the foundation to turn around the areas in and around Greenbriar Mall, Turner Field, Lakewood Fairgrounds, Fort McPherson, Bowen Homes, Bankhead Courts and Atlanta Industrial Park. The final four TADs, sometimes referred to as the Commercial Corridor TADs will operate as pay-as-you-go TADs, which opens the door to small and mid-size scaled projects. Bond issuances may be used in addition to Pay-Go when the scale of a project would support such financing. “These areas of the city need every incentive available in the toolkit,” says Cheryl Strickland, Managing Director of TAD Programs. “Without the help of APS, we can’t guarantee anything will happen, which would be a shame. It’s about equitable investment and equitable development.”
Over the next 25 years, the final four TADs have the potential to create 16,000 new jobs, add 5.7 million square feet of new commercial space, yield more than $255 million in new sales tax revenue, grow property tax revenues in the districts by 70 percent and attract a staggering $5 billion in new private investment.
TADs are a national redevelopment best practice. TADs are playing a major role in Atlanta’s revitalization, according to a study released in 2007 that provides a first look at finances and growth rates for Georgia’s tax districts. “They promote redevelopment in areas that were underutilized, and they’re doing it in a way that lets new development – not the average tax payer – pay for the public projects needed to make the development happen,” says Jim Durrett, executive director of the Livable Communities Coalition.
June 9th, 2009 at 9:01 pm
This PR piece from ADA is a completely misleading snow job to fool Atlantans into giveaways that are resulting in higher tax rates.
The city gives up tax now for some pie-in-the-sky tax revenue in the future? First, we’d get the growth without TADs – developers will build in places which they judge to have demand and nowhere else. Second, we’ve had Atlantic Station (a TAD property) open for years now, and the city’s total sales taxes have barely budged in the past 6 years.
APS gave up its revenues in the Beltline TAD and turned around mere months later and socked us with an extra cent on sales tax. How much more obvious can it be that TADs siphon off needed revenue and force the rest of us to pay higher taxes to make up for it?
June 9th, 2009 at 9:58 pm
Julian. You are mistaken. We would not get the growth anyway, were it not for the incentives TADs provide. The area around Centennial Olympic Park (Georiga’s first TAD) is a great example. TADs just provide the “spark.” Eventually, the market takes over because the demand builds and people begin to see the vision for an area. But by then, people forget what the place looks like before the TAD was put in place. Yes, I know you are thinking I’m saying this because I work for ADA, but I actually do believe it.
June 10th, 2009 at 1:22 am
Sonya can you explain to me why in the world we would want the School System directing where are tax dollars are spent on something as significant as the Beltline project?
The APS fund doubles our General fund and whatever it is we pay Fulton County for. It doesn’t surprise me that that Fund is where the Development Authority went but hasn’t Atlanta footed the bill for enough development on its own.
Rather than give the School Board a position it has no Business being in wouldn’t it make more sense to align the Millage rates for education to match our needs for education.
You get into a real harry area when you plug your development costs to justify an ever increasing millage rate for education.
Please consult the following site that explains the purpose and method of calculating Millage rates, something that Atlanta has yet to do, ever.
http://www.millagerate.com/blog/explained/
Isn’t it enough to ask us to pay for the Mass Transit, the overhaul of our Sewer system, EVERY bit of our Roads and the amount of pollution we suck down cause we whore this city out for PENNIES compared to any other city of its size?
Why are you unable to find a way to tax the commuters that are actually driving the need for the Beltline? I don’t want to hear that we have tried cause that is what you say every time and then I get to foot the bill anyway. Try harder or at least show me that you have.
June 10th, 2009 at 1:45 am
Julian Bene I think your thnking is flawed. It seems to me that the vast majority of construction growth over the last few years in the city has occurred outside of TAD’s in Buckhead and Midtown.
Secondly, your description of how TADs work is inaccurate.
Lastly, sales taxes are down because people are spending less.
June 10th, 2009 at 9:49 am
Turner. You ask, why in the world we would want the School System directing where are tax dollars are spent on something as significant as the Beltline project?
Answer: The concept behind any TAD is taking a blighted area (usually a haven for crime) that isn’t generating much tax revenue for the city, county and schools anyway and trying to do something different to turn things around. Any revenue that the area was generating, still goes to the 3 taxing jursisdictions, so nothing is being taken away. But the TAD is basically a bet that if the 3 taxing jurisdications come together and agree that any FUTURE tax revenue can go towards infrastructure or developer incentives, that at the end of the life of a TAD (usually 20-30 years) each taxing jurisdication will receive a windfall. There is a definite ROI. In the meantime, quality of life goes up for all Atlanta’s and kids have a safer walk to school. Hope that answers your question.
June 10th, 2009 at 12:03 pm
Growth way up, city tax revenue flat. Why?
Residents have seen public safety degrades and now our property tax rates are going up. As S&P says in its recent report on the city, Atlanta cannot manage to break even in the good times, so the outlook is poor. Why is this?
There are three explanations.
1. Tax abatements (giveaways) to developers. They are more or less secret, which is why the press never discusses them. But as Frankly says, and consistent with what I said in my first comment above, most of the development in the 2002-2008 period has been outside the TADs. Why have the billions of dollars of property in the new towers in Buckhead, Midtown and Centennial Park not raised the city’s revenue by one dollar? After all, homeowners’ assessments have also rocketed in the same years. It must be largely tax giveaways (abatements) that mean the new towers are not paying property tax at the rates homeowners have to pay.
2. TADS. In 2008 TADs siphoned off $13mm from the general fund, not a huge amount. The amount will soar as development of the attractive part of the Beltline TAD near Piedmont Park takes off. This never had any business being in the Beltline because it’s so desirable to developers. Except if your name’s Wayne Mason, in which case you made a cool $40mm profit on the tracks deal at residents’ expense, brought to us courtesy of ADA. (Whose side is ADA on? Not that of the ordinary resident, which is why they need a small army of PR folks churning out misleading info.)
3. Unpaid property taxes according to the city jumped from $10mm to $30mm from 2002 to 2007. The state puts Atlanta’s unpaid 2007 property tax at closer to $70mm. Why don’t tax liens work to recoup from the deadbeats? What happens to those liens? Why are the rest of us facing millage increases to cover the non-payers?
4. Sales tax should have grown substantially from 2002 to 2008. It managed an anemic 9% in those six years. Inflation in retail prices alone would have seen to much more than that. In addition, the city population grew 25% in those years and we had a consumer boom. The recession did not hit retail until second half 2008, which is after the city’s fiscal 2008 ends. Where did the sales taxes go?
Maybe the city has found ways to rebate sales taxes for favored mall developers. Or someone is looking the other way on collections. The tax gap cries out for explanation.
Before council whacks another tax increase out of us, we should get answers – and the media need to get on it. What we need most from candidates is a commitment to stop playing tax games that favor the well-placed few over the residents.
June 10th, 2009 at 12:45 pm
The sole goal of the Atlanta Public School Board of Education is to educate our children and provide them with a solid school system. The Atlanta School Board is obviously failing at its core mission. And now the School Board has the incredible audacity (and stupidity) to take school tax dollars and send them to real estate developers? On some cockamamie theory that a benefit will trickle down to the students and the school system sometime in the future? Do they think people don’t see through this bullsh*t? All the bums on the APS School Board need to be tossed out of office. And immediately! And while we’re at it, let’s get a new management team at ADA. They are doing an equally miserable job.
June 10th, 2009 at 12:49 pm
Sonya Moste says that TADs help blighted areas. But essentially all of the proceeds from the last Beltline bond went into the pockets of Wayne Mason. And the land that was bought from him was mostly in Morningside and Virginia-Highlands. Who is Sonya kidding? Morningside and Virginia-Highland are not blighted, unless you compare them to Rodeo Drive in California. Sonya: Please explain.
June 10th, 2009 at 1:04 pm
Sonya can you please incorporate the School System into your response since that was what my question was about?
Can you also explain to me how the ROI is ‘definite’? I’m sure the same was said about Undergound Atlanta.
June 10th, 2009 at 1:13 pm
Julian I would offer that the Shaffer Amendment was the first blow to Revenues. North and South Fulton then Incorporated which cut Atlanta out. There was very little press about it. humm…wonder why.
http://www.votedavid.com/press/files/060612lriley.htm
The Metropolitan Area grew by 25% but the City of Atlanta only grew around 9%.
The constant reduction of Millage Rates throughout Shirley’s term also lead to the decline in Revenues. There was no basis or mathematical reason for the cuts they just made them and now we are up the creek with 0 reserves.
June 10th, 2009 at 1:27 pm
TAD money is not the reason the state is ranked last in education. Education is not a priority to state govt.
June 10th, 2009 at 1:29 pm
The thing that we should all keep in mind is the the $18M APS was debating was only two years of background growth in only two TADS. Background growth is, by definition, growth that would have happened anyway. Over the life of these TADs, APS will therefore donate at least ten times this much money (and probably a lot more) to these two TADS alone. None of this money was in any way “generated” by these two TADs and all of it will be made up for out of taxes raised outside of the TADs. CoA and Fulton will be making similar donations to TADs. This is essentially a direct subsidy. When it jacks up its mill rate CoA will, by necessity, be jacking up the amount of its TAD donations. If APS and Fulton do this, then they will also be increasing their TAD subsidies.
There are a host of indirect subsidies associated with new TAD-generated (vs background) development that occurs within TADs also. This is because none of the public services required by this new development will be funded by the TADs’ revenue stream. Instead services (police, fire, public works, etc) will be paid for out of the general fund, which relies on revenues from outside the TADs in order to pay the bills.
Shocked, you should remember that the $40M that we donated to Wayne Mason was all borrowed money. It will cost the TAD way more than $40M because the TAD is paying more than 11% to Wells Fargo for the loan. Shocking, isn’t it?
June 10th, 2009 at 1:57 pm
Jim are you going to be at the next Atlanta Finance Exec budget meeting or what?
The last one only lasted 15min and I got there late. There is certainly more to talk about.
I believe it’s on the 14th at 6 or 7pm. will look later.
June 10th, 2009 at 2:13 pm
There is a massive gap between what the city’s property tax take should be and what it actually takes in.
Turner, the Shafer amendment has nothing to do with city taxes. Mayor Franklin claims a 25% increase in city population and the census data more or less support that.
The property tax digest increased by 50% – from $17bn in 2002 to over 26bn in 2008. Where on earth did the city’s tax revenues disappear? Unless y’all like paying more and more tax to subsidize developer profits, you should want answers, too.
June 10th, 2009 at 2:15 pm
There’s too many made up facts in this stream to count. Jim Martin and Shocked- I’m talking to you. The BeltLine is a long term investment in Atlanta’s future. Long term, as in the benefits will not manifest themselves overnight. They will take time, they will cost money, and they will ultimately transform this city for the better. There will always be armchair quarterbacks nitpicking all the individual plays- but it’s important for people to remember that bold, visionary projects do not happen in neat, orderly ways. They take hard work, some risk taking and not everything works out the way you want it to. I think the vision for this project is compelling enough to keep people focused on making it come to reality- and get done well. As a long time observer of cities, this is one of the most exciting projects I’ve ever seen, and it has strong, broad support. Instead of sniping and spreading misinformation, I encourage people to take a good look in the mirror and ask themselves, do they want more of the same, unsustainable sprawl and traffic, or do they want to pursue something bold that will create a better city?
June 10th, 2009 at 2:22 pm
Voice of Reason: Tell me where I’m wrong. Didn’t almost all of the proceeds from the last BeltLine TAD bond issue go to pay the Wayne Mason note?
June 10th, 2009 at 2:29 pm
‘Voice of Reason,’I did not see you specify a single factual inaccuracy on this stream.
Speaking for my input, it’s based on the city’s financial reports (CAFRs), a city document of 2007 showing property tax trends, the state DOR’s digest and tax data for the city and S&P’s latest city bond report.
If taxes are diverted from the general fund, whether by abatements, TADs or non-collection, the rest of us have to make up the difference. It’s time we heard that honestly from politicians and developers. Very few would have voted for Wayne Mason’s outrageous $40mm Beltline profit knowing it would come out of our hides.
June 10th, 2009 at 2:31 pm
Shocked- what’s a Beltline without 20% of the land? Or do you propose the Beltline not serve northeast atlanta?
June 10th, 2009 at 3:03 pm
Julian -
From the 2002 CAFR
Population according to 2000 Census
416,000
http://www.atlantaga.gov/client_resources/government/finance/cafr/coa%20cafr%202002.pdf
From the 2008 CAFR
Population according to Census Bureau
461,956
http://www.atlantaga.gov/client_resources/government/finance/cafr/coa%2008%20annual%20report%20finance.pdf
For an increase of 10% which is not more or less 25%
How can subsidies that the City was receiving that it now doesn’t not have something to do with City Taxes?
June 10th, 2009 at 3:32 pm
Turner
The Census Bureau says Atlanta is up from 416,000 in 2000 to 517,000 in 2007. Looks close to 25% to me. (Ref below) The 2008 CAFR must have used the wrong figure.
A City CFO presentation of mid-2008 says the city’s population increased 20% from 2002 to 2008. From memory, the Mayor’s budget latest letter says the growth is up to 25% now.
http://factfinder.census.gov/servlet/SAFFPopulation?_event=ChangeGeoContext&geo_id=16000US1304000&_geoContext=&_street=&_county=Atlanta&_cityTown=Atlanta&_state=&_zip=&_lang=en&_sse=on&ActiveGeoDiv=&_useEV=&pctxt=fph&pgsl=010&_submenuId=population_0&ds_name=null&_ci_nbr=null&qr_name=null®=null%3Anull&_keyword=&_industry=
June 10th, 2009 at 3:39 pm
So how is it that with such rapid growth in the city we have no more property or sales tax to show for it and to run operations like police and fire?
And, Turner, N Fulton’s Shafer money was being spent by the county, not by the city. It would not show up as tax revenue anyway.
June 10th, 2009 at 4:02 pm
Actually I do remember 517K now that you mention it. I’ve looked at so many friggen budgets between North Fulton, South Fulton, All of Fulton and Atlanta it’s insane.
The only thing I would say about the Shaffer Amendment is if we had to supplement what was being spent with our Revenues it would impact Taxes but would agree it would not impact Revenue numbers if that is the case.
Do you have any more info on what types of things the amendment is speaking to so I can look into the impact if any?
June 10th, 2009 at 4:21 pm
Turner, Thanks for letting the facts speak. Yes, reconciling the data can feel like a full-time (unpaid)job!
The impact of the Shafer amendment – diverting N Fulton money back to N Fulton – would presumably be to raise Fulton’s need to find money to maintain S Fulton services. Whether that has translated to a tax increase for all Fulton residents – or only for S Fulton special tax district – or alternatively to service cuts – I really don’t know.
June 10th, 2009 at 5:44 pm
The property Tax pie, as I understand it, is cut like this:
25% To Fulton
25% To the General Fund (it’s actually a little less)
and 50% goes to APS.
The Fulton Chunk goes to Mental Health, Libraries, Judicial System and Parks and Rec.
I’m pretty well versed on the General Fund. Where do I go to break down the Fulton Chunk and the APS chunk year over year?
I think that is the first step to see where the hell the revenues went. Any advice in that direction would be appreciated.
June 10th, 2009 at 6:32 pm
Voice of “Reason”: What is a beltline without 80% of the land? That is what ABI has now. The bit that they bought from Mason is the only bit that they own.
There should have been no urgency involved in purchasing the land from Mason. It had a rail easement running through it. Was someone else about to buy land with a rail easement through the middle of it?
If it is a long term investment, then why was the land bought with a 1-year loan at 11% interest (actually the 11% is interest + “fees”)? Would you buy a house with a credit card? The stupidity of doing that would have nothing to do with the useable life of the house or with how nice a house it was. It would still be a dumb way to spend money (i.e. on interest payments).
June 10th, 2009 at 10:36 pm
Voice of [Lack of] Reason: Your first post accused me of making up facts. I asked you to expalin why I was wrong. Now you changed the subject. What gives? Is it not you making up facts to suit your weird agenda? The fact is that almost all of the Beltline TAD bond proceeds went to pay off the Wayne Mason note. So, Atlanta taxpayer dollars went to a Gwinnett real estaste developer to buy prime land in teh NE quarter of the city. What does that deal have to do with blighted areas, as you suggest in your early post?
June 10th, 2009 at 11:09 pm
Shocked, the problem is not that the money went to Wayne Mason. He is entitled to make a profit since convinced the BeltLine to buy his land. The problem is what process (if any) was used to make the dceision? It seems little or no thought went into the decision, and that Mayor Franklin and Terri Montague were just out there negotiating without any knowledge or experience. And boy did they (read that as: we the Atlanta taxpayers) get snookered!
June 11th, 2009 at 9:36 am
Wayne Mason should not be entitled to make a $40mm profit on top of his $25mm investment in two years from his political pull. The guy had Roy Barnes in his pocket, shilling for him in a public hearing at City Hall, and doubtless pulling plenty of strings behind the scenes. So why would one not assume that Shirley, too, was well paid to negotiate on the city’s behalf with both arms tied behind her back. Anywhere sane, this is called corruption.