What happens now that the Atlanta BeltLine dispute is over?
Mayor Kasim Reed and Atlanta Board of Education Chair Courtney English smile for the cameras after a long and contentious negotiation.
The Atlanta BeltLine is the largest redevelopment project in the city’s history. Projected to cost nearly $5 billion—more than double the city’s investment in 1996 Olympics—the public-backed effort to turn a 22-mile ring of rusting railroad tracks into a multi-use trail with transit has garnered praise on par with its size: “The country’s most ambitious smart growth project” (The Atlantic); “A brilliant project that will completely transform Atlanta” (Business Insider); “Eraser of racial divisions” (National Journal). In recent years, though, a contentious $162 million standoff had ensnarled the BeltLine, placing the potentially transformative project in peril.
You can now breathe easy, Atlanta. After more than two years of tense talks—and angry sound bites—the City of Atlanta and Atlanta Public Schools have renegotiated an agreement that will prevent the BeltLine from going belly up. The new deal, officials announced, will require the city to immediately pay $14.8 million and transfer land to the school system. But in a big win for Mayor Kasim Reed, the city will be on the hook for only half of the remaining payments owed to the school system between now and 2030. Not only will APS get paid, but the BeltLine can also move forward without further threat.
“Without this resolution, the future of the BeltLine just had a cloud of uncertainty hanging over it in every respect,” Reed announced this morning.
The BeltLine dispute dates back to 2005 as the BeltLine evolved from a master’s thesis to a major public project. To fund the project, officials created the BeltLine Tax Allocation District (TAD), a localized tax paid by owners of property surrounding the project. Atlanta and Fulton County agreed to place a cap on the property tax revenue they each received. Any additional revenue—which, with rising property values in the bullish market, could be substantial—would go toward developing the project.
But the school board—the one that was in place before the cheating scandal broke—didn’t want to forgo tax receipts to help the BeltLine. In order to get the board’s buy-in, the city agreed to pay a flat amount to the school system that ultimately ended up being $162 million. At the time of the deal, the TAD was projected to bring in 60 percent of the BeltLine’s funding—a rosy outlook based on then-rising property values shortly before the Great Recession. But when the market tanked, it became clear that the TAD would only pay for a third of the BeltLine’s construction costs. What had looked like a good deal for everyone had turned rotten for the BeltLine—and the city.
In late 2013, the city made an initial $1.95 million payment to APS. But the following year, the city failed to make an expected $6.75 million payment, and withheld the next year’s payment as well. Behind the scenes, Reed was pushing to renegotiate the contract to reflect the realities of the current real-estate market—not the bubble of a decade ago. He argued that the agreement, which called for annual payments to climb all the way to $16 million in the next decade, could end up bankrupting a city government that had helped rebound during his administration.
APS, however, had no legal obligation to renegotiate the deal and no interest in doing so. School board officials stood their ground against a mayor known for his negotiating prowess. The children came first, board members argued, no matter the BeltLine’s merits. Former Superintendent Erroll Davis, who helped APS with the talks after his departure , threatened legal action against the city.
“Nobody’s going to negotiate at the end of a gun,” Reed said in June 2014. “So, if you’re going to take hostages, you’d better be ready to shoot the hostages.”
The lawsuit never materialized, but as talks slowed to a standstill, Reed faced pressure from parents asking him to settle the deal fast. He loudly rejected City Council President Ceasar Mitchell’s suggestion to make the late payments from the city’s general fund. The mayor refused to hand over deeds to school property that were kept on file at City Hall. He blocked critics on Twitter and fought for a better deal. Without that, Atlanta BeltLine Inc., the public entity responsible for the 22-mile loop’s construction and maintenance, would be placed in a bind: If ABI made the payments, it would have nothing left to fund future BeltLine construction. If no payments were made, ABI could be found into default.
Which brings us to this morning, when Reed and school board Chair Courtney English announced an end to the ongoing hostilities. Standing outside Park Tavern in Midtown a few yards away from the Eastside Trail, dozens of city officials and school board members were all smiles, posing for photos and making jokes in a rare moment of solidarity. Reed, who declared “the smoke has come from the House of Cardinals at the Vatican,” said negotiations with English were “tougher than Comcast.” Summarizing the deal’s importance, he said, “A healthier BeltLine means a happier APS.”
As part of the deal, Atlanta must immediately pay $14.8 million to the school system for two late installments, plus interest (in a good-faith gesture, the city late last year paid $9 million of this amount to APS), and make another $10 million payment next year. In return, APS agreed to a back-loaded deal for $73 million—half of the remaining $146 million the city owed—between 2016 and 2030. In addition, the city also will hand over the former Bankhead Courts housing project property near the Chattahoochee River just outside I-285. The school system intends to use the land—potentially up to nearly 45 acres—for a new bus yard. Both the school board and city council are expected to approve the deal within the next week. The land transfer must also be approved by the Department of Housing and Urban Development.
Of course, the biggest victor is the BeltLine and its development agency, which found it nearly impossible to get new loans with the APS debt hanging over its head.
“Much of what we wanted to do was put on hold,” said ABI CEO Paul Morris. “We didn’t have any confidence in the certainty of our revenue to plan or even spend funds. We had to freeze up our assets to be prepared.”
With the dispute finally settled, Morris said, ABI could “restart” delayed work. At the moment, the loop—which includes the Eastside and Northside trails—is slightly more than 15 percent complete (nearly 7 miles of spur trails are also done). The next segment, the three-mile Westside Trail between Adair Park to Washington Park, is fully funded and set to be finished next year. ABI recently picked a firm to design the four-mile Southside Trail connecting Memorial Drive to University Avenue.
Morris now plans to focus on land acquisition. The BeltLine will also need to play catch-up in meeting its goal of building 5,600 affordable housing units along the route. So far, ABI has only built about 200. “That’s not enough,” Morris conceded. “We have a long way to go.” Though the organization has launched other programs to preserve affordability—such as the funding of rehab projects for owner-occupied homes—Morris expects to pick up the pace toward meeting his affordable housing goals.
Lastly, Reed said, there could finally be discussions on how to fund light rail around the BeltLine. “Shortly after we wrap up these matters, we’ll be able to have a serious conversation,” the mayor told us. That’s no easy task given the massive cost associated with transit. Beyond the funding, it also requires a level of collaboration between private stakeholders and public partners that until recently didn’t fully exist. For the first time in a while, though, everyone seems to working to push the BeltLine forward.