The Atlanta Public Schools chief issued a lengthy, blistering criticism of the city’s proposal to publicly finance a massive redevelopment of the Gulch, and suggested a possible legal challenge, at an Oct. 11 meeting of the Buckhead Council of Neighborhoods.
“We can’t afford to do anything else… This will break the bank,” said Superintendent Meria Carstarphen. She demanded that APS have a role in deciding whether to use as an incentive a tax allocation district, or TAD, that would slash the school district’s share of Gulch-area taxes for decades, and suggested the plan would not survive a legal challenge.
Carstarphen said the city has long mismanaged existing TADs, including five that currently affect APS’s tax base. The city should fix those first, she said. “Don’t be gross. Don’t be negligent,” she said.
Her message to the city, she said: “Hold on. You have to clean up the past [TADs].” APS cannot take on the burden of another TAD funding program, she said, adding the district already works hard to cope with the loss of revenue from the existing ones with the attitude, “We’ll take care of this and suck it up because we were suckers.”
The city’s press office did not immediately respond to a request for comment.
According to Atlanta Journal-Constitution reports, Mayor Keisha Lance Bottoms and Carstarphen engaged in behind-the-scenes talks earlier this year about possibly closing out the Eastside TAD as a way of garnering APS support for the Gulch’s Westside TAD extension.
The Council of Neighborhoods is an umbrella organization of Buckhead civic associations. It invited Carstarphen to speak at its monthly meeting primarily to discuss the APS budget, property taxes and the state of the North Atlanta cluster. Her main comments about the Gulch and TADs came when she was questioned by attendee Bill Bozarth, who is also a mayoral appointee on Invest Atlanta, the city’s economic development authority.
Carstarphen was warmly received the by group, which applauded at the end of her comments. Members also posed with her for a selfie photo afterward. While speaking, she was flanked by Atlanta Board of Education members Nancy Meister and Cynthia Briscoe Brown. Also in attendance was Julian Bene, a former Invest Atlanta board member who has emerged as a prominent public critic of the Gulch deal and tax abatements.
The Gulch is a largely undeveloped 40-acre site downtown next to State Farm (formerly Philips) Arena. CIM Group, a California-based developer, is proposing a multibillion-dollar, mixed-use redevelopment there. The proposal is for a speculative development that may double as Amazon’s second headquarters if that still-secret bidding process ends up choosing Atlanta.
CIM and its supporters – including Bottoms and Gov. Nathan Deal – are seeking various public financing and tax abatements or exemption mechanisms valued at more than $1.5 billion. The City Council would have to approve part of the deal, with a vote possible as soon as Monday, Oct. 15.
One public financing mechanism is a TAD, pitched in the Gulch’s case at 30 years. In a TAD, the project would be funded by bonds, on the gamble that future development would pay off the debt. In the TAD’s area, property taxes would be frozen at the current low level, and further taxes from increased property value from the new development would go directly into its own infrastructure, not to APS or any other city project, for the life of the TAD.
Carstarphen said existing TADs are already draining APS’s coffers and alleged that the city is already over its legal percentage of the tax digest that can be subjected to them. She noted that some TADs, like one for what is now the Atlantic Station mega-development, are seeking extensions, saying they cannot pay their bonds off in time.
The existing TADs affecting APS “have not been managed well,” Carstarphen said. “…No matter what anybody tries to sell you, we’re not making anything off of them.” Paying them off on time – “not leaving it all funky with no end in sight” — could open room to consider something like the Gulch deal, she said, “but that’s not how Atlanta does its business.”
She also fears the Gulch project getting tax abatements as well. “And here’s my favorite part, as Bene knows,” she said. “They give abatements inside of TADs. It’s like double-dipping… No one’s asking questions. It’s just, ‘Give me more.’’
Carstarphen said she has no opinion on CIM’s proposal and that it is up to Atlanta officials to decide whether its people and its design are right for the city. “All I know is, we’re in a really bad deal” and cannot afford further TADs, she said.
One argument in favor of a TAD is that it will generate development — and eventually taxes — that would not exist otherwise. But Bene says the Gulch project will largely “cannibalize” development that would have happened elsewhere in the city, possibly under regular taxation.
Carstarphen and Bene also strongly criticized the Gulch project’s TAD structure, which is proposed as an extension of the existing Westside TAD rather than a new one. Bene said the Gulch project is enormous, singular and would not contribute to the entire Westside, so he concludes that is just a procedural sleight-of-hand to get around legal limits on creating a new TAD. Because it technically would not be a new TAD, APS was not consulted, Carstarphen and Meister said.
Carstarphen said she thinks someone “could make a legal case” that the Gulch project must be its own TAD. “There’s no way, I believe, anyone could legally get to the end of that” and succeed by saying it’s an existing TAD, she said.
Regardless, Carstarphen said, the position of APS and the school board is that, “if you’re going to go down that road [and use a TAD], you’re going to have to get our approval.”
Meister said that the City Council and Invest Atlanta got briefed on the Gulch plan, but APS did not. Carstarphen complained generally about a lack of information from city officials about deals that affect APS tax revenue.
“The communication is terrible” with Atlanta city officials, and “everyone is tight-lipped about what their strategy is,” she said. “You don’t know what’s coming around the corner… We have, ‘Surprise! There’s a new TAD. Everybody needs to get on board.’”
That also affects APS’s ability to work with officials and citizens on property taxes and its millage rate, Carstarphen said, citing as one example a new homestead exemption increase that is scheduled to go before voters on the Nov. 6 ballot.
She complained that “you can’t run numbers on something when people don’t tell you the whole truth.”
“If you can’t answer my questions, then I don’t have the info and I’d be one sorry CEO if I went to the public and said, ‘Just do what I say’…,” she said.