Atlanta City Council to tighten its control of city’s urban renewal program in wake of stinging audit

By David Pendered

The most sweeping slate of reforms in some 20 years is on tap for the most popular urban renewal program in the city of Atlanta.

Atlantic Station - 3

Atlantic Station was built with help from the urban renewal program that is in line for reforms to be enacted by Atlanta City Council. Credit: Atlantaphotos.com

The measures expected from the Atlanta City Council are to be in place by the year’s end, and are to match the five recommendations of a performance audit that reviewed the city’s use of tax allocation districts. TADs enabled construction of such signature projects as Atlantic Station, Georgia Aquarium, projects along the Atlanta BeltLine, and the Center for Civil and Human Rights.

“We have a lot of work to do,” Councilmember Felicia Moore, who chairs the council’s Finance Committee, said after a work session Monday at which Atlanta internal Auditor Leslie Ward presented her agency’s report in a meeting that lasted nearly two hours.

Moore and Councilwoman Joyce Sheperd, who chairs the council’s Community Development Committee, agreed that additional meetings will be scheduled after the council’s summer recess.

At those upcoming events, which will be open to the public, a timeline and work list will be devised for enacting the reform measures. And the working meetings will be open to the public, as well, Moore said.

This plan indicates the council intends to make certain the reforms are presented in a timely fashion and enacted.

TAD map-Atlanta audit, 2012

The map shows the extensive amount of Atlanta that is encompassed in TADs, or tax allocation districts. Tighter controls of TADs are to be enacted later this year by the Atlanta City Council. Credit: Invest Atlanta, via TAD Performance Audit

The audit envisions the policy changes being devised by the city’s COO and chief financial officer and delivered to the council. The framework described by Moore and Sheperd puts the council in a position to take action on its own account.

The reforms intend to address a program that has grown gangly over the years. Each of Atlanta’s 10 TADs tends to operate under its own rules, which city leaders heralded at the time each was created because it allowed each TAD to help a certain blighted area.

But those individual rules have created problems with oversight and control, the audit determined. For example, there are no consistent rules over how to handle surplus revenues collected via property taxes – such as the $226 million the audit determined to be sitting in city coffers with no specific usage attached to the money.

The meeting Monday at Atlanta City Hall was intended to include representatives from Fulton County’s Board of Commissioners and the Atlanta Board of Education. Those two bodies have voted to contribute taxpayer dollars to the city-run TAD program.

No elected officials from those two groups were apparent at the meeting.

The city’s TAD program is managed by Invest Atlanta, the city’s development arm that formerly was known as Atlanta Development Authority.

Brian McGowan, president and CEO of Invest Atlanta, said at the work session that his agency looks forward to helping devise new protocols. McGowan has said that he implemented some reforms of his own after taking control of the agency last summer.

The Atlanta BeltLine is one area in which the city audit raised questions about expenses and suggested more oversight from the council. The Atlanta BeltLine, Inc. was created by Invest Atlanta as its agent to implement the BeltLine development plan. As such,  Atlanta BeltLine Inc. is subordinate to Invest Atlanta.

One section of the report addresses a $1.3 million reimbursement request submitted by the BeltLine’s managers in March 2011. The questioned expenses include:

  • “$232,749 for staff salaries and benefits, which included pension contributions on previously granted bonuses totaling $26,000 to two employees. Benefits include a 15 percent contribution to employees’ pension accounts, which is considerably more generous than the city’s 6 percent contribution to employees’ defined contribution plan accounts;
  • “$59,243 in payments to Invest Atlanta for shared services and allocated staff time;
  • “$25,000 for two monthly retainer fees for a lobbyist;
  •  “$9,835 for credit card charges, travel and miscellaneous expenses, including an executive retreat and staff dinner.”

The audit made five specific recommendations for the council to consider. They are listed on pages 65 and 66 of the 94-page audit.

Click here to read the full audit.

Here is the entire section on recommendations included in the audit:

“To improve oversight and accountability of public funds generated by the tax allocation districts, the city’s chief operating officer should:

  1.    Propose for City Council approval modifications to the city’s service agreement with Invest Atlanta to require it to develop and report annual evaluations of each tax allocation district to assess progress towards completing specific projects and achieving goals established in the redevelopment plan.
  2.    Develop a policy to review annually surplus increment once the redevelopment plan is substantially completed and establish criteria for using surplus increment to pay down debt, return surplus increment to participating jurisdictions, or reallocate surplus increment to a debt service reserve or for a specific development project.
  3.    Before seeking reallocation of increment to new projects outside the intended scope of the redevelopment plan, require Invest Atlanta to prepare for City Council consideration an amendment to the existing redevelopment plan that includes at minimum:
  • establishment of the “but-for” clause for the projects within the expanded scope;
  • proposed specific uses of funds;
  • anticipated benefits to be produced by the private sector
  • entity receiving assistance;
  • description of sanctions, such as a claw back provision, for failure to meet goals.
  1.    Work with Invest Atlanta to re-evaluate its redevelopment strategies in the corridor districts as appropriate, considering current economic conditions in those districts.

In addition, the city’s chief financial officer should:

  1.   Propose for City Council approval revisions to the city’s service agreement with Invest Atlanta to:
  • include preparation of financial reports at least annually showing how public funds were used to support tax allocation district redevelopment plans.
  • require Invest Atlanta and any of its affiliates to provide detailed budgets at least annually showing proposed uses of tax allocation district funds by fund.

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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