Update: Atlanta, schools reach deal over Gulch developer subsidy

By Maggie Lee

Atlanta Public Schools will forego some property taxes as part of a city-state plan to subsidize development in the Gulch, in a deal that touches on such development subsidies across the city.

“I’m excited about the fact that this agreement reduces our exposure while at the same time gives us guardrails,” said Atlanta Board of Education Chair Jason Esteves on Monday morning, just before his board unanimously voted an overhaul to how the schools participate in special zones that see governments forego taxes to subsidize economic development.

the gulch

A view of the Gulch. Credit: Kelly Jordan

The vote signaled an end to APS’ legal challenge to just such a deal, supported by Atlanta Mayor Keisha Lance Bottoms and most of City Council, to subsidize a developer’s plan to rebuild some 40 acres of mostly vacant land Downtown.

APS had been preparing for a legal challenge to the bond sales that the city needs to do to raise up to nearly $2 billion in promised subsides for CIM Group, the Gulch’s developer. The money will ultimately come from the state and local government (and schools, under this deal) foregoing some sales and property taxes in a special westside zone until 2038.

APS was set to argue their objections to being in such a deal in a Jan. 16 court hearing.

It’s common enough for the city, county and schools to forego some increment of tax money and use it instead to jumpstart development in run-down parts of town. Such zones where that happens are called “tax allocation districts.”

The idea is that down the line, a built-up neighborhood does pay taxes: more than it would have without the developer subsidy.

But the huge price tag on the Gulch deal made it unusual. When details of it started coming out last year, what followed was criticism from APS Superintendent Meria Carstarphen, who was concerned about another a new, huge TAD development without closing or renegotiating any of the other five TADs in which APS participates.

So under the deal, APS will be a part of the Westside TAD — this zone that includes the Gulch — until 2038. APS will also join four other TADs from 2020 through 2050: Campellton Road, Hollowell/M.L. King, Metropolitan Parkway and Stadium.

But on the flip side, the city will pay APS the property taxes that schools would be due in an ongoing Eastside TAD, the equivalent of ending the schools’ participation there. And the city will reimburse the schools for some participation in the Westside TAD.

Schools will join those other TADs in steps, as the Atlantic Station TAD is wound down. In the new ones, schools’ participation will also be capped.

“Before you had no limits and projects [in TADs] could just keep going,” Carstarphen told her board, urging passage of the deal, saying it adds limits the schools’ exposure to TADs, evens it out over time, and spreads the work of TADs to the west and south parts of town.

“This is where we think you’re able to get some predictable, foreseeable, manageable, future around TADs,” Carstarphen said.

The critics of the Gulch deal remain as opposed to it as ever — and aren’t interested in the TADs that the schools will join as part of the deal. They don’t see what the schools get for foregoing property tax money.

“Think about the world that we live in, think about the students that deserve more opportunities, like me, to go to GSU,” Carver Early College almuni Ashley Sheats told the school board on Monday morning.

“The early college program opened up so many windows and doors for me. I am beyond grateful for what APS has done for me, but i would like to see them do more for the next generations,” she said, listing some of the things that she saw her fellow students needed: meals, more aides for special needs students and more assistive technology.

She was one of several residents and activists who came to APS’ special called meeting on the deal Monday morning.

Carstarphen said the deal represents a net gain of $130 to $180 million to the schools — based mainly on getting refunded for the Eastside and Westside TADs.

But Redlight the Gulch, a loose coalition of activists who fought the deal in Council, and whose leaders are part of an ongoing legal challenge to the bonds, put the net cost of the deal at $520 million to schools.

But that very different calculation assumes schools are joining in a Westside TAD that they don’t have to — and therefore foregoing hundreds of millions of dollars.

So are the schools already legally obligated to take part in the Gulch deal?

Well, there are “different legal views” on that, said Carstarphen.

The deal also needed Atlanta City Council approval, which it got unanimously on Monday afternoon.

Atlanta Tax Allocation Districts:

Download these map files at carto.com or from the city of Atlanta.

This story has been expanded since being first written on Friday. The original version is here.

Maggie Lee is a freelance reporter who's been covering Georgia and metro Atlanta government and politics since 2008.

4 replies
  1. Carolyn Wood says:

    I’m confused. This article states that APS “will be part of the Westside TAD” then discounts the argument that APS is losing hundreds of millions of dollars by stating “that very different calculation assumes schools are joining in a Westside TAD that they don’t have to — and therefore foregoing hundreds of millions of dollars. Is APS definitely part of the Westside TAD, or do they not have to join?Report

    Reply
  2. Maggie Lee
    Maggie Lee says:

    I think it’ll remain confused or unknown — if it’s not going to be argued out in court, then we’re left with “different legal views.”Report

    Reply
  3. Carolyn Wood says:

    Thanks for replying, Maggie. But, how can there be “different legal views” as to whether APS is part of the Westside TAD? Isn’t that a verifiable fact? I understand that there are different views of the consequences of being part of the TAD, but whether they are a part doesn’t seem up for interpretation.Report

    Reply
  4. Julian Bene says:

    APS in 1998 agreed to participate in Westside TAD to 2023. But they also had the right not to continue even before that except for issued bonds that their taxes support. Which is why their Dec 7, 2018 opt out was lawful. They had all the leverage and could have stayed out of the Gulch and any new spending in the rest of the Westside. Instead, they threw away their hand yesterday, and with it $520mm net in school money. Developers have a lot of power in this town and voters don’t have a strong track record of holding their elected officials accountable for this sort of massive developer welfare check.Report

    Reply

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