Day in court scheduled for challenges to public financing for Gulch construction

By Maggie Lee

Atlanta’s schools, plus a separate set of activists, have filed court challenges to a controversial city plan to subsidize a huge private construction project in the Gulch.

A group of Atlanta residents say there are legal problems with the city’s plan to issue and modify bonds that would help pay for the construction of as much as 12 million feet of new office, retail and residential space in Downtown Atlanta at a cost of as much as $5 billion.

They — and APS separately — have asked for time in front of the Fulton County judge who would need to validate three bond transactions.

A view of the Gulch with State Farm Arena in the background. Credit: Kelly Jordan

A view of the Gulch with State Farm Arena in the background. Credit: Kelly Jordan

The city would issue bonds, then use that money to help pay the bills of the CIM Group, the developer. The bonds would then be paid off with property taxes (which would otherwise go to the city and schools) and some sales taxes collected in the Gulch development itself through 2038. The city says those taxes foregone could come to something near $2 billion.

That’s a common enough strategy to jumpstart building in depressed parts of town; the Gulch area is already part of such a zone called the Westside Tax Allocation District. But the terms and the scale of the deal made it controversial.

Julian Bene, one of those four residents, said they have about 30 objections. The four — Bene, former state Sen. Vincent Fort, plus housing activist Tim Franzen and resident Jim Martin — were some of the most vocal critics of the deal as it moved through Atlanta City Council, and are some of the leaders of the Redlight the Gulch coalition.

“Our objections are objections as to law and the constitution of the state of Georgia,” said Bene.

Bene said the city’s presentation of the deal to Atlanta City Council was deceptive. For example, he said Atlanta Public Schools are only obligated take part in the deal through 2023; but that the city had presented APS as a part of the deal through 2038.

There are other aspects to the legal challenge too, like to the apparent creation of of a sort of TAD-within-a-TAD for the Gulch within the Westside TAD; and an allegation that the city doesn’t have the redevelopment power it claims, among many others.

Atlanta Public Schools are also making a legal challenge to the two bond transactions that deal with property taxes, but have been tight-lipped about details so far.

APS spokesman Ian Smith said in a written statement that APS must file its written objections to the court by the afternoon of Dec. 14.

APS “cannot speak to the accuracy of other parties’ challenges as it relates to this matter. The other interveners do not speak on behalf of Atlanta Public Schools,” he wrote.

Last week, the Atlanta Board of Education passed a resolution asserting that their would-be property tax dollars in the Westside TAD can’t be used for economic development without their written approval.

In response to a request for comment, a city of Atlanta spokesperson wrote that “the city cannot comment on the substance of the intervention at this time. However, we remain confident that the financing plan complies with State law and we intend to use the period between hearings as an opportunity to continue discussions with our partners at Atlanta Public Schools.”

Atlanta Mayor Keisha Lance Bottoms, who strongly championed the Gulch deal, said last week that the school board’s vote was “disappointing.”

Chief Judge Robert McBurney of the Superior Court of Fulton County, after hearing from attorneys for APS, the four city residents, the city itself and an affiliate of the CIM  Group, scheduled a hearing on Dec. 19 at 9 a.m.

Documents:

Answer and objections for three bond transactions, by the four Atlanta residents.

2018-CV-313247 Answer and Objections

2018-CV-313248 Answer and Objections

2018-CV-313249 Answer and Objections

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

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