A Beltline advisory committee charged with ensuring the 22-mile project sticks to its vision of connecting Atlanta in an equitable manner told Beltline leaders the project should not spend a large chunk of its first allocation of funds on a vital piece of property that runs along Piedmont Park.

In a polite-yet-firm letter addressed to Atlanta Beltline Inc. CEO Terri Montague, Eugene Bowens, Sr., chair of the independent advisory committee, said the group could not agree with what's looking to be a necessary move -- use more than half estimated $122 million that will become available later in the year to pay off loans and debt for the land.

"TADAC is deeply concerned that using such a large portion of the bond proceeds in this way and for the Northeast quadrant alone is not equitable or appropriate and that other key BeltLine projects will be limited or deferred altogether," Bowens says. "While TADAC acknowledges ABI’s need to be responsive to the dynamic and often unanticipated demands of the market, TADAC’s understanding of and limited involvement in the decision-making leading up to the transaction, together with the other concerns that are raised in this letter, prevent us from supporting the transaction (and its subsequent refinancing)."

The committee advises Beltline leaders to try to alter the financing deal, reduce funding for the northeast section of the Beltline that encompasses the property, and dedicate future sales of land to other parts of the Beltline.

The property is owned by Gwinnett County developer Wayne Mason and his son, Keith. ABI and Barry Real Estate entered a joint agreement to purchase the land after a prior deal with the father and son ended in the two walking away frustrated by the city.

The issue strikes at the core of the Beltline -- using an ambitious project to not only connect all 45 neighborhoods along it, but also attempt to right past wrongs and revitalize areas of the city that have long languished in blight and watched progress blossom elsewhere. It also raises the question currently being debated by Beltline leaders, activists and the city as to what "equity" really means.

Beltline CEO Terri Montague was asked last night how she felt about the letter. She said she had only just received it and was not prepared to comment.

Full letter is pasted after the jump.

For background on the Mason property, click here. A May article explored how this issue would be a touchy one.

July 8, 2008

Ms. Terri Montague

President and CEO

Atlanta BeltLine, Inc.

86 Pryor Street, SW

Atlanta, Georgia 30303

RE: TADAC RESPONSE TO ABI’S REQUEST FOR ADVICE

Dear Terri,

The Tax Allocation District Advisory Committee (“TADAC”) is fully committed to the vision and guiding principles of the Atlanta BeltLine and remains supportive of Atlanta BeltLine, Inc. (“ABI”) and the issuance of TAD bonds during 2008. We believe the mission of the BeltLine can ultimately be realized and that ABI’s revised Five Year Work Plan will remain faithful to the principles of equitable development, community engagement and prudent fiduciary management.

In a letter dated June 2, 2008, you requested formal TADAC advice “on whether or not the committee supports ABI allocating a significant portion of BeltLine TAD bond proceeds in order to prevent a default and eventual foreclosure on the Northeast BeltLine corridor property, should this action become necessary later this year”. Over the past several weeks, TADAC has met with you and members of your staff regarding ABI's proposed uses of proceeds from the upcoming BeltLine TAD bond issue.

Based on our conversations with you and your team and information that was provided, we understand that ABI seeks to allocate up to $66M of the bond proceeds to pay certain debts associated with the original financing of the Northeast Corridor purchase. We also understand that financing to include a seller-financed note that needs to be paid in full, refinanced or otherwise restructured by October 31, 2008 to allow for the continued ownership and control of a five-mile arc of the BeltLine. While TADAC fully appreciates the importance of controlling the right-of-way in the Northeast Corridor and ultimately supports this end goal, TADAC, at this time, cannot support using the TAD funds as currently proposed by ABI.

TADAC is deeply concerned that using such a large portion of the bond proceeds in this way and for the Northeast quadrant alone is not equitable or appropriate and that other key BeltLine projects will be limited or deferred altogether. While TADAC acknowledges ABI’s need to be responsive to the dynamic and often unanticipated demands of the market, TADAC’s understanding of and limited involvement in the decision-making leading up to the transaction, together with the other concerns that are raised in this letter, prevent us from supporting the transaction (and its subsequent refinancing).

We are especially concerned that ABI appears to have made a policy decision not to utilize certain legal options in conjunction with this purchase, understanding that such options were created specifically to ensure that private property needed for public transportation projects such as the BeltLine could be obtained at fair market value. Thus far, and despite repeated requests, ABI has failed to provide us with adequate justification for its decision, and we are concerned that the precedent set by the purchase of the Northeast Corridor property could negatively impact ABI's ability in the future to obtain the remaining right-of-way at a reasonable price and in an equitable manner.

In addition, the Northeast Corridor is not now owned by ABI; rather, ABI is the Manager of a private venture, NE Corridor Partners, LLC (“LLC”), that actually owns the corridor. This entity negotiated the purchase and the terms on which it was financed. If LLC does not satisfy its obligations when due in October 2008, it runs the risk of foreclosure of the corridor and a resulting loss of ABI’s $27 million investment in LLC. Significant legal, economic and tax issues will need to be resolved, including but not limited to what economic risk and reward ABI and the private sector will have going forward if TAD bond funds are used to fund the satisfaction of the unpaid obligation due to the seller of this Corridor to preserve ABI’s investment.

TADAC believes the plan for using the TAD bond proceeds should be altered to bring the structure into closer alignment with the guiding principles of the BeltLine. TADAC considerations include the following:

Commit Future Pod Sale Proceeds – TADAC would favor ABI’s commitment to reinvest the anticipated net proceeds from the future disposition and/or capitalization of the remaining developable parcels outside the right of way (i.e., “pod sales”) to other regions of the BeltLine. The redistribution of surplus capital generated from the Northeast Corridor transaction to fund other projects and initiatives on the BeltLine could ease concerns around the initial lack of equity. TADAC understands that pod sale proceeds may also be used, in part, to “pay down” the TAD Bond principal and restore future bonding capacity. However, ABI should be clear and transparent in designating how, when and where the balance of the surplus capital (or future bond proceeds) will be invested.

Create a Geographic Balance Plan - TADAC suggests that ABI create a Geographic Balance Plan, submitted to City Council as part of the revised Five Year Work Plan that outlines the equitable use of TAD funds (and pod sale proceeds as aforementioned) to all quadrants of the City over the five year planning horizon. The Geographic Balance Plan would be updated and published with future Work Plans and any alterations to the plan would be explained in detail. Further, in advance of creating the Geographic Balance Plan, TADAC invites ABI and other BeltLine stakeholders to develop a mutually acceptable definition of “equity” and “equitable development.” Equitable development is sensitive to the needs, strengths and weaknesses of communities and encompasses a framework whereby communities are provided resources and opportunities to create balanced, sustainable and competitive development; a balanced distribution of funding opportunities is only one of many criteria to be considered.

• Reduce TAD Allocation for the Northeast Corridor – TADAC would consider supporting a smaller and more equitable allocation of the TAD proceeds for the Northeast Corridor transaction. Indeed, if the amount to be used for the Northeast Corridor transaction were materially lower than under the current plan, ABI would preserve the ability to ensure strategic investments and initiatives in other regions and for other priorities of the BeltLine.

• Source Additional Capital – TADAC supports funding the remaining capital gap for the Northeast Corridor transaction with other private and public sources. Capital sources might include, for example, those targeting the preservation of parks and green space, or banks/investors willing to buy-out the Mason note.

• Seek TADAC Advice – We applaud ABI for seeking advice from TADAC in the decision-making process at this particular time, although major initial decisions have already been made. We encourage early and ongoing procedures that allow TADAC the opportunity to carry out its legislated purpose in “Making recommendations to ADA and the City on the issuance, allocation and distribution of tax allocation bond proceeds within the BeltLine Redevelopment Area...; and the effective and equitable implementation of the BeltLine Redevelopment Plan.” (Section 3-a-i, 06-R-1577; Section 8-c, 05-O-1733) Any obligation of tax allocation bond proceeds falls within the purview of TADAC’s responsibilities.

In closing, TADAC recognizes the complicated nature of ABI’s decision and its potential implications. As a result, TADAC wants to work closely with ABI to assist in evaluating Northeast Corridor financing alternatives that employ equitable and efficient uses of the TAD proceeds and that support the enormous promise of the BeltLine. Moreover, and consistent with TADAC’s mission and mandate, we want to partner with ABI in a positive and effective manner to ensure the overall success of the Beltline.

A response from you to this letter by COB on Friday, July 11, 2008 will be deeply appreciated. As part of our mandate to promote community engagement and citizen participation, TADAC plans, shortly after that date, to provide educational briefings to other components of the BeltLine Community Engagement Framework as well as to the appointing entities for TADAC. This letter is an important part of the content for our briefing sessions and we would very much like to include your response as an integral part of those educational briefings as well. We realize that our request has a relatively quick turnaround when compared to the amount of time TADAC has taken to respond to your very complex request. Along with other reasons, the time schedules for considerations by Atlanta City Council and its committees of ABI’s proposed uses of TAD bond proceeds make it imperative for TADAC to initiate the educational briefings as soon as next week. Given the importance of this matter, we consider this step as a major and ongoing responsibility to the Atlanta community.

Ultimately, for TADAC, we hope that the uses you presently propose for TAD bond proceeds will not become necessary later on this year. It is our sincere hope that positive results from your ongoing and interim efforts will mitigate our concerns and allow TADAC to endorse and support ABI’s subsequently revised plans to use TAD bond proceeds.

We thank you in advance for your consideration. We look forward to receiving a response and discussing next steps.

Yours for a Successful BeltLine,

Eugene H. Bowens, Sr., Chair

TADAC

cc: Members of TADAC