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Wednesday, July 9, 2014

Can everyone win in the APS/Beltline dispute?

For the last two weeks, Mayor Kasim Reed and Atlanta Public Schools leaders have publicly sparred over millions of dollars in outstanding payments the city owes the system related to the Atlanta Beltline. Jarod Apperson, a Georgia State University graduate student who follows events in APS, and Conor Sen, an investment manager and demographer who lives in Brookhaven, wonder if both sides could emerge as winners.

The old adage "you catch more flies with honey" sometimes seems lost on Mayor Kasim Reed. In yet another public spat, an absence of moderation out of the mayor's office has threatened to prevent Atlanta from reaching a win-win outcome.

The Atlanta Public Schools are owed millions of dollars by one of the city's most popular projects, the Atlanta Beltline. The legal responsibility is clear. A contract spells out exactly how much money the city's development arm, Invest Atlanta, should pay the school district and when.

Reed has resorted to threatening language - he's compared recently retired Superintendent Erroll Davis' threats to sue the city to a hostage situation - at a time when the city needs inspired leadership, not threats. Instead of bellowing that the Beltline outranks APS or lashing out at the chairman of the Board of Education, Reed should acknowledge that the city is wrong for not making its agreed-upon payments, then plead the benefits of the Beltline for the sake of the children of APS.

In order to explain the case Reed could be making to APS leadership, it's important to start with the mechanics of funding the Beltline. The smart-growth project is funded via a Tax Allocation District, or TAD. Ordinarily, property taxes in Atlanta are split between the city, county and schools. In the Fulton portion of the City of Atlanta, APS receives about 50 cents of each tax dollar, the city receives 28 cents, and Fulton receives 22 cents. All three - city, county and schools - agreed to permit the creation of the Beltline TAD in 2005.

The Beltline TAD, which encompasses properties along the project's 22-mile footprint, gives each entity the tax payments it received for the parcel in 2005. But, until 2030, the Beltline receives 100 per cent of each increased tax dollar raised due to rising property values.

APS wanted to limit its investment in the Beltline. The school system agreed to participate in the TAD on the condition that the Beltline agree to pay APS a set dollar amount annually (importantly, this amount was fixed rather than a percentage of the funds generated). That way, APS would receive some benefit of rising property values in the Beltline area.

However, the fixed payment schedule was negotiated prior to the collapse of the real estate market, which means that payments have a bigger impact on the Beltline's viability than anyone realized in 2005.

In some ways, this fixed dollar schedule became a windfall to APS because the payments did not decrease when the tax digest plummeted along with the housing market. Or more accurately, it would have been a windfall had Invest Atlanta made the legally mandated payments from the Beltline TAD as scheduled.

This year, APS officials say, the school system is owed $6.75 million - about one third of the Beltline's annual budget. To put this in further context of the bottom line impact for the Beltline, the payment due to APS for this year alone is more than twice the size of the Woodruff Foundation's $3 million donation, which is being used to fund the Eastside Trail's connection to Historic Fourth Ward Park and the multi-use trail's extension to Reynoldstown. By contrast, for APS, $6.75 million represents $135 per student, an amount that is less than 1% of APS's per student annual budget.

While the scale of the payment provides useful context, the real argument that Reed needs to make to APS isn't that the school system can afford to take the financial hit. Instead, Reed should present the benefits flowing to all APS children from the success of the Beltline project. Remember that negotiations in 2005 were speculative. APS understandably didn't know how the Beltline would develop. The school district is tasked with making decisions that are in the best interest of the city's students. And the realization of the Beltline vision that the city has seen in the last few years justifies a re-evaluation of the contract to see if agreeing to voluntarily further support the Beltline has the potential to benefit students.

Currently, one reason the district struggles is because many schools have a total lack of racial or socioeconomic diversity, with many of those schools struggling with low enrollment at the same time that schools in north and northeast Atlanta struggle with overcrowding. Investing in the Beltline might help solve such problems.

Excitement for the Beltline vision has already attracted some young, middle-class families to parts of the city they might not have considered but for the project. Adair Park, Capitol View, Westview, and other Beltline area neighborhoods are starting to benefit. In a city that struggles with occupancy rates, this isn't a matter of gentrification but rather viable neighborhoods over abandoned neighborhoods. At Perkerson Elementary, enrollment increased by 15 percent from the spring of 2013 to spring 2014. Some of that growth can be attributed to the boosterism of a handful of middle-income families. So, not only has Perkerson Elementary grown, but it also has become more economically diverse. If the Beltline can play a role in creating more economically and racially integrated learning environments, the city's students will benefit. And that may be worth part of the cost.

A second component of the Beltline vision is job creation in some of the city's blighted communities. These jobs will help parents of APS students earn steady incomes, keeping families in place and decreasing the challenge of serving a largely transient student population. This job growth will not only benefit parents, but also the city's students. The national unemployment rate for black teenagers has been above 30 percent since the Great Recession began in 2008. Job growth in neighborhoods that are too often isolated from the rest of the city means APS students will have new access to summer work, which can be just as formative for a child as in-class learning.

Finally, local nonprofits are leveraging the Beltline project to provide students with additional access to after-school learning opportunities. One such organization, Beltline Bike Shop in Adair Park, uses donated bicycles and teaches at-risk students how to repair them. Once kids have repaired the bike, it is theirs to enjoy around the community and on the Beltline's trails. As a bonus, the kids pick up a new skill.

Beyond bringing socioeconomic diversity and employment opportunity to neighborhoods that have lacked it, investing in the Beltline just makes good business sense. According Beltline CEO Paul Morris, so far, for every tax dollar invested in the project, three private dollars have been invested in the area surrounding the trails. Once the project is complete - yes, many years down the line - all those improved parcels return to APS's tax digest. Without the project, similar private investments in areas such as southwest Atlanta might not be realized, and the long-term property tax base supporting schools could suffer as a result.

In 2005, APS agreed to forego some funding resulting from the Beltline's growth in exchange for a fixed payment. The city also opted to contribute money from the its share of tax growth, allowing the project to be built without delay. In the wake of the Great Recession, it is now clear that, without greater participation from the school district, the project will have to either be scaled down or built at a slower pace.

Investing in the Beltline will strengthen the city's communities, promote socioeconomic integration, and grow jobs. All of these will benefit the city's schools, meaning that there is a strong case for the school district's leaders to consider a revised contract. But that decision lies solely with APS and hinges on what leaders believe is best for students. It would be a shame if the Mayor's short fuse and penchant for intemperate remarks cloud this symbiotic relationship from view and ultimately delay the Beltline - all of the project and everything it entails - from becoming a reality.

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