Reed Slams APS For Lawsuit Threat Involving Beltline Debt

At a June 11th BeltLine board meeting, Mayor Kasim Reed had strong words for outgoing APS chief Erroll Davis, who wasn’t in attendance.

“Nobody is going to negotiate at the end of a gun so if you’re going to take hostages you better be prepared to shoot the hostages,” said Reed.

Davis had recently told the Atlanta Journal-Constitution he wanted the contract dispute settled by the time he left office at end of this month. He added APS was considering legal action.

Reed called the comments inappropriate and said the city won’t be rushed to settle.

“There is no way this is going to be resolved by July 1. No way. So whatever you’re threatening to do you need to do it,” said Reed.

In 2005, the city and APS entered into a contract laying out how the Beltline would be funded. APS agreed to give up some of its property tax dollars. To help offset that, the city promised to make fixed annual payments to APS – payments based on the assumption that real estate prices would always rise.

“Shortly thereafter the economy tanked,” said Cynthia Briscoe Brown, a board member of both APS and the Beltline. “Fast forward to 2013, APS does not receive the first agreed-upon payment.”

Since the recession, the contract has been restructured to delay and spread out those payments. But contractually, as of now, the city still owes APS roughly $19 million. The number is only going to rise in the coming years.

The city, led by Reed, argues current economic realities require the contract be restructured yet again.

But Brown says a contract is a contract.

“Contract law is not designed for one party to suddenly decide, ‘I don’t like this. This is bad for me after all. I want to change the terms of the contract.’ If that were true, no one would ever enter into a contract,” said Brown. “Nineteen million dollars would go a long way towards adding additional teachers so we are not interested in being difficult but we have a responsibility to the children of Atlanta to get this worked out.”

In lieu of cash payments, the city has offered APS other forms of compensation such as IT help and police services.

APS Chief Financial Officer Chuck Burbridge says the school system is open to those discussions, but there’s still a lot of distance between the parties. He says it’s why APS is considering all of its options, including legal action.  

“We’d rather not be as confrontational but of course obviously if there’s two sides looking at a contract then potentially you do have to bring in a third party to help interpret the language,” said Burbridge.

He said it’s in the best interest of all parties, especially the Beltline, to resolve their differences sooner rather than later.

“As long as this dispute exists the Beltline is precluded from selling bonds using our tax increment to support more rapid development as opposed to having to do it on a pay-as-you-go basis and having this uncertainty out there,” said Burbridge.

The Beltline declined comment for this story. So did Mayor Reed.

But earlier this month at that Beltline board meeting, Reed said he won’t be pushed around. He took particular issue with APS forcing the issue during a Beltline fundraising drive.  

“To do this while we’re trying to raise $6 million in four months I just think is awful and I’m not going to sit here and play these flowery games,” said Reed.

He said the Beltline is the most popular public project in the city and suggested residents won’t take kindly to APS getting in the way of its progress.

“Let’s tee it up and let’s go. You take the actions you need to take and I want you to be clear: I’m going to be equally aggressive in addressing whatever you do,” said Reed. “There is nothing in my background in the four years that I’ve had this job that suggests I ever cave. It’s never happened.”

As the contract stands now, the city is to make annual payments to APS until 2030. During that time, the city is on the hook for more than $16o million in cash payments and land.

Brown, the APS and Beltline board member, says she hopes “personalities don’t get in the way of doing the right thing for Atlanta’s students.”

Note: Brown sits on the board of WABE’s governing body, AETC. WABE’s broadcast license is held by the Atlanta Board of Education.