By John Schaffner

Tax allocation districts (TADs), which in the past decade have become one of the most attractive means for enticing developers to invest in rejuvenating underdeveloped areas of Atlanta, were handed a setback by the Georgia Supreme Court Feb. 11.

In a unanimous decision, the court ruled that school property tax funds can’t be used to pay for the proposed BeltLine project, claiming the use of school taxes as security for bonds to support the 25-year project was unconstitutional. But the ruling reaches beyond the BeltLine to any TAD project in Atlanta. The only development project in Buckhead relying on TAD bonds is the small portion of the BeltLine that dips into south Buckhead.

Buckhead resident and attorney John Woodham is the person who sued and after a lengthy legal process obtained the Supreme Court ruling that the use of school funds for non-educational purposes violates the Educational Purpose Clause of the Georgia Constitution.

Buckhead Coalition President and former Atlanta mayor Sam Massell said, “I agree with the Supreme Court ruling. It was never intended that school taxes be used for that purpose. The Constitution of the State of Georgia says that school taxes can not be used for anything but school. So that was pretty clear.”

Massell pointed out, “The Legislature, I think, has the power to change that and the Legislature is in session, so they might come up with a new program that would meet the requirements of the Constitution. But the impact at present will be to slow down a lot of programs that were planned,” he added.

“The big cost of the BeltLine will be the transportation element, like light rail, and it is not likely that can be done without some magic funding,” Massell stated.

The BeltLine TAD, which was anticipated to be as much as $1.7 billion, has effectively been reduced by one-half, because the school portion of property taxes in Atlanta accounts for more than half of the total property taxes. Atlanta can use a TAD, for at least $800 million, from the city and county portions of the property taxes.

Despite this unanticipated setback, the city will continue to support the development of the BeltLine project. “Atlanta is not a city that gives up on its vision,” said Mayor Shirley Franklin at a press conference following the court decision. “Like the construction and opening of the Fifth Runway at Hartsfield-Jackson Atlanta International Airport, and the recent re-approval of the MOST for our $3.9 billion water and sewer overhaul, this community has the same opportunity to keep the BeltLine on track.”

Development is already underway in quadrants across Atlanta, including construction of the West End Park, the West End Trail, and the North Avenue Park. The City has allocated $160 million for the BeltLine redevelopment, and $18 million is included in the Atlanta Regional Commission (ARC) transportation funding plan.

“The BeltLine has deep, community support across the region and a wide range of partners and funding sources,” said Terri Montague, president and CEO, Atlanta BeltLine Inc. “We are disappointed in the Court’s ruling, but remain focused on the BeltLine vision.”