Thank you to everyone for the feedback from Part I of this series on whether or not DeKalb Schools should enter into an agreement to be a part of the Assembly TAD. Many of the concerns voiced are legitimate. One shouldn’t jump head-first into any agreement without taking some time to seriously weigh the costs and the benefits.
I want to preface this post by saying that any deal should maintain sound fiscal condition of schools, help solve overcrowding, promote continued diversity, and foster community. You don’t get what you don’t ask for, so I figure that the schools system should at least try to negotiate the best deal they can before making a final decision.
As you’ll recall, the two key questions from my last post were: (1) what is the likely value and speed of development with and without a TAD? and (2) how will the school system accommodate any additional students in an already crowded district?
Atlanta is booming with new construction. The dark cloud of the recession has begun to clear, and developers seem to be taking chances again. Construction and reconstruction is popping up all over the city, with developments like Avalon (Alpharetta), Ponce City Market (Midtown), Mercedes-Benz Stadium (Downtown), SunTrust Park/The Battery (Cobb County), Westside (Midtown), State Farm (Dunwoody), and Mercedes-Benz (Sandy Springs), to name a few.
Many (not all) of these developments have happened without the help of a TAD because the developments were fairly straightforward. There wasn’t a need for environmental remediation and dramatic investments in roads, sidewalks, water lines, sewer lines, and storm sewers – all things which Assembly will need in order to be redeveloped. The fact that the Assembly site remains largely undeveloped today compared to other sites around the metro area suggests that further public investment is needed before it will really take off. I think there is a compelling case to be made that the TAD will have a very significant impact on the development of the site.
Additionally, I think the school system could limit its own risk that this judgment is wrong by negotiating a deal where the school system is better off the first day following the TAD’s approval and has rights to share in the likely long-term financial and social benefits of redeveloping a blighted property. For example, what if the school system were to ask for terms like the following:
1. The developers could be required to donate land to the school system at the Assembly site or purchase and then donate other land nearby. One could insist that this donation occur at the same time as the school system approves the TAD. The school system has already acknowledged the need for at least some new construction in addressing the overcrowding in Regions 1 and 2. Having land donated would save the school system money, and no matter what happens with the development, the school system would have something it needs to solve an urgent overcrowding problem. In Atlanta Public Schools, they requested land but didn’t receive it up front. We should make sure to avoid this problem.
2. The school system could ask for an escalating annual payment over the life of the TAD to cover the costs of building additional schools and educating additional students. There are several safeguards that would help the school system avoid a situation like the one facing Atlanta Public Schools over the failure of the City of Atlanta to make payments related to the Beltline TAD. (Click here to view a Summary of Beltline TAD Contract between APS, City of Atlanta, and Invest Atlanta (f/k/a Atlanta Housing Authority.)
For example, one could designate a trustee, custodian or financial intermediary who would hold all funds received from the TAD and then distribute the escalating annual payments to the school system directly. Contrast this to the arrangement where the City of Atlanta receives the funds from the TAD and then it is obligated to pay APS. A neutral party is much less likely to refuse to pay the school system and risk a lawsuit than an interested party like a city or county. The City of Atlanta currently has the money; they’re just refusing to pay APS.
Another possible safeguard would be to make sure that the escalating annual payments owed to the school system are given equal treatment compared to the repayment of the TAD bonds. One could further include protections in the legal documents that would make any failure to pay the school system a default under the bonds. In the case of the City of Atlanta, they may be willing to pick a fight with APS, but I suspect the city would have been much more hesitant to pick a fight with its bondholders as well.
I am sure I am glossing over some of the details, but I am convinced that the school system could substantially reduce the risks that it won’t get its payments by hiring creative lawyers who can negotiate protective provisions like the ones above. In fact, a close friend who has public finance experience brainstormed with me on these ideas.
3. Currently there are several apartment buildings along Shallowford Road within the TAD. (pictured below)
The school system could require that any redevelopment of these apartments include — either at the same site or at another site within the TAD — affordable housing units equal to 40% of the number of units demolished. People with school-aged children in the Cross Keys district could be given preference, and the units should be affordable for families earning 60% of the median household income for the Cross Keys cluster. The affordable units should be at least two bedrooms and from the outside closely match in appearance the market-rate units. The agreement could state that the units must remain affordable for 15 years, which is about the time it would take for a young child to graduate from high school. This whole proposal ensures much more diversity and continuity in the community and its schools
4. Lastly, the school system could require that a portion of the affordable housing already required under the TAD intergovernmental agreement with DeKalb County be offered first to teachers who have taught in the Cross Keys cluster for at least three years and who currently live outside the district. (Note: I currently live in the Cross Keys cluster.) Options like this would help bring teachers, students and their families together in one community, which is the aim of existing programs like Communities in Schools.
I recognize that all of this will reduce the total amount of money that can be spent on infrastructure, but through creative negotiations, the school system can seek terms that will help it and still offer significant benefit to the TAD. If after the negotiations have been pushed as far as possible and the school system does not believe that the deal helps students, then let’s say no. But I think it is possible and certainly worth pursuing compromises that will provide the school system with immediate benefits, like land for a new school, and a number of other more long-term benefits.
I realize that these last few posts have been a bit beyond my traditional education topics, but I do feel that this post is one that potentially helps the community, board members, and other involved parties think through some additional aspects of the TAD and its effects on the school system and community. Please feel free to share your thoughts below.