Atlanta’s plan for a green rail corridor loses steam

This city’s much-hyped plan to transform an abandoned 22-mile railroad loop into a green trail and transit route received a significant setback Monday when the Georgia Supreme Court ruled that school property taxes could not be used to fund the project.

Atlanta officials, who have invested $160 million in the so-called BeltLine, had expected about $850 million to come from future school tax revenue. But in a unanimous ruling, the court said the use of school funds for the urban renewal project would violate the Educational Purpose Clause of the Georgia Constitution.

Mayor Shirley Franklin -- who long has envisioned the $2.8-billion green corridor as being a legacy of her administration -- said at a news conference that the ruling was “bad news.” But, she said, she remained committed to the BeltLine.

“This is just a bump along the way,” she said, adding that Atlanta would look to the private sector and philanthropic funding. “All big dreams have challenges, but this is not one we are not prepared to meet.”

The BeltLine concept was proposed by a student at the Georgia Institute of Technology in his 1999 master’s thesis. Before long, the idea had official momentum: City leaders, urban planners, private investors and community activists united in the hope of transforming the South’s poster child of urban sprawl into a pioneering, more densely populated green city. Real estate developers began snapping up derelict parcels near the railroad tracks and building luxury lofts and town homes. In October, volunteers started clearing debris from the southwest portion of the loop.

Though city officials expressed confidence that the project would be completed, there was speculation Monday that the ruling would stymie not only the BeltLine, but urban revitalization projects across the state.

“Obviously this could have a chilling effect on redevelopment,” said Steven J. Labovitz, an Atlanta attorney who counsels developers. With the other 49 states using similar tax allocation funding “very effectively” for economic revitalization, Labovitz said, the ruling could hamper Georgia’s ability to attract developers.

“Everybody is going to start reexamining their projects a lot closer to see if they can make it work,” he said, noting that he had fielded about two dozen calls from worried clients.

The tax allocation for the BeltLine project was approved by the Atlanta Board of Education and Atlanta City Council in 2005.

A year later, local attorney John Woodham filed a lawsuit claiming the funding was unconstitutional.

In Monday’s opinion, Georgia Supreme Court Justice Hugh P. Thompson said: “It is without dispute that the use of school tax revenue for the BeltLine . . . is not an explicit expenditure for educational purposes.”

Franklin, who has won praise from urban planners across the country for embracing the BeltLine plan, said Monday she still believed in the project’s ability to ease Atlanta’s traffic congestion, as well as add valuable green space and affordable housing. But parts of the project would now have to be reevaluated, she said.

“It will take a long time to appreciate what [the ruling] means,” Franklin said.

jenny.jarvie@latimes.com