Sembler’s Big Brookhaven Bailout

May 27, 2009

The proposed Sembler tax abatement for its “Town Brookhaven” project needs to be stopped.

One thing you can do to stand in its way is to attend an upcoming community meeting to be held on Monday, June 8, at 7:00 p.m. in the Fellowship Hall of Chamblee United Methodist Church, 4147 Chamblee Dunwoody Road.

At this meeting, we will discuss possible legal strategies for challenging this latest scheme foisted on the public by Sembler and the non-elected, unaccountable DeKalb County Development Authority. We also will explain the mechanics of the tax abatement proposal.

At the May meeting of the Development Authority, Sembler made its pitch for the tax abatement and dismissed the opposition to the proposal as coming from a small handful of discontented citizens. If the e-mails I am receiving from constituents are any indication, I’ll bet what Sembler is dismissing as a small handful of discontents will look a lot more like a packed room of unhappy taxpayers at the June 8th meeting.

Furthermore, attendance at this meeting should not be limited to those who live in the immediate vicinity of the Town Brookhaven project. Citizens across DeKalb County should be concerned about the proposal. Please forward this e-mail message and ask your neighbors to attend. Here’s why:

The deal Sembler is seeking is known as a PILOT bond deal. PILOT is short for “payments in lieu of taxes.” In this deal, Sembler will convey to the Development Authority ownership of large portions of its mixed-use Town Brookhaven project. The Development Authority will float bonds to finish construction of the project. The Development Authority also will lease the project back to Sembler. Under this lease, Sembler will make rent payments to the Authority sufficient to repay the principal and interest on the bonds.

Development Authority bond deals must be confirmed in DeKalb County Superior Court. Sembler and the Development Authority already have obtained Superior Court approval for a smaller PILOT bond deal. That deal was rushed through the Superior Court at a time the public was unlikely to notice, between Christmas Day and New Year’s Day, in 2008. Sembler now wants a bigger tax abatement and is seeking to abandon its earlier, less lucrative deal. As I discussed in this week’s Dunwoody Crier (click for link), the “holiday gift” that the Development Authority gave Sembler last December could furnish a legal basis for challenging Sembler’s new, more costly proposal.

This PILOT bond deal results in a property tax abatement because the Development Authority, a government entity, will own the property and therefore the property cannot be taxed. The value of this tax abatement is estimated to be $51 million over 20 years.

The direct costs of educating the children who will live in Town Brookhaven and providing county services to the project will be borne by families and small businesses across DeKalb, the same families and small businesses who are struggling to make ends meet in this tough economy.

By contrast, Sembler may no longer be subject to the risks of doing business in a tough economy. As a result of Sembler’s proposed PILOT deal with the Development Authority, those risks could be transferred to the public.

The Town Brookhaven project isn’t owned by Sembler the parent company. It’s actually owned by a “bankruptcy-remote” entity known as Sembler Bell Brookhaven, LLC. The sole purpose of Sembler Bell Brookhaven, LLC is to develop and operate Town Brookhaven. It doesn’t own any other property.

If the commercial real estate market remains as bad as it is right now (click for AJC article) and Town Brookhaven flops, Sembler Bell Brookhaven, LLC could file for bankruptcy. Bankruptcy would afford Sembler Bell Brookhaven, LLC the opportunity to reject its unexpired lease with the Development Authority. That would leave the Development Authority the owner of a failed project and abandon the Authority to sort things out with the bondholders. The deal probably does involve insurance to cover the bondholders’ losses, and could require security to allow the bondholders to make a recovery. However, these safeguards don’t change the fundamental concern that Sembler is socializing the risks of its project.

Last but not least, there’s the unique ethical dilemma of Dr. Eugene Walker, who serves in dual roles as the Chairman of the Development Authority and a member of the DeKalb County Board of Education. He was first elected to the Board of Education in 2008 with the help of $18,000 in campaign contributions from Sembler executives, employees, and their spouses. You can view Dr. Walker’s campaign contribution disclosure reports here and here (click for links to two separate reports).

In a recent Dunwoody Crier article (click for link), Dr. Walker credited his “platform of economic development” for carrying him to victory in his Board of Education campaign. In the same vein, I suppose he might explain the $18,000 in campaign contributions as Florida-based Sembler’s way of showing special concern for the children of DeKalb County.

You should feel free to e-mail [email protected] and let Dr. Walker know whether you think he should be involved as Chairman of the Development Authority in making a decision on Sembler’s request for a PILOT tax abatement. Unlike the other members of the Development Authority (click for more information), who get to vote to sock the taxpayers with Sembler’s $51 million tax bill without having been elected to anything, Dr. Walker is now an elected member of the Board of Education who should hear directly from DeKalb citizens.

Other developers are waiting in line behind Sembler to secure their own tax abatements from the Development Authority. If Sembler succeeds, the floodgates will be open. It’s a snowball effect that ultimately will cause county officials to claim they need to raise our property taxes to make up for lost tax revenues.

Somebody will have to pay for the services consumed by the new projects. You and I are those somebodies.

I hope to see you on June 8th.


Weekend Happenings

May 27, 2009

PDK’s “Good Neighbor Day” Open House and Air Show is this Saturday, May 30, from noon to 5:00 p.m. at DeKalb Peachtree Airport. Admission is free. Parking is $5 per car. Please click here for more information.

The Dunwoody/Northeast Georgia Soap Box Derby is this Saturday, May 30, at 9:00 a.m. at the First Baptist Church of Atlanta at North Peachtree Road and I-285. Gates open at 8:15 a.m. Please visit www.dunwoodysoapboxderby.org for more information.

Also, in the Murphey Candler area, there are two upcoming outdoor movie screenings for kids:

Chamblee First United Methodist is hosting a family movie night for free on Friday, May 29, at 8:30 p.m. The movie is Fly Away Home and the entire community is invited. Feel free to bring a picnic and come and join your neighbors before the movie begins for a variety of family-friendly activities. In the event of rain, the movie will be moved inside to Fellowship Hall. For questions, please contact the church office at 770-457-2525.

DeKalb County is hosting a free Movie Night on Saturday, June 6, at the Murphey Candler Pool on Candler Lake West. They will be showing Surf’s Up and the movie will begin at 8:30 p.m. Feel free to bring a picnic and a lawn chair. You can swim while you watch the movie (lifeguards will be on duty). Entry to the pool is free for this event. For questions, please contact Jackie Swain at 404-371-2990.


New Property Assessment Freeze in Effect

May 12, 2009

The news media had a lot to say about the 2009 session of Georgia General Assembly. Not much of it was particularly flattering.

If you’re a homeowner, there’s good reason to tune out this echo chamber of Negative Nellies. That’s because property assessments have been frozen for the 2009 and 2010 tax years.

Improving upon the five-year DeKalb property assessment freeze that I helped pass and the citizens of DeKalb County supported in a 2006 referendum, this new freeze covers your entire property tax bill, county taxes and school taxes alike. The 2006 DeKalb freeze only covers the county government’s portion of your property tax bill.

The legislation that accomplished this new across-the-board assessment freeze was House Bill 233. It passed on a party-line vote and was signed into law by Governor Perdue last week. I was proud to support it. My good friend Representative Edward Lindsey, who represents Buckhead, deserves kudos for authoring the bill.

Some of you may be asking: What about that notice of an assessment increase I received from the county within the past month?

Even in this difficult economy with headlines indicating that home prices are either falling or stagnant, but certainly not on the rise, DeKalb County recently sent notices of increased property assessments to a large number of homeowners in our community.

Thanks to HB 233, the assessment hike some of you recently received from the county is null and void. It will not be used in calculating your 2009 property tax bill.

It is recommended, however, that you still appeal your reassessment notice if you were planning to do so. The appeal deadline is Monday, May 18.

The procedures for filing an appeal can be found here.

The General Assembly also passed Senate Bill 55, a measure requiring that foreclosed properties be taken into account when counties set the tax values of nearby homes. You may recall that DeKalb had a problem with exactly this issue. The problem was solved this time with some quick intervention by CEO Burrell Ellis. Under the new state law, it won’t happen again.


Brief Submitted in Arts Center Appeal

May 12, 2009

You may remember that the DeKalb County Development Authority and the DeKalb County Government chose to disregard your right to vote on a bond transaction to cover $4.3 million in cost overruns for an expensive new “performing arts and community center” elsewhere in the county. I authored the 2007 law that gives you the right to vote on the specific type of bond transaction that the county and the Development Authority were seeking to effectuate.

I challenged the proposed bond transaction in DeKalb County Superior Court for failure to conduct a referendum. The Superior Court upheld the referendum requirement and declined to approve the bond transaction. Click here for an article I wrote after the Superior Court issued its ruling.

The county and the Development Authority appealed that ruling to the Georgia Supreme Court. If you’re interested, please click here to read the legal brief I submitted to the Supreme Court last week arguing in support of the Superior Court’s ruling. This brief is saved as a PDF file, and Adobe Acrobat Reader is required to view it.

The brief took a full week to prepare, but was necessary in order to preserve your right to vote on how public debt is incurred and how your tax dollars are spent.


Brookhaven Bolt on Saturday

May 12, 2009

The second annual “Brookhaven Bolt” 5K walk, run, and stroll to benefit Ashford Park Elementary is this Saturday, May 16. Please visit www.BrookhavenBolt.com for more information.


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