Representative Mike Jacobs

Click here for telephone numbers and e-mail addresses to contact the DeKalb County commissioners about the GM redevelopment plan. Please see below to read my recent article on the subject.

Drive north on Peachtree Road and Peachtree Industrial Boulevard through Brookhaven, Chamblee, Doraville and into Dunwoody and the view is startling. Shopping centers are empty like the ghost towns of the Wild West.

Town Brookhaven is finally sprouting major anchor stores, but is having trouble filling its smaller retail store fronts. Chamblee Plaza? Nearly empty. The new “Super H Mart” center adjacent to the GM site? It’s nearly empty, too.

The CoStar Group, a national real estate analysis firm, says the vacancy rates of retail, shopping centers and offices in North DeKalb are at catastrophic levels when you compare them to the national average. With so many empty store fronts, why would county officials push so hard to use our tax dollars for a supersized mixed-use project at the site of the former GM plant in Doraville?

Consider this:

- In the North DeKalb zip codes 30319, 30338, 30340, 30341, 30346 and 30360, the vacancy rate for shopping centers is 23 percent compared to 14 percent in DeKalb County as a whole and 10 percent in the City of Atlanta.

- The vacancy rate for North DeKalb office buildings is 24 percent compared to 18 percent in the county overall and 20 percent in the City of Atlanta.

- Retail vacancy rates are 17 percent in those zip codes, 11 percent in DeKalb overall, and 9 percent in Atlanta, according to CoStar.

The county’s elected officials are considering using a special allocation of $36 million in federal stimulus bonds on the 165-acre GM site with visions of creating another Atlantic Station. These bonds come with a high price tag to the taxpayers. DeKalb officials would use the stimulus bonds as a $36 million “gift” to an out-of-state developer, New Broad Street of Florida.

Worse yet, county taxpayers would have to pay the principal and a majority of the interest on these bonds. It’s very likely that means higher property taxes for you and me because the county doesn’t otherwise have the money to make the payments.

In ordinary times, the developer wouldn’t have to rely on county taxpayers. There would be more private investment to help finance the project. But these are no ordinary times. We’re in the midst of the worst commercial real estate market in memory. Private investors don’t want to provide the financing for an overly ambitious mixed-use project consisting of shopping, apartments and offices. The county wants the taxpayers to step in and do what private investors won’t do: bear the risks of this project.

If a new restaurant, retail shop or gas station, for example, wants to open for business, investors take the risk whether it prospers or fails. The same should be true for this project. DeKalb taxpayers are not a bank. They are not in the business of providing corporate welfare to jump start a project the private sector would never finance.

This is the most ambitious project we’ve ever seen county officials attempt to tackle, and it comes during a deep recession. It is not the taxpayers’ job to finance the next Atlantic Station and add to the already glutted market a new supply of retail and commercial space.

The definition of insanity, according to Albert Einstein, is doing the same thing over and over and expecting different results. We should heed the lessons of the “real estate bubble” and steer clear of risking taxpayer funds for further overdevelopment. After the bubble has burst, don’t use our tax dollars to create another bubble!

There are two final things to consider:

1. The GM site ultimately will be redeveloped if the county does not intervene. It’s arguably the most valuable parcel of available commercial property in the county. It’s on a major highway (I-285), a major north-south artery (Peachtree Industrial), and a MARTA station. In better economic times, something that private investors and market forces will support will be built there. I’m confident of that.

2. These particular stimulus bonds are supposed to be used for public infrastructure projects, not for private development. When used properly, they are a cheaper way of financing these projects. The county already has a list of infrastructure needs a mile long, not the least of which is the water and sewer system upgrades that they plan to fund with massive increases in our water bills. The bonds could be used to defray those costs. They also could be used for projects such as street repairs, new sidewalks, intersection upgrades, and parks.

The DeKalb County Board of Commissioners will vote on this matter next Tuesday, August 24.

Commissioner Elaine Boyer has pledged to vote against it. I encourage you to contact the other six county commissioners (Rader, Johnson, Barnes-Sutton, May, Gannon, and Stokes) and urge them to vote “no” as well. In particular, Commissioner Jeff Rader appears not to have taken a position as of yet. You can find the commissioners’ telephone numbers and e-mail addresses by clicking here.

When a county commissioner talks about spreading “risk” and “cost,” taxpayers should run in the other direction.

Those words were quoted from a recent edition of the DeKalb Neighbor (click for link) in which Commissioner Jeff Rader talked about the potential redevelopment of the Doraville GM plant: “We … need to spread risk and cost of this to other stakeholders. [Otherwise] the county will have to service the debt and use taxpayer funds to pay back that money.”

The GM redevelopment is a project that taxpayers need to be watching closely. Very closely.

New Broad Street, the developer of Florida’s Celebration community (click for link), is proposing a partnership with DeKalb County where the developer and the county will acquire the GM site and build a supersized mixed-use center with condos, apartments, retail stores, office space, and hotels. The county is proposing to use a special allocation of federal stimulus bonds known as recovery zone bonds to help finance the redevelopment of the GM site. The “benefit” of using these bonds is that the federal government subsidizes 45 percent of the interest.

However, the remaining principal and interest on the bonds would have to be paid out of the county treasury. That’s our tax dollars the county is gambling with. Whenever you read news stories that the county is thinking about shutting down recreation facilities and judges are reading the Riot Act to the CEO and county commissioners about the judicial budget (click for links), you have to wonder what the county is thinking when they consider using the very same tax dollars for risky development projects.

Some officials in the county government are going so far as to talk about increasing our property taxes to help pay for the bonds to redevelop the GM site. That should be a complete non-starter.

When Commissioner Rader was talking about spreading “risk” and “cost,” he was talking about the county’s efforts to shake down the Doraville City Council to use the city’s funds to help pay for the project, because the GM plant is located inside the City of Doraville. That’s still using tax dollars. It’s robbing from Peter to pay Paul. Doraville would be right to say no.

The DeKalb County Development Authority would be responsible for issuing the bonds to help pay for the New Broad Street project. Generally speaking, in DeKalb County, the use of our tax dollars to support the projects of a quasi-governmental authority requires a voter referendum. This referendum requirement is the result of a law I authored in 2007. As part of this year’s House Bill 203 (click for link), however, the General Assembly granted the county a one-time exemption for the stimulus bonds now being proposed for the GM site.

The reason for the exemption is that the stimulus bonds had a June 30th “use them or lose them” deadline. It would have been impossible to hold a referendum under this time constraint. The consequence of not meeting the deadline would be that DeKalb’s allocation of stimulus bonds would be reallocated to other local governments in Georgia. Those local governments would then be able to use the bonds for infrastructure projects like improvements to roads and sewers. Infrastructure is the real purpose of these particular stimulus bonds, not risky development projects. DeKalb either has obtained or is attempting to obtain an extension of the June 30th deadline.

Furthermore, I considered it an important safeguard that the county commission would have to conduct an open public vote on an intergovernmental agreement to spend our tax dollars to repay the stimulus bonds. This safeguard exists whether or not the referendum requirement applies to these bonds. The county commission has not yet voted on an intergovernmental agreement to use our tax dollars to repay stimulus bonds for the New Broad Street project at the GM site. In addition, the commission would have to vote to approve any property tax hike that is proposed for this purpose.

The commissioners absolutely should oppose such an agreement or tax increase. The county is in no position to bear the “risk” and “cost” of a supersized development project using our tax dollars. In a recent article in the Dunwoody Crier (click for link), Commissioner Elaine Boyer appeared to suggest that a majority of the county commission is prepared to reject a tax increase for the GM redevelopment plan.

To make sure this happens, your county commissioners need to hear directly from you. You can find their contact information at web.co.dekalb.ga.us/boc/contact.html if you would like to voice your opposition.

In case you missed it, the DeKalb County Commission axed the CEO’s proposal for a property tax hike in the county budget they passed on Tuesday, February 23. The budget was adopted by a unanimous 7-0 vote. Click here to read an AJC story about it.

The commissioners managed to fund most areas of public safety and the courts at 2009 levels. In this economy, that isn’t too shabby.

In order to ensure that a millage rate increase is avoided (the county millage rate is set in June), approximately 550 county employees will have to take early retirement. Early retirement is less expensive for the county than paying out unemployment claims, which is why they aren’t doing layoffs, at least not at this point.

If I may editorialize for a moment: It is troubling that CEO Ellis is willing to propose a property tax hike without batting an eyelash. Fortunately, the county commission did the hard work of trimming the budget to the point that raising property taxes might not be necessary. If all goes as planned, good work!

Every week during the legislative session, the members of the Georgia House of Representatives from DeKalb County hold a meeting to discuss state legislative issues affecting the county. These meetings are usually held on Mondays at noon in the Coverdell Legislative Office Building, across the street from the State Capitol. If you’re in the neighborhood, you should drop in and visit.

The DeKalb Delegation meeting that was held on January 25 was an eye-opener. It included a visit from three of our county commissioners, members of the commission staff, and representatives of the CEO’s office, although not the CEO himself. The tension between the commission’s and CEO’s representatives was palpable, and it nearly grew into open hostility when the commissioners made their presentation.

There appears to be a turf war brewing between the county commission and CEO. My request to these elected officials is a simple one: knock it off. At a time that tax revenues at all levels of government are slumping, citizens are hurting financially, and the county is considering an ill-advised property tax increase to prop up a budget that became seriously bloated after eight years of Vernon Jones, the last thing we need is posturing from county politicians.

The not-so-subtle hostility between the county commission and CEO’s office appears to be related to a December proposal by the commissioners to completely eliminate the CEO position. Because it deals with the basic structure of the county government, that proposal would require the approval of DeKalb’s state legislators. It came out of left field and was not expected by the legislative delegation. If necessary, I will see to it that any such legislation is defeated.

The commissioners also are requesting that we give them the power to approve their own contracts with outside vendors, rather than working through the CEO. Not even the state legislature has the kind of contracting power they are requesting. It simply isn’t a legislative function, and it’s a power that is a breeding ground for cronyism and corruption. This, too, is a proposal that is dead on arrival.

In 2008, the General Assembly passed and the voters approved reforms that enabled the county commission to conduct and set the agenda for its own meetings. This completely removed the CEO’s involvement in those meetings and strengthened the checks and balances between the CEO and county commission. Any further reforms, however, should have the approval of both the CEO and commission before state legislators give them any consideration.

In the meantime, if the county commission is looking for a way to leverage the existing checks and balances that are already built into our county government, I have a recommendation: Defeat the CEO’s proposal for a property tax increase. Rather than posturing to gain a political upper-hand over the CEO, that’s a tangible action your taxpaying constituents will appreciate.

By Commissioner Jeff Rader, District 2

The following commentary on the DeKalb County budget and the CEO’s proposal for a property tax increase is republished with permission from Commissioner Jeff Rader. It’s a worthwhile read:

The more things change, the more they stay the same.

A year ago, I publicly expressed my disappointment in the budget process for DeKalb County. The process, as described in my formal remarks in February 2009, is subject to political considerations and short-term gains at the expense of tough decisions and long-term sustainability.

It was my hope then that the new county CEO and the new governing structure for the county Board of Commissioners (BOC), each with a full year under its belt, would lead to improvements in the preparation of this year’s budget. Sadly, the process seems to have gotten worse, not better.

While major changes may not happen overnight, my recommendations last year included simple, incremental steps to ultimately create a budget that is inclusive and forward thinking. The first and easiest step is to add transparency by sharing the departmental budget requests, typically submitted in late summer, with the general public and BOC.

The requests would be used as a starting point for public and ongoing discussion among various constituencies, notably the BOC, to establish funding priorities for the coming year. Instead, the administration elected to keep the specific departmental requests under wraps. Thus, the BOC is flying blind if it attempts to cut spending because it has limited information on how such cuts impacts each department.

Further, because the departmental requests were not shared with the BOC, the latter did not develop the urgency to finalize its priorities for the coming budget. For what it’s worth, my top budget priorities are public safety and infrastructure. The first is self-explanatory and the second is needed to address an enormous backlog of deferred maintenance, which threatens the functionality of county services.

As in years past, the public’s and BOC’s first look at the proposed 2010 budget was mid-December, the constitutionally mandated date for the CEO to formally present a budget. The BOC, in turn, is mandated to approve the budget by March 1, leaving a mere two months to debate possible revisions, a timeframe that makes it difficult for substantive deliberations.

The CEO’s proposed budget is based on questionable assumptions and actions.

Perhaps the most misguided assumption is that the county tax digest (aka property taxes) will remain the same as it was in 2009. A reasonable person knows the national economy’s downslide was precipitated primarily by the implosion of the real estate market. The general consensus is the real estate market shows signs of, at best, a weak recovery in 2010. The county’s Board of Tax Assessors, in two separate memos this January, estimates the tax digest will decline by nearly seven percent in 2010.

Even if the administration’s revenue forecast is accurate, it still has a roughly $60 million deficit relative to its spending requests. The CEO proposes to close that gap roughly in half by raising the millage rate 1.86 points, and the other half by reducing the labor force through an early retirement offer.

Given the current economic climate, it is not prudent to burden the taxpayers with a tax increase. So a tax increase is not a viable option to address a budget shortfall.

The logical alternative is to reduce expenses by trimming positions from the county work force because labor costs (wages and benefits) comprise roughly 80 percent of the county’s budget. While no one wants people to lose their jobs due to layoffs, the county’s fiscal situation creates the necessity to right size the workforce now. Such a move is an economic necessity when there is not enough money in the financial coffers.

But offering early retirement is not the most efficient method to reduce the labor force, because the employees, rather than the employer, dictate the staff reduction. As a result, the county could end up losing its most talented, experienced and critical employees, creating a deleterious effect on county services.

That in turn could force the county to hire back those employees, or someone else to fill those positions, thus diminishing the financial savings from the initial staff reduction. The worse scenario would be to lose a disproportionate number of employees from public safety departments, which I, again, consider to be the top priority.

Ideally, the administration would identify those positions that could be eliminated with the least impact on county services. That can be done after a careful performance audit of each department to evaluate the correlation between quality of services and its staffing levels.

While the CEO’s budget proposes a reduction in force of 400 employees, it does not propose a comparable reduction in scope of services provided to the county. If the county is able to provide the same scope of services with fewer employees, that will be an indication it has been operating inefficiently in past years. If the county is not able to do so, then the public will suffer from the decrease in quality of services.

Early last year, in anticipation of the tough budget currently facing the county, the BOC considered contracting with Georgia State University to conduct a staffing study to identify excess and redundant positions that could be cut. The administration protested, saying that it would conduct its own study. But the administration did not follow through.

So last November, the BOC approved the staffing study initially proposed early that year. Regrettably, the results will be available towards the middle of February, extremely late in the annual budget process. The sad truth is that more budget cuts will likely be necessary to compensate for the revenue shortfall noted above, and the county may end up cutting the budget all year long.

Either way, it seems counterintuitive that in this economic climate, the administration has passed up this opportunity for fundamental restructuring of its operations. Aside from the consolidation of two development departments and the outsourcing of another development department, there is no significant shrinkage of scope of services outlined in the proposed budget.

In the private sector, companies and entrepreneurs have, out of necessity, discovered new ways of doing business that should reap benefits as the economy recovers. Families and individuals have fundamentally altered their way of life, out of necessity, such as giving up cable television, and eating dinner at home more often. But the administration has declared its intent to conduct business as usual.

The more things change, the more they stay the same.

In my budget commentary last year, I called attention to the county’s inadequate funding for capital maintenance. Historically, the county government has been enamored with the creation of new facilities rather than the maintenance of existing ones.

Last year’s budget set aside 10 percent of HOST (Homestead Option Sales Tax) for capital maintenance. This year, five percent, which projects to $4.4 million, according to the administration. To put that number in context, this time last year, the county was 60 years behind schedule on needed street repaving and had total deferred maintenance liability of more than $260 million. Business as usual.

The administration also proposes business as usual for those employees still in place after the reduction in force. In fact, the CEO’s budget proposes a one percent, across-the-board merit increase. While there are many county employees who are exceptional performers, the economic reality dictates that DeKalb does not have the luxury of offering pay increases, no matter how deserving.

Nor does the CEO’s budget propose any changes in the benefits programs — health, retirement — for county employees. The county, which is self-insured, pays 70 percent of all medical expenses for its employees. With medical costs rapidly escalating nationwide and an aging workforce, the county can not sustain that 70-30 ratio without raising taxes or requiring its employees to contribute more.

The county continues to operate a defined-benefit retirement plan, while the private sector predominantly offers defined-contribution plans. To maintain the promised benefit, the county’s actuaries advise that contributions to the pension fund should be increased to 15 percent of payroll in 2010 ($50 million) all the way up to 25 percent of payroll in 2020 ($105 million), which is a significant cost increase even before factoring the early retirement program.

The county currently pays about 67 percent of contributions to the employees’ retirement plan. That financial obligation is unsustainable. If the county wishes to save its defined benefits program, the beneficiaries must pay a larger share.

Nor does the CEO’s budget propose any changes to the number of paid holidays for county employees. Eliminating a paid holiday saves money and probably has the least impact on county services because government is considered closed that day.

The BOC has two choices to rectify the CEO’s proposed budget. One, it can save money by unilaterally reducing the scope of county services. Two, it can save money by improving the cost efficiency of its current scope of services. Both are difficult tasks because of the limited time frame and information provided to the BOC in this budget process.

In the short term, the latter seems to be the best option, specifically reviewing the compensation structure for county employees, as highlighted in this commentary. This means the budget would be balanced on the back of good county employees. That would be regrettable, but preferable to balancing it on the back of taxpayers.

The CEO describes the proposed budget as “bare bones,” one that provides little more than the essential, required county services. In 2001, the first year of the former CEO’s administration, DeKalb County had a $420 million budget. If that budget was sufficient to fulfill the county’s mandate at that time, then it should have continued to be the benchmark in the subsequent years while allowing for inflationary and population increases. Based on those two statistical factors, today’s budget would be $563 million rather than the $583 requested by the CEO. The numbers suggest there are ample opportunities to make significant cuts in government spending.

The CEO and his team are honorable and well intentioned, but regrettably they have not been able to keep ahead of the extraordinary economic and organizational challenges we are now facing. But it’s not too late to start. Crafting this year’s budget is not a one-time challenge. The county tax base is expected to remain flat for a significant period into the future. The administration needs to reject the premise of relying on short-term fixes in order to resume business as usual.