After spending some time crunching the numbers this weekend, this simple equation sums up the conclusion I have reached. And I’m not the only one reaching this conclusion.

The DeKalb Development Authority will meet this Thursday, June 18, at 8:00 a.m. at 150 East Ponce de Leon Avenue, Suite 400, in Downtown Decatur. The meeting time and location isn’t posted anywhere on the Internet. You have to call the county to get it.

The Sembler tax abatement proposal is on the agenda. There is no word yet as to whether a final vote on the tax abatement will occur at this meeting. At a minimum, it will be discussed.

Thank you to everyone who attended last Monday’s community meeting about the tax abatement. It is estimated that more than 250 people attended. I also want to thank State Rep. Fran Millar for serving as the on-the-spot emcee for the meeting, Commissioner Jeff Rader for his thoughtful remarks and for his efforts to draw the DeKalb County Commission’s attention to the shortcomings of the tax abatement, and Jeff Fuqua of the Sembler Company for taking the time to explain his company’s position to a skeptical public.

I believe the public is right to be skeptical. I have reviewed the KPMG analysis of the 20-year tax “benefit” that Sembler and the Development Authority are claiming the county government and the school system will receive if the 20-year tax abatement is granted. Courtesy of Jim Walls’ “Atlanta Unfiltered” blog (more on Atlanta Unfiltered below), you can review the document containing the KPMG analysis here (click for link).

The KPMG numbers indicate to me that the proposed Sembler tax abatement will REDUCE the county government’s and school system’s operating funds, if you subtract from the padded totals (1) the revenue that the county government and school system will receive whether or not the tax abatement is approved, and (2) the revenue that doesn’t defray any county or school operating costs. Please take a look at the somewhat difficult-to-read page 3 of the KPMG document, and I’ll show you what I mean.

First, the analysis counts one revenue source that doesn’t go toward operational (instructional) costs of the school system, but instead goes only toward school construction:

ESPLOST Revenue = $4,098,287

Also, the analysis counts one revenue source that doesn’t go to the county government or school system at all, but instead goes to MARTA:

MARTA Sales Tax = $40,982,873

In addition, the analysis counts two revenue sources that will go to the county government and school system whether or not the tax abatement is approved, because the buildings that would generate these revenues are at or near completion:

Property Tax on Non-Abated Buildings = $45,594,544
Property Tax on Personal Property of Renters = $5,761,440

None of the above sources should be counted as part of the tax “benefit” to county government and school system operations. The following sources, however, should be counted:

HOST Revenue = $36,024,362
Property Tax on Personal Property of Retailers = $5,817,997
Business Licenses = $3,185,756

When you add these three numbers together, the total of the actual tax “benefit” is $45,028,115. From that amount, the following three amounts must be subtracted:

Value of the Tax Abatement = ($51,699,253)
Cost of County Services = ($11,321,760)
Cost to Educate Children Living in the Project = ($10,990,000)

The result is a NET LOSS to the county government and school system of $28,982,898 over the 20-year life of the tax abatement. Even if you assume that the “cost of county services” and the “cost to educate” arise only from the non-abated portion of the project (which is not likely), and add those amounts back into the total, the result is still a net loss.

Worse yet, this doesn’t account for Commissioner Rader’s point at last Monday’s meeting that many of the “new” tax revenues claimed in the analysis are actually existing tax revenues that are being shifted to the Town Brookhaven project from elsewhere in DeKalb County.

Granting this tax abatement is bad policy. It will place upward pressure on your property taxes. That problem will be amplified the more often the Development Authority decides to give away the shop to developers whose projects are victims of the real estate market.

Don’t just take my word for it. Jim Walls, a former AJC investigative reporter who now runs his own blog, Atlanta Unfiltered, did his own math and wrote an article reaching a similar conclusion, albeit with a lower price tag. You can read Jim’s analysis here (click for link).

If you’re available this Thursday at 8:00 a.m., I encourage you to join your neighbors at the Development Authority meeting. It is crucial to show the non-elected, unaccountable Development Authority that the community is watching.

DeKalb County and the Georgia Environmental Protection Division (EPD) have eased the outdoor watering restrictions that were in effect as a result of the recent drought.

Under the new rules, odd-numbered street addresses can water on Tuesday, Thursdays, and Sundays. Even-numbered addresses can water on Mondays, Wednesdays, and Saturdays.

To help with water efficiency, it is recommended that residents avoid any outdoor watering between 10:00 a.m. and 4:00 p.m.

Thank you to everyone who responded to my e-mail message last week regarding the Sembler tax abatement proposal. I intend to reply to each of your messages personally, although that will take some time.

Most responded in opposition to the tax abatement. A handful supported it.

This is not about “standing in the way of progress,” as a couple of people characterized it. It’s about transparency and accountability in the way our county and school taxes are managed. It’s also about a very serious and real concern that throwing open the barn doors to giving property tax abatements to developers whose projects are caught in the doldrums of the real estate market ultimately will place upward pressure on the tax burden of DeKalb County citizens.

This e-mail is divided into categories to make it easier to read. It also includes a call to action at the end of the message.

COMMUNITY MEETING ON JUNE 8

There will be a community meeting regarding the Sembler tax abatement proposal on Monday, June 8, at 7:00 p.m. in the Fellowship Hall of Chamblee United Methodist Church, 4147 Chamblee Dunwoody Road.

We will discuss the mechanics of the tax abatement and ways that you can make sure you have a voice in whether it goes forward. In addition, Sembler will make a 15-minute presentation to give you their perspective on the proposal.

John Woodham, a lawyer who is fighting similar transactions in Fulton County, will not be speaking at the meeting. He had been invited to speak, but then last week the AJC and Fulton County Daily Report reported that he is facing sanctions from a Fulton County Superior Court judge after some questionable conduct. I promptly removed him from the meeting agenda.

DEVELOPMENT AUTHORITY MEETING ON JUNE 18

The next meeting of the DeKalb Development Authority is Thursday, June 18, at 8:00 a.m. Stay tuned for more information. There is no word yet as to whether the Development Authority will make a decision on the Sembler tax abatement proposal at this meeting.

BANKRUPTCY CLARIFICATION

I want to clarify that the Development Authority is never “on the hook” for any failure to repay the revenue bonds that would be issued to finish construction of the Town Brookhaven project. This is because Georgia law specifically provides that revenue bonds are never an obligation of the governmental body that issued the bonds.

With regard to bankruptcy, the point I was making in last week’s message (click for updated version) is that bankruptcy law gives a tenant such as Sembler Bell Brookhaven, LLC the unilateral power to reject its unexpired lease with a landlord such as the Development Authority, thus abandoning the failed project to the Development Authority.

REVENUE PROJECTIONS TOO ROSY?

At the June 8th community meeting, you will see tax revenue projections that appear to indicate the Town Brookhaven project will generate more tax revenues for the county and the school system over the 20-year life of the tax abatement than will be lost as a result of the abatement.

Caveat emptor. Buyer beware.

Like any projections, these tax revenue projections are based upon assumptions that might not pan out. You should make up your own mind about them, but remember that Sembler and the Development Authority are not infallible. Just last week, Dr. Eugene Walker, the Chairman of the Development Authority, e-mailed some of my constituents this gem of a prediction:

“It is estimated that this project will create 1,000 new jobs in the County, which is substantial particularly during these tough economic times, but this factor (I am surprised) does not appear to be receiving very much attention. If you conservatively estimate an average salary of $40,000 per job, that’s $40 million in wages pumped back into the local economy. Every year!”

Before assessing the “conservatism” of Dr. Walker’s estimate, it’s important to bear in mind that Town Brookhaven primarily includes retail stores and restaurants that are intended to divert business away from stores and restaurants located in Buckhead and Perimeter Center. To be fair, there is one small to mid-sized company considering the project as one of a couple of places to relocate its headquarters. However, I still wouldn’t call “1,000 new jobs” at “$40,000 per job” a conservative estimate.

Furthermore, many of the tax revenues included in the projections are from dedicated sources that are not used for providing county government services or covering instructional costs. For example, many of the projected tax revenues come from the seven-cent sales tax. Out of every seven pennies of sales tax, four pennies go to the state government, one penny goes to MARTA, one penny is for the five-year SPLOST that goes toward school construction (not school operations), and one penny goes toward the Homestead Option Sales Tax (HOST). Only that final penny goes to the county government. None of these funds are used directly by the Board of Education for school operations.

MY POSITION ON THE TAX ABATEMENT

As a state legislator, I have a role in writing the laws that govern the Development Authority.

Transactions like the Sembler tax abatement should be subject to a requirement that the elected bodies which might lose tax revenues (here, the Board of Commissioners and the Board of Education) must approve the tax abatement for it to take effect.

This is particularly true where the tax abatement would be granted after the developer already has broken ground on the project and is seeking to compensate for assumptions about the real estate market that proved to be incorrect.

State law gives the non-elected Development Authority the sole power to make this decision. I intend to change that.

Some, but not all, PILOT-type bond deals already have been made subject to a local government approval requirement. That was done in House Bill 63 (click for information), which passed the General Assembly this year. The same approval requirement also applies to those now-infamous Tax Allocation Districts (TADs).

The Development Authority is comprised of individuals who bear no direct responsibility to you, the voters and taxpayers of DeKalb County. Your elected officials should be making these decisions, not an unaccountable board that meets at 7:30 or 8:00 in the morning.

As I mentioned last week, Sembler’s tax abatement will have to be approved in a bond validation proceeding in DeKalb County Superior Court. DeKalb citizens are entitled to make a legal objection in that proceeding. Thus far, I have come up with at least one objection worth making.

There has been some chatter that Sembler and the Development Authority might claim that they are entitled to “bootstrap” their new tax abatement proposal to the Superior Court’s approval of a different abatement that was obtained last year between Christmas and New Year’s Day. I don’t see how that is legally permitted, because the Superior Court’s prior judgment in favor of Sembler and the Development Authority is a final, binding judgment as to “all questions of law and of fact.” They cannot now change the facts and claim to be covered by the same Superior Court judgment. I will seek an injunction from the Superior Court if they try to do this.

This is not my first time at the bond validation rodeo (click for information about the Arts Center bond validation). I am willing to forgo making any formal objection if Sembler and the Development Authority will do the right thing and allow the elected officials on the Board of Commissioners and the Board of Education to make the final decision on their tax abatement.

EUGENE WALKER’S CONFLICT OF INTEREST

I also want to clarify that I do not blame Sembler for looking after its business interests.

I do, however, believe that Gene “$18K” Walker should be made to understand the intractable conflict of interest between his dual service as Chairman of the DeKalb Development Authority and as a member of the DeKalb County Board of Education.

The public should call or e-mail every other member of the Board of Education and ask them to insist that Dr. Walker allow them to vote on whether the Sembler tax abatement will happen.

Word is spreading that CEO Burrell Ellis may insist that the Board of Commissioners be given the right to vote on the Sembler tax abatement proposal. He could make this happen because he appoints the members of the Development Authority.

Shouldn’t the Board of Education have that same right? After all, the school system could stand to lose more property tax revenues than the county if these tax abatements are allowed to go forward.

Both the Board of Education and the Board of Commissioners should have the right to vote on the Sembler proposal. If Dr. Walker disagrees with that, then he should have to answer to his colleagues on the Board of Education for his refusal to let them vote. He has sufficient power and influence over the affairs of the Development Authority to hold up the tax abatement until the Board of Education weighs in.

You can make that happen. Please contact the members of the Board of Education and ask them to ask Dr. Walker to let them vote.

You can find their contact information here (click each member’s name for a link to their contact information):

Tom Bowen, Chair
Zepora Roberts, Vice Chair
Jim Redovian, District 1
Don McChesney, District 2
Sarah Copelin-Wood, District 3
Paul Womack, District 4
Jay Cunningham, District 5
Pamela Speaks, District 8

If the above links don’t work, you can find contact information for the Board of Education at www.dekalb.k12.ga.us/board/members/.

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 drepwalker@yahoo.com 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.

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.

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.

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.

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.

Please join me and State Senator Dan Weber for a town hall meeting recapping the 2009 legislative session on Thursday, April 30, at 7:00 p.m. in Lupton Auditorium in the main building of Oglethorpe University, 4484 Peachtree Road. We hope to see you there!

In August 2005, DeKalb citizens scored a major victory for openness and transparency in our county government. That was the month Judge Robert Castellani granted summary judgment in Feltus v. DeKalb County to a group of citizens who were seeking records concerning the flights into and out of DeKalb Peachtree Airport (PDK).

That sort of openness and transparency should be guaranteed. It shouldn’t require a lawsuit that costs citizens hundreds of thousands of dollars in legal fees in order to obtain the records they are seeking. In fact, Judge Castellani found that DeKalb County had been stubbornly litigious and ordered DeKalb to pay the citizens’ legal fees as a result.

DeKalb’s legal defense in Feltus was based in part on an exception in the Georgia Open Records Act that provides public records may be withheld from disclosure if “specifically required by the federal government to be kept confidential.” Abusing this exception, DeKalb claimed that a confidentiality clause in a contract the county had negotiated with the Federal Aviation Administration (FAA) was the basis for hiding the PDK records. In essence, the county was saying they could sit down behind closed doors and write a contract with the FAA that would negate the Georgia Open Records Act.

That’s not the way the “federal government” exception is supposed to work. The exception is only meant to exempt records “specifically required by federal statute or regulation to be kept confidential.” The exception is intended to codify a basic legal principle known as preemption, i.e., that the provisions of federal law preempt state law.

With help from Senator David Shafer and my colleagues on the House Judiciary Committee, I amended Senate Bill 26 (click for bill text) during this year’s legislative session to fix the language of the “federal government” exception once and for all. Now, it will say exactly what it means, thus only allowing public records to be withheld if “specifically required by federal statute or regulation to be kept confidential.”

By striking two words and adding three — a minor change in the law — we have disarmed one weapon in the litigation arsenal that DeKalb County frequently uses to frustrate the will of its citizens. This limited exception to the Open Records Act should never be used to force citizens and taxpayers to spend large sums of money in a legal dispute over public records, related to PDK or otherwise, that should have been disclosed without hesitation.