By John Schaffner
State Rep. Mike Jacobs (R-DeKalb) and DeKalb County officials are battling over the use of property taxes to repay or guarantee payments on public development bonds without a taxpayer referendum.
Jacobs says he understands DeKalb has been granted about $50 million in federal economic recovery stimulus funds and the county would like to use the Economic Recovery and Facility Bonds for funding of public development projects.
The federal government will pay 45 percent of the interest payments associated with the public facility bonds. DeKalb County must repay the principle and the remaining 55 percent of the interest on those bonds.
Jacobs said the county may also have another $30 million for use for private developments, but private developers are responsible for repaying those bonds and the interest.
DeKalb County CEO Burrell Ellis, who already has called for a 1.8 mill tax increase to support his budget for the coming fiscal year, apparently wants to pay the public facility bond interest and repay the bonds using 1 mill of county property tax revenues, Jacobs said.
But, there is a glitch in that plan. Jacobs had a law passed in 2007 that restricts counties from committing property tax funds to repay the principle and interest on public facility development bonds without a taxpayer vote.
Jacobs’ change to the state code, which was directly aimed at DeKalb County at the time, withstood a challenge and was upheld by the Georgia Supreme Court.
Jacobs said he had recently been asked by DeKalb officials to amend his 2007 action so that the county would be able to bypass a referendum in its attempt to use 1 mill of property taxes to pay off the principle and interest obligations for public facility bonds used to repay the federal economic stimulus funds.
Jacobs said his answer was short: “No.”
DeKalb’s Deputy Chief Operating Officer for Development Jabari Simama said Jacobs initially agreed to look at revising the 2007 action so that the county could deal expeditiously with the stimulus funds before the July 1 deadline. “Then he changed his mind,” after months of discussions, Simama said.
Simama explained that the county asked Jacobs to consider removing the public referendum requirement when federal stimulus funds are involved because “the county risks losing the funds” if the July 1 deadline is not met. “We don’t want to lose the stimulus money to surrounding counties.”
He said there is no way a public referendum could be held before the July 1 date, so “DeKalb is being thwarted by the legislation….and unfairly singled out,” he said.
He said the whole purpose of the stimulus funds is to have them spent rapidly to spur economic development and jobs.
Jacobs, who represents Brookhaven, said the purpose of his 2007 amendment is to prevent county governments from committing up to 1 mill of the county tax digest to repay the principal and/or interest on bonds issued for public facility development projects without the county taxpayers having the opportunity to approve or disapprove that action through a referendum.
He said his amendment was passed in 2007 when DeKalb County wanted to raise its general obligation bonding cap for public and judicial facilities from $50 million to $100 million. When the change was rejected, the county decided to do the bonding through an independent government entity known as the DeKalb Development Authority. The authority would sell the bonds to construct a public building and then lease the project back to the county, avoiding the county having to do a traditional “general obligation” bond issue which require a referendum.
The county tried to challenge Jacobs’ amendment by issuing $4.3 million in bonds to complete the Porter Stanford III Performing Arts Center. That was challenged by Jacobs . The Georgia Supreme Court upheld the Jacobs amendment and told the county it must have a voter referendum on all bonds issued for public facilities that obligate tax revenues. The Supreme Court decision was handed down in September 2009.
Jacobs said the concept is that this sort of bond should be paid off by revenues generated by whatever the bonds were issued to build. For instance, sewer bonds would be paid off by utility fees. That was not the case with the performing arts center and many other public facilities, he said.
Jacobs claims that DeKalb County again wants to do exactly what his amendment was passed to stop. “The county wants to use these nifty stimulus bonds for public redevelopment projects” and commit to their repayment without having to obtain taxpayer vote approval, “and I am saying no way,” Jacobs stated.
Asked if DeKalb CEO Burrell Ellis or other county officials might get other members of the DeKalb House delegation to put forth an amendment to Jacobs’ 2007 action that would allow them to proceed with their plans, Jacobs said it would never happen.
“There will be no new bill that revises that section of the code unless I sign off on it,” Jacobs stated.
Although only three Republicans – compared to 16 Democrats — sit on the DeKalb House delegation, no Republican would likely sponsor such an action and any bill put forth by one of the Democrats representing DeKalb would never make it through committee.
“I would have it killed,” he said.