High court: DeKalb voters must approve arts center bonds (Sembler & future GM purchase too?)

From the award winning blog by Jim Walls of Atlanta Unfiltered. (A daily must read.)

The Georgia Supreme Court told DeKalb County’s development authority Monday that it needs voter approval to sell bonds to pay off the debt on a new performing arts center.

But the impact of the ruling could be much broader, subjecting virtually any bond issue by the authority to a public referendum. In a footnote on page 3, the court said a 2007 law requiring voter approval applies to bonds issued for “any new buildings or facilities or improvements to existing buildings or facilities.”

That would include a controversial proposal, tabled in June, to help the Sembler Co. complete its Town of Brookhaven mixed-use project. Sembler had asked for a bond issue to pay for a $52 million property tax abatement, a deal that the DeKalb Board of Education and a majority of county commissioners opposed unless they were given a chance to vote on it.

The controversy flared up further over authority chairman Gene Walker’s role in the decision-making. Walker last year sought and won a seat on the DeKalb board of education, a race financed in part by more than $20,000 in political contributions by members and associates of the Sembler family. Walker has since resigned from the authority.

The high court ruled that the authority cannot sell bonds to pay off $4.3 million in debt on the new Porter Sanford III Performing Arts Center without voter approval. A DeKalb County judge refused to validate the bonds last year, siding with state Rep. Mike Jacobs, who had intervened to argue the authority would be violating the language of a law he sponsored unless there were a public referendum.

In his brief, Jacobs argued the law would not affect every transaction by the authority. But the court said a literal reading of the law shows it applies to virtually any bond issue that the agency might consider.

“What the Supreme Court is saying,” Jacobs said, “is that the referendum requirement as currently written also applies to any bond deal where the authority … is constructing new buildings or improving existing buildings, and that would include the private bond deals.”

Jacobs said he believes voter approval is necessary for some deals, such as so-called “backdoor general obligation” bond issues by the authority, whose members are all appointed by the DeKalb County Commission. In other cases, such as the proposed Sembler deal, he might support amending the law to only require approval by the county commission.

“In all cases, a body of elected officials would have to sign off on it,” he said.

DeKalb argued the law is unconstitutional because it only applies to one county and does not apply to any municipalities. The justices disagreed.