A proposed Brookhaven Facilities Authority with the ability to issue revenue bonds to pay for the Peachtree Creek Greenway stirred considerable debate at Mayor John Ernst’s March 15 town hall with several residents questioning the need for the authority and some demanding they be allowed to vote on how to pay for the linear park.
A bill to create the Brookhaven Facilities Authority has already passed in the state Senate and is now being considered in the state House.
City officials explained at the town hall the Facilities Authority is necessary to spend the money raised from the hotel/motel tax increase approved last year in the General Assembly to fund the Greenway. The Facilities Authority would have the ability to issue revenue bonds against the new revenue stream created by the hotel/motel tax.
The City Council approved a $35 million Greenway master plan in 2016. Revenue bonds allow a Facilities Authority to lock in rates and keep costs down rather than paying as you go and dealing with such things as rising inflation costs, Assistant City Manager Steve Chapman said.
“Basically we are taking out a mortgage,” he said.
For some at the town hall, though, the idea of issuing revenue bonds — which do not require a public vote — to pay for the Greenway is a major concern. The other major concern is that there is no specific language in the Facilities Authority bill that ties it to the Greenway, argued Catherine Bernard, an attorney who unsuccessfully ran for state House District 80, including Brookhaven, in 2016.
“I don’t think anyone here is against the Greenway,” Bernard said, “but it is not mentioned in this bill.” She suggested adding language to the Facilities Authority bill requiring a referendum before a revenue bond is issued. Her argument also centers around the 2014 city vote defeating the Redevelopment Powers Law.
Chapman said a referendum wasn’t practical and noted 755 other cities in Georgia use Facilities Authorities. Sandy Springs has a Facilities Authority that is being used to fund the building of its City Springs center; Dunwoody last year approved creating a Facilities Authority so it could approve a 40-year lease contract with the Dunwoody Nature Center.
“The only way to do [the Greenway], unless you want to do this project 100 yards at a time, is to create a Facilities Authority,” Chapman said. “That’s the only vehicle we have.”
“Are you jut having this town hall so you can tell us what’s going to happen and tell us we have to like it, or are you having this town hall so we can discuss what is the best way forward for Brookhaven,” Bernard said to Chapman.
“We are here to gather input,” he said.
City Manager Christian Sigman added that the elected mayor and City Council made the decision to approve a Greenway plan and raise hotel/motel taxes to pay for the Greenway while elected state officials approved the legislation making it possible to raise the hotel/motel tax to fund for the Greenway.
Going back to the voters “seems superfluous” on something the city and state elected officials have already done, Sigman said.
Resident Chad Boles, who also believes residents should vote on any debt the city wants to take on, said the elected officials said nothing about a Facilities Authority or revenue bonds before they got elected.
Mayor John Ernst then interjected and said he and the entire City Council campaigned on building and funding the Greenway. “It was known to voters that I wanted it done and done in the quickest amount of time,” he said.
Boles also noted of the 755 cities with Public Facilities Authorities, Brookhaven was the only one where voters defeated the Redevelopment Powers Law.
State Sen. Fran Millar (R-Dunwoody), whose district includes Brookhaven, sponsored the Brookhaven Facilities Authority bill in the state Senate with state Sen. Elena Parent (D-Atlanta). He was at the town hall and explained he voted last year to approve a tax hike for hotels in Brookhaven because the city had a great plan to spend it on the Greenway. That bill also includes language specifically about the Greenway, he noted.
“If you didn’t have this plan, I wouldn’t have voted for it,” he said. Facilities Authorities are a “proven commodity” for projects like the Greenway, he added.
“This is the accepted practice. If you want the Greenway, this is the best and fastest way to do it,” Millar said.
Chapman explained state law prohibits a city from entering into long-term contracts to spend public funds beyond one year, but by contracting with another governmental body, in this case a Facilities Authority, the city is able to enter into such contractual agreements, such as revenue bonds. State law allows Facilities Authority to enter into contracts up to 40 years.
“One council can’t bind another council,” Chapman said. When the city was founded, it created the Brookhaven Finance Corporation, giving the city the ability to enter into 5-year lease agreements for City Hall and the Police Department. This finance corporation is essentially the same as a Facilities Authority, he said.
The legislation approved last year in the General Assembly giving the city the authority to raise its hotel/motel tax from 5 percent to 8 percent included a clause to create the Facilities Authority to spend that money, Chapman said.
Betsy Eggers, chair of the nonprofit Peachtree Creek Greenway board that advocates for its construction, voiced frustration with people saying they support the Greenway, but then oppose ways to fund it or demand a referendum to pay for it, calling them “unnecessary hurdles.”
“I appreciate elected officials who stuck their necks out for last year’s legislation and this year’s legislation,” she said to Millar and state Rep. Meagan Hanson (R-Brookhaven), also in attendance at the town hall.
It is disingenuous for someone to say they support the Greenway, but then oppose the quickest way to fund it, Eggers said. She said the Facilities Authority was the “perfect solution” to ensuring the Greenway is built quickly.
“If we do this piece by piece without a Facilities Authority, [the Greenway] will be rotting at one end before the other end gets started. It’s the momentum we cannot hinder right now,” she said.
The city’s elected officials were given their “marching orders” when elected to create more green space, more bike and pedestrian-friendly areas, she said, and that is what the Greenway will do.
After the meeting, state Rep. Hanson said she plans to “continue to look at ways to get everyone on board” before the session ends on March 31.
It may be helpful to note that the term “revenue bond” is likely to be shorthand for “revenue anticipation bond”. That is, the bond brings in investors who are providing “front” money for a project whose returns will be based upon revenue in the future. In this case, it is revenue that is generated by the hotel / motel tax. By issuing a revenue anticipation bond, funds are raised at the front for the construction of a project that will last for several years. From a construction standpoint, this allows for one-time bidding rather than letting out a series of smaller jobs. This takes the long term view of the project.
There are a number of loose ends. The bonds themselves will be sold on the open market, and their pricing will be based in the investors’ attitude toward the project. If the investors feel that a project will be soundly managed and will provide an asset to the community, then there should be competition for those bonds and the interest rate that the bonds pay will be lower, yielding more money for the project itself. On the other hand, if the bond is viewed to be risky, then the interest paid will have to be higher to attract investor money. So, prudent management of the project is of essence if the project is to get the most bang for the buck.
Generally, municipal bonds are reliable investment vehicles, which is why they are so popular with the widows and orphans. At the same time, there is the concern that if the revenue source, in this case the hotel / motel tax, will falter. Such an event would take place during a financial recession, where people would lessen their use of public lodging because of the uncertainty in the air. Likewise, there is the concern of project cost overruns and such.
All of which made for a spirited discussion last night.
This govt was promised as being able to deliver without raising taxes. We raised taxes! We raised taxes to fund a sidewalk along a polluted creek. Maybe we should have delivered the promised services from promise makers before jumping head first into the debt pool that can only be repaid by raising the tax rate AGAIN.
So we are now borrowing money for a new “park” when we cannot even maintain the parks or infrastructure we have. Instead of managing what we have we are going to take on more than we can manage which will without doubt wind up in tax increases. Someone please explain to me how this man deserves to remain mayor of Brookhaven.
Five points of concern for SB 478 that were shouted down by Mayor Ernst, City Staff Chapman and Sigman, and City Attorney Balch.
1) The bill eliminates the second step of a purchase contract by eliminating ‘consideration’, or the ability of a private landowner to negotiate their own real estate sale price. De Facto eminent domain authority will be given to an unelected, bureaucratic agency.
2) The bill provides for the issuance of revenue bonds far into the future. The Peachtree Creek Greenway IS NOT MENTIONED ANYWHERE in the bill. Senator Millar raised taxes on local businesses last year to fund the Peachtree Creek Greenway, that based on recent polls 85% of the population don’t want. The bill allows for open-ended financing for any special interest projects the current mayor, or future mayors would like to see.
3) The bill provides for the full employment of full time architects, engineers, managers and employees to staff those projects outside of the purview of City of Brookhaven Constituents. The Authority will NEVER create a financial statement for review, nor will it be audited.
4) The bill has an ILLEGAL clause, shot down by the Supreme Court in Jacobs v. DeKalb County Development Authority, 2009. The clause states the city would be able to enter into Intergovernmental agreements with the Public Facilities Authority to pay for the principal and interest on any revenue bonds issued. In other words, the city would like to pay for their special interest projects and never ask you permission ever again. The city wants their financial cake, and eat it, too.
5) The bond market rewards general obligation bonds, the ones you vote on, with 20% lower interest rates than revenue bonds because they value taxpayer support. The city will spend an additional $500,000 per year in additional interest costs on a 20-year $50,000,000 bond than they would if they simply took popular ideas to the ballot. Makes you wonder why they won’t take this ‘popular’ idea to the ballot. (See #2)
6) and finally, last night was the rudest group of elected officials ever on display. When a city attorney says “We’re not trying to slip one past you”, but then no one can answer why it doesn’t go to the ballot, you should be concerned.
Please email Meagan Hanson, Scott Holcomb and Mary Margaret Oliver and tell them to withdraw this bill from consideration.
After the past few months of eminent domain actions and other court losses due to known illegal positions, I have zero doubt that John Ernst, Christian Sigman, and attorney Chris Balch should be out of jobs within the city of Brookhaven. That starts with Mayor Ernst who hand picked Christian Sigman and just renewed Chris Balch’s contract. This is not the direction we were supposed to be headed when this city was formed.
Ms. Bernard, the he answer to your question about the purpose of the town hall was confirmed during the interaction between Citizen Boles and Mayor Ernst.
John Ernst’s behavior was shockingly unprofessional and outrageously rude. Its clear that citizen input was being squashed because it didn’t support his desired outcome for the meeting. He seemed to feel threatened by the facts and the truth. Christian Sigman and Chris Balch acted like bully henchmen.
Last nights meeting was a discrace. It is apparent Chris Balch is nothing more than a henchman for John Ernst. Being an attorney with a crappy website, a condescending attitude, and an overpaying contract is all you need to work for John Ernst.
Betsy Eggers “voicing her frustration” is some next level irony.
She and Joe Gebbia sold Brookhaven residents- especially those that live in District 4- a Peachtree Creek Greenway that has nothing to do with reality.