A consultant illegally hired by the city overstated any possible increase in the tax base on downtown redevelopment projects by utilizing unrealistic figures, public records show.
Meanwhile, a Tax Allocation District clarification letter purportedly written by Mayor Willie Adams Herald is contradicted by the two documents that establish the contractual framework for administering a $6 million revenue bond, records show. The two documents are the Intergovernmental Contract by and between Albany-Dougherty Inner City Authority and City of Albany, Georgia dated Feb. 4, 2009 and Resolution 09-R107. Both of these documents were signed by Mayor Willie Adams Jr., M.D.
These revelations shared in a report to city officials by Albany developer Tim Coley and confirmed by The Albany Journal indicate that the proposed $6 million bond issue that was to be administered by former downtown manager Don Buie was based on bogus information. Indeed, the information shows that the scandalous activity that led to downtown manager Buie being fired spread way beyond Buie, who worked for City Manager Alfred Lott. In fact, the Georgia Bureau of Investigation probe into corruption at city hall was initiated after city officials ignored Coley’s and the Journal’s revelations that Buie was improperly spending taxpayer funds
Lott violated a city law by not soliciting competitive bids before paying two private firms $86,000 of taxpayer funds to produce the redevelopment plan that was mysteriously posted on the downtown manager’s Website earlier this year. Also, the expenditure is larger than Lott’s spending threshold, public records show.
One of the private firms, McKenna Long & Aldridge, is now making additional money as the city’s bond counsel without having to compete for the job with other firms. A city ordinance specifically prohibits the consulting deal Lott made with McKenna Long & Aldridge.
“No contract for public work, amounting to $5,000 or more, shall be let except to the lowest and best bidder, and then, only after the contractor shall give the city sufficient performance and payment bonds, as provided in (state law),” the city’s lawbook states. “If the contract for public works amounts to $5,000 or more, opportunity for competitive bidding shall be given after reasonable advertisement for at least five days prior to the date set for receiving such bids.”
City Attorney Nathan Davis says that a city charter provision enables the city manager to spend up to $40,000 without City Commission approval – but, the provision only is for “purchases of supplies for departments under his control … and all contracts for printing.”
Following is the report by Coley, an officer with the Dougherty County Taxpayers Association. The Albany Journal requested responses on Coley’s findings from Adams, Lott and Assistant City Manager James Taylor, to no avail. As was the case when Coley revealed information that ultimately resulted in a criminal investigation, city officials are ignoring Coley’s recent revelations.
The TAD clarification letter, which was also signed by Mayor Adams states, “It should be noted that the financing is NOT secured by city, county, or school board current taxes or by their full faith and credit”. This statement is directly contradicted throughout the Intergovernmental Contract, such as Article 4 Section 4.3(a), which reads “The obligations of the City to make Contract Payments when due under Section 4.2 hereof, and to perform its other obligations hereunder, are absolute and unconditional general obligations of the City as herein provided, and the City hereby pledges its full faith and credit and taxing power to such payment and performance” and Article 4 Section 4.3 (b) which reads “The obligation of the City to make the contract Payments shall constitute a general obligation of the City and a pledge of the full faith and credit of the City to provide the funds required to fulfill obligation”.
Mayor Adams’ assertions that “the financing is NOT secured by city, county, or school board current taxes” and that the financing is only secured by “the new property tax revenues resulting from the redevelopment activities taking place within the tax allocation district” are directly contradicted by The Intergovernmental Contract Section 4.3(a), which authorizes the City to “levy ad valorem tax on all taxable property located within the limits of the City subject to taxation for such purposes, as now existent or same may hereafter be extended, not to exceed three mills per dollar upon the assessed value of the taxable property in the City during any given calendar year, as may be necessary to produce in each calendar year revenues which shall be sufficient to fulfill the City’s obligations hereunder” and by Resolution 09-107 which reads “and the City, in consideration of the Authority’s doing so, will agree to pay to the authority amounts sufficient to enable the Authority to pay the debt service on the Series 2009 Bonds and, if necessary, levy an ad valorem tax on all property in the City subject to such tax”.
Mayor Adams states, “As it relates to the $6M bond of which there has been much discussion, this bond is a pre-development advance by the City to the redevelopment agent of the TAD, not to ADICA”. Resolution 09-107 specifically contradicts Mayor Adams by stating the City proposes “to issue its Albany-Dougherty Inner City Authority Taxable Revenue Bonds, Series 2009 in an aggregate principal amount of up to $6,000,000”. Furthermore, The Intergovernmental Contract grants ADICA complete control of the “Operation of the Project” in Section 5.1 and complete control of “Operating Expenses” in Section 5.2.
Mayor Adams refers to a redevelopment plan that the City must complete and formally approve as part of the TAD process. Bleakly Advisory Group submitted such a plan on September 29, 2008 for a fee of $86,000. Recognizing that the plan is fatally flawed, I attempted to discuss details of the redevelopment plan with a City Commissioner and an ADICA board member in February 2009 but neither seemed aware the plan even existed.
Potential projects within the TAD as outlined by the Redevelopment Plan include approximately “1,976 residential units and 928,100 square feet of commercial space”. These lofty projections seem unattainable. The redevelopment plan estimates these projects will increase the total taxable value of property within the TAD by $155,464,700. Bleakly Advisory Group used exorbitant figures to calculate the increase in total taxable value such as:
- East Bank Development – 12,000 square feet of commercial space with an estimated increase in value of $14 million ($1,116 per square foot)
- Silvers Building – 15,000 to 20,000 square feet of revitalized commercial space with and estimated increase of $6 million ($300 to $400 square foot)
- Exchange Building – 20 to 25 residential units with and increase of $9 million ($360,000 to $450,000 per residential unit)
- The Enclave – the infamous sand dunes project is estimated to increase the tax base by $25 million
Bleakly obviously overstated any possible increase in the tax base on the above projects by utilizing unrealistic figures. Bleakly also made another fatal mistake in calculating tax revenue generated by their overstated $155.5 million increase in the tax base by failing to assess the total tax value at 40 percent before applying the millage rate. Bleakly’s improper application of the millage rate results in an 60 percent overstatement of new property tax revenue even assuming the $155.5 million figure legitimate.
I anticipate that the current bond, projected future bonds, and any new property tax revenue will be utilized to simply subsidize private downtown development at the taxpayers’ expense. A prime example is how the City of Albany currently subsidizes the Hilton Garden. The City has loaned the Hilton Garden Inn $5.5 million at a fixed rate of 2 percent while the City borrowed that same $5.5 million dollars with floating rate.
The Hilton Garden, a private development, pays the City a fixed amount of roughly $29,000/month. That fixed payment from the Hilton Garden is roughly a $20,000/month shortfall to cover the entire debt service on the City’s $5.5 million floating rate loan. Thus the City strokes a $20,000 check every month to subsidize the Hilton payment. How many of these deals can we afford?
The new redevelopment plan, produced between April and August 2008 and published in October, has not been approved by the City Commission or the Albany-Dougherty Inner City Authority (ADICA). It cost $86,000 to produce, less than the $120,000 Lott told McKenna Long & Aldridge he could spend on the project, and is being cited as the basis of a $6 million downtown revitalization bond issue the city is seeking, public records show.
The published document was authored by the Atlanta firm Bleakly & Associates, which was a professional relationship with McKenna Long & Aldridge. City records show that the two firms were paid $43,000 apiece.
Controversy over the redevelopment plan surfaced in a February meeting of the Dougherty County Taxpayers Association, at which ADICA board member Phil Cannon said he was unaware that a new master plan existed. When asked about the city’s downtown master plan, Cannon correctly cited a consultant’s plan approved in the 1990s. Upon learning from a Taxpayers Association member about the new plan, which is posted on www.ILoveAlbany.com by Buie, Cannon said, “That’s news to me.”
By Kevin Hogencamp