Judge denies bonds for arts center
$18 million project proceeds despite ruling
by Andy Phelan
andy@dekalbchamp.com
A county Superior Court judge denied the validation of more than $4.3 million in revenue bonds that would have been used to fund completion of the Porter Sanford III Performing Arts and Community Center in south DeKalb.
Judge Daniel M. Coursey Jr. issued his order Nov. 10 that the county would have to first receive approval from voters in a referendum to float the bonds.
The ruling comes after a July 15 hearing in which state Rep. Mike Jacobs [R-Atlanta] challenged the county’s ability to float the bonds without sending it to the people for a vote.
“The county made a mistake when it decided to build the performing arts center in the first place,” said Jacobs. “DeKalb County is facing a $40 million budget shortfall, and now has to figure out how to cover the ongoing operating costs of a new arts center – what a joke.”
But the $18 million arts center on Rainbow Drive, which is about 90 percent complete, is moving ahead despite the ruling.
Commissioners approved in September using $1.5 million in interest income from the 2006 parks bonds to help fill the gap. Executive Assistant Richard Stogner said the other $3 million would come from Community Development Block Grants.
The Development Authority issued $6 million in revenue bonds to help fund the center in 2006.
“The center will be completed as scheduled,” said Stogner. The center is scheduled to be complete by Dec. 19. “We would have reimbursed Community Development and the park bonds fund with proceeds of the bond sale.”
Stogner said the county launched its backup plan after Jacobs challenged validation of the bonds. “We hated to have 85 percent of the building complete and not be able to finish it,” he said.
In June 2007, Gov. Sonny Perdue signed into a law – known as HB 181 – a measure that prohibits any county that has a Public Safety and Judicial Facilities Authority from floating service bonds to build projects and then lease the facility back to the county in the form of rent payments without first asking the voters for their blessing in a referendum.
In this case, the county and its development authority were trying to do just that – issue the $4.3 million in development bonds, use the proceeds to complete the project, turn around and lease the facility back to the county, which would then pay principal and interest to the authority as rent.
Attorney Gregory H. Worthy of Powell Goldstein, who represented the county in the matter, had not read the judge's order, and only knew that he ruled against validating the bonds.
“I’m a bit surprised by the ruling,” said Worthy, who is legal counsel for the county’s development authority. “We believe HB 181 [Jacobs’ law] is inconsistent with the state’s development authority law. The development authority law should govern the issuance of bonds. HB 181 should not apply.”
But Coursey sided with Jacobs, author of the legislation, when he denied validation to issue the bonds.
“From here on out, anytime the county wants to float bonds through an authority and where the county has to pay for them directly out of the treasury, the people have the right to vote on it,” said Jacobs, who indicated that the county might appeal to the state Supreme Court.
Stogner could not comment on any future legal action, but said Jacobs’ law hamstrings local governments.
“It limits our ability to fund capital projects,” said. “It limits our flexibility.”
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