Wednesday, January 8, 2003
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Wednesday, January 8, 2003 |
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PTC Authority contracts may be illegal By JOHN MUNFORD
A new legal opinion from Peachtree City's new municipal attorney and its bond counsel questions whether the city's development authority can legally operate the city's tennis center and amphitheater under its current contracts with the city. Georgia law, which delineates the powers of development authorities, doesn't "appear" to "authorize a development authority to own, operate or manage an amphitheater or tennis center," according to the opinion from city attorney Theodore P. Meeker III and bond attorney Earle R. Taylor III. The attorneys also indicated the city can "assume" the authority's current $1.456 million in debt only by creating a recreational authority to issue revenue bonds to repay the debt, or by holding a referendum to allow voters to approve a bond issue or by funding the debt through the city's bricks and mortar program and having the city assume operations of both facilities. The city council and the authority had been in negotiations over how to pay for the authority's debt, part of it incurred by the recent tennis center expansion. The authority planned to retire its debt over a 20-year period after council under then-Mayor Bob Lenox agreed in 2001 to guarantee the authority $265,000 a year from the city's hotel-motel tax revenues. The majority of the facilities budgets are funded by revenues from ticket sales, memberships and court fees but the hotel-motel tax funds have been used to subsidize operations also. Incoming Mayor Steve Brown raised objections to the funding method and questioned the legality of the authority's management contracts for operating the tennis center and the Frederick Brown Jr. Amphitheater. Last month, the authority announced it was hiking user fees and ticket prices at both facilities to lessen the reliance on the hotel-motel tax funding. Tate Godfrey, chairman of the Development Authority of Peachtree City, said if he felt comfortable about the venue's future in the hands of the current city leadership, he "might not have a problem in seeing if someone else can take them" and operate both facilities. But Godfrey said he lacks the comfort level he's seeking, particularly with the rumors that Brown wants authority executive director Virgil Christian fired. Brown previously denied that he was "out" to get Christian, but several weeks ago he called for Christian and all the authority members to resign because of what Brown called financial mismanagement. Brown has also referred to Christian as "the highest paid public official in the county." "I feel like there's another agenda here to do something with these facilities," Godfrey said. "I just find it odd that after 10 or 12 years of doing this it's improper. Why didn't the bankers, lawyers and politicians say anything about this before?" Godfrey said Tuesday that he hadn't seen the opinion from Meeker and Taylor but the authority would "evaluate it when we see it and go from there." "I don't know what the city plans to do with this," Godfrey said. Authority members have argued the tennis center and amphitheater are being operated legally because they help develop trade, commerce, industry and employment opportunities in the city. Both facilities are used to entertain industrial and business prospects and both are also shown to industrial and business prospects in tours of Peachtree City. Currently, the authority manages the tennis center and amphitheater operations in exchange for monthly payments from the city's hotel-motel tax fund to subsidize both venues along with economic development initiatives. Both operations have been running at a deficit in recent years. Last year, Mayor Brown asked the authority to cut back its dependence on the hotel-motel tax. Since then, representatives of the authority and council hammered out a new agreement that would cut the authority's share of hotel-motel tax funds by $85,000 this year to $180,000. Next year, the authority's take would be capped at a maximum of $140,000, but it would actually receive 15.113 percent of the hotel-motel tax collections. In the third year, the authority must set a goal of reducing its hotel-motel tax funds to a maximum of $100,000. The authority also stipulated in the agreement that it will no longer seek long-term debt to fund projects for the tennis center or amphitheater; instead, any such projects must be funded by the city. That agreement, however, depends on the city assuming the authority's indebtedness, most of which was used to improve the tennis center and amphitheater, which are both owned by the city. Otherwise, the authority might be left with a significant cut in funding and no way to pay its loans back. Although most of the authority's current $1.45 million in debt was for capital improvements, a portion of it is for operating expenses. The authority uses a revolving line of credit to pay expenses in months when revenue dwindles. Those funds are repaid again on a seasonal basis such as when summer concert season tickets are purchased at the amphitheater and when the tennis center gets its membership revenues. Meeker and Taylor also indicated they were willing to meet with the development authority and its attorney to discuss their opinions in detail and "consider any contrary viewpoints that can be offered ... in an effort to clarify and resolve the issues addressed in this memo." Members of the development authority are Tate Godfrey, Brian Palmitessa, Bob Brooks, Scott Bradshaw, Belinda Sward, Scott Formel and Doug Warner.
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