Much has been made in the past two years of the financial status of the proposed City of South Fulton, now set for a vote either up or down on Sept. 18. A letter last week by Fulton County Finance Director Patrick O’Connor at the request of Commissioner Bill Edwards provided a county assessment of some portions of the Report on the City of South Fulton, authored by Dr. Robert Eger of Georgia State University’s Andrew Young School of Policy Studies. Some of O’Connor's points, if accepted by commissioners, might also have implications for county assets inside the voter-approved City of Chattahoochee Hill Country.

In his one page narrative report to Edwards, O’Connor cited several areas in which he questioned Eger’s report findings. The first of those, referenced by O’Connor in Eger’s Executive Summary section of the Report on the City of South Fulton, noted Fulton County assets in the proposed new city valued at $1,460,700.

“We do not know what basis they used to arrive at this amount,” O’Connor said. “Nor is there a schedule detailing the assets.”

In response, Eger said Sept. 6 he estimated the capital expenditures of the City of South Fulton by the established precedent set by the Fulton County for assets including park land, greenspace and fire stations.

“That precedent was a cost of $100 per acre for park land and $5,000 for the capital asset of the firehouse building,” Eger said. “Based on these costs, the assets currently owned by Fulton County but residing within the new boundaries of the City of South Fulton are valued at $1,460,700.”

Residents of the proposed City of South Fulton, if voted in, and those in the newly approved City of Chattahoochee Hill Country, approved by voters in June, will soon learn the county’s intention as it relates to county assets such as fire stations and the old school likely to become the new Chatt Hills City Hall.

A second area addressed by O’Connor related to revenue collection in the new city.

“Because of the ongoing downturn in the real estate market, our projection for Licenses and Permits in the district is $6.6 million compared to $9.3 million in the (Eger) report,” he said. “This is a $2.7 million gap that needs to be reflected in the potential City of South Fulton budget for 2008.”

Eger responded, saying that estimates used in his report were based on available public data from Fulton County from 2006.

“If Mr. O’Connor says that revenue collection is down for 2007, he may be correct. As a feasibility study, we obviously strive to be as accurate as possible yet there can be unavoidable changes in the financial conditions that affect certain aspects of our estimates,” Eger said. ”The revenue data we have was provided by the county except for our estimates of the franchise fees as noted in our report. We utilized the 2006 Tax Digest as certified by Fulton County. When the Tax Digest errors became apparent, we corrected those errors to the best of our abilities using Geographic Information Systems analysis to re-estimate the 2006 Tax Digest.”

Another revenue area cited by O’Connor relates to revenue from insurance premium taxes, saying that a portion of the revenue cited by Eger was not consistent with county findings.

“The ‘All Other’ revenue category of the (Eger) report anticipates a collection amount of $10 million for the year. We disagreed with this amount because this category includes $5.6 million of Insurance Premium Tax which will not be available to the potential City of South Fulton in the first year of incorporation,” O’Connor said. “The state requirement for filing Insurance Premium Tax applications by newly incorporated cities make it impossible for the (new city) to be eligible for the premium tax in 2008. The recurring amount apportioned to the potential City of South Fulton in 2009 when it becomes eligible to receive the tax as a city will be about $3.1 million less than the $5.6 million projected in 2007. The $3.1 million is the insurance premium tax the cities of John’s Creek and Milton lost in their first year of incorporation but will be eligible to receive in 2008.”

Again, Eger saw the issue from a different perspective.

“The $5.6 million in the Insurance Premium Tax will be paid each year, in arrears, after the year of application. We did this projection as if the City of South Fulton was already a city and in the scenario of a typical, operational system,” Eger said. “There is no clear reason in Mr. O’Connor’s statement why the $3.1 million figure related to John’s Creek and Milton is applicable to South Fulton in any way. Mr. O’Connor or Commissioners Edwards should expand or clarify this statement because the Shafer Amendment has clear parameter about revenue accumulation and use with a tax district.”

Speaking Thursday, Eger made another comparison, one that calls into question a revenue source currently unavailable unless the new city comes into existence.

“The (unincorporated) South Fulton Tax District, assuming Mr. O’Connor is correct, faces a deficit approaching $15 million. A new city may face the same issues, however it has the opportunity to increase its revenue by about $13 million without changing any of the millage levels. That is quite an important difference. How can this be?” said Eger. “The difference between the new city and the county is that both the Local Options Sales Tax estimated at $11,683,000 and the estimated franchise fees of $1,130,000 are not available to the South Fulton Tax District. Thus, the financial hurdle presented to the county commissioners is much more daunting than that presented to a new mayor and city council. Remember that currently the county General Fund, which has a reserve, cannot be used in the South Fulton Tax District.”

Since his initial reports on the financial feasibility of the City of South Fulton, Eger’s figures have been largely either praised or vilified. As with the City of Chattahoochee Hill Country, Eger has maintained that the numbers work, stating as recently as mid-August that the City of South Fulton is in the black. Though called upon for more than two years at various public meetings to address financial issues, Eger earlier this week voiced what he said were other important factors relating to city-hood.

“Financial feasibility studies, like ours, focus on financial estimates. This is only one aspect of what the citizens in the South Fulton area must be concerned with. The question of city-hood includes financial control, representation, and level of service. All ‘new’ businesses face a series of hurdles; the question raised in our financial feasibility analysis is not singularly a revenue issue,” Eger said. “In good faith, we presented the facts to the citizens of the South Fulton Tax District and we stand by our estimates. If you look closely at our estimates, you will find that we offer a balanced look at expenditures and revenues based on other cities of like size and the metro Atlanta cities. We want the citizens residing currently in the South Fulton Tax District to look at their choices and draw their own conclusions. The goal of financial feasibility studies is to provide accurate and full information, not to choose whether or not you should or should not decide to become your own city. To use the old adage of the horse race and the political race, the Andrew Young School Fiscal Research Center does not have a horse or a politician in this race; we are just the providers of the information that is available.”

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