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Monday, June 3, 2013

Supreme Court sides with Beltline, city in constitutional challenge

The Georgia Supreme Court today unanimously ruled that the use of school tax revenue to help pay for non-educational development projects such as the Atlanta Beltline is constitutional.

The case, which was filed by John Sherman of the Fulton County Taxpayers Foundation and argued by Buckhead attorney John Woodham, has been quietly pinballing through the court system for four years.

The justices say in the 28-page opinion released today that Sherman's challenges "lack merit."

So sayeth the Supreme Court's public information officer today in an opinion summary:

The case stems from plans by the city government of Atlanta to fund redevelopment projects in the BeltLine and Perry-Bolton "tax allocation districts," or "TADs." Such projects, which are part of the city's efforts to redevelop some of its neighborhoods, use borrowed funds that are repaid by the increases in property tax revenue - ad valorem taxes - that are generated by the improvements. The use of the public funding helps entice private developers to invest.

In December 2008, the taxpayers filed a lawsuit against the city of Atlanta and the Atlanta public school system seeking an injunction to prevent them from using any school property tax revenues on development projects in the BeltLine and Perry-Bolton tax allocation districts. They also wanted the court to require the school system to refund all "illegally" levied taxes to taxpayers or, in the alternative, spend the funds on educational purposes. They based their claims on the state Supreme Court's February 2008 decision in Woodham v. City of Atlanta.

The high court ruled in Woodham that the proposed use of school tax funds as security for the sale of bonds for the BeltLine Redevelopment Plan was not "necessary or incidental" to public education and was therefore an unconstitutional use of the funds. John Woodham, the plaintiff in that case, is among the lawyers representing Sherman in this case, as he is in another case pending before this court, Sherman et al. v. City of Atlanta et al. (S13A0067). Following the high court's decision in Woodham, the legislature passed a constitutional amendment, which voters later ratified, that would allow the use of school taxes to pay for TAD projects, as long as school boards approved the use. Subsequently, the General Assembly amended the Redevelopment Powers Law, so that it now states that the 2008 amendment authorizes counties, municipalities and local school boards to consent to the inclusion of educational ad valorem property taxes for use in redevelopment projects "notwithstanding Section VI of Article VIII or any other provision" of the Georgia Constitution and "regardless of whether any county, municipality or local board of education approved the use of tax funds for such purposes and programs before January 1, 2009." In October 2011, the trial court ruled in the school system's favor, finding that use of the school tax revenue for redevelopment projects in the two TADs violates neither the state Constitution nor the Atlanta City Charter. Sherman then appealed to the state Supreme Court, arguing that the 2008 amendment changed nothing of relevance to this case and that under the Woodham decision, the BeltLine and Perry-Bolton tax allocation districts are unconstitutional.

But Sherman is "decisively" wrong, today's 28-page opinion says, "because the subsequent constitutional amendment and revision of the statute governing TADs changed the applicable law, and those changes were expressly made retroactive with respect to the county, city, and local board of education approvals needed to use school taxes for redevelopment purposes." Sherman's argument "reflects a failure to keep in mind the difference between the power of the legislature to pass laws, subject to the constitution of the state and the limitations imposed thereby, and the power of the legislature to propose and of the people to ratify, in the prescribed method, an amendment to the constitution."

"The Georgia Constitution 'is the supreme state law,' and our Constitution can be amended to make constitutional things that were once declared by this Court to be unconstitutional."

We're waiting on comment from John Woodham, Beltline officials, the city, and Invest Atlanta, the city's economic development arm which oversees Atlanta's TADs. We'll update when we hear word.

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