Lawsuits against cities cost taxpayers

DeKalb County will decide next week whether to go to court against some of its own residents, and if it does, those same residents will help foot the bill.

Litigation in connection with the new city of Dunwoody has already cost county taxpayers more than $30,000 in private attorney fees. On April 14, county commissioners will decide whether to up the ante with a legal challenge against the city’s very existence. The fees for outside counsel would climb, and all county taxpayers, including those in Dunwoody, would pay.

DeKalb has its own cadre of lawyers — 18 last year — but routinely hires private firms for litigation and other court services. In 2008, the county attorney’s office allocated nearly half its $4.7 million budget for contracted services.

Other metro Atlanta counties also pay for outside legal expertise. Cobb and Gwinnett counties each have nine staff attorneys, and said they spent around a half-million dollars apiece on outside counsel last year.

A big chunk of DeKalb’s outside counsel expense — over a half-million dollars last year — went to firms that either defended the county in court or acted as plaintiff’s counsel on high-profile cases, according to a review of invoices obtained under the Georgia Open Records Act.

Robert Augustine, a former DeKalb development official, said counties often must hire outside attorneys for special expertise or extra firepower.

“But obviously it needs to be looked at very carefully,” said Augustine, who is also a lawyer, “because it’s an expensive proposition.”

Former Gov. Roy Barnes, a lawyer, contracted with DeKalb at $473.33 an hour to handle a couple of cases against Dunwoody, and he billed $32,000 last year.

That and other 2008 outside legal expenditures occurred under former County Attorney Bill Linkous and then-Chief Executive Officer Vernon Jones. The new county attorney, Lisa Chang, and Jones’ successor, Burrell Ellis, said through a spokeswoman that they were unavailable to comment for this article.

Augustine, who served as chairman of the DeKalb Development Authority board of directors, said DeKalb has been too litigious — especially against other governments.

All residents lose, he said, when governments fight each other in court because of the cost and the message it sends to companies looking for a new home.

“What kind of an image does it present to them when they’re thinking about locating a business here?” he asked.

But a lot of money is often at stake in these legal battles, and officials say they feel responsible to fight for their constituents.

For instance, neither side has backed down in a nine-year fight between DeKalb and four of its cities. The case involves the county’s penny on the dollar homestead option sales and use tax. City officials say their residents pay the tax but get no benefit. The fight has rumbled through Georgia’s Supreme Court three times, most recently last year, when the court ruled against DeKalb.

The disputed amount is over $9 million. Meanwhile, the legal bills are mounting. DeKalb spent nearly $60,000 on the case last year alone.

“The city of Decatur itself has paid nearly a million dollars since we started this,” Mayor Bill Floyd said. “I would bet they’ve spent twice that.”

The outcome could affect tax distributions over the next four decades and amount to tens of millions of dollars. “It’s a million dollars a year for the city of Decatur,” Floyd said, “and that’s just too much for us to walk away from.”

DeKalb spokeswoman Kristie Swink declined to comment about these cases since they are ongoing litigation. She would not confirm how much the county has spent on them.

In the case of Dunwoody, DeKalb lost a court action last month against a state requirement that it share sales tax revenue with the city.

A Fulton County Superior Court judge cited testimony from DeKalb’s own finance director, Mike Bell, that refuted the county’s claim that sharing sales tax money would drive up property taxes for county residents. The ruling means an additional $1.6 million in tax receipts for Dunwoody.

County Commissioner Lee May contends DeKalb has gotten a raw deal from the new city. He’s pushing a lawsuit that would undermine Dunwoody’s existence by challenging the legality of last year’s incorporation vote. May said creating Dunwoody had tax implications countywide and all county residents should have been given a vote.

“The boundaries of what was incorporated is costing us big time,” he said. “And it’s not fair.”

May said he would also like to appeal this month’s decision in Fulton over the Dunwoody sales tax proceeds. “I would like to just fight to the end until there are no options,” he said.

— Staff writers Kent Miles and Pat Fox contributed to this article.