Decision on tax break for Sembler postponed

A developer who wanted a $52 million public subsidy for a project in north DeKalb County will have to settle for less money.

It’s unclear how much less, but Sembler Co. president Jeff Fuqua said after his request for the unprecedented tax break was indefinitely postponed Thursday that he would “come back with another proposal that is not a 100 percent abatement.”

The authority had been expected to rule on the controversial tax request Thursday, but board members instead voted to postpone a decision, citing the public outcry. Residents and their elected officials had been complaining for weeks about the proposed 100 percent, 20-year property tax waiver.

There had also been criticism of authority chairman Eugene Walker, who won a seat on the county school board last year with campaign financing help from Sembler. The school system late Wednesday memorialized that criticism in a complaint to DeKalb Superior Court that alleged he had a conflict of interest.

Previously, Walker had said that he would vote on Sembler’s request despite calls for him to step aside. But he finally succumbed to the criticism, telling his colleagues Thursday that he would recuse himself “to keep from tainting the work of this body I respect so much.” He then left the meeting.

The authority’s remaining six members voted unanimously for a motion by member Delores Aldridge to defer Sembler’s request indefinitely. She noted “the overwhelming output from the community” as she made her motion, which also called for a review of the authority’s tax incentive policy.

The decision came after county CEO Burrell Ellis sent a memo to the authority asking that officials “not approve” Sembler’s request. The county has never given such a generous tax break before — the larger Mall at Stonecrest got a fifth as much money — and Ellis questioned the deal as an “unusual departure” from policy that would increase DeKalb’s “exposure to market risk.”

County commissioner Jeff Rader showed authority members a resolution that opposed the deal and threatened a trip to court. It was signed by himself and four of his fellow commissioners, which makes a majority on that seven-member body.

And, though no one on the authority board mentioned it at Thursday’s meeting, the DeKalb school board filed a complaint in DeKalb Superior Court late Wednesday questioning the constitutionality of the proposed tax abatement and whether the Development Authority can act without the school board’s consent.

Among the school system’s legal claims was a charge that Walker, who is both a school board member and the chairman of the development authority board, has an “inherent” conflict of interest between his duties to the schools and to the authority because the authority can divert money from the schools.

The legal complaint also cites the money Walker accepted from Sembler for his school campaign last year. Campaign finance reports show that he accepted $18,000 from Sembler executives and their relatives.

“The campaign contributions by individuals affiliated with Sembler, which stands to gain from the vote by the Development Authority, appear to create an objectively reasonable probability of actual bias,” the complaint contends.

Walker told the crowd at Thursday’s meeting that he’d been “totally transparent” from day one and that his vote on the tax break would be “driven by the information I received.” An analysis by a consultant determined that Sembler’s claims that sales tax revenue from the project would far exceed the cost of the abatement were slightly exaggerated but credible.

“Retail developments by their very nature are money makers for local governments,” said the consultant, Dick Layton, a managing director with Wachovia Bank.

Ellis’ memo to the authority asked the board to review and possibly adjust its tax incentive policy to reflect the economic downturn.

Two county commissioners, Rader and Lee May, said after the meeting that the commission should have a say in any policy changes the authority adopts.

May said he opposed subsidizing the Sembler project because he believed the company would build it without a tax incentive and because the county’s budget is tight. Rader said any new policy should differentiate between businesses that bring money into DeKalb from those that merely move it around the county. New corporate headquarters, for instance the recently-announced relocation of Dayton, Ohio-based technology giant NCR to Gwinnett County, channel income from corporate profits across the country and even the globe, he said. By contrast, he said, local retail developments “cannibalize” existing store sales.

“It’s not that we don’t want to participate in an incentive deal,” Rader said. “It’s that we want an NCR.”