Court revives Fulton taxpayer foundation's lawsuit

By Bill Rankin

The Atlanta Journal-Constitution

The Georgia Supreme Court on Monday revived a lawsuit that claims a number of luxury Atlanta development projects have received unconstitutional tax breaks, costing the county millions of dollars in lost revenue.

The 4-3 decision is a victory for John Sherman, president of the Fulton County Taxpayers Foundation. He filed the suit last year and appealed the case to the state Supreme Court after a Fulton judge dismissed it.

"It's a wonderful ruling for the taxpayers," Sherman said. "Giving 50-percent tax abatements to projects in wealthy areas like Midtown and Buckhead is an abomination of state law."

A spokeswoman for Fulton County did not have an immediate comment.

Sherman filed suit against the Fulton County Board of Assessors, claiming the tax breaks granted by the board for large developments in Buckhead and Midtown were unconstitutional. Among the projects were The St. Regis Buckhead, The InterContinental Buckhead and The Mandarin Oriental Hotel Midtown.

The lawsuit objects to the board's "50 percent valuation formula" to determine the market value of the property held by the private developer. Under the formula, the board agrees to initially value the estate at 50 percent of its overall fair market value and then increase the value by 5 percent a year over the life of the lease, the suit said.

Sherman's lawsuit says this valuation method is illegal because it allows the developers to pay less than their fair share of property taxes because the properties were initially appraised at less than fair market value.

Sherman said the tax abatements should be used to develop new industry, such as the Kia car plant in West Point, or new development in economically depressed areas. Instead, the Board of Assessors used the incentives illegally for projects that were built decades ago and for development in upscale areas such as Midtown and Buckhead, he said.

"I am sure once the case goes forward, the facts will bear us out," Sherman said. He estimated that "multi, multi millions of tax dollars" are being lost because of the tax breaks.

In its decision, the state Supreme Court held that Fulton Superior Court Judge Jerry Baxter should not have dismissed the case so quickly and directed him to hear more evidence.

The overriding issue in the case is whether the valuation method used by the Board of Assessors fairly sets the market value for the properties and that the method being used was not arbitrary or unreasonable, Justice George Carley, writing for the majority, said. Carley noted that Sherman had already presented an affidavit from a qualified expert real estate appraiser who said the board's method does not fairly and accurately determine fair market value.