Sembler's investment in DeKalb

Campaign donations go to official with influence over a key tax break.

People affiliated with Florida-based Sembler Co. spent $18,000 last year helping Eugene Walker win his seat on the DeKalb School Board.

Walker is also chairman of the DeKalb Development Authority, which could vote Thursday on whether to give Sembler what officials say is an unprecedented subsidy in the county: a 100 percent property tax abatement over 20 years for part of the company's Town Brookhaven project near Oglethorpe University.

Campaign finance records show that five Sembler executives gave Walker $2,000 apiece on Sept. 27. Then, on Nov. 19, those same executives and three of their relatives each gave Walker an additional $1,000.

The donations did not exceed legal limits, but they did contribute to Walker's financial advantage in the election. He had six opponents, and he raised four times more than all of them combined. Sembler gave him about a third of his total.

Sembler President Jeff Fuqua said he encouraged his colleagues to contribute to Walker because Walker "has a great sense of business," is "an economic genius" and understands how development subsidies contribute to economic growth

"He sees that these things are good for the county," Fuqua said.

Walker said he "welcomed every penny" from Sembler but that the contributions "certainly haven't bought my vote."

Walker has already cast two votes that benefited Sembler.

Last fall, the Development Authority gave the company a 10-year, partial property tax abatement. Under that graduated agreement, which Sembler hopes to replace with the new proposal, the company pays 5 percent of its property tax the first year, 14.5 percent the second and so on in annually increasing increments until the abatement expires in year 11.

Walker voted for that subsidy on Aug. 12. The second vote, on Oct. 14, was for a related $500 million bond issuance to the company.

An ethics watchdog organization says Walker has a conflict of interest.

"Given the degree to which he received campaign contributions from this particular developer, he should have recused himself from any decision involving them," said Bill Bozarth, the executive director of Common Cause Georgia.

Bozarth said Walker should step down from one of his official roles because, he said, they conflict. Walker as authority member can divert money from the education budget that Walker the School Board member is supposed to safeguard.

But Walker said he campaigned as an advocate for economic development and that he believes growth will benefit the county's education budget. He said he was reviewing the numbers in Sembler's new request, and that "whatever vote I take it will be data driven."

Fuqua said there are 100 investors in the project and that he is one of them himself. He said they need taxpayer money to finish it as envisioned.

With the full abatement, he said, the public would get a shopping center and office complex that, during the next 20 years, would generate between $40 million and $80 million in sales tax revenue and $9 million in business-related fees and taxes for the county and its school system, plus $41 million in sales taxes for MARTA.

The company also projects $51 million in revenue from taxes on the residential towers that are already built and on the car tags of future residents, but critics say the county would collect that money regardless of whether Sembler gets the abatement.

Subtract the $22 million that Sembler estimates it would cost for the government and the school system to service the tenants, and the company says the county is still getting a good deal.

But take out the $52 million abatement, and critics contend it's no deal at all. If Fuqua can't develop the property to its full potential, they say, somebody else will —- and without a tax break.

"Let the marketplace take care of it," said Paul Womack, a School Board member.

The schools and the county are being squeezed by declining tax revenue and shouldn't have to subsidize the project, he said. "If Sembler goes broke, that's their problem."

Greg Worthy, the attorney for the Development Authority board, said its seven members can amend the tax abatement embedded in Sembler's bond deal without votes by the County Commission and School Board despite a new state law that requires their consent.

The law took effect this year, and the bonds and related abatement were validated by the courts late last year.

"There's a provision that effectively grandfathers those bonds," Worthy said.

Critics say that proposition needs to be tested in court, but if the authority's authority goes unchallenged, then Walker and his six colleagues will make the decision that matters.

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