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Claiming the Development Authority

of Peachtree City has been fiscally irresponsible, Mayor Steve Brown is

calling for all seven authority members and its executive director to

resign.

Brown cited "massive"

cost overruns on the recent tennis center expansion project which he calculates

at over $450,000, the authority's failure to help fund the hotel-motel

tax shortfall and its use of a bank loan to fund operating expenses such

as payroll.

Brown also said if the situation

isn't resolved he may ask the U.S. Department of Justice to investigate

the matter, although he considers that "a last resort"; instead

he wants to create a recreation authority to take over the tennis center

and amphitheater operations.

Development authority executive

director Virgil Christian, who oversaw the day-to-day construction of

the tennis center expansion, said the cost overruns on the project actually

total $287,000 and most of the changes couldn't be avoided. The cost overruns

include $25,000 for overages on the construction of the covered tennis

courts and $23,000 to the architect of the project, Christian said.

"They were specifically

told adamantly to stay within the $2.5 million budget," for the expansion,

Brown said Tuesday morning. "And then we find out they're using debt

funding to do it. ... This is not what I would call a well-oiled machine."

Development authority Chairman

Tate Godfrey pointed out that the authority offered to participate in

the anticipated hotel-motel tax shortfall with an agreement it presented

to council earlier this year but council declined to authorize the agreement.

Godfrey also defended the authority's

use of a loan to meet payroll obligations since its income from operating

the tennis center and amphitheater are seasonal. The loan will be repaid

in the coming months once more revenues are available, he said.

Those debts are temporary "just

because we don't have the same cash flow each month," he added.

Christian said the changes

that brought the tennis center expansion over budget were necessary, including

changes to the parking area, a new electrical distribution panel, new

wiring for lighting fixtures (the fixtures were donated by Cooper Lighting)

and upgrading the electrical and HVAC system to accommodate a restaurant

on the second floor of the office/pro shop building.

Although Brown contends the

development authority needed city permission for the increased costs,

Christian contends the development authority was the entity that contracted

with Group VI and other subcontractors for construction of the expansion,

and the authority decided to use a loan to fund the cost overruns.

"I'm proud of the product

I have delivered to the citizens of Peachtree City," Christian said,

adding that he wishes the project would have stayed under its original

budget of $2.5 million. The building will probably be appraised at over

$3.5 million once an appraisal is conducted, Christian said.

Group VI, the contractor for

the project, worked with the authority to provide improvements not in

the contract which helped add value to the project, Christian said.

Christian noted that he kept

council members up to date on the project monthly via e-mail and he was

glad to answer any questions about the project.

Brown has also called the authority's

loans "illegal" but he will commit to having the city pay off

the loans, which total over $1.45 million.

Godfrey contends the loans

are legal and that previous city councils were aware of the loans and

the authority's financial status. That information was also shared with

the council committee that helped hammer out the recently-approved intergovernmental

agreement between the authority and council, Godfrey said.

"We were going to get

that all paid off eventually," by using long-term financing Godfrey

said.

A recent full audit of the

authority listed all the loans it had outstanding and that information

was also shared with the City Council, Godfrey added.

"It documented in the

report that the loans were legal," Godfrey said. "If they were

illegal, why didn't the auditors bring it up before now?"

Although the authority doesn't

"like" to be in debt, that was one of the reasons the authority

was asked by the council in 1993 to run the tennis center and amphitheater,

Godfrey said, "because we could take risks that the council couldn't."

One such example is taking

out a loan several months in advance so deposits could be paid for artists

in the amphitheater's summer concert series, Godfrey said. The loans were

repaid once the amphitheater got its revenue for ticket sales, Godfrey

added.

"They didn't have the

resources to do that," Godfrey said.

Godfrey also pointed to one

occasion several years ago when the city council directed the authority

to borrow funds to make improvements to the amphitheater as the city council

agreed to fund the second phase of the tennis center to add a number of

clay courts to the facility.

Brown wants a new recreation

authority to operate the tennis center and amphitheater, which the development

authority has done since 1993.

"That way they can be

run in a more cost-efficient manner and leave economic development to

the development authority," Brown said.

He floated a similar concept

to city council earlier this year, but it was ultimately voted down in

favor of keeping the current arrangement with the venues operated by the

development authority.

A recreation authority could

issue tax free revenue bonds at better rates than the authority is currently

getting, Brown said.

"The big problem is figuring

out how to pay all that debt service," Brown said.

Brown said he will commit to

having the city pay off the development authority's debt. The city has

been advised the only legal way for the city to issue revenue bonds to

cover the debt with long-term payments would be through creating a new

recreation authority, Brown said.

"I am fully in favor of

paying all the authority's outstanding debt ..." Brown said.

Current and former authority

members strongly dispute Brown's allegations, about authority loans, saying

everything has been done legally, above board and in the open, and with

approval from the previous city councils.

The current council has agreed

to take on the authority's debt, providing the city gets an appropriate

line-item listing of what the debts were incurred for. In exchange, the

council will dramatically cut the amount of hotel-motel tax funds the

authority receives from the city.

Brown has also questioned what

collateral was used to secure the loans since the city owns the tennis

center and amphitheater buildings, not the authority.

Godfrey said the loans were

approved by the banks based on last year's agreement with the city that

guaranteed $265,000 a year of hotel-motel tax revenues to the authority

for the next 15 years. The banks also calculated in the sponsorship and

membership commitments the authority received as revenues for the tennis

center and amphitheater, Godfrey said.

While Brown has concerns some

of the authority's loans were being paid on an interest-only basis that

stood to benefit the banks, Godfrey said the authority only makes interest-only

payments on a temporary basis until they can afford to resume principal

payments or combine loans with terms more favorable to the authority.

Former longtime authority members

Bob Truitt and Jim Fulton said the city council asked the authority to

operate the venues back in 1993 specifically because it could take more

"risks" by seeking loans such as those used to pay deposits

for acts coming to the amphitheater's summer concert series. The authority

could also seek sponsors for the amphitheater and tennis center whereas

the city council could not, said Fulton, who along with Truitt served

on the authority for over 20 years.

If any of the loans were illegal,

they would have been reported to a number of authorities including the

city council and bank examiners, Truitt said.

"They (the city council)

told us to run it like a business," Fulton said, adding that doing

so involves borrowing money for the business to grow.

In addition, there were several

occasions when the council would ask the authority to use loans to pay

for improvements to the amphitheater, Truitt said. One occasion involved

work on the cast house area of the amphitheater and another was for a

project to add new lighting and a catwalk to the amphitheater, Truitt

and Fulton said.

In both instances, council

told the authority to seek a loan to fund part or all of the projects,

Truitt said.

When the authority sought lines

of credit and other loans for projects and operating expenses, they got

"very competitive interest rates" Fulton said, giving credit

to the late Tom Farr, another longtime authority member who helped engineer

many of the loans through his employer, Peachtree National Bank.

"They were favorable rates

and favorable terms," Truitt said.

Money earned from the projects

was always put back into the venues for improvements, particularly in

the amphitheater's case, Fulton said.

Truitt said he thought the

tennis center and amphitheater combined, which are both owned by the city,

would have a value between $7 and $10 million.

"In the 20-plus years

I served on the authority, nobody on the development authority or airport

authority ever did anything that wasn't in the best interest of the city,"

Truitt said. Although he admitted some mistakes were made, "nobody

ever did anything maliciously."

"We didn't have time to

develop a conspiracy," Truitt said.

And though sometimes there

were disagreements with elected officials on the best course of action

to take, the dispute was always worked out, Fulton said.

"We just figured out the

right way to do it," Fulton said. "It was never 'I win, you

lose.'"

Fulton and Truitt said the

authority initially resisted council's request for them to manage the

amphitheater and oversee construction and management of the tennis center,

which at the time didn't exist.

The amphitheater, which needed

numerous construction improvements, was being managed by volunteers previously

but the authority turned it into a venue that brings in nationally-recognized

performing artists, Fulton noted.

"The volunteers did the

best they could, but they didn't have a $200,000 check to hire acts,"

Truitt said.

Truitt pointed out that the

venues are supported with funding from the hotel-motel tax, and each time

the tax was raised authority officials explained the projects to the local

hotel operators to get them on board.

"The idea that taxpayers

are having to pay more money than (council was) aware of is ludicrous,"

Fulton said.

The reduction in hotel-motel

tax funds the authority agreed to with the city council will require an

increase in ticket prices and court fees, Godfrey said. But with the new

covered courts, the tennis center is expected to boost revenues from lessons

and court fees that normally would have been cancelled due to rain.

There will also be a concentrated

effort to secure more sponsors for both the tennis center and amphitheater,

Godfrey said.

Godfrey said the authority

agreed to cut its funding from $300,000 to $265,000 with last year's council,

and although that "made it tough" the guaranteed money for 15

years allowed the authority to refinance its loans and pay it off in a

longer term, Godfrey said. The further cuts agreed to with this year's

council further hurts the authority's ability to repay its debt, which

is why the authority wants the city to take over paying the debt.

The authority and city have

agreed to cut the authority's hotel-motel tax funding next year from $265,000

to $180,000. The following year it would shrink to $140,000 with a goal

of reducing it to $100,000 the third year.

"It's going to be tough,

but we agreed to it," Godfrey said.

Fulton said the tennis center

and amphitheater were so successful because of the quality staff who operate

the facilities like Christian, who "has the contacts and the expertise."

Truitt said he also takes issue

with claims the authority did little for economic development in later

years. To lure the National Weather Service here, the authority purchased

land for the project to donate to the federal government, he said.

"That created 60 high-quality

jobs," Truitt said.

While the authority cannot

take all the credit, it has participated in luring a host of local businesses

that are located in the industrial park, Truitt added.

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