The May 21 e-mail alleges that

borrowing money for operating expenses is illegal. The allegation of illegality

implies that some criminal activity has occurred. There are no criminal

statutes which prohibit a development authority from borrowing money for

operating expenses. Therefore, no crime has been committed by the simple

act of borrowing money for operating expenses by the Development Authority

of Peachtree City ("the Authority"). Such a negligent and careless

allegation simply cannot be supported under the law.

More importantly, borrowing

money by the Authority for operating expenses is specifically permitted

under the Development Authorities' Law. As you know from the opinion I

provided to you dated Jan. 10, 2003, the operation of the Tennis Center

and the Amphitheater by the Authority are appropriate projects under Official

Code of Georgia Annotated ("O.C.G.A"). O.C.G.A. §36-62-2(6)

as it complies with the requirement in the Development Authorities' Law

that any project promote the public purpose of the development of trade,

commerce, industry and employment opportunities. I stand by that opinion.

For your information, when I met with Representative Lynn Westmoreland

on March 19, 2003, he indicated that the attorney he asked to review this

same issue agreed with my opinion.

O.C.G.A. §36-62-2(6) sets

out the powers of development authorities. That code section states in

part as follows:

Each authority shall have all

of the powers necessary or convenient to carry out and effectuate the

purposes and provisions of this chapter, including, but without limiting

the generality of the foregoing, the power:

(12) to construct, acquire,

own, repair, remodel, maintain, extend, improve and equip projects located

on land owned or leased by the Authority or land owned or leased by others

and to pay all or part of the cost of any such project ... from any contribution

or loans by persons, firms, or corporations or any other contribution,

all of which the Authority is authorized to receive, accept and use;

(13) to borrow money ... and

to use the proceeds thereof for the purpose of paying all or part of the

cost of any project, including the cost of extending, adding to, or improving

the project ... and to otherwise carry out the purposes of this chapter

and to pay all other costs of the Authority incident to or necessary and

appropriate for such purposes... .

(16) to expend for the promotion

of industry, agriculture, and trade within its area of operations any

funds of the Authority determined by the Authority to be in excess of

those needed for the other corporate purposes of the Authority; and

(17) to do all things necessary

or convenient to carry out the powers expressly conferred by this chapter.

Subparagraphs (12) and (13)

make it abundantly clear that the Authority has right to borrow money

and to use the borrowed money to pay all or part of the costs of any project

(in this case, the costs of the Tennis Center and Amphitheater) and to

"otherwise carry out the purposes of [Development Authorities' law]

and to pay all other costs of the authority incident to or necessary and

appropriate to such purposes." This is exactly what the Authority

has done by borrowing money from Peachtree National Bank to pay some of

the operating costs of these projects.

Further, the Authority has

a contractual obligation with the City to operate these facilities in

the best manner possible. Pursuant to the Fredrick Brown, Jr. Amphitheater

Agreement and the Planterra Tennis Facility Agreement, entered into by

and between the Authority and the City of Peachtree City, both of which

are dated Nov. 18, 1993, the Authority is responsible for the efficient

management and operation of these facilities. This includes the timely

payment of all bills and other invoices related to the operation of the

facilities. At times the Authority was required to use the funds borrowed

from Peachtree National Bank to cover expenses when income from the facilities

was down. This was particularly true during the winter months when the

Amphitheater was not selling tickets and play at the Tennis Center was

down.

During the course of the operation

of the facilities by the Authority, if money had not been borrowed by

the Authority, there were only two options. The first was for the Authority

to request that the City pay these bills from already limited financial

resources. The second option was to not pay the amounts due and owing

at all. Under either scenario, the Authority would have been in breach

of both of the agreements with the City for failing to pay the expenses

of the facilities as the Authority is required to do in each of these

agreements. Thus, not only is the Authority's borrowing money to pay operating

expenses legal, it was also required under the contracts between the Authority

and the City.

2. Borrowing money for construction

Again, there are no Georgia

statutes which indicate that borrowing money for construction by a development

authority is a violation of any criminal statute. Thus, there can be no

dispute that the acts of the Authority in borrowing money for construction

related activities are not prohibited criminal activity.

Further, as indicated above,

subparagraph (12) of O.C.G.A. §36-62-6 explicitly states that a development

authority can "construct, acquire, own, repair, remodel, maintain,

extend, improve and equip projects." Additionally, subparagraph (13)

of that same code section authorizes the Authority to "borrow money

... and to use the proceeds thereof for the purpose of paying all or part

of the cost of any project, including the cost of extending, adding to,

or improving the project." These are exactly the activities the Authority

has engaged in with regard to the expansion of both the Amphitheater and

the Tennis Center. The only way that the construction of these facilities

could be completed was to borrow money. As is permitted under the Development

Authorities Law, this is what the Authority did to accomplish these goals.

Thus, this activity is provided for under the Georgia law and is not illegal

in any way, shape or form.

3. The Authority has not made

any misrepresentations to Tennis Center participants about the fiscal

health of the facility.

The Mayor has claimed that

the Authority "lied to Tennis Center participants about the fiscal

health of the facility." It is difficult to respond to this allegation

because it completely lacks any specifics with regard to what facts were

misrepresented, who made such misrepresentations, to whom such misrepresentations

were allegedly made, etc. As a result of threats made by the City Council

to reduce or even cut off the funding supplied by the City to the Authority

through the hotel/motel tax, members of the Tennis Center have been informed

that some changes may be required in the operation of that facility. However,

there has not been any indication that the benefits of the membership

would be changed or reduced. One possibility suggested to Tennis Center

members was that to offset any reduction in the hotel/motel tax support

an increase the nonmember user fees may be required. These statements

are all true and accurate.

4. No expenses have been sheltered

in false line items.

The mayor has accused the Authority

of sheltering expenses in false line items which he equates to a "MINI

ENRON." As you are aware, the Enron debacle resulted from that company's

attempts to shelter income and expenses through partnerships that were

not legitimate. As a result of those actions, many associated with that

company were charged with and prosecuted for criminal violations. Again,

the mayor's implication appears to be that the Authority's actions have

somehow violated criminal laws. This allegation simply has no basis in

fact or the law.

No expenses have been "sheltered"

in false line items in the Development Authority budget. Although recent

reworking of the budget has resulted in re-categorization of some income

and expenses, this has been the result of an attempt to permit the Authority

members to better understand the finances of the Authority so that they

can be better fine tuned. Any expenses were contained in previous budgets

and profit and loss statements with the result that the net effect of

the accounting for these expenses would have been the same, i.e., the

profit or loss would have been the same.

More importantly, unlike the

Enron situation in which the individuals running the company who have

been charged with criminal violations handsomely profited from their actions,

no one associated with the Authority now or in the past has ever directly

benefited financially from the Authority's actions. The Authority is made

up of a group of volunteers who are appointed by the City Council. They

get paid nothing for their numerous hours of work and attending meetings

and working on projects, all to assist in some way to hopefully better

the lives of the citizens of Peachtree City. The members have gained nothing

financially from their work on the Authority. To allege otherwise and

to make the allegations contained in the May e-mail is an insult.

5. The Development Authority

has responded to Open Records Act requests with all of the documents in

existence.

On behalf of the Authority

I have responded to Open Records Act requests from Paul Salvatore of the

City of Peachtree City and from the mayor with several hundred pages of

documentation, primarily copies of budgets and profit and loss statements.

Even though Mr. Salvatore's request and that of the mayor were somewhat

duplicative, we produced the requested documents twice to comply with

the Authority's obligations under the Open Records Act. No requested documents

were withheld. Importantly, I have never received any communication from

the mayor or Mr. Salvatore requesting additional documents.

It is my understanding through

other sources that the mayor claims that the Authority should have produced

two additional types of documents: (1) documents what the funds from the

loans by Peachtree National Bank were spent on and (2) documents with

regard to the Tennis Center pro shop. With regard to the first category,

there are no documents in existence in the possession of the Authority

which detail the items for which the loans from Peachtree National Bank

were used. During the course of the approximate eight years over which

those loans were obtained, they have been used for various expenditures.

Nothing in the loan documents requires the Authority to keep a detailed

inventory or an accounting of these expenditures. There are no restrictions

on the use of the funds contained in the loan agreements. The loan documents

themselves have been produced to Mayor Brown and Mr. Salvatore.

O.C.G.A. §50-18-70(d),

part of the Open Records Act, states that "no public officer or agency

shall be required to prepare reports, summaries, or compilations not in

existence at the time of the request" in response to an Open Records

Act request. Thus, the Authority has no obligation to prepare a document

to respond to the mayor's quest for an accounting of the expenditure of

each and every penny of the Peachtree National Bank loans. The Authority

is more than willing to turn over whatever records the mayor would like

to see so that an independent forensic accountant can examine those records.

However, it is my estimation that such an examination would cost in excess

of $10,000 and there is no guarantee that it would result in providing

the information that the mayor seeks. The Authority certainly does not

have the money to spend on this exercise and I would be surprised if the

City wishes to engage in such an expenditure. However, again, if the mayor

wishes to have such a task undertaken, I strongly recommend that the Authority

provide any and all information requested.

The other group of documents

requested by the mayor have to do with the pro shop at the Tennis Center.

As you know, the pro shop is owned and operated by Peachtree Trading Post,

Inc. which is a private, domestic, for profit corporation owned by Virgil

Christian. The Authority has no interest in that company and it is not

entitled to share in any of the profits or required to absorb any of the

losses of that entity. At the time Mr. Christian was being recruited to

come to Peachtree City, the Authority considered owning and operating

the pro shop. However, the overwhelming consensus amongst the Authority

members was that they did not want to be involved in such an enterprise,

particularly since the majority of such entities lost money. Therefore,

the opportunity to run the pro shop was offered to Mr. Christian. He took

this opportunity and formed his own private company primarily so that

he could assist in recruiting new members for the Tennis Center. The records

of the Peachtree Trading Post, Inc. are those of a private entity over

which the Authority has no direction or control. Therefore, they are not

subject to an Open Records Act request and have not been produced to the

mayor or Mr. Salvatore.

6. The Authority has had an

accountant work with its books and records in the past.

The mayor alleges that for

the "first TEN years of operation, the accounting was poor to nonexistence."

Initially, it must be noted that the Development Authority has been in

existence for over thirty years and has been operating the Tennis Center

and Amphitheater for approximately nine years so it is unclear as to which

ten year period he is referring. During the vast majority of its existence,

the Authority has had an independent accountant, most recently Ms. Alice

Reeves, who has kept track of the income and expenditures, transported

those into a profit and loss statement, cut checks and performed various

other accounting functions. All of these tasks were performed in a good

and workmanlike manner. Additionally, a banker, [the late] Mr. Tom Farr,

oversaw many of the accounting functions of the Authority during his tenure

as a member. Bills have been paid on time, the facilities have remained

in operation and patrons of both facilities have been well served. Thus,

the accounting has not only been in existence, but has properly performed

its role for the Authority.

Recently the Authority has

made a decision to have more detailed accounting of its income and expenditures.

This has resulted in a revision of line items in the budget and profit

and loss statement so that a more detailed picture can be shown of the

Authority's financial picture. This is a part of a natural progression

from 1993 when the Authority started operating an amphitheater that was

in disrepair and not often used and a tennis center that was not even

built to the two facilities in existence today which generate over $1

million in income. However, the fact that the Authority is becoming more

detailed in the way it accounts for income and expenditures does not necessarily

lead to the conclusion that its previous accounting methods were "poor

to nonexistent."

7. The Authority relied upon

its managers to monitor productivity and bonuses were given out to retain

employees and maintain morale.

The mayor claims that the Authority

had "no way to monitor productivity." However, the Authority

is designed to operate like a board of directors for a large company.

It is not charged with overseeing the minutia of the day-to-day operations

of the two facilities. Those tasks are delegated to managers employed

with the Amphitheater, Kristi Rapson was in charge of the day-to-day operations

of that facility and now Donna Romeo has assumed that task. Similarly,

Virgil Christian was initially responsible for the operations of the Tennis

Center and now that task is primarily performed by Sean Ferreira. The

Authority has relied on these individuals to gauge productivity at the

facilities and to make alterations as they see fit to be more productive.

Indeed, as evidenced by the overwhelming success of both of these facilities,

these managers have done an outstanding job with these tasks. However,

just as a board of directors does not wish to and cannot be involved in

the day-to-day operational decisions, the Authority cannot do so either.

The mayor also complains that

bonuses were given out during periods when losses were incurred by the

facility. It is my understanding that some bonuses were given to employees

during the nine years the Authority has operated these facilities. However,

those bonuses were given to retain employees and to boost employee morale.

As you are aware, it is much more expensive to have high employee turnover

than to maintain the same employee in their positions. Providing bonuses

assisted in ensuring that employees remained with the Authority so that

significant expenditures would not be incurred to find replacements.

Additionally, at the Tennis

Center, some employees received cash which was designated as a bonus which

came from the Peachtree Trading Post, Inc. This cash contribution came

from the income of Mr. Christian's private company and did not result

in any debt to the Authority. This was a gift by Mr. Christian which he

used to ensure that key employees would remain with the Tennis Center.

This is a generous gesture by Mr. Christian to assist in ensuring that

the Tennis Center achieved its high level of success.

8. The facilities have been

altered by the Authority as is permitted under the law.

The mayor claims that the Development

Authority illegally altered the City's facilities without City permission

or review. As indicated in Sections 1 and 2 above, subparagraph (12) of

O.C.G.A. §36-62-6 gives the Development Authority the power to "construct,

acquire, own, repair, remodel, maintain, extend, improve and equip projects

located on land owned or leased by the Authority or land owned or leased

Center and the Amphitheater. Additionally, as is contemplated under the

agreements with the City, the Authority appropriately modified both facilities

so that they would be properly operated and provide the highest quality

services to the patrons and be the economic development vehicle for the

City. Further, at each City Council retreat, the Authority provided a

report as to its activities and these reports have generally been met

with enthusiasm and full and complete support by the City Council. In

no event could the changes made to the facilities by the Authority be

deemed to be illegal.

9. The overages on the budget

for the expansion of the Tennis Center are not illegal.

As indicated in Sections 1,

2 and 8 above, the Authority has the power to construct, repair, remodel

and improve the facility, the budget overages were amounts that were required

to complete the expansion of the Tennis Center. No money was improperly

diverted to other sources or used for anything other than the Tennis Center

expansion. This expenditure is not illegal.

If you have any questions or

concerns regarding this matter, please feel free to contact me at your

convenience.

Mark D. Oldenburg

Attorney for Peachtree City

Development Authority