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Jim Walls

Five questions the Georgia state ethics investigation of Governor Nathan Deal’s 2010 campaign never answered

The state ethics commission is a mess, its organization and reputation in shambles. It’s forked over $3 million to four fired employees who blamed a cover-up in an investigation of Governor Nathan Deal’s 2010 campaign, then fired its most recent director last month after a judge said she’d been “dishonest and nontransparent.”

Nathan Deal
Nathan Deal

Courtesy Deal for Governor

Even now, on the eve of Deal’s re-election bid, questions about the ethics allegations from four years ago have only grown stronger. His opponent, Jason Carter, returns to them almost daily. “Imagine,” he said in the first debate between the candidates, “a world where the governor comes on the radio and he’s not talking about an ethics scandal.” Common Cause Georgia says a jury’s $1.1 million award to former ethics commission director Stacey Kalberman underscores the need to reopen the investigation; Sam Olens, the state attorney general, dismissed Democrats’ earlier call to revive the probe as politically motivated.

Technically speaking, all the complaints against Deal were resolved in 2012, when he paid $3,350 in administrative fees for filing defective campaign and personal finance disclosures.

But a review of the commission’s files shows the investigation leading to that settlement was never really completed. Ethics commission staffers abandoned inquiries into tens of thousands of dollars spent on air travel and credit card charges, and questioned no one but lawyers for the campaign accused of wrongdoing.

Deal, while denying misconduct, has sounded the need for reform, calling for more money for the commission and a restructuring of its leadership. Skeptics contend true reform must go farther by shielding the ethics commission from political pressure and giving it a dedicated source of funding.

Deal’s campaign spokesman, Brian Robinson, referred our specific inquiries to the campaign’s lawyer, but not before scoffing at a suggestion that the commission’s probe missed anything.

“We’ve answered all these questions over and over and over again,” Robinson told me in a recent telephone interview.

Not really. Among the questions that the commission never appeared to have answered:

  • Did Deal’s business profit improperly by leasing a plane and helicopter to his 2010 campaign?
  • Did his 2010 campaign pay a supporter more than market value for office space?
  • Did the 2010 campaign pay personal expenses of its staffers?
  • Did Deal’s 2010 campaign spending help to pay off a six-figure tax lien on the plane used by the campaign?

Neither Robinson nor campaign lawyer Randy Evans responded to a detailed set of follow-up questions on these topics.

I tried to answer these questions by examining investigative files and other public documents. What did I find? Rather than ensuring transparency in a state with a legacy of graft and corruption, the ethics commission settled the case, providing few answers and sometimes none at all.

 

1. Did Deal’s Gainesville business profit improperly by leasing a plane and helicopter to his 2010 campaign?

In 2009 and 2010, Deal’s gubernatorial campaign paid North Georgia Aviation, a subsidiary of his Gainesville auto salvage business, $201,200 over seventeen months to use a plane and helicopter that the subsidiary co-owned. That expense, plus $15,915 spent with other air carriers, was 70 percent more than air travel costs for Roy Barnes, his Democratic opponent, during the same period.

Deal’s costs were so much higher than Barnes’s because, before paying for any flight time, the campaign was also spending $6,000 a month to help cover the owners’ loan payments, taxes, and other fixed costs. Deal’s top aide defended the arrangement as an arm’s-length transaction and said the other owners of the aircraft paid an identical rate.

The plane, a Swiss-built Pilatus turboprop that seats nine was owned by HRPW Investments LLC, which took its name from the initials of the last names of its original members: Chris Riley, Deal’s congressional chief of staff, and Gainesville businessmen James Hough, Philip Wilheit, Sr., and Dr. Larry Payne. All but Riley donated to Deal’s campaign for governor; Wilheit served as the campaign’s chairman. By 2009, North Georgia Aviation and businessman Jim Walters, a longtime friend of Deal’s, had also become co-owners of the plane.

The ethics commission accepted the campaign’s explanation without confirming the details with independent sources. The agency’s investigator testified later that she asked no one other than Deal’s lawyer for information on the campaign’s expenses.

As a congressman, Deal had also used the aircraft without appearing to pay the monthly fee. His federal campaign account reflected $20,350 in air transportation costs to North Georgia Aviation over eight months between 2008 and 2009, but there is no mention of a monthly fee.

A September 2010 complaint filed by gadfly George Anderson alleged that Deal’s campaign, by paying an inflated amount for air travel, was improperly benefiting his private business. State law bars candidates from using campaign funds for personal expenses.

Sherry Streicker, who started as deputy executive secretary of the ethics commission just two days after Anderson’s complaint, went a step further in her initial investigation.She questioned whether the co-owners were paying the same costs as the candidate was.

“We suspect that this entire travel plan was a method by which the Deal campaign used campaign contributions to make a profit out of North Georgia Aviation,” Streicker wrote in a February 2011 memo that is contained in the commission’s files.

Nearly a year and a half later, Elisabeth Murray-Obertein, the ethics commission lawyer who worked on the case after Streicker left, told her superiors she needed more time to dig into the complexities of the plane expenses. She and Holly LaBerge, the agency’s new director, both said at the time that they did not believe the commission could consider the air travel allegations until they got advice from an outside attorney.

But then, in July 2012, Commission Chair Kevin Abernethy scheduled a hearing on Deal’s motion to dismiss Anderson’s complaint. Murray-Obertein has maintained that LaBerge, Abernethy, and Deal’s lawyers kept pressure on her at that point to settle all the pending Deal complaints that month.

“I hadn’t even started that [investigative] process with the plane,” she told me. “I wasn’t allowed to do that.”

Earlier this year,LaBerge said in an interviewwith Fox 5 Atlanta that Deal’s top aides pressured her to make the cases “go away” a week before they were settled.

Deal campaign lawyer Randy Evans, making his case at the 2012 hearing, defended the expenses as “commercially reasonable,” noting the shared-ownership agreement had been negotiated long before Deal decided to run for governor.

“This isn’t [a situation] where you started up the campaign and you say, ‘Okay, let’s figure out how much to pay ourselves,’” Evans said at the 2012 hearing. “All that happened was the campaign stepped into the shoes of one of the owners.”

Records in the commission’s files, though, show Deal’s campaign did not step entirely into those shoes. According to the lease, North Georgia Aviation in June 2009 still owned its share of both aircraft and, even though it wasn’t paying the fixed costs, could use the plane whenever it wanted.

Leasing the aircraft also hiked the campaign’s costs for flight time well above the $500 an hour that the ethics commission had establishedas fair market value for hiring a single-engine plane. The campaign paid $600 an hour until March 2010, when the hourly rate climbed to $650.

By the end of 2010, campaign payments for flight time that exceeded the $500-an-hour threshold amounted to an additional $16,175.

At the 2012 hearing, the five-member commission dismissed Anderson’s complaint, agreeing that its own rules on air travel for candidates were unclear. Four months later, the commission adopted a new guidelinethat said a campaign may pay fixed costs in shared-ownership agreements like Deal’s, as long as it’s paying fair market rates. In the Deal case, the commission did not determine whether the rates had been market value.

Deal and his partner sold their auto-salvage business in June 2013. Three months later, FAA records show, HRPW Investments sold the plane to a Florida real estate investor for an undisclosed sum.

2. Did Deal’s campaign pay more than market value for office space?

In the year and a half leading up to the 2010 general election, Deal’s campaign subleased about 1,150 square feet of office space at Lee Gilmer Memorial Airport in Gainesville. The landlord was Jim Walters, the Deal friend and co-owner of the plane. Walters rented a hangar at the airport from the city of Gainesville.

Over eighteen months, the campaign paid Walters more than $76,000 to use the space as its headquarters. In 2010, its $54,167 payment to Walters worked out to just over $47 a square foot. Top-tier “Class A” office space in Atlanta fetches an average of $22.45 a square foot, according to CoStar, a commercial real estate research firm. Office space in an industrial area, though, costs even less—more like $16 a square foot.

In atelephone interview, Walters said Deal paid market value for the space but he could not recall how the amount was determined. “We wanted to be sure everything was aboveboard,” Walters said.

Any amount over market rates, he said, probably factored in Walters’ cost for the renovations.

Deal’s campaign shared in those costs, records show. Disclosures from the campaign show that, besides the rent, it paid several thousand dollars to suppliers of building materials and $5,160 to the contractor for office construction. The building permit estimated the work would cost $12,000, not counting electrical and plumbing.

Walters told me that owners of the plane and helicopter used by Deal’s campaign also paid $1,200 a month to lease space in the hangar. Combined with rent from the campaign, that was nearly twice what Walters was paying each month to lease the hangar.

“I’m making money, aren’t I?” Walters said when I first asked about the campaign payments in 2011. “That’s what capitalism is all about.”

3. Did the Deal campaign pay personal expenses of its staffers?

Deal’s campaign paid about $155,000 in credit card bills in 2009 and 2010. But an audit by the ethics commission found his disclosures did not list all of the expenses on those bills, leaving more than $10,000 unexplained.

In April 2012, the commission asked about a bill from 2009. In response, Deal lawyer Ben Vinson said that the campaign had “accidentally” paid more than $1,000 in personal expenses for Chris Riley, who had become Deal’s campaign manager. Vinson submitted copies of two checks showing Riley had paid the money back. The campaign failed to report the return of the money, Vinson told the commission, “through unintentional error.”

Murray-Obertein told me she asked Vinson to explain the remaining credit card discrepancies but never received any information. A July 19, 2012 auditing memo by the commission kept track of them, though, noting that there were eleven credit card payments where the itemized expenses still didn’t add up to the total.

Four days later, the commission voted to settle the Deal case, including the credit card discrepancies. A consent order treated them as technical defects, for which Deal was allowed to pay $1,050 in penalties without providing further explanation.

4. Did Deal’s campaign help pay off a six-figure tax lien?

In June 2009, when Deal’s campaign leased the two aircraft, the plane’s co-owners were trying to come up with cash for sales tax that was never paid when they bought it. The purchase occurred in Louisianain 2007 but Georgia’s Department of Revenue, which monitors new aircraft registrations, was still trying to collect sales tax two years later.

HRPW challenged the tax bill, filing papers to take the dispute to an administrative hearing, but dropped its appeal in January 2009, records show. The debt remained unpaid eleven months later when the state placed a lien on the plane for $362,777, an amount thatincluded sales tax, interest, and penalties.

Early in 2010, Hall County filed its own lien on the plane for an additional $28,695 in unpaid personal property taxes.

In an interview, Walters said the sales tax debt stemmed from a misunderstanding with the plane’s seller about who would pay it. Deal’s campaign payments to Walters’ business interests, he said, had nothing to do with the need to pay past-due taxes.

Deal “is clean as a hound’s tooth and would never, ever do anything underhanded or unethical or illegal. Period,” Walters told me. “Put that in your story.”

Both tax bills were satisfied by May 2010, property records show. A record of the canceled state lien, found in the commission’s files, bears Streicker’s handwritten note, “Who paid taxes?”

She never found out. In June 2011, two days after the target date for serving subpoenas that might have answered that question, Streicker was cleaning out her desk and leaving the commission’s office for the last time.

5. Why did the commission obtain so few of Deal’s campaign records?

Streicker, as she investigated Deal’s finances, came up with a number of questions by early 2011 that went beyond the allegations in pending complaints against his campaign. To sort them out, Streicker told me, she and Kalberman planned to subpoena a broad array of campaign and business records—including bank and credit card statements, corporate balance sheets, travel schedules, and pilot’s logs.

“What I really wanted to see was where this money was going,” Streicker, a former Fulton County prosecutor, told me recently. “Without documents to show what happened with that money, there was just no way to get to the bottom of it.”

The investigation stalled, though, shortly after Streicker briefed commissioners on her findings in May 2011. Within a month, the commission eliminated her job, ostensibly for budget reasons. Kalberman left a few months later after her pay was cut by 30 percent.

Just before Kalberman resigned, the commission asked Evans, the campaign’s attorney, to turn over documents voluntarily instead. Evans balked, contending it could entail 250,000 pages.

As an alternative, Evans offered to turn over documents relevant to the specific complaints pending against his client. Reframing the issues that way sidestepped many of Streicker’s questions.

Narrowing the scope of the inquiry conformed with LaBerge’s belief thatthe investigation had expanded beyond the ethics commission’s authority.

“We have a very limited jurisdiction,” LaBerge testified in Kalberman’s whistleblower case. Rewriting a citizen’s ethics complaint to include new allegations, LaBerge said, “is not the responsibility or the purview or the authority of the agency.”

Murray-Obertein said she did her best even though she was never briefed on Streicker’s investigation.

“I was just given thousands of pages of documents to review,” Murray-Obertein testified in the Kalberman case. “Nobody sat down with me and explained this is why I think this or this is how this evidence supports that. I was just given a big mess to look at.”

Evans assured the commission that Murray-Obertein “made us supply the lease agreement, she made us submit the ownership agreement, she made us provide all the invoices, all the payments and to show that all of those existed before the campaign started.”

If those records were ever in the commission’s files, they’re not now. We found a copy of the campaign’s lease for the aircraft and North Georgia Aviation’s invoices to the campaign, but no canceled checks or bank statements to show they were paid. There’s no shared-ownership agreement or evidence of fees that co-owners of the aircraft might have paid.

The auditor’s report

By no means were the complaints about Deal’s 2010 campaign the only area where the ethics commission failed to do a thorough job. Last week, the state auditor released a fifty-two-page report that pilloried the commission for, among other things, a “dysfunctional organizational culture,” an “unprofessional work environment,” and “underqualified staff.”

Among the audit’s other observations:

  • The commission “often relies on statements or attestations made by those being investigated, rather than obtaining documentation (e.g., receipts, invoices) that might support the legality of the expenditure.”
  • Between January 2011 and April 2014, the commission hired eight staffers—four of whom did not meet the minimum qualifications set forth in the job announcement.
  • Last year, the commission waived more than $500,000 in late fees as a “courtesy” to offenders.
  • The commission’s 216 open cases have been open an average of three years, and thirty of those have been open an average of seven.
  • The commission is inconsistent in how it classifies errors. “Similar errors may be categorized as violations by the Commission in one case and as technical defects in another.”
  • The way commission members are appointed—three by the governor, one by the House, one by the Senate—may appear as if it ensures balance, but “when the governor and both chambers of the General Assembly are of the same majority party” [as it is now] “there can be problems with the Commission’s real or perceived independence.”

Jim Walls is the editor of Atlanta Unfiltered.

Fire on the property of the attorney who filed an SEC complaint about the Braves stadium financing

Fire damage at the home of Susan McCoy
Fire damage at the home of Susan McCoy

Courtesy Susan McCoy

East Cobb lawyer Susan McCoy hoped “something exciting” would happen when she asked the feds to investigate Cobb County’s bond deal with the Atlanta Braves. “I didn’t realize that would be my garden and fence burning up,” she said.

McCoy informed Cobb County officials earlier this month that she’d asked the U.S. Securities and Exchange Commission to look into the county’s proposed $397 million bond sale to help build a new stadium for the Braves. Speaking at the county commission’s regular meeting, she also urged anyone with inside knowledge about the deal to contact the SEC.

That passionate plea was covered here and splashed across the front page of the next day’s Marietta Daily Journal, an unexpected but welcome shot of publicity for critics of Cobb’s stadium financing plan.

Early Thursday morning, someone set fire to the white picket fence outside McCoy’s home of 18 years. The blaze destroyed large sections of the fence and adjacent shrubbery, damage that she said could run into the thousands of dollars.

Cobb arson investigators suspect a flammable liquid was used, but they’re waiting for confirmation from lab tests due to be completed this week. Until then, fire lieutenant Dan Dupree said, the blaze is classified as “suspicious.”

Investigators are also reviewing video surveillance recordings made by McCoy’s home security system. “It’s impossible to tell at this point” whether the incident was related to her public comments on the Braves, Dupree said.

Susan McCoy
Susan McCoy

Courtesy Susan McCoy

McCoy said that she believes the incident was an attempt to “send me a message,” fueled by recent public statements by stadium backers to minimize the extent of opposition to the deal. Cobb Chamber of Commerce President Ben Mathis, for instance, described critics as a “bitter minority” in the Marietta Daily Journal, while commission candidate John Weatherford called them “the CAVE people: Come Out Against Virtually Everything.”

“I don’t think they actually lit the match,” McCoy said. But comments like those, she said, are “creating an environment where people believe doing something like this is okay.”

McCoy said that her request for a federal probe was inspired by the SEC’s ongoing investigation of $500 million in public financing for the Miami Marlins’ new baseball stadium. In 2009, when Miami-Dade County okayed the deal, Marlins’ management insisted the team couldn’t afford a larger share of stadium costs. The club refused to open its books, though; later, leaked documents showed the club had turned a $49 million profit during the two years it lobbied for the public subsidy.

Investigators at McCoy's home.
Investigators at McCoy’s home.

Courtesy Susan McCoy

Officials interviewed by the SEC told the Miami Herald that the agency wants to know whether elected officials or prospective bond-buyers were given false or misleading financial information. Mayor Tomas Regelado told the Herald that investigators also asked whether he’d met with anyone “outside the Sunshine” while the stadium deal was pending.

The Braves’ negotiations for a new stadium were limited to a handful of county officials who were sworn to secrecy. Since the move became public, Atlanta magazine has reported that commissioners’ briefings on the deal skirted Georgia’s open meetings law and that assumptions about the stadium’s fiscal benefits were questionable. The Atlanta Journal-Constitution also reported in August that a private attorney, hired outside purchasing procedures to negotiate on Cobb’s behalf, had named his own firm to collect $4 million in fees in an early version of the stadium agreement.

Critics complain that Cobb exceeded its powers in imposing new fees and taxes to pay for the Braves bonds and understated transportation, public safety and other stadium-related costs.

Those and other issues, McCoy said, could lead the SEC to conclude the proposed bond sale violates federal securities laws

Lee offered last week to meet privately McCoy to discuss her concerns. But, she said, county attorney Deborah Dance called Friday to express regrets about the fire and retract Lee’s offer in light of the possible SEC inquiry.

McCoy, before taking off Friday to give a statement to arson investigators, spoke wistfully of the damage to her property and her sense of security.

“I always wanted a white picket fence,” she told me. But, “what’s actually more precious to me [were] the evergreens on either side of my driveway. I planted them when they were really teeny tiny. It’s kinda sad to see them go.”

Cobb waiting for official approval of stadium bond financing

Cobb County officials went into extra innings Monday trying to get bond financing approved for the Atlanta Braves’ new stadium. But it’ll be weeks before they know if they won.

During a six-hour hearing that lasted until 7:30 p.m. on Monday, Superior Court Judge Robert Leonard heard arguments for and against Cobb’s plan to issue up to $397 million in bonds to help pay for construction of the ballpark, projected to open in 2017. Leonard said he hopes to decide whether to validate the bonds by July 31.

Leonard presided Monday in place of Superior Court Judge LaTain Kell, who recused himself because of ties—first reported by Atlanta magazine—that he and his mother have with the Cobb County Chamber of Commerce and Cobb Commission Chairman Tim Lee. Kell serves on the chamber’s board and his mother, the chamber’s 2006 East Cobb Citizen of the Year, chaired Lee’s 2012 re-election campaign. (Leonard is a 2013 graduate of the chamber’s Leadership Cobb program.)

Monday’s hearing was held under a state law that allows residents of a city or county to intervene when their local government asks a court to approve plans for a bond issue. They have a right to appeal if dissatisfied with the judge’s ruling.

The debate at Monday’s hearing–fueled by the Tea Party sentiments of some opponents—centered on the limits that Georgia’s law and Constitution places on the powers of county governments. Opponents contend Cobb overreached its authority by creating new tax districts and fees to help pay for the project and by agreeing to take on new debt without asking for voters’ approval.

Government lawyers countered that a public referendum was not required because the Cobb-Marietta Coliseum and Exhibit Hall Authority, not the county government, will incur the debt. Cobb County will pay the authority up to $18.9 million a year–and the Braves $6.1 million–to pay off the bonds.

Cobb will make those payments under an intergovernmental agreement that, its lawyers say, exempt the deal from needing voter approval. Critics argued that the arrangement is a sham.

The agreement “was created out of thin air for no reason other than to circumvent the Constitution,” Larry Savage, one of nine citizens who petitioned to block the bond validation, told judge Leonard. “That’s the kind of government action that the Constitution is designed to protect us from.”

Savage argued that the court’s approval of the agreement would “create a template that will be used statewide” to issue bonds without voter approval. “There’s no local government in this state that can’t replicate that at will,” he added.

Leonard repeatedly cut off interveners’ attempts Monday to delve into county officials’ negotiations with the Braves or their decisions on structuring the financing package. “You want me to go back and Monday-morning-quarterback all the negotiations,” Leonard said. “That’s not my role.”

Under Georgia law, the judge must decide whether the stadium project is “sound, feasible and reasonable” and whether security to pay off the bonds is sufficient. He must also determine whether the intergovernmental agreement complies with Georgia law.

The interveners repeatedly hammered at the county’s plan to issue revenue bonds, which must be paid off with revenue generated by the project, rather than general obligation bonds that require a public referendum. Cobb plans to use property taxes and new levies on car rentals and hotel rooms to offset the cost of servicing the bonds.

“How are extra taxes defined as revenue generated by the project?” asked intervener Christopher Peters, a software developer.

Peters noted that Cobb County pledged to use higher property taxes, if necessary, to make debt payments. “If county taxpayers are on the line for these, if we’re on the hook, I think these are general obligation bonds,” he argued.

Blake Sharpton, a lawyer for the county, told the judge that Cobb’s annual $19.1 payment, derived from sales and property taxes generated by the stadium and related development, will pay for the bonds. New fees and taxes, he said, should be considered “budgetary tools” used by Cobb County and are irrelevant to the judge’s deliberations.

Opponents also questioned whether the stadium will meet the legal definition of a public facility. The coliseum authority will own the ballpark, but the Braves will have virtually complete control of stadium operations and an exclusive option to buy it after 30 years at half its market value.

The stadium, said citizen speaker Tucker Hobgood, is “really a Braves thing that the public is simply putting money into.”

Kevin Moore, the authority’s lawyer, noted that he disagreed with the interveners but applauded their role in vetting plans for the bond financing.

“It’s a good thing,” Moore said. “It’s what makes us great.”

The role of the Cobb Chamber of Commerce in luring the Braves away from Atlanta

On May 27, John Loud watched proudly as a dozen speakers, each wearing one of the T-shirts he’d handed out, marched to the podium to urge Cobb County commissioners to bring Major League Baseball to Cobb. It was a carefully organized event; Loud corralled supporters to show up early, leaving no spots on the agenda for dissenting views. A few minutes later—and six months after Loud and friends had launched their Cobb Home of the Braves website—the commissioners agreed 5-0 on agreements to build and finance the team’s new stadium.

Loud’s work was done. After winning the vote, he could get back to his other responsibilities: running his Kennesaw security business; serving on the executive board of the Cobb County Chamber of Commerce; and managing ex-Chamber official Bob Weatherford’s campaign for an open seat on the county commission.

It would be difficult to overstate the role the Cobb Chamber, a 2,500-member business organization, played in bringing the Braves to Cobb, whether as public cheerleaders or private decision-makers.

“They touch everything,” Larry Savage, a two-time candidate for Cobb commission chairman and critic of the county’s $314 million subsidy of the Braves stadium, said of the chamber.

Chambers of commerce everywhere try to influence local economic development policy. But the cozy relationship between the Cobb chamber and county government has helped keep details of the Braves recruitment secret even after the deal became public knowledge. A private membership organization, the chamber does not consider itself subject to the open meetings and open records laws that govern Cobb County’s economic development staff.

Cobb Commission Chair Tim Lee has given the chamber a much more prominent role in business recruiting since becoming commission chairman in 2010, particularly when he named Brooks Mathis, the chamber’s vice president for economic development, as the county’s point man for new business prospects.

While the deal was still a closely held secret, Mathis helped the Braves pick the stadium site and sat side-by-side with Lee in negotiations with the ball club and discussions with a bond lawyer. At Lee’s suggestion, the chamber commissioned a $25,000 study, hiring a consultant recommended by the Braves, to project the economic benefits of a new stadium.

As we reported back in January, the chamber hosted closed-door briefings for county commissioners on the deal after the Braves announced their plans. Chamber officials, including Mathis, sat in on those briefings, but one participant recalled that Cobb County economics development director Michael Hughes, the economic development expert on the public payroll, was noticeably absent. Commissioners rotated in and out of the room two at a time to avoid creating a quorum and having to open the meeting to the public.

Chamber leaders played a role when other county agencies weighed in on the deal as well. When the Cumberland Community Improvement District, created by the county to allow commercial property owners to tax themselves, agreed to contribute to the stadium development, three of the five “yes” votes came from Tad Leithead, Barry Teague, and Mason Zimmerman. All are current or former members of the Chamber’s board. Two current or former board members—Jerry Nix, and Johnny Gresham—also sat on the Marietta-Cobb Coliseum Authority’s board when it voted later to issue bonds to finance stadium construction.

If opponents challenge the stadium deal in Cobb court, odds are good that the judge will have a chamber connection. Online biographies of seven of the 10 full-time Superior Court judges note their involvement with the chamber or its Leadership Cobb program. Judge Tain Kell sits on the chamber’s board; his mother, who chaired Lee’s 2012 re-election campaign, was its 2006 East Cobb Citizen of the Year.

Ben Mathis, the chamber’s 2014 chairman whose law firm paid half the cost of the economic benefits study, insisted that open-government laws apply only to private entities like the chamber in “very limited” situations. “The chamber never took on a role that effectively was a substitute for the county or any government,” he said in an email.

“It is easy for people to proclaim that the ‘public’s right to know’ is paramount in situations like this where there is great public interest,” Mathis said. “However, it is equally important to protect the right of private individuals to engage in civic activities with the assurance that their right of privacy will be protected.”

The chamber has not endorsed Weatherford, the former chamber official running for county commission, but Mathis, Loud and other past and present chamber officials gave him more than two-thirds of his nearly $28,000 in reported campaign donations.

Nor did the chamber give money to the Cobb Home of the Braves website, Loud says. Its leadership, though, was so impressed with his advocacy for the Braves and for a local sales tax for schools that he won its 2014 Mack Henderson Public Service Award in January. Last week, the chamber also honored LOUD Security as its Small Business of the Year.

Savage, the former county commission candidate who’s spoken at public meetings to question the wisdom and legality of the Braves deal, says the chamber’s pervasive boosterism can drown out opposing views.

“At face value, there’s really nothing wrong with what they do,” Savage said. “The problem is they control reality for the board of commissioners, and the only view the board of commissioners ever gets is the view the chamber presents. It wouldn’t be so bad if there was another viewpoint presented to the county.”

In case you’re curious, here’s what dissenters wanted to discuss at the Cobb Commission meeting on the Braves stadium

Before Tuesday’s vote on bond financing agreements for the new Atlanta Braves stadium, Cobb County commissioners refused to let critics voice concerns. A brief standoff ensued, as several members of the advocacy group Cobb Citizens for Governmental Transparency (CGT) stood to protest before police escorted them from the room. We were curious to hear what CGT might have said if given the chance, so we asked representatives of the group whether they’d come to the Cobb chambers with talking points in hand. As it turns out, they had.

CGT, a coalition of groups ranging from the Southern Christian Leadership Conference and the Sierra Club to the Atlanta Tea Party Patriots and the Cobb Taxpayers Association, has been pushing for more scrutiny and a public referendum on the county’s deal with the Braves. The group had wanted the commissioners to consider these five factors:

  • The openness of the decision-making process to public input
  • Doubts about undisclosed Braves-related costs to the public
  • A need for more public hearings before the Braves deal is finalized
  • Public sentiment against using taxpayers’ money to bring the Braves to Cobb
  • Public sentiment against using a sales tax to fund so-called “Bus Rapid Transit” between Kennesaw and the stadium area

To download CGT’s talking points memo prepared for Tuesday’s meeting, click here.

For the acronym-impaired, here’s a quick guide to the abbreviations used in the talking points:
BOC = Board of Commissioners
BOE = Board of Ethics
MOU = Memorandum of Understanding between Cobb County & the Braves
DACC = Development Authority of Cobb County
BRT = Bus Rapid Transit

All references to public opinion come from a recent poll conducted by Lincoln Park Strategies, as reported by the Atlanta Journal-Constitution on May 14.

We also obtained the talking points prepared by Larry Savage, an open government advocate who ran against Tim Lee for the Cobb County Commission chairmanship in both 2010 and 2012. He, too, was not allowed to speak at Tuesday’s meeting,

To download the talking points Savage prepared for the meeting, click here.

We also wanted to learn a little more about just how the dissension shutout was organized. Stadium supporters lined up five hours before the meeting to claim the 12 available public comment slots. That maneuver was the brainchild of John Loud, the owner of a Kennesaw security company who organized the booster group Cobb Home of the Braves.

“I’m the one that actually made phone calls over the last several days and invited each and every one of them and set the plan together and said, ‘Let’s all get out there and show that we want to support [the Braves],’” Loud said in an interview.

Citizens may sign up for public comment at commission meetings on a first-come, first-served basis. Loud said Braves supporters couldn’t be sure when opponents might arrive at the commission meeting to get on the list. “So we just picked a time and said when we get there, they’ll either be there or they won’t,” he said.

The first Braves boosters lined up at 1:45 p.m. to speak at the 7 p.m. meeting.

Editor’s Note:
For even more back and forth on this week’s vote and the Cobb Commission meeting, read the op-eds by John Schuerholz of the Braves and Terry Taylor of Common Cause Georgia in the AJC.

Representative quote from Schuerholz:

The responses that I have heard have all been the same: We are
delighted about your Cobb County project. We can’t wait for you to
open. We are excited about going there. We are excited about buying
season tickets. So there is a real positive response.

And from Taylor:

The Tuesday county commission meeting did not allow for public
conversation. All the speaking slots were taken by stadium boosters
who lined up several hours ahead of time. It’s the same tactic used in
earlier meetings to ensure that their voice dominated. That’s nice for
them, but many people don’t have the luxury of taking half a day off
of work. And even if citizens had a chance to speak, the meeting
format did not permit questions and answers.

With one ethics charge against the Cobb Commission dismissed, critics file a second

Critics of Cobb County’s $314 million deal with the Atlanta Braves moved on to round two on Wednesday, filing a new ethics complaint against Cobb commissioners just hours before their first such complaint was summarily dismissed.

Some skeptics have threatened to challenge the county’s public-funding plan for the Braves’ new stadium in court. So far, though, a coalition of Tea Party conservatives, neighborhood activists, and good-government advocates has confined its tactics to long-shot filings with the Cobb Board of Ethics, generating media coverage but little else.

The group’s first ethics foray, filed by former commission candidate Larry Savage, alleged commissioners violated their oath of office, and therefore the Cobb ethics code, by approving a Braves deal that is illegal and unconstitutional.

The commission exceeded its authority, Savage charged, when it agreed in November to incur new bond debt without voter approval and to impose taxes in new special districts to pay for it. Plans to pay off revenue bonds that will be used to finance the stadium with taxes that won’t be generated by the project, he alleged, will also violate the revenue bond clause of the Georgia Constitution.

The ethics board made short work last night of Savage’s complaint, taking just 26 minutes to convene, approve minutes, swear in two new members, listen to their legal marching orders, and let every member comment. Neither Savage nor county attorney Deborah Dance, who had filed the commissioners’ response, was permitted to speak.

Most members said county commissioners should not be brought up on ethics charges for using their own judgment and following their staff’s legal advice. Savage’s grievances, they said, should more appropriately be aired in the courts.

“He may certainly have recourse elsewhere but it is not here with this board,” board member Darrell Sutton said.

The one dissenting vote Wednesday night came from the Reverend Walter Moon, the commission’s appointee, who said he wasn’t convinced the commission didn’t know beforehand that the special districts could be a problem.

The board’s six other members are appointed by homeowners groups, the elections and civil service boards, county employees, and the Cobb County Bar.

The coalition’s newest complaint, filed by member Gary Pelphrey, alleges eight ethics violations primarily related to the secrecy and speed with which commission Chairman Tim Lee negotiated the Braves deal and orchestrated the commission’s approval of it.

Pelphrey said comments by several board members showed they confused their duty—determining whether the commissioners’ actions were unethical—with the legal obligations of a court of law.

“An offense can be, simultaneously, a violation of the law and of one’s ethics code,” he said. “The ethics code is, by definition, personal, and violations must be considered with one’s own standards, not by some mob majority.”

Do financial projections for the new Braves stadium add up?

If the new Atlanta Braves stadium becomes the economic engine that boosters predict, it would be as likely as seeing Julio Teheran throw a perfect game. Economists say they know of no major league ballparks that justify their public subsidies. “Study after study after study agrees with this finding,” said sports economist J.C. Bradbury of Kennesaw State University. “People don’t even study it any more, it’s so non-controversial.”

Cobb County commissioners showed they believe otherwise, though, in committing at least $314 million to help build the Braves’ new stadium near Cumberland Mall. Proponents argue that taxes paid and generated by the team will more than cover the county’s investment.

“This is an opportunity of a lifetime that we can’t afford to pass up,” Commissioner JoAnn Birrell said on November 26 just before voting for the Braves deal. “The return on the investment is tremendous.”

How could the same economic figures lead to such different conclusions? A review by Atlanta magazine shows that county officials relied in part on a consultant’s rosy economic report that appears to have overstated the jobs, spending, and tax revenue that the Braves would bring when relocating from Turner Field to the new stadium in Cobb. Compounding the consultant’s optimistic projections, county officials trumpeted their own cost-benefit analysis that played up potential benefits and ignored much of the public cost of moving the team to Cobb.

Jason Thompson, regional vice president of the consulting firm Brailsford & Dunlavey, defends his firm’s methodology and findings as a professional analysis using tried and true economic models. “We’re not trying to fool people,” Thompson said. “We’re not trying to be dastardly with this.”

Consider:

  • Thompson projected the stadium would create 61 paying jobs for Cobb
    residents but, just before the commission’s vote, hiked that estimate
    to 543 jobs. That change, he said, was based on new information
    provided by the Braves.
  • On top of that, Thompson’s report estimated the ballpark would
    provide an additional 1,074 “nonprofit” jobs, a term that it did not
    define. As it turns out, those are positions presently filled by
    unpaid volunteers who work concessions to earn money for charities,
    certainly no one’s standard definition of a job. Some can work fewer
    than 20 games a year. Thompson contends the jobs would be there,
    though, if the Braves dropped the volunteer program, in which case
    they could become paying gigs. “They may have a change of heart and
    say, ‘Well, we’re not going to do that anymore,’” he said. “It
    becomes a job.”
  • Based on data supplied by the Braves, the Brailsford & Dunlavey
    analysis projected baseball fans will need 402,000 hotel rooms a
    year, generating $1.7 million in taxes for Cobb. Last summer, though,
    a different economic impact study found fans attending games at
    Turner Field need only about one-fourth as many rooms.
  • Cobb will pocket $4 million a year in sales tax on fans’ purchases,
    Thompson estimated. Maybe so, but economists say many of those
    dollars would be spent and taxed anyway on movies, bowling or other
    leisure activities in Cobb. Experts call shifting of discretionary
    spending from one activity to another the “substitution effect.”
  • The county also expects to collect $6 million annually in property
    taxes on the Braves’ planned mixed-use project next to the stadium.
    The question is when. The size and timing of the team’s investment is
    not guaranteed. The Braves resisted one commissioner’s request to put
    its commitment to completing the project in writing.
  • Cobb officials’ glowing cost-benefit analysis of the Braves’ move
    omitted more than half the public costs. It counted $8.7 million a
    year to be paid by property owners countywide but omitted another
    $9.2 million a year in new taxes and fees on businesses, apartment
    owners, hotel guests and car renters. Transportation, public safety
    and other needs will cost additional millions.

Commission Chairman Tim Lee said the Brailsford & Dunlavey report was one of many factors considered in approving the Braves deal. County officials did not question the accuracy of the findings, Lee said when we talked on April 4. “We read through it and didn’t see anything that raised any red flags,” Lee said.

The county relied on Brailsford & Dunlavey as professionals whose work did not require vetting, Cobb spokesman Robert Quigley said. “When you take a reputable firm like this and ask them to do a study,” he said, “we take it at face value based on the reputation and the work they do.”

The Braves did not respond to calls and emails requesting comment.

Bradbury, who chairs Kennesaw State’s Department of Exercise Science and Sport Management, said he’s not studied the terms of the Braves’ deal with Cobb. But he points to studies that have shown, time and time again, that building a new stadium has a negligible economic benefit for a community.

The conservative American Enterprise Institute and the more liberal Brookings Institution both reached the conclusion that sports venues do not provide economic benefits for communities. The Cato Institute, in a 2004 study of 37 cities, found a slight dip in communities’ per-capita income after major league baseball arrived, as well as an average net loss of 1,924 jobs. An economist at Holy Cross College found no significant impact on local economies during three baseball strikes in the 1980s and 1990s.

“Cities would be wise to view with caution the economic impact estimates provided by supporters of MLB,” Holy Cross’s Victor Matheson wrote in his 2005 research paper “Striking Out? The Economic Impact of Major League Work Stoppages on Host Communities.” Observed Matheson, “As a method of economic development, professional baseball, like Casey at bat, strikes out.”

Cobb taxpayers won’t know whether the new stadium will pay off until at least 2017. If it doesn’t, they can always take comfort in the same mantra as Braves fans after recent lackluster seasons: “Wait ’til next year.”

Neither snow, nor sleet, nor taxpayer objection keep Cobb from fast-tracking stadium plans

Cobb County commissioners agreed Tuesday to a two-week delay before voting on new zoning rules for keeping backyard chickens. But they wouldn’t postpone a much more contentious decision on $8 million a year in new taxes to subsidize the Atlanta Braves.

Opponents objected that new information on who would be taxed to help finance a new stadium for the Braves had only become available this week. Previously released maps of new tax districts, they said, were poorly reproduced and virtually unreadable.

Speakers also scolded commissioners for proceeding even though snowy weather had canceled or curtailed two prior hearings on the Braves financing plan. A Feb. 11 hearing was held even though Gov. Nathan Deal had declared an emergency and urged Georgians to stay at home because of icy roads.

“Anything that’s done out of order legally … creates an environment where we say, ‘We don’t have to follow the law as long as we’re pursuing an attractive goal,’ ” Tea Party activist Larry Savage said. “When you have that mindset, it’s almost impossible to imagine all the things that could go wrong.”

In response, commissioners said they had met all legal requirements for advertising and conducting the hearings.
Commissioners proceeded to approve a new 3 percent tax on rental cars, expected to generate about $400,000 a year for stadium financing. They also created two new tax districts in the Cumberland Mall area, where office and commercial property owners and hotel guests will pay a projected $7.9 million more annually for the same purpose.

Each decision came on a 4-1 vote. Commissioner Lisa Cupid, who cast each no vote, said she supported the stadium but felt the county had broken its promise to fully inform Cobb residents about each step in the process.

In an email sent to constituents at 3 a.m. today, Cupid said she was persuaded “when a member of the public stated that the Board did not follow through on a commitment to create a communications plan with milestones and deliverables surrounding the Stadium deal.”

“Consequently, I asked before the first Braves-related vote tonight for the Communications Director [Robert Quigley] to at least address the county’s intent to provide the detailed plan to the public and to commissioners,” Cupid wrote. “My desire was for him to assure the public and me that we were still headed in the right direction in producing the timeline as committed. With his assurance the public may have felt more comfortable and I could have felt more comfortable in voting in support of the resolution and ordinances.

“Unfortunately, Mr. Quigley was told not to address my comments.

“When this occurred my position hardened. I felt denying him the opportunity for explanation was a sign of something problematic. Of note, since joining the Board in 2012, I cannot recall a time where staff has been outright deterred from addressing any commissioner’s concerns during a BOC vote.”

Opponents also complained that funding for public safety, transportation, and other needs should take priority over subsidizing nearly half the cost of a new $672 million baseball stadium. A few hours earlier, officers had packed the commission’s meeting room in support of pay, staffing, and equipment improvements for the Cobb police department; several speakers said said low morale, aging police cars and officer turnover had brought the agency to a crisis.

Tea Party activists have promised to file a lawsuit to challenge public financing for the stadium. Savage, who lost a 2012 race for Cobb Commission chairman, contends Georgia’s Constitution and state law bar Cobb from bar Cobb from creating the new tax districts; he read the relevant portions aloud at Tuesday’s hearing, as if to create a record that could be cited in potential litigation.

Also Tuesday, the state House Judiciary Committee tabled a bill that would have protected personnel and payroll records of the contractors who will build the Braves’ stadium from public disclosure, effectively killing the measure for this session.

Two Cobb legislators were among the bill’s sponsors, prompting speculation that it was intended to cloak stadium construction records.

The scope of the bill was much broader, though, and would have applied to virtually any government contract. Lobbyists representing state and national business groups and the state’s general contractors had all endorsed the bill at a Monday hearing.

Update: Open records bill moved forward

Contractors building the Atlanta Braves’ new Cobb County stadium would be protected from public disclosure of payroll and personnel records under a bill endorsed today by a state House subcommittee.

The bill has been mentioned in connection with the Braves because two of its co-sponsors hail from Cobb, but the measure would have much broader implications. An amended version passed this morning would exempt records of contractors “performing services or a construction project of any kind” for a Georgia city or county.

The Georgia Chamber of Commerce, the National Federation of Independent Business and the Associated General Contractors of Georgia all urged passage today before a House Judiciary subcommittee.

Representative John Carson, the bill’s sponsor, said it’s intended to guard against identity theft and to keep private contractors’ business practices confidential.

Carson’s bill goes next to the full House Judiciary Committee, which has not yet scheduled a hearing on it.
Government watchdogs, though, contend Georgians need to know how private employees are performing public services.

“What happens to that employee who is habitually drunk at work?” Jim Collins, a lobbyist for the Georgia Trial Lawyers Association, asked the subcommittee. “There is a legitimate need to know what’s going on with that person.”

A proposed law could cloud details of spending on the Braves and Falcons stadiums

Atlanta Braves pitchers and catchers are basking under the Florida sun as they prepare for the 2014 baseball season. Meanwhile, dark clouds could be forming in Atlanta to obscure details of public spending on the team’s proposed $672 million stadium.

Georgia’s sunshine law, with some exceptions, requires disclosure of all records regarding spending of public funds. The law applies even to documents held by private businesses doing work for public agencies, such as those who will do the construction of the Cobb County stadium, which will be publicly owned once it’s completed.

Two Cobb legislators are co-sponsoring House Bill 796, which would create a new exemption for personnel and payroll records of government contractors working on public property. The exemption would apply to the Braves’ new home, as well as the Falcons’ new stadium—not to mention construction of roads, bridges, and schools across Georgia. In theory, the exemption could extend to any outsourced government function that’s performed in a public building.

Representatives John Carson (R-Marietta) and Earl Ehrhart (R-Powder Springs), co-sponsors of the bill, did not return telephone calls seeking comment. In a Marietta Daily Journal article published last week, however, Ehrhart said that the bill was intended to preserve workers’ right to privacy and scoffed at suggestions that it was meant to protect the Braves from scrutiny. “I think they need to readjust their tin foil hat,” he told the MDJ.

Critics contend the bill would remove an important level of oversight over the public’s $300 million investment in the stadium. “A company that holds a public contract should be accountable to the right of the people to see exactly how their tax dollars are being spent,” said William Perry, director of Common Cause Georgia. “Bills like this add to the erosion of Georgia’s once fairly decent transparency laws.”

A House subcommittee heard testimony on the bill last week and is scheduled to take up the matter again this morning.

“This would reverse decades of progress,” Hollie Manheimer wrote in a February 7 letter to subcommittee chair representative Barry Fleming (R-Harlem). Government contractors, she said, need to accept a level of transparency so citizens “can confirm that public money is being spent wisely on qualified personnel.” (Click here to download a copy of Manheimer’s letter.)

In 2011, private payroll records showed that a lobbyist who underwrote a $17,000 junket for House Speaker David Ralston was also a DOT subcontractor charging $330 an hour for his services. Similar records have helped news organizations identify unqualified school bus drivers and expose sham pass-through contracting firms.

Braves executives and Commission Chairman Tim Lee have been noncommittal when asked whether stadium spending would be subject to public disclosure under the Georgia Open Records Act. Plant told me in December that he hadn’t thought about it, while Lee said the matter would be addressed in ongoing discussions with the team.

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