The Potential Conflicts of Georgia's Community Improvement Districts
In Georgia, Community Improvement Districts (CIDs) are a creation of
state government (they're in the amended 1984 state constitution)
that involves local governments in serious potential conflicts of
interest, in order to allow developers to fund their public
infrastructure with tax-free bonds. CIDs are a clever idea, but
cleverness is often inconsistent with government ethics. Smith,
Gambrell & Russell, a law firm, has <a href="http://www.sgrlaw.com/resources/briefings/bond_practice/452/" target="”_blank”">a
good, short overview of CIDs</a>.<br>
<br>
The county and/or city in which a CID is located approves and even participates in the management of the CID (the local government(s) gets one seat on the CID board). Approval by landowners is not
based on one-person one-vote, but rather on the value of real
estate, which gives the power to commercial entities. The major
landowners also vote for board members. But all landowners pay the
assessments, along with their county taxes, so that the county is
involved in this aspect, as well.<br>
<br>
CIDs can also enter into cooperation agreements with counties or
cities, so that, for example, a county may agree to maintain the
roads built with bonds issued by a CID.<br>
<br>
Despite all the municipal involvement with CIDs, they have many
fewer restrictions on their issuance of bonds than if the bonds were
to be issued in other ways. For example, they do not have to publish
or conduct a public hearing.<br>
<br>
Cobb County, outside of Atlanta, has been the leader in creating
CIDs, passing <a href="http://library.municode.com/HTML/10572/level3/PTIISTENLE_CH6CODE_ARTIIC…; target="”_blank”">their
CID ordinance</a> in 1985. It is also the center of a current
controversy involving CID support for regional transportation
referendums.<br>
<br>
According to <a href="http://www.mdjonline.com/view/full_story/12229271/article-CIDs-help-fun…; target="”_blank”">an
article in the Marietta Daily Journal</a> this March, two CIDs
donated a total of $150,000 to an advocacy group supporting the
first referendum. One of the CIDs said that its contribution was
made on the condition that it be used "for nonpartisan neutral and
accurate voter education activities and not to advocate for the
passage or defeat" of the referendum. But this is clearly
disingenuous, as critics pointed out. Money to an advocacy group
will be used to advocate, not to educate.<br>
<br>
Bill Byrne, a former chair of the Cobb County board of commissioners
and current candidate for the same position, says that what the CIDS
have done "is legal. However, I believe it is unethical. Their
viewpoint is it's not tax money, but I'm sorry it is. The money they
get comes from the people who buy products and services within that
jurisdiction."<br>
<br>
In <a href="http://cobbhomeowner.org/2011/07/21/restrain-the-cids/" target="”_blank”">an
open letter to the Cobb County board of commissioners</a> two
weeks ago, Larry Savage, who ran against the current county board
chair, takes a different approach to the same issue involving the
advocating activities of CIDs: "Their investments and their
influence are intended to make their properties more
attractive to enhance the value. The Cobb County
government is different. It should consider equally
the interests of all citizens of Cobb County. There
should be clear daylight visible between Cobb
government and the CIDs. At present it can be
difficult to determine where one ends and the other
begins, or who leads and who follows. Cumberland and Town
Center CIDs were created by the Cobb County Board of
Commissioners and the Board of
Commissioners must take responsibility
for getting them to operate as intended."<br>
<br>
If a county board is not permitted to support an advocacy group, a
CID also should not be, and the county board should be the one to
prevent this, whatever its members' view on regional transportation.
Otherwise, it looks to the public as if the county board is
effectively contracting out its advocacy. Yes, the board did
nothing, but inactivity when responsible, and when a vote would have
easily and quickly cured the problem, is no different from activity.<br>
<br>
In other words, if a local government is going to give developers
special rights and be involved in a CID's management, tax
collection, and road maintenance, it must recognize the potential
conflicts of this relationship and be very careful to deal
responsibly with these conflicts. It does not have the luxury of
inaction.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
203-859-1959