Lawsuits Challenge Beltline Inc.’s Existence, Beltline TAD, and Perry/Bolton TAD

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(APN) ATLANTA — Three different lawsuits, where John Woodham serves as legal counsel, are pending in the courts that challenge various aspects of the Beltline, the Beltline Tax Allocation District (TAD), and the Perry/Bolton TAD, Atlanta Progressive News has learned.

One lawsuit–John S. Sherman, on his own behalf and on behalf of all those similarly situated, and Christopher D. Eichler, an Individual Resident, Citizen and Taxpayer of the City of Atlanta, Georgia, v. the City of Atlanta, the Atlanta Development Authority (ADA), the Atlanta Independent School System (AISS), Atlanta Beltline, Inc., and Dr. Arthur Ferdinand, solely in his official capacity as Tax Commission of Fulton County–was filed on October 21, 2011.

Sherman is the President of the Fulton County Taxpayers Foundation and Eichler works for the Foundation, although they sued as private citizens rather than on behalf of the Foundation.

The Sherman/Eichler lawsuit challenges, among other things, the very existence of Beltline, Inc., the nonprofit entity created by the ADA, that manages the Beltline TAD.

“The ADA does not possess the power or authority to create a Georgia non-profit corporation, and therefore the ABI is a void entity as a matter of law, and this Court should declare ABI as such,” according to Plaintiff’s First Amendment to the Complaint, a copy of which has been obtained by APN from Fulton County Superior Court.

The lawsuit cites Georgia Attorney General Official Opinion No. 2009-3 in support of the claim.

The 2009 opinion, authored by the Office of Attorney General Thurbert Baker, ruled that Boards of Education in the State of Georgia were not allowed to create a nonprofit entity.  The opinion noted that Boards of Education are creatures of the State of Georgia, and “An entity created by the State ‘has only such powers as the legislature has expressly, or by necessary implication, conferred upon it.’”

Similarly, the ADA is an entity created and controlled by Georgia law, which provides for development authorities that may be triggered by local counties and cities.  There is nothing in Georgia law that allows for development authorities to create nonprofit organizations, according to Woodham.

Beltline, Inc., filed a Motion to Dismiss in the Sherman/Eichler case; however, the Motion was denied in a May 09, 2012, Order by Fulton County Superior Court Judge Cynthia Wright.

The Eichler/Sherman case also makes numerous claims challenging various aspects of the Beltline and Perry/Bolton TADs.

As previously reported by APN, Woodham successfully sued and won a Supreme Court of Georgia ruling in 2008 declaring the first Beltline TAD to be unconstitutional.  The Court ruled that the law did not allow the City of Atlanta to divert educational tax money from the School System for non-educational redevelopment purposes.

Since the 2008 ruling in Woodham v. City of Atlanta, the Constitution of Georgia was amended to purportedly allow such diversion of tax dollars in the future.  

In addition, the City of Atlanta and the AISS amended the intergovernmental agreements and legislation related to the Beltline and Perry/Bolton TADs.

However, the Sherman/Eichler suit claims that the TADs could not be amended because they were illegal, null, and void in the first place, following the 2008 Supreme Court of Georgia ruling.

The TADs would have had to have been reenacted, not simply amended, according to Woodham.

“If this were a law school exam, we would get an A.  They would get an F,” Woodham told APN.

Woodham asserts that the City of Atlanta and the AISS did not want to reenact the TADs following the 2008 ruling because they would have a newer base year, and therefore, all of the tax increment that had been accruing since that time could not be used for those TADs.

Furthermore, given the current state of the US economy, where property tax values are not expected to increase any time soon, Woodham argues that if the City and AISS wanted to reenact the TADs now, that there would be no anticipated increment available to justify a TAD.

In a second Order on May 09, 2012, Judge Wright also stayed and administratively closed the Sherman/Eichler case, pending the resolution of a related case known as the Clark case, which is currently on appeal.

Wright also dismissed the claims of Sherman in the Sherman/Eichler case because she ruled that they were duplicative of claims made by Sherman in the Clark case; however, Woodham denies this and says he plans to appeal.

The Clark case argues “(1) The City of Atlanta ordinances, resolutions, and redevelopment plans pertaining to the Beltline TAD and the Perry/Bolton TAD, the Beltline TAD Intergovernmental Agreement and the Perry/Bolton Intergovernmental Agreement are ultra vires, null, and void; (2) the Perry/Bolton TAD Intergovernmental Agreement was executed by the Mayor of the City of Atlanta without legislative approval from the Atlanta City Council in violation of Section 3-104(10) of the City of Atlanta Charter and is therefore ultra vires, null, and void; and (3) a preliminary and permanent injunction is necessary to prohibit the City and/or ADA from spending, pledging, or otherwise using any of the educational tax allocation increment derived from the Beltline TAD and the Perry/Bolton TAD, including the educational tax allocation increment currently held by the City/ADA and hereinafter received.”

Judge Wright ruled against each of these claims in an Order dated November 15, 2011.

Sherman, who had been co-Plaintiff with John Clark, is now the only remaining Plaintiff on appeal.  Clark elected not to proceed with the appeal.

Sherman filed an Appellant’s Brief with the Court of Appeals of Georgia on April 19, 2012; the case is currently pending as part of the Court’s April 2012 term and a ruling is expected by the end of November 2012, according to the Clerk’s Office.

Once the appeal in the Clark case is ruled upon, the Sherman/Eichler case will be able to proceed.

There is also a third case where the Plaintiffs are intervening in the proposed first bond issuance for the Perry/Bolton TAD.

In a separate matter, it should be noted that Woodham is also the subject of pending disciplinary proceedings, stemming from a matter where Woodham was an attorney in a bond case against the ADA and the Fulton County Development Authority (FCDA).  

Attorneys for the Defendants audio-recorded a phone conversation with Woodham where he offered to drop the case in exchange for a payment of 1.3 million dollars.  This was deemed inappropriate because the relief being sought in the case did not include monetary damages.  

While Woodham later clarified that the funds were intended for donation to a homeless shelter, Woodham did not state this during the phone conversation, according to a copy of the Supreme Court of Georgia case record, In the Matter of John Floyd Woodham, reviewed by APN.

On June 18, 2012, the Supreme Court of Georgia rejected Woodham’s petition for voluntary discipline in the case, ordering the State Bar of Georgia to re-review the matter.

Incidentally, former Fulton County Superior Court Judge Michael Johnson, currently a candidate for US Congress challenging US Rep. John Lewis (D-GA) in the Democratic Primary, filed an Amicus Brief criticizing Woodham in the case.  The Brief was unprecedented because Johnson was the judge in the original case involving the ADA and FCDA, and it is unusual for a judge to do so.

Former Supreme Court of Georgia Justice Leah Ward Sears also filed an unusual Amicus Brief critical of Woodham on behalf of the FCDA.

(END/2012)

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