Scandal-plagued Fulton agency should be abolished or reined in, lawmakers say

The calls for reform — or more drastic changes — first erupted on social media after an AJC story Tuesday revealed that several board members had collected multiple per diem payments the same day, expanding on previous reporting that raised questions about DAFC’s financial oversight.

What was apparently a regular occurrence at the agency until November is also, according to experts, wrong.

The AJC’s most recent review of records found that DAFC board members over the past decade have collected $1.1 million in per diems. More than $800,000 of that sum went to three former board members — Bob Shaw, Samuel Jolley Jr. and Walter Metze Jr.

The AJC found that at least three of the board’s current nine members also collected multiple per diems a day, though to a lesser extent, totaling about $3,000. When the AJC brought the duplicate payments to the attention of the board members during the reporting process, the trio said they have or will reimburse the agency.

Fulton commissioners, meanwhile, have been unable to find evidence the county ever authorized board stipends, as required by state law.

Fulton Commissioner Bob Ellis, a Republican who represents part of North Fulton, said some people calling to abolish the agency never liked the DAFC giving tax and other incentives to developers and are using the recent scandal as cover.

Credit: Rebecca Wright

Credit: Rebecca Wright

“I think it’s a good, functional economic development tool for our county to have,” he said.

But Ellis said DAFC needs to be more transparent.

Rep. David Dreyer, an Atlanta Democrat and head of the Fulton House delegation, said the agency is beyond repair.

“Things are just too far off track,” he wrote Tuesday while retweeting McLaurin’s call to abolish DAFC.

Republican state lawmakers also want to see changes.

“If it is to continue, I want reform in the Authority’s governance,” House Speaker Pro-Tempore Jan Jones, a Milton Republican, wrote in an email. “I also want assurances in place that the authority will coordinate with Fulton cities and school boards before committing local tax revenues as incentives.”

DAFC Chairman and Interim Executive Director Michel “Marty” Turpeau IV defended the authority’s reason for being, and touted changes new board leadership had made to eliminate future per diem abuse.

“It’s a new day with a new direction at DAFC and now they want to abolish us for past practices,” he said. “We’d be happy to walk them through the important steps we have taken to prevent these past practices from happening again.”

In November, the board established its first per diem policy, limiting board members to one stipend per day. Then, on June 22, the board approved a more robust policy, which explicitly banned board members from earning both per diems and salary.

The most recent change came after the AJC was preparing a story about how former DAFC chair Bob Shaw also had earned more than $500,000 in salary over six years for a job that few knew he had.

“It is short-sighted to allow past practices to impact the future economic development opportunities that the DAFC can bring to Fulton County, especially in the southern region of the county that has been historically underserved when it comes to economic growth,” Turpeau said.

Reform or abolish?

Sen. Jen Jordan, an Atlanta Democrat who heads Fulton’s Senate delegation, said she’d rather reform the loose state law governing development authorities than abolish DAFC. She said development authorities have accomplished many positive things in rural and urban parts of Georgia over the decades.

Development authorities approve bond financing deals, which could create thorny technical issues that complicate abolishing DAFC, Jordan said. Reforms to prevent future abuses, she said, might be a path that could garner bipartisan support.

Fulton commissioners can appoint DAFC board members and set a board per diem rate, but generally have no oversight.

“This void has allowed a lot of bad things to happen in Fulton County,” Jordan said.

DAFC also has a powerful ally on its board in state Sen. Brandon Beach, an Alpharetta Republican.

Beach earns a DAFC per diem for board meetings, though he does not appear to have abused the system by collecting more than one per meeting, according to records the AJC reviewed.

Jordan said Beach should recuse himself from legislation involving DAFC. Further, Jordan said reforms should prohibit state lawmakers from serving on authority boards.

“We’re prevented from serving on any number of boards as elected officials,” Jordan said. “Why are development authorities any different?”

Beach did not immediately respond to AJC’s request for comment.

Jordan also wants geographic limitations. State law allows county development authorities like DAFC to operate within the jurisdictions of cities that have their own authorities, meaning developers can pit city and county authorities against one another.

It’s more than a hypothetical: For years, the city of Atlanta has failed in its efforts to pass legislation preventing DAFC from doing deals within the city.

DAFC — which until recently had the political muscle of Shaw, a former state GOP chairman, as its chairman — was able to block any changes to state law that might rein in DAFC’s practices, several state lawmakers have told the AJC. Such limits might have cut board fees Shaw and other members earned, by reducing the authority’s business. DAFC also has had well-connected lobbyists such as Sandy Springs Mayor Rusty Paul, a former state lawmaker, on retainer.

Jordan said she wants to see state law changed to strengthen oversight by county commissioners.

“It’s one of those things you don’t want to necessarily throw out the baby with the bathwater,” she said. “Clearly we’ve got a problem here with respect to this one development authority.”

Credit: Rebecca Wright

Credit: Rebecca Wright

Fulton County Commissioner Liz Hausmann also urged caution.

“Any talk about dissolving it is emotional and a premature reaction,” said the North Fulton Republican.

Board influenced by fees?

Development authorities generally earn the bulk of their revenue from fees charged to developers for the tax breaks they grant to big real estate projects or from fees for issuing bonds that finance infrastructure projects — so when developers get millions in tax breaks for their projects, the authorities earn a fee.

Rep. Betsy Holland, an Atlanta Democrat, said she’s concerned about money influencing board decisions.

“I don’t want to accuse anyone of doing that, but certainly it is structured in a way that would make that very possible,” said the Democrat.

Holland represents part of Buckhead, where DAFC has inked tax breaks for many large projects. But she said it doesn’t take “heavy-duty math” to realize that the deals shift the burden to homeowners in the form of residential property tax.

Offering a different perspective, Rep. Debra Bazemore, a Riverdale Democrat, said destroying the DAFC would harm cities like South Fulton already ignored by developers.

“I will stand with my colleagues … and we help each other, but we also have to make sure we are not neglecting one over another,” she said.

Our reporting

Legislators for years have tried and failed to control the DAFC, or Development Authority of Fulton County. But lawmakers have found new energy for reform following the AJC’s months of reporting about the seemingly engrained culture of loose financial oversight at DAFC.

Documents and interviews show some board members availed themselves of multiple per diems a day at a rate that elected county commissioners now believe may not have been approved. The agency is written into state law, but county commissioners are charged with appointing members and setting per diem rates.

Our reporting about DAFC, the Development Authority of Fulton County