Fulton County chief tax appraiser fired

The chief tax appraiser of Fulton County was fired last month. David Fitzgibbon was blamed for miscalculations that led to a delay in Fulton County's property tax billing. Note that it was the board of assessors, not the tax commissioner nor county commission, that had authority over this matter. From 11 Alive:

FULTON COUNTY, Ga. -- Fulton County's chief tax appraiser has been fired after a miscalculation in property taxes delayed bills from going out by nearly two months. 

Late Thursday, the Tax Assessor's Board voted to terminate David Fitzgibbon's employment after a two-hour meeting. As chief tax appraiser, Fitzgibbon is responsible for setting the county's tax rates and sending out tax bills. He failed at both this year, 11Alive Investigator Catie Beck has uncovered.

A county vendor provided wrong numbers and delayed bills from going out in July to being sent in September. County board members blamed Fitzgibbon's office for not finding the problem sooner and for stalling operating budgets across the county. 

Several members of the county board called for increased accountability for the commissioner after the debacle caused confusion and distraction within several municipalities. 

Fitzgibbon has taken no responsibility for the mistake and claims the board was acting under political pressure from county commissioners. 

"It was the software vendor -- the software vendor's contract is with the IT department and the tax commissioner," he said. "The issues were on the tax commissioner's side and not the assessor's side." 

The tax commissioner of Fulton County is Arthur Ferdinand.

Georgia Supreme Court upholds Fulton County's property tax breaks

Fulton County has a program providing property tax incentives to companies producing jobs or investing in the county.  The companies make payments in lieu of taxes (PILOT) pursuant a deal with the development authority.  PILOT agreements are periodically used throughout the state as an economic development method.  Fulton's PILOT program was challenged by an individual who objected to the formula used by the Fulton County Board of Tax Assessors for calculating the value of PILOT properties.

The SALT Shaker blog has the details:

Georgia Supreme Court rejects challenge to property tax incentives

BlogSALT Shaker
Sutherland Asbill & Brennan LLP Michele Borens, Jonathan A. Feldman, Jeffrey A. Friedman, Todd A. Lard, Carley A. Roberts and Leah Robinson

April 1 2015
On March 27, 2015, the Georgia Supreme Court rejected a challenge to the legal validity of property tax incentives in Georgia, largely on procedural grounds. SJN Properties, LLC v. Fulton County Bd. of Tax Assessors, No. S14A1493, 2015 WL 1393398 (Ga. Mar. 27, 2015).

Background
The case began in 2009 when a citizen, John Sherman (later substituted with SNJ Properties, LLC), filed a class action suit against the Fulton County Board of Tax Assessors seeking to invalidate property tax incentives provided to companies investing and creating jobs in the area. The Georgia Constitution’s uniformity provision generally prohibits county tax assessors from directly abating a company’s property taxes. Property taxes can potentially be reduced, however, through bond transactions involving local development authorities.

The transactions at issue were structured such that title to private property is transferred to a local development authority in connection with the issuance of revenue bonds. The authority leases the property back to the private party and uses the lease stream to pay down the bonds. The fee estate held by the tax-exempt authority is generally exempt from property tax, while the private party pays property tax on its leasehold interest. For purposes of determining the amount of property tax due on the leasehold interest, the parties agreed to use a “50% ramp-up method,” under which the property is valued at 50% of the fair market value of the fee estate in the first year, ramping up by 5% each year over 10 years until the property is valued at 100%. Sherman sought a determination that the 50% ramp-up method was unlawful on the basis that it did not reflect the property’s fair market value. Op. at 2-3.

The trial court initially dismissed Sherman’s claims, but in 2010, the Georgia Supreme Court reversed, holding that dismissal at that stage was improper because Sherman should have had an opportunity to present evidence regarding whether the valuation method was valid. 701 S.E. 2d 472 (Ga. 2010). On remand, the parties filed cross motions for summary judgment supported by expert affidavits of real estate appraisers. The trial court granted summary judgment on the merits to the Fulton County Board of Tax Assessors, and Sherman appealed.

The Georgia Supreme Court’s Opinion

On Friday, the Georgia Supreme Court upheld the trial court’s judgment on the merits in favor of the county. The Court held that:

1. Sherman (and his substitute, SJN Properties) had standing as citizens and taxpayers of Fulton County to seek mandamus relief, which would allow the claimant to seek to force a public official to perform an official duty (here, valuing property), Op. at 12; 
2. Sherman’s claims for injunctive relief were barred by sovereign immunity, Op. at 10-11; 
3. Sherman’s claims for forward-looking declaratory relief were barred because he “faces no uncertainty or insecurity as to any of [his] own future conduct, but rather seeks an adjudication only of issues that will impact the future conduct of the FCBOA,” Op. at 17-19; and 
4. On the merits, Sherman’s claims for mandamus relief failed, due in large part to a lack of proof. The Court reasoned that county tax assessors have broad discretion in valuing property, and the county’s two expert appraisers testified that the 50% ramp-up formula was analytically sound and reasonable. The Court also noted that Georgia courts had “previously endorsed” similar methods for valuing bond leasehold estates, citing DeKalb County Bd. of Tax Assessors v. W.C. Harris & Co., 282 S.E. 2d 880 (Ga. 1981). Sherman’s expert appraiser opined on the 50% ramp-up formula only in the abstract and did not actually appraise any particular property. Thus, the claims failed “for the simple reason that [Sherman] has adduced no evidence that any actual assessment of any particular property has been or is other than at fair market value.” Op. at 13-17.

Sutherland Observations: Citizen taxpayers often lack standing to challenge economic development incentives. See, e.g., DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006). Georgia, however, like some other states, grants citizen taxpayers standing to pursue mandamus relief, see O.C.G.A. § 9-6-24, and it was through the mandamus vehicle that Sherman was able to bring his challenge.

As this case and others like it illustrate, taxpayers negotiating credits and incentives must be mindful of the possibility that, at some future time, the legality of the incentives may be challenged. Care should be taken when negotiating and drafting the relevant agreements to anticipate and plan for these challenges and other potential risks (e.g., clawbacks, burdensome reporting obligations, etc.).

Officials square off over property tax increase

In 2013, the governor signed House Bill 604 into law, which prohibited the Fulton County board of commissioners from approving a property tax increase until 2015 at the earliest. The law says, “Any proceedings by the governing authority of Fulton County to make or fix a levy of ad valorem taxes for Fulton County at a millage rate which would exceed the roll-back rate shall be suspended until January 1, 2015.”

The Fulton County commission then voted to repeal the state law on the basis of their home rule authority under the state constitution, which says, “a county may, as an incident of its home rule power, amend or repeal the local acts applicable to its governing authority” (Sec. II, Par. 1) under certain conditions.

Last week, the county commission approved a 17 percent millage rate increase.

Former co-sponsors of House Bill 604 immediately sued Fulton County and are seeking an injunction to prevent the county tax commissioner from collecting taxes with the higher rate.  Lawyers for the lawmakers say that the home rule power cited by Fulton County is trumped by a 1951 amendment to the state constitution that specifically authorized the General Assembly to control Fulton County’s ad valorem taxation powers.

The tax increase has revived interest among some north Fulton County taxpayers to secede to create their own “Milton County.”

Assessment techniques under scrutiny

The AJC had an interesting article on Monday about the use of credit-bid sales to determine property values in 2010 for Fulton County.  Read the article here (hat tip to Georgia Zoning Blog).  The practice, which Fulton says it is discontinuing, may result in inflated values for tax purposes.

DeKalb assessor Eugene James is also quoted in the article.