Public Private Partnerships
By Craig Kootsillas
As sources of capital dry up, developers have turned to Private / Public Partnerships (PPP) touting them as innovative solutions to funding challenges as critics eye them with deep suspicions over the blurring of the line between public and private.
This series of articles is the result of an examiner.com investigation concluded today of a large-scale transit plan now branded as “Connect Cobb“. The public record was examined and this investigation’s findings reviewed by officials at the county, region and federal level. Cobb County is a northern suburb of Atlanta that generally is urban to the south and generally suburban to the north.
A consortium of owners of commercial property centered around the largest malls in Cobb County (GA) lie poised to implement a transit plan they created in secret over a decade ago as all levels of government overlook years of concealment, deceit, conflicts of interest and potential fraud clearly documented in the public record.
The plan, for which development first began in 1999, has come to be branded as “Connect Cobb” and the effort involved a number of quasi-governmental entities, also described as “public/private partnerships” (PPP).
Georgia law provides for the creation of “community improvement districts” (CID) when the majority of owners of commercial property within an arbitrary and contiguous area agree to the formation. They then elect officers and a board of directors from within their membership.
A CID functions similar to an investment club with the government operating as a no-cost money handler. CIDs agree to invest an amount proportional to the the value of the property they own within the boundary of the CID.
This is considered to be a “millage rate” and the investment is collected by the government as a tax. After being pooled by the government, the entire amount is made available to the CID.
When deciding on all matters, CIDs vote in a manner in which the value of each member’s vote is determined by the value of the property owned within the CID.
This process is derided by critics as “the golden rule” wherein “he with the most gold rules” and point to the fact that the largest property owners are conglomerates headquartered well outside the CID and county.
Georgia law provides CIDs the ability to to use pooled revenue as local matching funds to seek grants from federal, state and local governments. With this dynamic, CIDs regularly “leverage” their pooled funds paying only 10 percent of the total cost of large transportation projects with the balance funded by various governments.
This savings is referred to as a “rate of leverage”; in this example a “10 to one leverage rate” would be touted.
Georgia law also provides for the creation of “development authorities”, a PPP to which elected officials appoint board members who then elect officers and establish rules. Development Authorities are able to package “inducements” to individuals and firms that include abatement of school and property taxes, the issuance of tax free bonds and lump sum payments.
Cobb County elected officials view development authorities as independent entities and rely on courts and mandated federal hearings to provide oversight.
While some development authorities will work closely with local government given authorities’ ability to alter and create development patterns, the Development Authority of Cobb County does not. This has led to controversy within Cobb by members of the public and authority board members centered on the charge that the DACC has granted a disproportionate share of inducements to owners of property within the Cumberland CID causing development to focus there.
Examination of the DACC’s record and Connect Cobb’s analysis of job opportunities within Cobb substantiates this claim.
Two local firms worked alongside Bechtel Infrastructure Corporation to develop the plan beginning in 1999 and have since merged.. Don Hix, one time CEO of one of the local firms (then associated with Mayes, Sudderth and Etheridge), now is employed by the other firm, Croy Engineering.
Since before development of the plan and until recently, Hix served as chairman of the Development Authority of Cobb County (DACC) and not the only project insider to serve on the DACC.
Upon completion, the Bechtel plan was delivered to the chairmen of the two CIDs, at the time Kessel Stelling, now Synovus Chairman/CEO, served as the chairman of the Cobb Chamber of Commerce, the Cumberland CID and was a member of the DACC board.
Like Croy, Stelling would return to Cobb during the 2008 update of Cobb’s Comprehensive Transportation Plan (CTP) by reassuming the chairmanship of the Cobb Chamber of Commerce.
During the development of the project transportation planning, management and most other roles of Cobb government regarding transportation were being “privatized”. In a recent interview during his bid to reclaim the chairmanship of the Cobb County Board of Commissioners, an office he held during the development of the transit plan, Bill Byrne pointed out the fact that the privatization plan was developed with guidance from Croy.
Since then, Croy has remained one of Cobb’s most influential consultants.
After overseeing the privatization of transportation in Cobb as Cobb’s Director of Transportation, Croy went on to head the State Road and Tollway Authority (SRTA) and the creation of the Greater Regional Transportation Authority (GRTA) under Cobb native and former governor Roy Barnes. GRTA was a campaign imperative of Barnes. Once elected, Barnes appointed Croy to begin what was labelled as Barnes top issue: the development of transit corridors within the Atlanta metro region.
While heading SRTA, Croy became the center of controversy when it was revealed that toll revenue was being redirected from tollway operations, including $10 million to purchase land for a development located near the terminus of Connect Cobb.
Then, in 2008, Croy returned to Cobb to oversee development of Cobb’s Comprehensive Transportation Plan (CTP), the document in which local governments choose targets for state and federal funding. He went on to serve as Cobb’s liaison to the Northwest Corridor Study (NWCS), a study considered to be a precursor to Connect Cobb during which a variant of the 1999 plan was considered then rejected as too expensive and too slow.
Croy continues to be deeply involved having been chosen to oversee multiple efforts totaling many millions over the years required to implement Connect Cobb.
The original stakeholder committee formed to oversee development of the plan was co-chaired by Tad Leithead, who spearheaded the development of Cumberland while at Cousins Properties, and Bob Voyles, founder of the Seven Oaks development firm, both long-standing members of and developers focused on the Cumberland CID.
Leithead would succeed Stelling as chairman of the Cumberland CID, a title he holds till today. Leithead also served as chairman of the Atlanta Regional Commission (ARC) Atlanta’s federally designated Metropolitan Planning Organization, the local body charged with oversight and allocation of federal funds.
After acceptance of the plan by the Cumberland and Town Center CIDs, the plan received no public hearing and was not brought forward for consideration or adoption by Cobb’s Board of Commissioners.
In spite of having been adopted into Cobb’s 2008 Comprehensive Transportation Plan in a manner that has sparked controversy, the public would remain unaware of the plan until revealed by CDOT at a work session of Cobb Commissioners May 4, 2010.
Next up: The strategy