Fulton Development Authority defends members’ $25K grant program, pledges new reforms
Still rocking from a financial scandal, the Development Authority of Fulton County is now defending a controversial new policy allowing each board member to propose grants of up to $25,000 to local organizations. Among concerns voiced by one prominent DAFC critic is the potential political advantage for board members who are also running for local public office, such as current board treasurer turned Atlanta City Council candidate Samuel Bacote — who, so far unsuccessfully, has made the first and only grant pitch.
DAFC says the policy — budgeted at $225,000 per year — is actually a reform-minded attempt to be more locally involved and to formalize existing grant-giving practices. Meanwhile, some of its other self-reforms are not staving off the scandal over large “per-diem” payments made to some of the volunteer board members for work as basic as signing documents, which forced former chairman Bob Shaw to leave the board. That scandal deepened June 15 as the Atlanta Journal-Constitution revealed even larger per-diem payouts and questions about the legality of even the newly reformed payment system.
Julian Bene, a DAFC critic who has challenged some of its tax abatement deals in court, calls the grant program “a further inducement for board members to rubber-stamp hundreds of millions in tax breaks that generate DAFC’s fee income. Having the say-so over a $25K-per-year grant is a thing of value. This is especially the case for board members running for election — like Sam Bacote — as exemplified by his trying to give the grant to two associations in the council district where he’s running.”
The DAFC’s vice chair is also an elected official — state Sen. Brandon Beach (R-Alpharetta) — and board members Steve Broadbent and JoAnna Potts have held or run for office in recent years.
Bacote says he will recuse himself from any board vote about the local grant. And Michel “Marty” Turpeau, DAFC’s board chair and interim executive director, says the criticism misses the point.
“It is no surprise Julian Bene, a man with active litigation against DAFC in the Georgia Court of Appeals, would find fault with a policy simply meant to establish more formal procedures in which board members can provide recommendations for community-based economic development opportunities and organizations by submitting a written proposal and then obtaining approval by the full DAFC board,” said Turpeau in an email.
However, DAFC board members Broadbent and Thomas Tidwell reportedly were not fans of the policy, either. Tidwell did not respond to comment requests and Broadbent referred questions to Jackson Spalding, the DAFC’s public relations firm, which did not address the issue. But the Northside Neighbor recently quoted Tidwell as saying in a written statement: “The $25,000 fund allotment for each board member is a policy adopted by the executive committee without the knowledge, consent or approval of the remaining board members. Board members Tom Tidwell and Steve Broadbent objected to this policy once they learned about it.”
Turpeau did not directly comment on those objections, but said a “concern” in discussions was whether the grants would be set in the DAFC operating budget or funded as needed from reserves. “It is being allocated from our reserves on a case by case basis,” he said.
Under questioning about the grant policy and hours before the latest AJC story about per-diem payments, Turpeau announced a slate of further reforms that he said will show DAFC is “serious about our commitment to provide even greater transparency in our policies and practices” and that “we will put into place immediately.”
They include more detailed reporting and accounting of per-diem payments; a requirement that board members annually complete an official income and financial disclosure report; the posting of all bylaws, policies and ethics disclosures online for public viewing; and continued broadcast of board meetings virtually by Zoom, even after in-person meetings resume, to increase public access.
First grant proposal
At the DAFC’s May 25 board meeting, Bacote proposed spending all or some of his grant allotment on proposals from the Cabbagetown Neighborhood Improvement Association and the Reynoldstown Civic Improvement League, both of which are within City Council District 5, where he is running for office.
The Reynoldstown group said in an email that “RCIL, along with Cabbagetown Neighborhood Improvement Association, were approached to see how the development authority could help our local business[es] who were deeply impacted by [the] COVID pandemic. We have thought about … options on how to help businesses creating awareness that they exist in both neighborhoods and promote to visitors coming from the BeltLine.”
Bacote said that the board did not make a decision on the proposal. “The grant request was tabled by the board to allow the community organizations to further define and refine their focus and specific needs in helping their community-based small businesses come out stronger post-pandemic,” Bacote said in an email. “One example used would be providing grant funds to ease the investment burden of outdoor space conversions.”
As for criticism of the political benefit of such grants or their effect on how he views tax abatement requests, Bacote said he will recuse himself from voting on this proposal and any others like it.
“As a practice of board members, I will recuse myself if there’s a perceived conflict of interest that I could personally benefit from a project or grant request,” Bacote said in an email. “…I have done this in the past when I owned property near a project under consideration for approval by the DAFC. I live near the communities eligible for these grant dollars and I will recuse myself from voting when the board puts this grant request up for approval later this year.”
Turpeau cited the tabling of the proposal as evidence of DAFC’s self-reform.
“The first grant proposal to come to DAFC under this new policy was tabled by a board vote for not being specific enough,” said Turpeau. “This is proof the new policy is working to ensure we meet the economic development objectives we have now put in writing.”
Bacote is serving a DAFC term that expired in May and will be either renominated or replaced by Fulton Commission Chairman Robb Pitts, who has yet to make a decision while questioning the existence of DAFC amid the per-diem scandal.
Grant-giving, then and now
The DAFC has been a target of controversy in recent years, as it has granted tens of millions of dollars in tax abatements to projects in some of the Southeast’s hottest real estate markets, including Buckhead, Midtown and the Atlanta BeltLine corridor. The DAFC says those deals boost the tax base in the long run, while critics — including Atlanta Public Schools — say many of the projects would be built anyway, so the deals give away public money that other taxpayers must cover.
The DAFC also has been controversial for opaque operations; until 2019, it did not even publicly report the estimated value of the tax abatements it granted. With political pressure from some Atlanta and Fulton officials and state legislators, the DAFC has increased transparency in recent years. When Turpeau and Bacote came into leadership positions in November 2020, they instituted further changes, including capping the now-scandalous per-diem payments and tightening the policy on their use.
That same month also saw the creation of the new grant policy, or the “Policy on Economic Development Investments of the Authority.”
While tax abatements get a lot of press, the DAFC has traditionally given grants to various local organizations, typically after a presentation to the board. According to Turpeau and DAFC documents obtained by Bene through a records request, the Greater North Fulton and South Fulton Chambers of Commerce have received $50,000 annual grants; other recipients have included the Chattahoochee Nature Center, Progress Partners, the South Fulton Economic Development Partnership, and the Chamber-affiliated Progress Partners of North Fulton Atlanta.
The DAFC says it intends to continue some of those grants. But the new policy established a program budgeted at $225,000 a year to support “economic development” projects. “These projects can include those being undertaken by non-profit organizations and focusing on education, workforce development, among other things,” the policy reads, also citing “economic development” and “affordable housing.” The grant money cannot be used for overhead or salaries, it says.
Under the policy, each board member can recommend one or two projects with a total cost up to $25,000 within the district they represent, or anywhere in the county for at-large members. Two or more members can team together for joint proposals covering more than one district. It is “highly recommended” that board members consult with the local Fulton Board of Commissioners member as well, the policy says. The proposals must be made in writing and are vetted by the DAFC’s Strategic Initiatives Committee and voted on by the DAFC board, Turpeau said.
Turpeau said part of the inspiration was the COVID-19 pandemic, during which DAFC last year partnered with the county and a nonprofit to offer $1.5 million in business loans. “Our focus [in] economic development is broader than real estate and coming out of the pandemic it is important to have a broader view to help businesses and communities recover,” he said.
He added that the policy is also “part of our new board leadership determining it would be prudent to have better defined, written policies in place to guide the board of directors especially with the potential for new board members in 2021.”
Bacote said the grant policy is a way to do something with DAFC fee revenue, especially at the scale of small businesses that don’t get tax abatements though the usual mechanism of authority-discounted bond issuances. Financial overview documents show DAFC as having roughly $8 million in 2020.
“Under previous leadership of the DAFC, we did not have a policy on how to return or invest our fees back into the community, especially given pandemic business needs we identified for small businesses, which typically are not scalable to benefit from our bond transactions,” said Bacote. “Our economic development investment policy now provides that mechanism.”
Bene, the DAFC critic, sees other motives in the policy. He dismissed the grants as “a handy way to buy good PR” and said that “calling these grants ‘investments in economic development’ doesn’t make them so.” The value of the grants is much smaller than that of the tax abatements that fund DAFC, he said, and the ability to give grants to “pet projects” could affect the objectivity of board members and the county commissioners who appoint them when it comes to tax-break deals.