Atlanta confident state Supreme Court will uphold ruling to distribute taxes into bond security account

By Cristal Cody

Springdale, Ark., March 24 - Atlanta is confident that the Georgia Supreme Court will uphold a ruling that would continue to distribute school tax funds to the city's tax allocation districts.

Atlanta tax commissioner Arthur E. Ferdinand filed an appeal on March 6 to the state supreme court to determine whether the office should pay the taxes to the school district's special funds account.

The account serves as security for $397.01 million validated Atlanta tax allocation district bonds.

Ferdinand told the Atlanta Public Schools district after a state Supreme Court ruling on Feb. 11 that the use of school tax revenue for non-education purposes violates the state constitution. Because of the ruling, his office no longer would turn over or pay any portion of the school district's tax funds to any tax allocation district.

The Georgia Supreme Court had ruled in Woodham vs. City of Atlanta that the portion of tax allocation increments computed based on educational ad valorem taxes may only be used for school purposes.

The city said the ruling does not affect the tax allocation bonds that have been previously sold and are outstanding. Those include $14.955 million series 2001 Westside project bonds; $82.565 million series 2005A and 2005B Westside project bonds; $47.48 million series 2005A and 2005B Eastside project bonds; $166.515 million series 2006 Atlantic Station bonds; and $85.495 million series 2007 Atlantic Station bonds.

The city then filed for a restraining order and a preliminary injunction with the Fulton County Superior Court in Georgia to prevent the commissioner from diverting the school tax increments.

Fulton County Superior Court judge Craig Schwall ruled in favor of the city on Feb. 27.

The appeal to the state Supreme Court is pending.

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