(UPDATED) Report claims LaVista Hills isn’t financially feasible

Posted by Dan Whisenhunt September 14, 2015
A map of the proposed city of LaVista Hills

A map of the proposed city of LaVista Hills

This story has been updated. 

The Atlanta Journal Constitution has published a report suggesting flaws in a study that concluded the proposed new city of LaVista Hills would take in enough tax money to provide services.

This suggestion isn’t new. Questions about the study began circulating in May, but were dismissed by LaVista Hills supporters.

However, LaVista Hills appears to have put out its own contradictory data regarding a potential tax surplus.

The AJC concluded that instead of a $1.7 million surplus claimed in one feasibility study, LaVista Hills will actually run a deficit of $114,000. The article cites Russell Carleton, who the AJC identifies as a researcher who lives in the LaVista Hills area.

To see a spreadsheet detailing the AJC’s analysis, click here.

Carleton posted his analysis on the DeKalb Strong Facebook page. DeKalb Strong is a group working to oppose cityhood, though membership in the group doesn’t imply support for the group. (Decaturish follows the group as well, and also follows the Facebook pages for the proposed cities of Tucker and LaVista Hills.)

The AJC story also concluded that the analysis for Tucker, another proposed city in DeKalb, remains valid because it was based on a lower tax rate than LaVista Hills.

According to the AJC story, the enabling legislation that put the proposed city on the Nov. 3 ballot uses a lower tax rate than the one used to develop the financial feasibility study. The feasibility study was conducted by the Carl Vinson Institute of Government.

The CVI study assumes a millage rate of 7.64 mills for LaVista Hills. But the LaVista Hills enabling legislation caps the millage at 5 mills.

Carleton is also a Decaturish reader and emailed similar observations about the LaVista Hills budget back in May.

“They forgot to tell CVI about their property tax cap, and their revenue estimates are based on a millage of (7.64), when by their own charter, the maximum that they can charge is 5.00,” Carleton wrote to Decaturish in May. “Even if you assume that they set the initial millage at 5.00, their revenue estimate falls by $4 million, turning their $1.7 million surplus into a $2.3 million deficit.”

His conclusions, which were originally posted on DeKalb Strong’s website, alarmed Allen Venet, president of LaVista Hills Yes, who quickly emailed CVI seeking clarification.

“Please see the posting below from the website of the chief anti-city group, so called DeKalb Strong,” Venet wrote to CVI in May. “Are these criticisms valid?  Do they risk our status as being feasible?  Can we talk sometime this afternoon?”

When Decaturish contacted LaVista Hills supporters in May about Carleton’s conclusions, Venet forwarded a response from Ted Baggett, an associate director with CVI. In a nutshell, Baggett said Carleton is comparing two different things.

“A county millage rate is not equivalent to a city millage rate in this context,” Baggett said. “A city millage rate does not come with the HOST county property tax rollback or the applicable county homestead exemptions. Thus a lower city millage rate will generate more revenue than DeKalb County’s millage rate. It compares apples to oranges.”

Decaturish forwarded that response to Carleton.

“Fair enough,” Carleton replied in a May 15 email. “A little shocking that he had to go back for clarification, but such as it is.”

And that’s where the conversation ended, until the AJC published its article on Sept. 14.

Decaturish has reached out to Carleton, and will update this story when he responds.

The questions surrounding LaVista Hills’ financial viability are echoes of the confusing process that led to the approval of the cityhood bill. The LaVista Hills cityhood movement combined the former Briarcliff and Lakeside movements. Both had completed independent feasibility studies before the two groups merged. A new study was not required for the LaVista Hills bill to move forward in the legislature. LaVista Hills released its updated feasibility study in May, after bills for Tucker and LaVista Hills were approved by the General Assembly.

After the session ended, the LaVista Hills movement split into two camps: the LaVista Hills Alliance and LaVista Hills Yes.

Both groups published feasibility studies on their websites showing two different surpluses.

LaVista Hills Yes posted the study with the most-cited surplus of $1.7 million. But the LaVista Hills Alliance posted a study that shows a projected surplus of $2.4 million.

LaVista Hills Alliance appears to have updated its website on Monday evening to link to the study projecting the $1.7 million surplus. To see the cached version of the website linking to the study projecting the $2.4 million surplus, click here.

Venet said the questions raised by Carleton’s analysis and the AJC story are not new and they’ve been answered. He couldn’t address the discrepancies between the different studies posted on the LaVista Hills Yes and LaVista Hills Alliance websites.

“I do not think that there is anything new in Carleton’s charges,” Venet said. “I believed that he raised these very issues before. We went back to CVI, and CVI assured us that his analysis was wrong and that they stick by their conclusion that LaVista Hills is economically viable. I don’t know if there is an error on one of the websites, but I can assure you that there is only one CVI study.”

Here are the two studies, for comparison:

LaVista Hills Alliance CVI LaVista Hills Yes CVI

Both CVI studies show a sharp drop from what LaVista Hills supporters were projecting back in January. During a meeting at Young Israel, the cityhood group told voters the projected surplus would be $6.8 million.

Here Carleton’s his most recent analysis, which he posted to the DeKalb Strong Facebook page on Monday afternoon …

Motor vehicle taxes

CVI revenue estimate: $412,498 (again, assumes a rate of 7.64)
Revenue at 5.00: $269,959
Difference: $142,539

Intangible Taxes
CVI estimate: $181,442
Taxed at 5.00: $118,745
Difference: $62,697

Personal Property Taxes
CVI estimate: $1,151,027
Taxed at 5.00: $753,290
Difference: $397,737

For real property taxes, CVI doesn’t break out the income for residential vs. commercial/industrial, but they do give a breakdown of the assessed value, and they list the estimated revenue from all real property taxes at $11,690,718

Again, from above:
Assessed value of commercial and industrial properties: $693,277,003
Taxed at 7.64: $5,296,636
Taxed at 5.00: $3,466,385

For residential properties, the total assessed value is given as $1,921,091,263 and there are 19,775 residential parcels in the city’s footprint (source: http://www.decaturish.com/…/ProposedLavistaHillsBoundar…)

Other calculations showed that 90 percent of houses were eligible for a homestead exemption (I can show you that one if you want).

90 percent of the digest is worth $1,728,982,137. Subtract out the one mill exemption ($345,796,427) and the 17,797 (and a half!) flat $10k homestead exemptions ($177,975,000) and a total of $523,771,427 is exempt from taxation. Taxed at a rate of 5.00, it produces $6,026,054 in revenue.

The remaining 10 percent of the residential digest does not qualify for an exemption and is worth $192,109,126. Taxed at 5.00, it raises $960,546.

CVI estimates:
Motor vehicle: $412,498
Intangible: $181,442
Personal property: $1,151,027
Real property: $11,690,718

Sum: $13,435,685

Revenue if taxed at 5.00
Motor vehicle: $269,959
Intangible: $118,745
Personal: $753,290
Commercial: $3,466,385
Residential (homestead eligible): $6,026,054
Residential (non-homestead): $960,546

Sum: $11,594,978

Difference between CVI estimates and 5.00 adjustment: $1,840,707. Difference from the reported surplus ($1,726,682): $114,025

The early version of the AJC story lists the projected deficit at $197k. I’ve notified Mr. Niesse about the error.


About Dan Whisenhunt

Dan Whisenhunt is editor and publisher of Decaturish.com. https://www.linkedin.com/in/danwhisenhunt

View all posts by Dan Whisenhunt

  • factivist

    Thank you, Dan, for doing some digging and straightening out some misconceptions — and for having previous information on this very same accusation by Mr. Carleton months ago. I wonder why he does not use the 2015 assessments instead of the 2014 values, if we are indeed talking about the 2016 valuations that will be used for the city? The 2015 valuations seem to be a good 20% higher than 2014, so he’s not even using current data for his analysis. It’s pretty obvious that ego took control, in his continuing quest to promote fear, uncertainty and doubt among voters. None of us should do that to each other.

    • Russell Carleton

      Cityhood advocates have consistently used this report as evidence that their proposal is feasible. However, it contains a serious error, one which materially changes the conclusion of the report.

      If they would like to commission a study which uses the 2015 data, I would gladly read it and judge it of its own merits.

      • RAJ

        Let’s all keep in mind that the CVI study is only good(or not) on the first day the city opens for business. After the first day the six district City Council members will be making the best financial decisions relying on the best advice they can hire. I doubt that most of the people you see involved in LVH now will be around for long. Cast your vote wisely.

      • notapunk

        Didn’t the Brookhaven CVI contain a similar flaw? Did it make Brookhaven insolvent? The 2015 tax digest has been out for months. I had to link to it for you. It costs $130 to have a GIS map made breaking out the LaVista Hills footprint’s share of the digest. But it’s easier to use someone else’s homework, isn’t it?

    • simple

      2015 expenses would have been higher as well and the results would have been consistent – the issue is not the method, but that the cap was left out of study

      • notapunk

        Not unless expenses increased 15% to 20% in one year. That’s about how much property values are up in DeKalb this year.

  • Amy Velez

    Why wouldn’t CVI have had the property tax cap info? It’s been online since March, on the Georgia Legislature’s web site. Very easily accessible. They didn’t need the LVH people to “tell them about it.” Wasn’t the study update done after the bill passed?

  • DecaturMax

    A typical Lavista Hills tax assessment went up about 15% this year. This is not reduced by a a millage rate cap. After adding about a 15% higher property tax digest, does anyone out there really think Lavista Hills will not be solvent? Please tell me how.

    So if the city is “solvent” based on 2015 numbers that include a higher tax digest (with lots of money to spare), why print an “opinion” with cherry picked numbers insinuating it is not solvent based on 2014 numbers. The raise in the tax digest made this a moot point. If this was real journalism or a study with any interest in the true financial health of a new city next year, why not use the 2015 tax digest figures since they are available. While I do not believe there would have been a budget deficit if we “pretend” Lavista Hills existed last year, this GHASTLY scenario suggested a whopping $2 per citizen deficit. Wow…the worst the fear mongers could do is $2 per citizen.

  • Tom B. Doolittle

    Interesting point about using 2015 tax valuations. One can see an opportunity for city pols to lobby county assessors anytime cities need more revenue.

    Note: working in secret in tandem to manipulate valuations hasn’t been done with “old” cities because they weren’t formed on “no new taxes” pledges, nor so dramatically dependent on commercial tax revenue that isn’t available.

    The new cities (governments, not property owners) are already benefiting from this as the subjectivity of assessing property values has resulted in unrealistic massively higher valuations within new cities.

    Collusion of this sort between cities and counties will not end there as the new cities turn their current supposed hatred for county government into a love affair with county economic development and revenue programs.

    Cynicism has no bounds (I admit to my own in this comment) and citizens unfortunately don’t know how government and lobbying really works–they are too busy putting food on the table.

    • notapunk

      Sorry to crush your valuations collusion theory, but the new cities have assessment freezes to prevent that from happening.

      • Tom B. Doolittle


        I didn’t realize there is an “assessment” freeze on property in new cities. Thanks for the info. Does that include old cities as well?

        I admit, my collusion theory is just that–and indeed highly speculative. So regardless of whether cities will see doing bid’ness with county finance officials as an opportunity or not, I want to be clear about what you’re saying:

        This is how I interpret you:

        When the county appraisers raise the property valuations, which they have done in spades in Brookhaven and Dunwoody–you are saying that the cities haven’t received and won’t receive additional revenue in the future for the millage they currently charge. Is that what you mean–because its the increased revenue potential that’s at issue.

        Also–are you expecting any “assessment” freeze (some sort of zero base) to continue indefinitely?

        • notapunk

          It’s just in the new cities (and for Dekalb County). They last at the pleasure of the legislature. The county freeze is what Fran Millar was fighting to extend when he was trading for his support of the DeKalb reform legislation.

          Check your 2015 tax bill. It works the same as that assessment freeze. My bill shows a $799 reduction in county taxes this year due to the freeze.

    • RAJ

      Sorry Tom you are just guessing on this one. If you took the time to get out a little more I think you would discover that new cities have little or no influence on what Calvin does in the tax office.

  • Smarter Than You

    If all these wizards who intuitively know how prosperous Lavista Hills will be would have followed the process in place for new cities (the very same process that brought about every other new city) we wouldn’t be having this issue now. The fact that special exemptions were allowed, that the bill itself had to find its first sponsor from outside of the LVH footprint, the last minute boundary manipulations – all point to a careless disregard for the citizens who would be paying for this mess. Who is going to benefit from a new city anyway? Certainly not taxpayers, or seekers of transparent, honest governing.

    We supposed to be voting on Lavista Hills based on the 2014 feasibility study which quantified its viability. But now we’re being told to give the process one more kick between the legs and ignore the fact that there was a serious miscalculation in the study… because we all know intrinsically that the city will be able to pay for all its promises and politicians. I call BS.

  • Don Young

    So if $114,000 deficit equates to not being feasible, should we be at all concerned that Dekalb County has increased it’s budget by 386 MILLION (29% increase) for the year!

    A link to Dekalb’s new budget plan: https://dekalbcountyga.opengov.com/transparency#

    • Marjorie Snook

      That’s because revenues have gone up. A lot of the increase is going into reserve, not being added to expenditures.

      • RAJ

        Snookie was probably not a math major….expenditures have to go up if revenues go up?? And why did the County have to “borrow” 4M from the park bond money to fill potholes if revenue is going into reserves. I go to most all the County budget meetings and don’t see you in attendance.

      • notapunk

        If it was a city, you’d be complaining they didn’t hit the rollback rate. And millions ARE being added to expenditures. Not only did DeKalb reduce the tax rate attributed to the police budget, it has enough money left over to increase the police budget.

  • Cities Are Bad

    This is what I am talking about. Cities are bad. Lavista hills would not be able to have as many jobs as DeKalb county has now. This is a bad move and the study done by the doctor Russell just shows this. This man went to school for a long time to learn how to do these things with numbers. Upsetting the apple cart at the lowly UGA. It is a sad day for Georgia graduates.

    Deklab strong wants to keep you safe from these bad cities. Keep you safe from higher tax bills and higher population of refugees. Cities allow these things to happen. They also cut the number of jobs that are needed to maintain the county. If you want to continue keeping things in your carport or parking in the grass? for get about it. Want to maintain civility in your neighborhood without having a 5000 square foot house being built right next door? Don’t think about it. They need the money to support pet projects like parks and making sure there roads in front of the coucils houses are paved. We don’t need this crap to happen to us. Vote no against the bad cities and keep DeKalb strong the way it is.

  • Trey Bliss

    I have several issues with the CVI, just as important as the property tax millage rate is that the numbers in study were not inflation adjusted. You can talk about property values going up in 2015 for Russell’s analysis but so have costs since the 2012-2013 period and when compounding a 2% inflation rate on millions of dollars, those numbers add up quickly for expenses.

    If you think property values are going to continue to increase at a double digit clip in our district or will even go up more because we form a city, you haven’t been following the markets recently and what Chairwomen Yellen and the Fed is about to embark upon. This will be the first tightening by the Federal Reserve in almost ten years, it might not start Thursday but it is coming. Higher interest rates are not good for housing, so anybody that expects a multi-year boom in prices should reassess their outlook for the market and the most importantly the tax base of the proposed city. At best we get a flood of buyers into the market before mortgage rates hit 4% and fence sitters make the decision to buy but that leaves no dry powder let to buy and sets the stage for a property value decline in 2016-2017.

    Whether you agree with Russell or not, the city will start with a shoe string budget that will only get worse when the next recession hits. If you follow the business cycle you know that we are now 5+ years into this expansion and a recession is likely in late 2016-2017, it’s just cyclical business cycle math, most likely Fed induced just as the new city is trying to get its feet under itself.

    • RAJ

      Interesting….I have a degree in economics and you know what people say about economists. Inflation has been running well below 2% for years and has little to do with how the city will be operated financially. The underlying economics of the area in the LVH footprint is good but not great, How the services provided are managed will determine the financial success of the City and this largely is contingent on the people we elect to the six city council districts;so it really comes down to us.

    • notapunk

      Nobody expects double digit increases year-after-year. Many of us have owned our homes for 20, 30, 40 years and know better. And if you think mortgage rates of 4%, 5% or 6% will be that big a drag on housing in our area, well, you haven’t owned many homes in this area, or owned a home here during times of 10% or higher interest rates.
      None of that really matters in the world of tax appraisals. And it’s tax appraisals that determine how much money DeKalb County and the cities within collect. What killed DeKalb during the Great Recession wasn’t a loss of value in our area (there wasn’t much). It was the foreclosure crisis that hammered South DeKalb.

Receive the Daily Email DIgest

* = required field