The court's 4-3 decision found that a Fulton County judge prematurely dismissed a 2009 lawsuit filed by the Fulton County Taxpayers Foundation before reviewing all the facts. Presiding Justice George Carley wrote in the opinion that the complaint was dismissed without first establishing whether it was "arbitrary and unreasonable."
The foundation's lawsuit contends that taxpayers were forced to subsidize The St. Regis Buckhead, the Mandarin Oriental Hotel Midtown and four other luxury properties because the county was using a complicated, yet flawed, tax scheme.
It centers on a formula the Fulton County Board of Assessors used to determine the fair market value of the properties. The board agreed to value the property at 50 percent of its fair market value and then to gradually increase it by 5 percent a year over the life of the lease, the lawsuit said.
The scheme essentially requires taxpayers to subsidize the projects and asks the court to scrap the formula and then reassess the projects for prior years — a decision that could mean millions of dollars in back-taxes, said John Sherman, the foundation's president.
He said Fulton County officials took advantage of a state law designed to provide incentives for new industries in economically depressed areas to bring luxury projects into the heart of Atlanta.
"It's been misused. They were unjustified in doing this," said Sherman, who celebrated the ruling. "It's a victory for us and it's a victory for the taxpayers. Justice is prevailing and the taxpayers are benefiting instead of the few selected private developers."
Fulton County attorneys did not immediately respond to several requests to comment.
The court's ruling noted that state law requires valuations to be "just and fair between all taxpayers of the county" and that any use of the statute to value a property at less than its fair market value could make it illegal. Justices Harris Hines, Harold Melton and David Nahmias also joined the decision.
Justice Robert Benham wrote in a dissent that the judge was right to dismiss the petition because Sherman waited too long to bring the lawsuit. The dissent was joined by Chief Justice Carol Hunstein and Justice Hugh Thompson.