MARIETTA - The front runner in the Nov. 3 race for Marietta mayor, Steve Tumlin, is asking the City Council to postpone a Wednesday vote and seek an opinion from the Georgia Attorney General on a financial proposal that would restructure the debt on the city's hotel and conference center by millions.

The council is being advised to approve a deal that would pay off and cancel the $30 million left in bond debt it owes on its hotel and conference center by using funding set aside for the city's Board of Lights and Water construction projects.

Five of the seven council members have told the Journal they plan to approve the deal on Wednesday.

Under the proposal, the city would ask the Downtown Marietta Development Authority to issue up to $35.5 million in new bonds to use for funding those BLW projects.

The city would then use the lease payments it receives from the management company that runs the city's hotel and conference center, Dallas-based Remington, to eventually pay off the new bonds.

The 200-room Marietta Conference Center and Resort on Powder Springs Street opened in 1996 with an original bond debt of about $26 million. The facility is technically owned by the Downtown Marietta Development Authority, which issued the bonds and leases it to the city. In 2004, after struggling with myriad problems - including paying $4.3 million in '03 to buy out the contract and cover the losses of embattled former operator Sentry Hospitality - the city leased the facility to Remington.

In December 2007, the City Council approved a new lease with Remington spanning to 2028. The bond debt - which also included a $7 million renovation to secure the affiliation with Hilton - rose to $36.1 million but is now down to $29.4 million, according to Gordon Mortin of Morgan Keegan, the city's bond advisor.

The problem with that 2007 lease is that while the lease payments Remington makes to the city are fixed, the payments the city makes to pay off the bond are not, so when the interest rates on the bond payments spiked in November, the Remington payments fell short by about $300,000 annually. To avoid dipping into its general fund to make up the difference, the city took the bonds off the market, waiting for interest rates to drop. But since that hasn't happened, the city's bond advisor on Thursday advised the council to approve this latest proposal.

Mortin said most of what would raise the city's debt from the existing $30 million to $35.5 million is an estimated $4 million prepayment penalty the city would incur.

In a Saturday letter to the Journal, Tumlin said he understands that the city wants to decrease its payments on the bonds used to finance the conference center.

"But the proposal to extend and increase, once again, the city's long-term indebtedness in whatever form for the Conference Center facility would be a penny wise but pound foolish decision," he said.

Tumlin, a tax attorney with the Marietta firm of Smith, Eubanks, Smith and Tumlin, used the example of a Marietta homeowner being asked in limited time to pay a $40,000 up front penalty with a $3,500 broker's fee in order to save $250 a month on his mortgage payment on a $295,000 principal and less than 20 years remaining on the mortgage. With the penalty and costs in this example, it would take over 13 years until the break even point of paying the penalty was reached, he said.

"But multiply the above offer times 100 and that's what our City Council is being asked to approve. A $4 million fee to save $25,000 a month in Conference Center bond payments," Tumlin said.

While the underlying points of Mortin's latest bond proposal were too complicated to explain in one letter, Tumlin said one fact is "unmistakably clear: the taxpayers are being left out of the process."

When the city uses the DMDA to issue bonds just as it did in 1996 the taxpayer is left out of the process, he said.

"It's a legal process, but it denies the citizens their right to vote on the matter, and that's just simply not right. Given the financial woes associated with that 1996 non taxpayer approved bond, it would have been prudent to learn from our past and go back to the taxpayer for approval. However, the same scenario is back and 'here we go again,'" Tumlin said.

Mortin, as the city's bond advisor, is not only recommending the proposal, he stands to receive a fee of about $350,000 along with Atlanta bond lawyer Earle Taylor if the deal is approved.

At one time the council had a policy of engaging a bond consultant who was not permitted to underwrite or participate in the issuance of the bond, Tumlin said.

"This allowed for complete independence and an unbiased second opinion. Further, if not independent consultation, then as other governments have done on procedural matters, out of an abundance of caution seek an advisory opinion from the Attorney General's office for the protection of our City, DMDA, BLW and its citizens, some yet unborn," he said.

The city, he said, should slow down and listen to all the options from both an independent bond expert "with no skin in the game" and from its citizens.

Mortin, for his part, says the proposal is the only option he can think of.

Yet Tumlin said, "There are major dollars and considerations at risk and it would be prudent for the Council to seek more time and written presentations or analysis and 'pro formas.' And that's when the best long term decision can be made to solve a short term problem."