COUNCILMAN GRIF CHALFANT'S blue-ribbon committee looking into the wisdom of lame duck Mayor Bill Dunaway's secretive attempt to add $4 million in bond debt to the Marietta Conference Center this week recommended the council hire independent legal and financial advisors to explore other options. That's a good idea because the convoluted scheme hatched by city bond advisor/underwriter Gordon Mortin doesn't exactly square with the "KISS theory" - i.e., "Keep It Simple, Stupid." In fact, the group points out that the bonds proposed by Mortin would require "a fairly complex structure involving the use of the city Board of Lights and Waterworks."

Reading between the lines, the report said Dunaway, powerful Councilman Philip Goldstein, City Manager Bill Bruton and city finance director Sam Lady goofed up by hiding from the full council since last November the fact that the city had secretly bought up $30 million in variable-rate taxable bonds. The committee noted Bruton and Lady had the authority to buy the bonds without a council vote, but added the obvious: "It would have been prudent to obtain formal council buy-in for the bond buy-back, given the sensitivities around the conference center." In other words, honesty and candor are always preferable to secrecy when dealing with the public.

In another subtle dig at Mortin, Bruton and Lady, the report said, "The refinancing package presented to City Council is not user friendly" unless one is an "expert" on such things. It said documents offered the council in support of new bonds at the 11th hour were "at best sketchy and at worst inadequate." In short, it vindicated Chalfant and the three other council members who voted Sept. 9 to successfully block Dunaway and Goldstein from stealthily ramrodding the complex scheme to passage.

And while conceding Bruton and Lady had the authority to buy up the bonds without council approval, the report indicated that it was far from the pure vanilla transaction city hall had represented it as. It was so "non-vanilla," in fact, that they secretly got the OK in advance from Dunaway and Goldstein and then got two opinions for $17,000 from lawyer Earle Taylor, Mortin's partner in the deal, that the buy was legal. Never mind that 11 months after the pricey legal opinions were delivered, nobody at city hall had bothered to read them. We suppose that's all in a routine day's work at city hall.

The committee acknowledged Lady had used "unrestricted cash" that was invested in CDs to buy up the bonds that it said in the long term could be risky due to the possibility of rising interest rates. It also said if city didn't refinance the secretly purchased bonds, it faced a significant write-down, or loss in value, as well as a downgrade in the city's bond rating in several years due to an accounting rule. In other words, city hall backed the council into a corner with a risky, perhaps even toxic, investment. No wonder city hall was eager to cover up the purchase and hurry the issuance of new bonds.

The committee side-stepped the question of whether the bond underwriter who also serves as bond advisor has a conflict of interest, but recommended an independent advisor to avoid the "appearance of a potential conflict." An independent advisor might also come up with a plan different than Mortin's novel scheme, the committee said. In other words, there might be more than one way to skin a cat.

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THE COMMITTEE also wisely said an independent bond lawyer should be asked about the legality of dragging the city's wholly owned subsidiary the BLW into Mortin's novel bond refinancing scheme, which it euphemistically described as "creative." "Cooked up" might have been a better way to describe it.

Remember, many BLW customers live outside the city limits. We doubt rate-payers want to be on the hook for a city project should the bonds go sour.

Moreover, it now has come to light that most of the $33.4 million in new revenue bonds could be used for BLW construction projects - but only those inside the city limits. The list obtained by the MDJ, if it is approved by the council, shows those capital projects include new cable, street lighting, water-line replacement and new trucks, etc. But the list makes no effort to segregate the projects in the city from those outside it. Is it fair to ratepayers outside the city to upgrade only within the city? Are the new BLW trucks bought with the bond proceeds to be prohibited from driving outside the city? Is the BLW's electricity and water using those new cables and pipes going to know to stop at the city line?

Is the BLW really planning to discriminate against its non-Marietta customers? It looks like it, even though they already help subsidize the city's general fund budget to the tune of roughly $10.5 million per year, which helps keep city property taxes substantially lower than they would otherwise be. And it looks like it would be an administrative nightmare.

In sum, the committee issued a pretty stern warning to stop, look and listen and not be stampeded by Dunaway, Goldstein and city hall.

"This complex scenario (the BLW entanglement) has unknown, but potentially high risk, that is beyond the scope and talents of this committee," it wrote. If so, you can bet it is miles over the head of city hall bureaucrats and councilmen.

Even without an independent legal overview, the committee also noted the bonds could be attacked in court by any private citizen at a validation hearing.

Marietta also needs a citizen advisory committee in the future to oversee conference center issues, the committee said. Remember, Marietta will owe more than $33 million on a hotel that has struggled since opening in 1996, that is probably not worth more than $15 million and is leased to a dummy corporation that could walk at any time, leaving Marietta taxpayers holding the bag. The committee knows many Mariettans, including some council members, want Marietta out of the hotel business as soon as the real estate market rebounds. You'll never see it mentioned on the city's Web site, but if the bond deal goes through, every man, woman and child in the city will owe $550 on what some see as a white elephant. Ouch!

Many Mariettans are not overjoyed either that the city will owe more than $33 million on the hotel without a taxpayer vote. Bond lawyers, aided and abetted by easily swayed city council members, have saddled Marietta since 1996 with the debt via a very questionable "intergovernmental agreement" that bypasses the voters, who are on the hook for the bonds. Slick. Slick. Slick.

The irony is that while the council was trying to "backdoor" its questionable $33 million bond scheme past voters, it decided it was important to let voters decide on a $25 million parks bond next month. But then, who ever expected consistency from this city hall?

Regardless of what our lame-duck council does, the secret bond refi scheme has backfired and given Dunaway, Goldstein and city hall a self-imposed black eye. It's a PR disaster that has probably dashed all chances of passage for the $25 million parks bond.

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CHALFANT'S GROUP is to be commended. It was public service at its best. The council's Finance/Investment Committee of the Whole put the knowledge uncovered by the group to good use on Wednesday, voting 3-2-1 to obtain second opinions from outside legal and financial experts who don't stand to gain if the council goes forward with the proposal. Unfortunately, Dunaway, Goldstein and Councilwoman Annette Lewis chose to reject the committee's recommendations.

That's too bad. If there's anything City Hall needs, it's more transparency and "good governance." It's a shame the mayor and its most powerful councilman still can't understand that.