Environment
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By David Pendered
Nov. 27 – The Buckhead cityhood movement is challenged by a poison pill provision Atlanta included in a $409 million bond offerings that closed Nov. 3.
Terms of the bonds state that if Buckhead leaves the city, its property taxpayers would have less than two years to pay off Buckhead’s projected share of the $409 million in bonds, interest and other costs. The rest of Atlanta would have until at least 2042 to retire the remaining debt.
This is the second poison pill provision Atlanta has inserted into a bond package. Atlanta applied similar provisions in a $188 million bond package sold in December 2021.
As a consequence of these two measures, taxpayers in a newly established Buckhead city would be faced with a demand for fairly swift payment of Buckhead’s estimated portion of $588 million in debt.
The money would be due by the date of the first interest payment that’s due 12 months after the official deannexation of Buckhead, as enabled by the Legislature and approved by referendum, according to the bond’s official statement. A second provision relates to the enactment of a special tax district.
The amount of each property tax bill in Buckhead would be calculated with a formula that’s to include a property value that’s to be set by an “valuation expert” chosen by Atlanta. In addition, the amount of the bond to be repaid by Buckhead is to be 103 percent of principal sum, plus an unamortized premium and any accrued and unpaid interest to the date agreed upon the redemption date.
The public fervor over a Buckhead city may have waned in the past year. However, the posture of the movement at the state Capitol may also have changed.
The leading opponent of a bill allowing for Buckhead cityhood did not seek reelection, Lt. Geoff Duncan. House Speaker David Ralston, who had cited Duncan’s opposition as reason for the House to waylay House Bill 854, stepped down as House speaker and has since died. A new bill would have to be introduced in 2023 to renew the debate.
Lawmakers have not publicly discussed their appetite for a Buckhead cityhood effort in the legislative session that begins Jan. 9, 2023. The only pre-filed bill in either chamber is House Bill 1, which relates to Georgia’s abortion law.
This bond package is comprised of three issuances of debt backed by the city’s full faith and credit, essentially its property tax collections.
The first two bonds are for debt Atlanta voters approved on May 24 in order to pay for various construction projects and equipment – $369,380,000 and $36,620,000. The money is to fund city buildings, recreation and public safety facilities, and arts projects. The third bond is a routine annual borrowing of $3.7 million to finance an array of small projects.
The bond sale benefited from the relative scarcity of municipal bonds and the ensuing healthy investor appetite for city-backed debt. Atlanta reported more than $1.2 billion in total orders “among a diverse investor base of institutional buyers.” The all-in true interest cost was reported at 4.246%, according to a report by Atlanta.
The poison pill does not target only Buckhead. The language refers to any area that is deannexed from Atlanta by the Legislature and voted on positively in a referendum.
The language used to describe the procedure is “extraordinary optional redemption.” The ordinance approved by the Atlanta City Council and included in the official statement of the bond package provides this specific language on Atlanta’s ability to call on a deannexed area to make early payment on the applicable bonds. The first two provisions observe:
“Extraordinary Optional Redemption.
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