Mayor Reed’s legacy list grows as Wall Street approves city’s course

By David Pendered

Following voter approval of Tuesday’s $250 million bond referendum, Atlanta Mayor Kasim Reed can add the improvement of Atlanta’s roads, bridges, sidewalks, and public facilities to his lengthening legacy list.

Mayor Kasm Reed on opening day of the Eastside Trail

Mayor Kasm Reed can add to his legacy citywide improvements to roads, bridges and sidewalks following voter approval of a $250 million bond referendum. Here, Reed rides along the BeltLine’s Eastside Trail on its opening day. Credit: beltline.org

As Reed begins his sixth year as mayor, legacies of his tenure include:

  • Reform of the city’s pension system;
  • Extension of a 1 percent sales tax to continue repairs of the city’s water and sewer system;
  • Economic expansion fueled by Invest Atlanta, the city’s development arm, which he chairs;
  • Filmmaker Tyler Perry’s planned redevelopment of Fort McPherson into a film studio;
  • The city’s financial support of the new Falcons stadium – a $200 million bond package backed by a funding source approved by a ruling issued Monday by the Georgia Supreme Court.

Reed’s administration has won support from another important partner – Wall Street investors, and the rating agencies that influence their investment decisions.

The investment community’s positive outlook on Atlanta’s fiscal and financial future enables Atlanta to borrow, at favorable rates, the money that’s paying for public projects.

Atlanta CFO Anthony “Jim” Beard expects the interest rate on the bonds to be in the range of a favorable 5.4 percent. Annual debt payments are forecast at about $16.5 million a year and are to begin Jan. 1, 2016. The bonds are to be retired in 30 years.

Atlanta CFO Anthony "Jim" Beard

Atlanta CFO Anthony “Jim” Beard

The cost of issuance is forecast at $3 million to $5 million. Atlanta has not selected the team of underwriters and attorneys to handle the bond transactions, according to a city statement.

Reed’s administration has been working more than a year to position the city to make debt payments on the infrastructure bond without raising property taxes. Central to this plan are the recommendations of the mayor’s Blue Ribbon Committee on Waste and Efficiency in Government. The committee was co-chaired by Atlanta Councilmember Howard Shook and Delta CEO Richard Anderson.

Reed has enacted a number of the committee’s recommendations. For example, Reed’s administration found a buyer for Underground Atlanta. By selling the attraction, Atlanta will cut about $3 million in Atlanta annual expenses to maintain the facility. This sum is in addition to the elimination of about $15.5 million in outstanding debt the city still owes on Underground.

Underground is just one of properties the committee recommended Atlanta dispose of as surplus property. The sale of all such surplus property was expected to reap from $25 million to $60 million in one-time revenues. In addition, the sale of surplus property was projected to trim from $1 million to $8 million in recurring expenses, according to the committee’s report.

Reed has maintained that these savings, combined with other measures, will enable Atlanta to pay off the $250 million infrastructure bond without a property tax hike.

rp_Underground-Atlanta-300x210.jpg

Mayor Kasim Reed’s decision to designate non-performing city assets as surplus property and dispose of them is to enable Atlanta to make debt payments on the $250 million infrastructure bond without raising property taxes. Underground Atlanta was designated surplus and is being sold.

Moody’s Investors Service issued a rating action Oct. 10 in which it revised upward Atlanta’s credit rating for general obligation bonds.

GO bonds are backed by property taxes and are the financing instrument voters approved Tuesday.

Moody’s raised its outlook on Atlanta to positive from stable for a $60 million package. Atlanta sold bonds to refinance existing debt at a lower cost.

Moody’s report recognized the city’s challenges related to the loss of property taxes during the great recession. Those challenges were not enough to dampen Moody’s overall outlook of Atlanta.

Moody’s explained its rationale in awarding a rating of Aa2, which is the third-highest ranking by the credit-rating agency:

  • “The Aa2 general obligation rating reflects the city’s improved reserve and cash position, the diversity and scope of the city’s mature economic base that remains at the center of a nationally-important trade and transportation hub, and further incorporates the city’s manageable debt and pension burdens.
  • “The positive outlook reflects our expectation that the city’s reserves will stabilize at currently sound levels following a period of tax base declines and rapid financial improvement. The outlook also incorporates our expectation of healthy levels of future growth in the city’s tax base, which saw significant declines and high foreclosure rates throughout the recession, but is showing signs of rebounding.”

 

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

9 replies
  1. Guest says:

    You need to add the failure of T-SPLOST to the Reed legacy.  It failed regionally because of Reed.  Then you could add the airport contracting shenanigans.Report

    Reply
  2. atlman says:

    @Guest 
    You keep talking about “airport contracting shenanigans” but you never list what they are. And your claim that Reed would be indicted “any day now” by the U.S. attorney over this issue turned out to be totally false, and the U.S. attorney incidentally received a promotion in the justice department.
    T-SPLOST failed regionally because of Reed? Please. If so, it was only because of segregationists like yourself. But here is the hilarious part: Atlanta benefited from the failure of T-SPLOST, because the resulting pressure from the business community (and the national media after the snowstorms) was MARTA expansion into Clayton County, the lifting of the 50/50 funding split, and either heavy rail, light rail or BRT up Georgia 400. So, the city received all the new infrastructure that it really needed – except funding for the Beltline, but the legislature has stated that Beltline funding is coming too because the business community wants it – without having to pay an extra penny in tax in addition to the MARTA tax. Basically, Atlanta benefited from the failure of T-SPLOST while the suburbanites who like yourself voted against it because of their segregationist tendencies were the only ones harmed.Report

    Reply
  3. Burroughston Broch says:

    @Guest atlman  Yes, atlman has long since revealed himself as an angry black man who blames whites for all the black man’s shortcomings, and as an ardent apologist for Hizzoner.Report

    Reply
  4. atlman says:

    Burroughston Broch atlman 
    Ha ha. You guys respond to this with the same old nonsense because you can’t back it up with facts. So that is why we get vague claims about “corruption” and being “an apologist” when your real issue is inability to cope with the reality of the end of segregation. But for the record, I have not revealed my race – and will not do so – and I have been accused by progressives such as scottnatlanta of being a white suburban Republican racist as often as you guys accuse me of being an angry black man. But as for being angry, why should I be? I live in the city after all. And being that I actually live in the city I know that Atlanta was a total mess and careening out of control before Reed was elected, thanks to the disastrous, corrupt and incompetent tenure of Bill Campbell and the empty suit do-nothing era of Shirley Franklin. Crime was out of control. Population growth was flat. The jobs picture was grim. MARTA was running annual deficits in the tens of millions of dollars. The school board was on the verge of losing its accreditation. The city’s bond rating and financial picture was terrible because of pensions and other issues. Many grand ideas and visions to help turn things around were either actually A) terrible ideas or B) never got off the ground due to a lack of follow through. And so forth. And keep in mind: this was BEFORE the great recession. 

    Since then – and in only five years – Reed has:
    A) engineered the turnover on the school board, saving SACS from hammering APS (though part of this was done while he was still in the legislature with the aid of Sonny Perdue)

    B) enacted public employee pension reforms, which caused the bond agencies to upgrade Atlanta’s credit rating
    C) hired a new chief of police and a bunch of new police officers, causing the crime rate to plummet, and in some areas of the city plummet dramatically
    D) engineered the hiring of a new MARTA chief, who has turned their deficits into surpluses and has transformed the MARTA talk from being an agency headed for privatization and dismantlement to one that the state GOP has allowed to expand into Clayton County and given its blessings for expansion up I-400 into North Fulton
    E) the city has had real population growth for the first time since the white flight era, with a lot of the new residents being (yes) white and Asian
    F) the city has finally began to address a massive infrastructure backlog that has plagued it since the Jackson/Young eras
    G) private investment – actual spending and future commitments – in the city are well over $1 billion, with much of it centered around the Beltline and streetcar routes meaning that parts of the city outside of north Atlanta and Buckhead are seeing new economic activity for the first time in decades, and most of it is housing that will accommodate still more new residents
    H) lots of employers bringing high paying jobs – many of them in the health care and tech sectors – are moving into the city, and in the case of Coca-Cola’s IT center and NCR, are moving from the suburbs downtown. Others, such as Porsche and Athena Health, are making their initial forays into the Atlanta area inside the city limits
    I) Reed has finally been able to rid the city of white elephant albatrosses that have been magnets for blight, drains on the city’s resources and not generating tax revenue for years or decades i.e. Fort McPherson and Underground Atlanta. And yes, I will go ahead and include the Turner Field area too, as Turner Field itself was the only positive about that part of the city, and now that it is going to be a second campus for Georgia State (along with condos for students, faculty and graduates of GSU) will do a lot more for that area of the city than the Braves were going to. 

    And keep in mind: Reed has only been in office 5 years. When he leaves office 3 years from now to go back to the private sector, the city will have lots more jobs and employers, a lot of new infrastructure, no pensions crisis hanging over its head, a school board agency and a transit agency that actually work, and less crime. And for pointing all of these things out, all of which are incontrovertibly true, I get called “an ardent apologist for Hizzoner” by people who could care less about this fellow’s accomplishments because their real problem is a guy like Reed getting to be mayor in the first place, and that the city’s population has the right to elect people like him in the first place. The funny part is that the naysayers like you two can’t come up with a single thing that you would rather the mayor have done instead except A) fire much of Atlanta’s city workforce – because a lot of them are black people that are making more money than you believe that black people should make and B) vague claims about how not enough is being done to address the infrastructure problems – and you make those claims without either identifying what those infrastructure problems are or how the city would come up with the money to pay for them. And incidentally, even had the mayor made the infrastructure backlog his number 1 priority, you folks would have simply claimed that he was ignoring “other needs” in order to get money for the table for himself and steer cash to his (black) cronies and supporters. In other words, Reed could be the next Rudy Giuliani (who despite being a loathsome human being was a fantastic mayor and before then was a very good U.S. attorney) and you guys would still bash and trash him solely because he is a black Democrat elected by a majority black city (which incidentally will not be majority black much longer thanks to the gentrification made possible by Reed’s SUCCESSFUL initiatives to reduce crime, improve infrastructure and attract employers, and the hilarious thing is that the black and progressive left hate Reed – calling him a lackey for the Chamber of Commerce and Governor Deal – as much as you segregationists do). 

    My only problem would be Reed’s successor not being as pro-business, anti-crime and bipartisan as Reed has been. The AJC has already kicked off their campaign to get gay rights activist Cathy Woolard – whose tenure as Fulton Commission chair was a total mess – elected mayor. As ill suited as Woolard is to lead this city (or anything but a gay rights protest march) and as a huge disaster as her reign would be, my guess is that you guys would see her getting elected as an improvement and be every bit the apologist for her as you claim that I am, all because of the color of her skin.Report

    Reply
  5. FreeBird says:

    Seems like either you’re confusing Cathy Woolard with Karen Handel or the Fulton County Commission with the Atlanta City Council. As a resident of the City of Atlanta, I’m more comfortable with the idea of a Mayor Woolard (or a Mayor Kaiser) over a Mayor Norwood. Would prefer Felicia Moore over either of them, though. I’d probably be ok with Caesar Mitchell as well, depending on how well he runs his campaign.Report

    Reply
  6. K3nn3th says:

    @atlman Burroughston Broch I think Mayor Reed has done some good things, but he this effusive praise goes too far. For one, Reed cannot be given credit for the Beltline. Read http://beltline.org/2011/12/02/history-of-atlanta-beltline-project-in-public-roads-magazine/.
    Secondly, to say that Reed’s predecessor, Franklin, did nothing about infrastructure also shows gross ignorance. Franklin took on the huge, not-so-sexy, $3 billion task of fixing the city’s outdated and overtaxed sewer system that was resulting in lawsuits and state/federal fines and potentially halting development.  
    Reed deserves blame for failing to negotiate an agreement with the Braves to stay in the city. That is a shame. 

    Politicians do some things right and some things not so right. Give credit and blame reasonably.Report

    Reply
  7. Burroughston Broch says:

    K3nn3th Burroughston Broch  Franklin took on the sewer upgrade only because she had no choice. She was unable to kick the can down the road as her predecessors had done.Report

    Reply

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