By Maria Saporta
Friday, March 23, 2012
The next big challenge for Atlanta Mayor Kasim Reed will be to tackle the estimated $922 million backlog in the city’s infrastructure — namely roads, bridges and sidewalks.
The mayor is looking at several financial options to pay for that backlog, including going to voters with a bond package that would be a minimum of $250 million and could be as much as $750 million.
In a private meeting with the city’s top business leaders on March 19, Reed made the case for making such an unprecedented investment in the city’s infrastructure.
The last time the city went to voters with such a proposal was in the 1990s during the administration of former Atlanta Mayor Bill Campbell, when a $150 million quality-of-life bond package passed.
Jim Hannan, CEO of Georgia-Pacific Corp. who also is chairing the mayor’s blue-ribbon group — the Atlanta Committee for Progress, said the business community is behind the city’s desire to address its aging infrastructure.
“There’s been consistent support for what’s going to make a difference long term in the quality of life in the city,” Hannan said.
Richard Anderson, CEO of Delta Air Lines Inc., is chairing the mayor’s infrastructure initiative.
“What the mayor is doing is exactly the right thing,” Anderson said. “We have to invest in the city’s infrastructure. It’s important for the whole state.”
Anderson said “presentability” of Georgia’s capital city is key “if you want to be a leading city in the world” and if you want to attract new economic development to the state.
“The roads, bridges, parks, sidewalks, streetlights — they all need to be well-maintained,” Anderson said. “The mayor has got it right.”
Reed said the infrastructure investment is part of the city’s methodical approach in handling its top agenda items.
First, the city is completing work on the new Maynard H. Jackson International Terminal at Hartsfield-Jackson Atlanta International Airport.
Second, earlier this month, Atlanta voters overwhelmingly passed (by 86 percent) a renewal of a one-cent sales tax for the city’s water and sewer infrastructure.
Third, over the last two mayoral administrations, the city has been working on getting its financial house in order — reducing its overall budget, passing a property tax increase in the summer of 2009, reforming its employee pension plans, building up its reserves and now working to reform its employee health-care packages.
Those efforts appear to be paying off.
The top three rating agencies — Standard & Poor’s, Moody’s and Fitch — were in Atlanta earlier this month to look over the city’s finances.
“We think our story is pretty favorable,” Reed said of the visit. “In the last 24 months, we have shown a clear willingness to do a number of things that are hard.”
The mayor added that Hartsfield-Jackson, which is owned and operated by the city, was one of only two airports in the nation last year to get an upgrade in its ratings.
Duriya Farooqui, the city of Atlanta’s chief operating officer, said the city is working toward having at least 20 percent of its budget in reserves, and it currently has about $94 million. “That’s a huge indicator for the rating agencies,” she said.
Doug Hooker, executive director of the Atlanta Regional Commission, commended the mayor’s attention to repairing the city’s infrastructure.
“Those are the hardest dollars to find,” said Hooker, who served as the city of Atlanta’s commissioner of public works for about a decade. “So many of our public works infrastructure investments have gone for years without an appropriate level of maintenance to keep them in good working order.”
When it comes to paying for the city’s $922 million infrastructure backlog, the mayor said it is looking at three pots of money.
First, the Transportation Investment Act (TIA) — a 1 percent regional sales tax — will go to voters on July 31. If that passes, 15 percent of the tax will go directly to local governments with the rest going to pay for regional transportation projects.
For the city of Atlanta, that 15 percent share will total about $9 million a year — which Reed said would be invested in the city’s infrastructure.
The city also is entering negotiations with Fulton County on the equitable distribution of the Local Option Sales Tax (LOST). That is a one-cent sales tax collected by Fulton and then allocated to the various municipalities in the county. That allocation is reviewed every 10 years, and negotiations are expected to take place between now and July. Currently, the city receives about $100 million a year from LOST.
“We believe we deserve a bit more based upon our contribution,” said Reed, who refrained from saying how much more the city should receive because he does not want to “pre-judge negotiations.”
Once the city knows the outcome of the transportation referendum and of the LOST negotiations, it will have a better idea on how big an infrastructure bond package it will need to address the city’s backlog.
“You can see a path where you can go to market,” Reed said. “The infrastructure focus is no less than $250 million minimum [for a bond referendum].”
Reed added that the city also is studying possible bond packages of $500 million and $750 million.
“We will be able to give a real answer in the next six to nine months,” Reed said. “The TIA will be over. The budget will be over. LOST negotiations would be over. We can’t do anything until all those things are done.”
Then the city will be able to answer whether “the juice is worth the squeeze,” the mayor said.
Given the timing, a bond package likely wouldn’t be presented to voters before 2013, the same year Reed will be running for re-election.
“This needs to be teed up regardless of who is mayor,” Reed said. “The $922 million backlog needs to be addressed whether I’m in place or not.”