Atlanta

Expert: 'Terrible money management' will cost taxpayers additional $30M for Atlantic Station

ATLANTA — A Channel 2 Action News investigation has found millions of tax dollars will be wasted because of how the city is handling Atlantic Station's development.

Records we’ve obtained show the city could have paid $71 million in principal toward bonds, but has paid just $15 million over 12 years.

Channel 2 investigative reporter Richard Belcher has learned the city's actions are legal but an expert told him it's terrible money management.

Records show that Atlanta has paid interest but very little principal on the bonds that financed Atlantic Station.

Financial expert Dick Layton estimates the delays in paying principal will cost an additional $30 million in interest and lead to an embarrassing default.

“I don’t believe there’s any way in the world that that principal gets paid down by the maturity date,” Layton told Belcher.

Layton is an expert on government-sponsored projects like Atlantic Station and the Atlanta Beltline.

Governments borrow money for improvements like roads and parking decks, and the money is paid back with the rising taxes generated by increased property values.


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Layton said Atlantic Station is producing about $20 million-a-year in those new taxes, but the city has paid very little principal for 12 years.

“(That’s) bad money management, bad fiscal policy, and ultimately I believe will result in a bond default that will be embarrassing to whatever administration is in place when that happens,” Layton said.

Former Mayor Shirley Franklin's administration repaid about $7 million in principal. Current Mayor Kasim Reed's administration has paid about $8.2 million in principal.

That leaves unpaid principal at about $151 million. Layton said that creates unnecessarily higher interest payments.

“Yeah about $2.5 million a year in interest at current rates,” Layton said.

Imagine you never paid the principal on your car or truck loan. Over time, you'd pay a lot more interest.

Layton estimates Atlanta is on the way to paying $30 million more than it should.

He said instead of paying down the principal on the Atlantic Station bonds, Atlanta invests that money.

But it earns a tiny fraction of what the city is having to pay out in additional interest every year.

“In other words, they've been earning less than they need to keep up with the interest payments that are due,” Layton told Belcher.

Mayor Reed's office declined to provide a detailed response but sent a statement that reads, in part, "The city is under no obligation to modify the current arrangement and there is no extraordinary threat of default."