Perdue offers sewer money
By TY TAGAMI and JIM THARPE
The Atlanta Journal-Constitution
Related:
• Politics play out behind loan plan
HOW THE BIG SEWER FIX WOULD WORK
First, the state gives the city $500 million in low-interest loans over 10 years:
• Gov. Sonny Perdue restructured the Georgia Environmental Facilities Authority so large cities can borrow up to $50 million annually for infrastructure improvements.
• The Legislature would approve the sale of $170 million in low-interest bonds over much of the next decade. State taxpayers would pay back the bonds, and the proceeds from the bond sales would pour into a revolving loan fund managed by GEFA. The fund, which is augmented with federal loans, would grow as communities pay back what they borrowed, with interest. Atlanta would have 30 years to repay the loans.
The catch: The Legislature has to approve the loans each year. With changing politics, no one can assure that will happen.
• Second, the state allows Atlanta's voters to raise the city's sales tax by a penny:
• The Legislature would approve a bill to permit any city to increase its sales tax to defray the cost of a court-ordered sewer repair.
• Perdue would sign the legislation, which could help the city raise $70 million to $100 million a year for up to five years.
• The City Council would authorize a referendum in which Atlanta voters would have to approve the penny increase.
The catch: City residents already unhappy about a big water and sewer rate hike would also have to pay the additional sales tax. Officials say up to 30 percent of those who would pay it live outside the city.
Atlanta water and sewer customers got some good news Tuesday, when Gov. Sonny Perdue and Senate President Pro Tem Eric Johnson announced proposals that could generate nearly a third of the money required for the city's planned $3.2 billion plumbing overhaul.
The bad news is that most of the up to $1 billion in aid would come largely from city residents -- half from a series of low-interest loans that Atlanta water and sewer customers would have to repay, and another $350 million to $500 million from a proposed citywide sales tax increase.
Mayor Shirley Franklin, though supportive of the proposals, said they would not change how much she proposes to raise water and sewer rates in the near term. Franklin said she will still recommend to triple base rates to improve the crumbling sewer system, but the state assistance would eventually help offset the increases.
Perdue announced at a morning news conference that he will ask the Legislature to approve $50 million a year in low-interest loans to Atlanta over the next 10 years. The state has an impeccable credit rating and can borrow money at a lower interest rate than the city. That means Atlanta water and sewer customers would pay less interest when they repaid those loans.
"It's not just about the city of Atlanta, but the state as a whole," said Perdue. Other Republicans also said they recognized that Atlanta's financial health is crucial to the state's.
The loans would make only a small dent in the beginning. That is because the lower-interest loans would likely comprise about one-tenth of the overall debt over the next five years -- the period during which Franklin has proposed to triple the base rates. The city is planning to commit $2.5 billion to plumbing improvements by 2008, and under the best scenario the state would lend only $250 million by then.
The loans would have to be approved each year by the Legislature, even after Perdue leaves office. And they come with a string attached: The state board that lends the money would oversee how it is spent. Perdue, referring to a history of financial scandals at City Hall, named Georgia-Pacific President Lee Thomas to the oversight board.
Johnson proposes help
An hour after Perdue's announcement, his Republican ally Johnson, the leader of the state Senate, made news of his own. Johnson (R-Savannah) said he will back legislation allowing for a local referendum to raise the sales tax in Atlanta to 8 cents.
Johnson's proposal, which would require approval by the Legislature and city voters, would push Atlanta over the current 7-cent cap set by state law. City officials estimate it could raise $70 million to $100 million a year for the five years it would be in effect.
The increase would put Atlanta among the country's top-taxing cities. New Orleans levies a 9 percent sales tax; Seattle, 8.8; Chicago, 8.75; and New York City, 8.625.
Franklin, who attended Perdue's and Johnson's news conferences, said she was thrilled with both proposals.
She said 30 percent of the sales tax proceeds would be paid by tourists, commuters and others who live outside the city.
Franklin said the governor's backing would lend "support and credibility" to the overhaul plans, and would assist with efforts to lobby for aid in Washington -- which have so far met with little response. "It gives us the kind of push and oomph we need to get over the finish line," she said.
U.S. Sen. Zell Miller (D-Ga.) agreed Tuesday's announcements could serve as a catalyst to free federal funds for the massive public works project. "Anytime our congressional delegation can point to examples of how the city and state are working together to help solve this problem, it will help us make a stronger case for federal help," Miller said in a written statement. The Republican proposals will need to pass the Democratic-controlled state House, whose Speaker Terry Coleman (D-Eastman), gave the plan favorable marks. " I commend the governor for offering low-interest loans but it's going to take a combination of solutions to help the city of Atlanta and it's going to take some self-help, too," Coleman said.
State Rep. Bob Holmes (D-Atlanta), said he does not think a 1 percent sales tax hike would change shopping habits in the city much, and he predicted the proposal would get a warm reception from Atlanta's legislators.
"It will not hurt business in the city significantly," Holmes said. "If it would, members of the business community would not be behind it like they are."
Business backs plan
Sam Williams, president of the Metro Atlanta Chamber of Commerce, stood along with the governor when he announced the state loans. And Williams said in an interview that the chamber supports Johnson's sales tax proposal because business leaders fear the alternative: huge increases in water and sewer bills and a moratorium on development.
Environmental regulators have threatened to stop new water and sewer hook-ups should the city fail to make mandated improvements, and city officials have interpreted the warnings to mean that ongoing projects such as the Georgia Aquarium and Atlantic Station would be idled.
That would ruin Atlanta's reputation as a good place to do business, Williams said.
"Literally all of the goodwill created since winning the Olympics would be terribly damaged," Williams said.
The threat of a moratorium and other sanctions hangs heavy. Atlanta agreed in federal court to do $1.8 billion in improvements to its water and sewer system -- part of a $3.2 billion spending package to be completed by 2014.
Of that amount, $1.5 billion in court-ordered work would begin within the next five years, along with another $1 billion in projects that were not court-mandated, for a total of $2.5 billion in work by 2008.
The city must raise water and sewer rates to pay for the work. This month, the City Council, feeling pressure from residents who said they couldn't afford to pay triple rates, voted 8-7 for a smaller increase. Franklin vetoed those lower rates.
'It won't impact' plan
Franklin said in an interview Tuesday that increases in the base rates could be scaled back as the revenue from the state loans and the sales tax materializes.
"It won't impact our rate proposal for 2004. It may begin to impact it in '05, '06 and '07," Franklin said.
City Councilman C.T. Martin, who was among the eight council members who voted against Franklin, wasn't happy with that.
"I think we can thank the governor and all the people who stepped up to the table, but the ratepayers still don't want 45," Martin said, referring to the 45 percent increase in the water and sewer rates that Franklin proposed for next year and again in 2005.
But Franklin only needs one of the eight council members to have a change of heart. And one of them, Councilman H. Lamar Willis, stood with the mayor and the governor at the news conference Tuesday.
Asked if the state loans had influenced his position on rate increases, he responded: "We do understand a rate increase is necessary."
State offers Sewer Loans
Started by
Guest_donaltopablo_*
, Dec 24 2003 09:55 AM
4 replies to this topic
#2
Rail Claimore
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Posted 24 December 2003 - 12:38 PM
Did I not call this before!!! I was right! Told ya it would happen. 
Either bonds would be floated or the state would jump in with loans meaning federal help will be that much easier to get. Pragmatism WILL always prevail in Atlanta. This is just another fine example.
Either bonds would be floated or the state would jump in with loans meaning federal help will be that much easier to get. Pragmatism WILL always prevail in Atlanta. This is just another fine example.
#3 Guest_donaltopablo_*
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Posted 24 December 2003 - 12:51 PM
It certainly does. What's really left to determine is how they will finish paying for it and what level of rate increases will be required. But I agree this is excellent news for Atlanta. This would be a horrible thing to kill the amazing boom of construction and redevelopment going on in Atlanta.
#4
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Posted 24 December 2003 - 01:37 PM
I posted this over at SSP btw. This is great news for everyone who keeps up with Atlanta.
#5
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Posted 24 December 2003 - 07:47 PM
Here's more of how the politics has played out. This is HUGE. 
---------------------------------------
Politics play out behind loan plan -
Business execs bridge partisan gap
By JIM THARPE
The Atlanta Journal-Constitution
It was a rare sight in the take-no-prisoners world of Georgia politics.
There was Republican Gov. Sonny Perdue clearing the way for massive loans to Democratic Atlanta Mayor Shirley Franklin, money needed to extricate a city full of Democratic voters from a financial quagmire. An hour later, state Senate President Pro Tem Eric Johnson (R-Savannah), a renowned Democrat-basher, was touting an alliance between GOP lawmakers and the Democratic-dominated Atlanta legislative delegation to ensure passage of a 1 percent sales tax increase needed to pump millions more into city coffers.
A beaming Franklin thanked Republicans, and Perdue and Johnson stressed that the mayor had inherited the sewer problems from her predecessors.
It might have been the biggest pre-Christmas happy hour since Tiny Tim and Scrooge patched things up.
"It's changed from a partisan thing to a statesmanlike thing," state Rep. Bob Holmes (D-Atlanta), a frequent Perdue critic, noted later. "If we find out what's going on, we ought to bottle it because we'll need it again."
What was going on -- beneath the group hug played out for the television cameras -- was some serious politics, a lot of closed-door meetings and the considerable heft of the Atlanta business community, veteran powerbrokers who move comfortably between Republicans and Democrats.
Just two months ago, the state GOP power structure and Franklin appeared locked in a no-win dispute over Atlanta's sewer mess. Many Republicans did not want to appear to be bailing out a Democratic-controlled city with a recent history of questionable finances. And the city could not come up with the money it needed without help from the GOP, which controls the governor's office, the state Senate and eight of the state's 13 congressional seats.
"We didn't cause Atlanta's problem and we shouldn't have to bail them out," Johnson said in late October. Perdue rejected the city's call for $500 million in grants, and Franklin was getting a cold shoulder in Washington.
But Republican leaders say they realized they had a lot at stake in making sure Atlanta's outdated infrastructure got fixed. If things went badly for the state's largest city, the impact would be felt across Georgia.
"Atlanta is the engine that drives the state's economy, and the state cannot risk losing current or potential businesses, industries and citizens because of this serious and ongoing problem," U.S. Sens. Saxby Chambliss (R-Ga) and Zell Miller (D-Ga.) jointly wrote to Franklin earlier this month.
Perdue, meanwhile, met quietly in mid-November with his key economic advisers and Paul Berks, director of the Georgia Environmental Facilities Authority, to figure out how to get loans to the city with minimal impact on state taxpayers. They came up with three options, according to officials who participated in the negotiations:
• The existing GEFA program could provide Atlanta with $33 million a year, the maximum the program allowed at the time;
• The cap could be raised just for Atlanta;
• The entire GEFA program could be expanded so cities across the state could access large sums for capital projects.
The first option did not provide enough money. Perdue thought the second would seem unfair to other Georgia cities. Berks came up with a plan for what insiders were calling "Option 3" and presented that to the governor Dec. 17.
The next day Perdue met with Republican legislative leaders to inform them of his plan. By Monday, Perdue had called key Atlanta business leaders -- including Lee Thomas, president of Georgia-Pacific; Joe Rogers, CEO of Waffle House; and Sam Williams, president of the Metro Atlanta Chamber of Commerce -- to the Governor's Mansion to discuss the loan plan. They backed the idea, and Perdue scheduled a 7:30 a.m. Tuesday meeting at his office with Franklin.
Franklin and City Council President Cathy Woolard met with Perdue, who outlined his proposal as key aides stood nearby.
The meeting lasted 20 minutes, and the mayor and governor emerged smiling.
By 10 a.m., Franklin was standing beside Perdue at a hastily called news conference. An hour later she climbed three flights of marble stairs to get more good news from Johnson, speaking from Savannah via a speakerphone in his Capitol office.
http://www.ajc.com/m...4sewerside.html
---------------------------------------
Politics play out behind loan plan -
Business execs bridge partisan gap
By JIM THARPE
The Atlanta Journal-Constitution
It was a rare sight in the take-no-prisoners world of Georgia politics.
There was Republican Gov. Sonny Perdue clearing the way for massive loans to Democratic Atlanta Mayor Shirley Franklin, money needed to extricate a city full of Democratic voters from a financial quagmire. An hour later, state Senate President Pro Tem Eric Johnson (R-Savannah), a renowned Democrat-basher, was touting an alliance between GOP lawmakers and the Democratic-dominated Atlanta legislative delegation to ensure passage of a 1 percent sales tax increase needed to pump millions more into city coffers.
A beaming Franklin thanked Republicans, and Perdue and Johnson stressed that the mayor had inherited the sewer problems from her predecessors.
It might have been the biggest pre-Christmas happy hour since Tiny Tim and Scrooge patched things up.
"It's changed from a partisan thing to a statesmanlike thing," state Rep. Bob Holmes (D-Atlanta), a frequent Perdue critic, noted later. "If we find out what's going on, we ought to bottle it because we'll need it again."
What was going on -- beneath the group hug played out for the television cameras -- was some serious politics, a lot of closed-door meetings and the considerable heft of the Atlanta business community, veteran powerbrokers who move comfortably between Republicans and Democrats.
Just two months ago, the state GOP power structure and Franklin appeared locked in a no-win dispute over Atlanta's sewer mess. Many Republicans did not want to appear to be bailing out a Democratic-controlled city with a recent history of questionable finances. And the city could not come up with the money it needed without help from the GOP, which controls the governor's office, the state Senate and eight of the state's 13 congressional seats.
"We didn't cause Atlanta's problem and we shouldn't have to bail them out," Johnson said in late October. Perdue rejected the city's call for $500 million in grants, and Franklin was getting a cold shoulder in Washington.
But Republican leaders say they realized they had a lot at stake in making sure Atlanta's outdated infrastructure got fixed. If things went badly for the state's largest city, the impact would be felt across Georgia.
"Atlanta is the engine that drives the state's economy, and the state cannot risk losing current or potential businesses, industries and citizens because of this serious and ongoing problem," U.S. Sens. Saxby Chambliss (R-Ga) and Zell Miller (D-Ga.) jointly wrote to Franklin earlier this month.
Perdue, meanwhile, met quietly in mid-November with his key economic advisers and Paul Berks, director of the Georgia Environmental Facilities Authority, to figure out how to get loans to the city with minimal impact on state taxpayers. They came up with three options, according to officials who participated in the negotiations:
• The existing GEFA program could provide Atlanta with $33 million a year, the maximum the program allowed at the time;
• The cap could be raised just for Atlanta;
• The entire GEFA program could be expanded so cities across the state could access large sums for capital projects.
The first option did not provide enough money. Perdue thought the second would seem unfair to other Georgia cities. Berks came up with a plan for what insiders were calling "Option 3" and presented that to the governor Dec. 17.
The next day Perdue met with Republican legislative leaders to inform them of his plan. By Monday, Perdue had called key Atlanta business leaders -- including Lee Thomas, president of Georgia-Pacific; Joe Rogers, CEO of Waffle House; and Sam Williams, president of the Metro Atlanta Chamber of Commerce -- to the Governor's Mansion to discuss the loan plan. They backed the idea, and Perdue scheduled a 7:30 a.m. Tuesday meeting at his office with Franklin.
Franklin and City Council President Cathy Woolard met with Perdue, who outlined his proposal as key aides stood nearby.
The meeting lasted 20 minutes, and the mayor and governor emerged smiling.
By 10 a.m., Franklin was standing beside Perdue at a hastily called news conference. An hour later she climbed three flights of marble stairs to get more good news from Johnson, speaking from Savannah via a speakerphone in his Capitol office.
http://www.ajc.com/m...4sewerside.html
