Effort to tidy DeKalb finances again highlights political tension

By April Hunt

The Atlanta Journal-Constitution

DeKalb County Commissioners agreed Tuesday to borrow money to fund government operations for the first time in 11 years.

Borrowing money via tax-anticipation notes, or TANs, could impress bond rating agencies that the county is serious about getting its financial house in order. As is often the case, though, the issue again highlights tension between the county commission and the chief executive.

This time, the issue is CEO Burrell Ellis' selection of Raymond James and Associates as the underwriter without putting the transaction out to bid or seeking board input.

Finance officials couldn’t say Tuesday how much the county will pay in fees to the underwriters, though they did pledge it would be under $100,000 on the $125 million of borrowing.

“ I don’t know how we can act responsibly, defending the interest of the public in transparency, if you keep coming back and telling us you’ve got to do this today and use this firm only and you can’t even tell you how much it will cost,” said Commissioner Jeff Rader, who with Commissioner Kathie Gannon dissented on the vote to let the firm handle the borrowing.

Cities and counties across Georgia and the nation issue TANs routinely, usually early in the year. The money borrowed helps a government pay its bills until tax revenues come into coffers at the end of the year.

DeKalb last used TANs that way in 2000. It has since moved money between various accounts for cash flow, a legal policy but one that makes it hard to know just how much cash the county really has available.

In giving the county its highest credit rating for TANs earlier this month, Moody’s Investor Services cited the borrowing as one way for DeKalb to boost its overall credit rating.

An overall upgrade would save the county millions in interest on major borrowing, such as the $1.35 billion upgrade to its water/sewer system.

Finance director Joel Gottlieb said the county selected Raymond James because the agency was already familiar with DeKalb and could get the bonds out by early September.

Tuesday’s vote only allowed the firm to price the borrowing this week, he said. The commission must vote next Tuesday on actually issuing the debt, when it will learn its interest rate and have a better handle on how much it must pay the firm to oversee the process.

“After the rating agency’s review of us, this is a critical bond issue to set up quickly and recover our reputation in the market,” Gottlieb said.

The borrowing is considered short term. The county will pay back its $125 million debt by Dec. 31.

But it also will begin issuing TANs next year as other governments do, typically at the start of the year.

One condition of the commission’s approval Tuesday was that 2012 TAN and all other future borrowing be done using competitive bidding. Doing so, the commission hopes to bring down bring the cost of borrowing and also force the CEO and board to work together on finances.