The city of Atlanta has disclosed it held stock in Delta Air Lines for about a year in violation of state code and city policies.
The city accepted 453,000 shares in February 2011 to settle claims stemming from the bankruptcy case of Northwest Airlines, which once occupied a maintenance hangar at Hartsfield-Jackson International Airport.
Delta bought Northwest in 2008, so it became responsible for a $12.9 million claim against Northwest related to repairs and environmental remediation needed at the vacated hangar.
The stock holding came to light in a report by an outside auditor this past winter. Holding stock in companies is acceptable for government pension funds but not as part of the a city’s non-pension investments.
The audit said any shares received as a gift or in a financial transaction “should be timely converted to allowable investments,” according to a presentation to an Atlanta city council committee.
After the audit, the city sold the shares in late February, when they were worth roughly $4.3 million to $4.4 million -- about the same as in an account statement last June.
“There was no alternative that would have allowed the city to receive compensation for its claims,” city finance chief Jim Beard said in an e-mail response to questions from The Atlanta Journal-Constitution. Beard was not in the post at the time of the deal. He was named to the position last October.
The city said it “worked diligently” to sell the shares in response to the audit.
Delta is the largest tenant at Hartsfield-Jackson, owned and operated by the city.
Atlanta-based Delta and Eagan, Minn.-based Northwest went into Chapter 11 bankruptcy at the same time in 2005. Among the agreements unraveled during the bankruptcies was Northwest’s lease on the Atlanta hangar.
The hangar, where Northwest maintained DC-9s and did engine work, remains vacant and may be torn down, airport general manager Louis Miller said.
He said environmental work will still be needed on the site, which has groundwater contamination from metal finishing solvents. The contamination has not reached any drinking wells and does not threaten public health, according to the Georgia Environmental Protection Division.
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