The cost of building fire stations or bringing new water treatment facilities online could skyrocket across Georgia if Eagle's Landing is allowed to become a city by taking territory from Stockbridge, experts in the municipal bond market say.
If the Henry County community is successful in breaking away from Stockbridge, some fear other high tax revenue areas around the state, such as Buckead in Atlanta, could follow and open the door to hikes in municipal bond rates because of concerns over the stability of a city’s tax base.
“Every city in Georgia would be at risk and put on credit watch by the credit-rating agencies … because every city would be at risk for having part of their territory taking away by a new jurisdiction,” said Bart Hildreth, an expert on municipal bonds in Georgia State University’s Andrew Young School of Policy Studies.
That could force municipalities across Georgia to raise taxes, downsize projects or eliminate capital projects altogether if they have communities that suddenly want to secede, the experts said.
“What the municipalities worry about is if they get downgraded because the rating agencies see problems that they may have servicing their debt,” Kennesaw State University economist Roger Tutterow said. “That translates into having to pay higher yields to borrow the money.”
Legislation to create the city of Eagle’s Landing was passed by the Georgia Legislature earlier this year and is waiting for Gov. Nathan Deal to decided whether to approve it or not.
Backers of the proposed cityhood argue that breaking away from Stockbridge is necessary because the city has failed in providing services such as parks, senior facilities and control of traffic congestion. They also think the new city would be better able to attract new businesses, such as high-end restaurants and hotels.
Stockbridge leaders counter that some of the concerns, such as parks, are a county matter and that the Eagle’s Landing proponents should work to improve the city, not tear it apart.
Deal has not made a decision on the matter, his office said Wednesday. Deal met with leaders from Stockbridge and those backing Eagle's Landing cityhood on Tuesday to hear their arguments. He also met with bond analysts in New York last week to discuss the impact the move could have on Georgia's AAA bond rating.
Most cities, counties and school districts use some form of bonds to pay for capital projects such as roads, performing arts centers, schools, emergency facilities and even airports because of the high cost of financing them out of pocket. Atlanta, for instances, has billions in bonds invested in its sewers and Hartsfield-Jackson International Airport.
Stockbridge city attorney Mike Williams said the city’s capital projects list — which includes replacing a cultural arts building, constructing an amphitheater and downtown revitalization — will be hard to realize if it loses half of its tax revenue from retail and other businesses to Eagle’s Landing.
“We have certainly communicated that problem to the governor,” he said.
Steve Hutchison, mayor of nearby Hampton, said city leaders across the state should be worried. Communities disagree with leadership all the time, he said, and the solution can’t be to allow them to break apart. Once that begins, where does it end.
“We’re a small town and if we had half our town taken away, we couldn’t survive,” he said.
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