Comments on: Not So MM: Decatur Debt, Depot Needs a Sign, and Best Sledding Spots in ATL

By: Geoff

Geoff — Tue, 04 Feb 2014 15:45:25 +0000

Well said, WP r. We were able to “make hay while the sun was shining” in terms of borrowing nearly “free” money. The debt rating agencies are not always the most upstanding institutions, but they are trustworthy in this regard. They scrutinize these things, they are the experts. And if they are giving us their top rating, then we ought to be happy about that.

I, for one, am happy that we were able to take advantage of the lending environment and make some very needed upgrades around town. The staff at City Hall knows their stuff. They understand public finance. I think on this one, we should give them the benefit of the doubt. I see no problem in the public bringing it up and asking questions about it, but all things considered, we seem to be ok and have, thankfully, increased our public infrastructure.

By: Ben

Ben — Tue, 04 Feb 2014 15:02:14 +0000

Yes exactly! I have no idea if this is a lot or a little bit of muni debt. I am not against debt by any means, and I agree that it is necessary to pay for big capital projects that will benefit everyone.

It just seems that all of this debt, which is long term debt, was taken on in the last few years (probably because interest rates were so low). So if you decide to buy a house when mortgage rates are low, are you going to want to take out more loans in the future to buy other things? What is the long term plan?

By: At Home in Decatur

At Home in Decatur — Tue, 04 Feb 2014 13:26:07 +0000

That makes sense. A city could do nothing, fall apart, become derelict and irrelevant, and have no debt. Having no debt is not a virtue in itself. There’s a reason that the entire financial and banking industry exists. Problem is, many of us ordinary citizens don’t understand what are best practices vs. risky ones that get you in the news eventually. What we need for context and perspective is a sense of the best practices for sound, small, in town, successful cities like ours. I’m sure there’s been some wisdom out there that could be shared. Public finance professors….?

By: WP resident

WP resident — Tue, 04 Feb 2014 04:03:46 +0000

Do you see these rates? The city can borrow so cheaply and these are for projects that have a very long lifespan of benefits to the community.

Additionally, go look at Emma (the site for muni securities). You’ll see they’re all trading at premiums, so there is no indication the city has over-borrowed. ( I think some bonds were issued at premiums, but they are trading even higher)

If anything, the city should be borrowing more for capital projects to benefit the city for years to come. The debt service is extremely low.

Think of it this way, would you get a mortgage to buy a 4 bedroom house, or would you rent a 2 bedroom apartment for 15-20 years and save up 100% of the purchase price, just to say you had no debt?

By: Ben

Ben — Tue, 04 Feb 2014 03:10:35 +0000

good point

By: Steve

Steve — Tue, 04 Feb 2014 02:28:29 +0000

Remember that part of Beacon Hill is for CSD admin offices so that Westchester will revert back to a school.

By: Ben

Ben — Tue, 04 Feb 2014 01:25:06 +0000

wow, I had no idea. I am sure that the City can easily pay its obligations (hence the good bond rating), but most of this is 30-year debt, meaning it’s unlikely to be paid off anytime soon. This is all fine and good, I am just wondering what will happen if/ when other large-scale capital improvements are needed (e.g., new schools)? Does anyone else think borrowing $53M for Beacon Hill in 2013 is a little strange when we are facing overcrowding in our schools?

By: Frankly

Frankly — Mon, 03 Feb 2014 23:32:39 +0000

What did Ridley say that was ‘misleading’ other than understating the City’s debt by about $54 million? Does Merriss sound really unhappy about Ridley’s completely factual statement to anyone else? I’d favor more transparency about the City’s obligations, as this is a mind-boggling sum to me. If there are reasons this was done in a relatively short time, like interest rates and construction costs have been down during the depression, it might help to say so. This debt limits our ability to do other things – opportunity cost.