A recent op-ed on Decaturish by Former Atlanta COO and Decatur resident Hans Utz recently got some appreciation in FFAF regarding its explanation of the city’s debt cap.  As such, it seemed a good article to highlight and discuss here, since we so enjoy discussions that involve such thrilling topics as debt and enrollment figures.

In short, it helps spell out…

• Why city debt is necessary – to spread the cost of projects out over time so future residents also get to pay in
• The different forms of Decatur’s debt
  • The city’s revenue bonds – taken out against non-property tax forms of revenue
  • CSD’s certificates of participation – “like a homeowner taking out a second mortgage”
  • “GO bonds” – which are borrowed against property taxes
• Which forms of debt apply to the “Constitutional Debt Cap” of $137 million – only the Go Bonds
• Where Decatur would stand if it were to borrow the full $82 million in Go Bonds to build new/larger schools
  • Watch these mathrobatics – The city currently has borrowed $31 million and CSD has borrowed $5 million in Go Bonds, so add the requested $82+ the current $36 = $118 million.  And what was that limit again?  $137 million?  So $137 – $118 = $19 million!

Is that $19 million gap risky?  Mr. Utz’s states…

Incidentally, the constitutional debt limit is itself a conservative ceiling meant to prevent fiscally weak or irresponsible municipalities from overextending themselves.  Decatur is neither.

Ultimately, Mr. Utz’s argues that Decatur shouldn’t be all that worried about its debt cap with this bond proposal and that the major concern should be the very real increase to taxes as a result of the bond – he calculates it as a 7% increase on Decatur property taxes.

He concludes…

So are we in a bad place with debt?  No, not at all.  Not even a little bit.  Not even if the schools do get an additional $82 million in capital.  We should stay vigilant, of course, but we are operating well within our capacity.

The question is whether we think the schools need the capital sufficiently enough for us to willingly to increase our overall property tax by 7 percent.  That is a big conversation that we must have as a community.

Oh how nice it would be if we still had the old Ponce de Leon School on West Ponce.  (Hence the random-ish Ponce de Leon School photo courtesy of Ponce de Leon Elementary Facebook page  )