By Justin Boron
Clayton County has drained its savings of more than $2 million for a bond payment that it initially planned to forgo, but was forced to make after a Gateway Village bond refinancing deal hit a snag in the district attorney's office.
Ending a more than two week conflict Tuesday, District Attorney Jewel Scott announced she had signed off on the refinancing of $28 million worth of bonds used in 1999 to launch Gateway Village, a 165-acre mixed use project in Morrow and Lake City.
But her endorsement of the deal, which plans to slash interest rates on the bonds by almost half, came too late to save the county from making an Aug. 1 payment on the initial bond issues, according to a news release from the office of County Commission Chairman Eldrin Bell.
The delay, Scott said, stemmed from not being given ample time to review the bond proposal for a project that she maintains has progressed without sound financial judgment.
She also said the county should be more forthright in the future and "stop trying to look for scapegoats."
Bell's release says the delay would add a .2 percent increase on the cost of the refinanced bond, resulting in a less favorable interest rate. The percentage cost could go higher before the bonds are sold.
The county commission approved a resolution Tuesday night that Michael Smith, the county's chief staff attorney, said will transfer funds to cover the payments.
About $550,000 of the payment came out of the county's reserve fund, which was recently boosted from a level some commissioners considered insufficient.
Doubts had raised concerns in county officials in the past few weeks over Scott's willingness to sign off on the refinancing.
Using what in many bond validation cases is a formality, Scott balked at the proposal, saying she would not endorse the deal until she reviewed and discussed it with bond counsel.
She said Tuesday she let the deal go through only for the sake of lower interest rates while maintaining strong reservations about the project based on her discussion with attorneys and the finance banker for the deal.
"I am informed that (Gateway Village) was ill-conceived from the inception and that the county should have never proceeded with the risky and speculative financial backing of this venture."
Scott's move allays at least some tension between her office and the Board of Commissioners but also may have opened new doors of conflict.
Commissioner Charley Griswell was thankful for Scott's signature but he questioned her place to criticize the project.
"I'm glad she went on to sign it because it was the right thing to do."
The role of the two offices should be distinct, Griswell said.
"She's the D.A. and we're the commissioners," he said.
Griswell also said the development, which includes state and national archives, a proposed hotel-conference center, and planned mixed-use facilities, is still "very viable."
Scott said as an elected official and the district attorney she owes it to the citizens to raise questions about the redevelopment plan.
"Anything I put my signature on has to be wholesome . . . has to be legitimate.
"I am not the enemy of any project that makes economic sense, and my bosses are the 260,000 citizens of Clayton County," she said.
Property sales and revenue from a county-owned apartment complex were intended to pay back the bonds issued in 1999. But those revenue generators have waned because of economic constraints.
Meanwhile, a planned hotel and conference center - also intended to generate revenue - has been on hold.
Initially, the county commission debated the topic in late 2003 and early 2004. At the time, there was concern about whether the hotel would keep sufficient occupancy rates to repay the bonds issued for its construction.
Griswell said the commission is continuing to discuss the possibility but had doubts about the hotel.
"I never did feel like the hotel could pay for its way," he said.
The county earlier this year almost financed the hotel, but it backed off the idea before the bonds could be validated.
At around the same time in February, the county also came close to defaulting on the bonds it is currently refinancing. It saved itself by making an emergency decision to replenish bond reserve funds with $892,000, so a payment could be made.
Grant Wainscott, the economic development director in Morrow, said he still has full confidence in the project despite the refinancing debacle.
"We'll work these politics out just like we have for years," he said. "We'll get this (hotel and conference center.)"