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County almost defaults on bonds

By Justin Boron

Clayton County is moving forward with the issuance of additional bonds for a hotel even though it came close to defaulting on $26 million worth of bonds originally taken out for the Gateway Village development project.

After reserve funds for bond payments dried up, the Board of Commissioners made an emergency decision recently to replenish the account with $892,000, so payments could be made on existing bonds, said Clark Stevens, the county chief of staff.

The vote was the closest the county has come to defaulting on the project, he said.

While the commission approved the measure, saving the county from damage to its bond rating, some commission members raised concerns about the project's oversight.

Commissioner Charley Griswell and Commissioner Wole Ralph recused themselves from the special-called vote.

Ralph said he did not want to vote on a measure that could potentially leave taxpayers to pay back bonds in a failed development.

If the venture does not pan out, the county would have taken out almost $60 million in bonds with little alternative but to raise taxes.

"This is a project that the chairman really is going to have to get involved in," Ralph said.

Commissioner Virginia Gray, Commissioner Carl Rhodenizer, and County Commission Chairman Eldrin Bell voted for the measure.

Bell said the current commission inherited the circumstances from the previous administration, which had issued a series of bonds in 1999 to purchase the land for the Gateway Project.

While development has moved forward with the construction of the state and federal archives, other real estate deals have gone awry.

Most recently, the U.S Postal Service backed way from its intent to buy property for a post office location, delaying the development until 2006, Stevens said.

If the purchase had occurred, the county would have had sufficient funds to make the bond payment.

The future of the project hangs on the success of the planned hotel, which will be constructed with the still pending $28 million in bonds, said Emory Brock, the county director of economic development.

The money generated from the hotel would be used to pay back the bonds, he said.

Brock said the near-default was not a sign of the area's waning real estate market, calling it " a minor little bump in the road."

The risk of the hotel venture had been discussed in 2003 when commissioners first raised concerns.

Having taken out millions of dollars in bonds, commissioners worried the county would be out on a limb if the hotel did not run at a 65 percent capacity.

But Brock, who has been a strong proponent of the project, said the hotel's failure was unlikely.

The state and federal archives already have created a substantial amount of value in the area, he said.

Brock also said Gateway's future fomented Wal-Mart's urge to expand its operation in Morrow by building a Supercenter.

The hotel would exist in a unique market from any other hotel in the county, he said.

Supported by conferences and tourism created by the archives and the expanding Clayton College & State University, Brock said the hotel would definitely succeed.