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Gateway conflict could cost county

By Justin Boron

A standoff has emerged over financing in the Gateway redevelopment project with fallout that could raise taxes or drain about $2 million from Clayton County's recently replenished reserve fund.

The conflict surrounding the 165-acre, mixed-use project in Morrow and Lake City signals what one commissioner characterized as "political feud" between the district attorney and the Board of Commissioners, who already have bad blood over the adoption of the most recent operating budget.

At the core of the Gateway financing debacle is District Attorney Jewel Scott's signature, which is needed to initiate a validation hearing for the refinancing of $28 million worth of bonds - usually a formality for bond issuance.

The stroke of her pen could save the county from a more than $2,041,000 bond payment due Aug. 1 and allow the county, Commissioner Charley Griswell said, to slash in half the interest rates on the 1999 bonds.

The county commission and the Development Authority two weeks ago approved the refinancing of the Gateway Village bonds issued for property purchases in the project.

The validation hearing in Superior Court was one of the few loose ends remaining in the refinancing deal.

But Scott said Tuesday from a prosecutors conference in Savannah that she had not endorsed the close to 130-page document delivered to her two weeks ago.

Scott in an earlier interview wasn't sure if she would make the deadline necessary to avoid another payment on the existing bonds.

"It is possible, but I do have a lot of questions about the project," she said. "It has never been a feasible project. It has never been able to pay for itself."

Scott said she was looking to have a meeting with bond counsel this coming Friday or Monday.

Griswell said he was disappointed that the bond deal was turning out the way it has.

"I hate that Ms. Scott chose not to sign (the petition) because I think it's going to cost the taxpayers."

He added that to make the upcoming bond payment, the county commission would likely pull from its reserve fund, which it recently bolstered by appropriating more than $2 million originally planned for a tax cut.

Commissioner Wole Ralph had similar feelings, attributing the breakdown to an uneasy working relationship fueled by "political feuds."

"It's clear that we need to build a stronger working relationship between our D.A. and the county commission so that taxpayers' dollars aren't squandered on political feuds."

Past conflict rears its head

In June during budget hearings, Scott along with other elected officials fought with the commissioners over several additions to their budgets that they had said were needed to expand their office's resources worn thin by a spike in crime.

The dispute brought possibilities of lawsuits from Scott and Sheriff Victor Hill.

Scott said resources would play a role in whether the petition got signed in time. But she also said she is just being cautious as an elected official.

"I just don't rubber stamp things," she said.

Scott said she worried her prudence would be unfairly characterized as the cause for potentially costing the county millions of dollars.

"What I do not want is (for them) to try to make me the scapegoat for something they bungled," Scott said.

Michael Smith, the county attorney, said hypothetically in order to compel Scott to sign the petition, the county would have to file for a writ of mandamus and take the matter to court.

He also said her responsibility in the Gateway bond refinancing would be only to initiate the validation hearing, not to manage the substance of the project.

Gateway progress characterized by stops and starts

Property sales and revenue from a county-owned apartment complex were intended to pay back the bonds issued in 1999.

But unforeseen circumstances dictated by the economy have complicated repaying the money, said Emory Brock, the director of economic development.

After the 2001 terrorism attacks and the anthrax scare, the U.S. Postal Service pulled back, at least for the time being, on its commitment to build in the area, he said. As an anchor, the post office may have attracted more property sales, Brock said.

Also, the Rainwood Apartments have stopped being an effective revenue generator for the county after low-interest rates led to an increase home purchasing and a drop in rental occupancy rates, Brock said.

"It makes money but not enough to cover the costs," he said.

Nevertheless, once a planned hotel and conference comes on line, Brock said the vitality of the project would improve.

"It's going to have a huge impact on the area," he said. "It's going to be a big, big plus."

But the county commission has been hesitant about the conference center. Initially, it 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.

The county earlier this year almost financed the hotel, which it may own and operate. 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 isn't phased by tripping point in the project.

"We're as confident in the Gateway project now as we ever have been," he said. "This is a major, major project. It's a delicate process, and it takes time."