'Poison Pill' Deannexation Provision Would Charge Nearly $200M To Buckhead City

ATLANTA, GA — A Buckhead City would have to refund Atlanta hundreds of millions of dollars if voters choose to split off as a new city.

In an apparent effort to discourage a Buckhead cityhood move, the Atlanta City Council voted Wednesday to add a poison pill option to a bond sale that requires a new city to repay nearly $192 million to Atlanta in the event of a de-annexation vote in November.

The special feature that was added into the bond sale calling for an “extraordinary optional redemption … exercisable by the city in the event that the general assembly of the state enacts a de-annexation act” came as a surprise to many of the councilmembers.

“What we’re talking about now is a provision that was sneaked into being in the dead of night,” said Councilmember Howard Shook, who represents much of Buckhead. “How many of you knew about this poison pill provision in this until today or yesterday?”

Jennifer Ide, the outgoing council member who also heads the finance committee, expressed surprise at the option.

“I didn’t know about this either,” Ide said during a special call meeting Wednesday. “I do understand the concern of the city to meet its bond obligations if there were to be a significant change in its tax base.”

The provision would give the council the option to create a special district for any areas that leave the boundaries of the city, enabling city officials to set up the proportionate amount of any assets or property severed by the change in boundaries. Those assets would then be assessed according to the fair share of the bonds.

Mohamad Balla, the city’s chief financial officer, said the move was a necessary response to a lending community unnerved by the prospect of Atlanta being split apart.

“Given the landscape that we’re in, any ideas regarding de-annexation regarding any part of the city presents an inherent risk to the city going forward and is in the best interest of the fiduciary for those options to be in place,” Balla told the council.

If that happened, he said, the option to levy charges against a new Buckhead City wouldn’t be automatic and would require subsequent action by the council.

Shook vehemently opposed the measure, calling it a threat rather than an option.

“This is a brutal raw act of political bullying aimed at one part of the city, which is interesting given all the rhetoric for everyone to work together,” he said. “The poison pill is aptly named
The poison’s reserved for north-side households only.”

Ide resolved that the council’s hands were tied on the option.

“I hope that the city stays intact and this is never necessary,” she said. “But today, with this having gone out to the market yesterday, it’s too late to unwind this.”

The measure passed with an 11-1 vote, with Shook opposing it.