PLANTATION POLITICS

How Buckhead’s Secession From Atlanta Would Destabilize the Entire State

A renewed effort to sever the whitest and wealthiest area of Atlanta from the rest of the city would have sent the region into a financial tailspin.


Luxury homes in the Buckhead area of Atlanta, which is reviving its efforts to secede from the city. Photographer: Elijah Nouvelage/Bloomberg

By Brentin Mock
March 2, 2023 
Brentin Mock is a writer and editor for CityLab in Pittsburgh, focused on issues of racial equity, economic inequities, and environment/climate justice.

A group of Georgia lawmakers has revived efforts to sever the tony, upscale neighborhoods of Atlanta’s Buckhead from the rest of the city — a move that city leaders say could end up financially ruining the entire Atlanta metro region, if not the whole state.

On Monday, a state senate committee passed two bills that would allow for residents of the wealthiest and whitest areas in Atlanta to vote in November 2024 to secede from the city and create a new municipality called Buckhead City. However, the full state senate rejected the legislation Thursday evening with 33 senators voting against it. Still, the movement isn't going anywhere: Proponents pledged to continue supporting secession in future legislative sessions.

Governor Brian Kemp’s administration had expressed constitutional concerns earlier in the week. A Feb. 28 letter to lawmakers from Kemp’s Executive Counsel David B. Dove asks lawmakers to settle dozens of questions related to how municipal bond debt will be handled, where Buckhead City students would attend school if taken out of Atlanta’s public school system, how the water and sewage system would be divided up and other uncertainties concerning parks and policing.

“Without thoughtful consideration, these bills, together, may retailor the cloth of governance for Georgia’s municipalities in ways that will ripple into a future of unforeseen outcomes,” reads Dove’s letter.

It’s worth unraveling what that kind of retailoring looks like, and Atlanta officials are already anticipating years of expensive litigation if the secession were to happen. Atlanta’s fate is tied to that of dozens of surrounding suburban towns and cities through various tax revenue-sharing and bond programs, and a departure of a significant share of Atlanta’s population and property could send the region into a financial tailspin, city officials worry.

The Kemp administration’s letter asks state lawmakers how Atlanta’s debt would be impacted if the city lost what’s estimated as 20% of its population and nearly 40% of its properties and tax revenue to the new Buckhead City.

The Buckhead City Committee, the organization behind the push for cityhood, responded to Dove’s letter in an email that debt agreements would be unaffected because a special taxing district within the would-be Buckhead City would continue to make debt payments and honor contractual obligations.

The city of Atlanta is currently embroiled in several massive economic development projects, including the BeltLine and the ambitious Centennial Yards project, slated to bring hundreds of apartments, houses, hotels, retail and restaurants in redeveloping its south downtown quarters. The city is also committed to $750 million in infrastructure projects it has proposed to complete over the next five years.

All of these ventures are funded in large part through sales taxes collected from various cities and counties and distributed by municipal revenue sharing programs.

How breaking apart Georgia’s largest city and creating a new one using Atlanta’s heaviest revenue-generating properties would impact these programs is anybody’s guess given the unprecedented nature of the plan. But the guesses don’t sound good. Credit and bond rating agencies forecasted financial doom and ruin for Georgia cities if this kind of de-annexation were to occur when they weighed in on a smaller secession attempt in 2018: the failed de-annexation plot tried by a wealthy enclave from the city of Stockbridge, in metro Atlanta’s southern quarters.

In response to Dove’s inquiry about what impacts this legislation would have on municipal bond ratings and further de-annexation, the Buckhead City Committee responded in its email that ratings agencies, bondholders and “numerous industry professionals” have been consulted to ensure that there would be no adverse impacts due to the secession.

Atlanta city leaders are unconvinced, though. Bloomberg CityLab spoke with Courtney English, the senior advisor to Atlanta Mayor Andre Dickens, about how these tax and bond programs are set up, and how a possible Buckhead divorce could end up destabilizing not just Atlanta, but cities throughout the entire metro Atlanta region. This interview has been edited for clarity and length.

Atlanta is currently involved in several huge economic development projects, including the BeltLine, expansion of the airport, and redevelopment of the Gulch. How would a Buckhead secession impact those projects?

It certainly slows, if not stops many of them, in part because the city of Atlanta has the highest municipal bond rating possible and over $250 million dollars in reserves. And what this effectively would mean is that up to 40% of the underlying revenues that support those bonds that ultimately go to support those projects will be gone.

And so bondholders will likely do a capital call. Somebody has to make up for this loss of revenue and so that would be devastating for Atlanta and the residents of Buckhead because we're talking not millions of dollars, we're talking billions of dollars that have to be accounted for with the creation of the city.

What this could potentially mean is that the de-annexation of Buckhead City could potentially also mean a tax increase imposed by those cities who lost their revenue.

We're talking about decades of water and sewer improvements. We're talking about the world's busiest and most efficient airport. We're talking about a $2.5 billion redevelopment project in the Atlanta BeltLine. We're talking about a $750 million infrastructure package. We're talking about the schools and the debt that they owe and their outstanding debt on their facilities. And the list goes on.

And so any of those projects whether it’s the school construction, whether it's the BeltLine, whether it's proposed MARTA rail projects. But all of those projects candidly come into question because the underlying revenue stream is called into question now. Moreover, not just for the city of Atlanta, but every single municipality in the state. So if you are a municipality in Valdosta, Savannah, or Albany, Georgia, and you're looking to build anything using municipal financing, the bottom line is going to say, well, because this legislation authorizes the de-annexation of any city, any municipality in the state of Georgia, I would wager that the interest rates will skyrocket on all municipalities throughout the state of Georgia.

There are several Atlanta-owned properties that are currently being financed by taxpayers, including the proposed new public safety training center, that could be affected by a secession. Could you provide insight on how that would be impacted?

The legislation contemplates essentially that areas that are not in the city of Atlanta limits, but the city owns — those assets would automatically get subdivided and sold off. And the proceeds from that sale would be divided among the city of Buckhead and the city of Atlanta on a pro rata basis. And so that calls into question that any asset that the city owns but is not in the confines of the city is put at risk, and that includes a significant portion, if not all of the Atlanta airport, for example.

The legislation also calls on Atlanta to sell city-owned land within Buckhead limits, such as parks and firehouses, to Buckhead City at far below market rates. Given that there’s no real precedent for those kinds of arrangements, do you foresee loads of litigation over how to settle those kinds of matters?

It's going to be a lawyer's dream. But effectively, I think that our cities will suffer. Atlanta and residents of Buckhead and people throughout the region are going to suffer, and lawyers are going to get rich because we will be tied up in litigation for years

What this legislation contemplates is selling city of Atlanta assets for pennies on the dollar, literally. Tens of millions of dollars in real estate would be sold for $100 an acre. That's just one example. Fire stations, water, and sewer components will be sold again for pennies on the dollar. And so what this ultimately means is that citizens who have paid into these systems for years would be losing those assets and access to those assets for next to nothing. So I would envision years of litigation about compensation. This legislation doesn't contemplate how you divide a sewer system, for example; it just says that they would pay somewhere around $200,000 for it. Well, our sewer system is almost a $7 billion a year entity. I don't know how you subdivide those pipes, which are connected to a station that will still be owned by the city of Atlanta. And so it raises tons of legal questions about assets that certainly would lend [themselves to] litigation.

Explain the tax-sharing programs and how an Atlanta secession would impact that, especially in terms of how metro suburbs would be affected.

Payments that accumulate from the sales tax go into this large pot that the county collects and then divides amongst cities based on that negotiated agreement that they landed on in December. And so it is primarily used for a variety of things, to support general fund services — and that’s everything from fire support, infrastructure projects, sidewalks, roads and so forth. A majority of the smaller cities throughout the region use that money to support fire and police services.

These tax-sharing arrangements have to be renegotiated every certain number of years, and this past year, in December, our mayor led the renegotiation for how sales tax dollars get divided between cities and the county of Fulton County. And essentially they arrived at an agreement that we think was equitable, but what a creation of a new city would mean is that, one, you have to open up that negotiation again. But two, and probably more importantly, because you're creating a new city, it would further divide the sales tax — and that was not contemplated in that negotiation.

(Updated with the result of the state senate vote against the secession legislation.)