A Look at Brookhaven’s Finances
Fast Facts:
- Brookhaven operates with a surplus of reserves every year, ranging from 25% to 49% of budget estimates
- Brookhaven is not able to carry a deficit because it is against Georgia state law
- Brookhaven would not be able to secure the highest credit rating (better than the US government), and would not have been able to give homesteaded residents a tax cut to city taxes each year for the past four years if our finances were not in excellent standing
- All City debt for capital expenditures is paid for by other revenue streams, not residential property taxes, except for the yearly 2.2 million park bond repayment which is well within the means of our operating budget
- The City did not use American Rescue Plan funds to pay debt… that would be illegal. Our auditors, in addition to the federal auditors, would have found and reported this to federal authorities already.
It is patently false that “Brookhaven is deficit spending.”
First, Georgia law prohibits deficit spending. Deficit spending would mean the City spends more than it has. Brookhaven practices conservative budgeting, and spends less than it takes in each year. At the end of each year since 2015, the City has added between $1 million and $2.5 million in surplus, which is earmarked for reserves, in addition to a balanced budget.¹
Second, City Council policy requires the City to maintain at least 25% in reserves. This means, at the end of the fiscal year, there is a reserve equal to at least 25% of the expenditure budget. The City Council, from time-to-time, uses the additional money (above 25%) in reserves for capital projects like greenspace acquisitions, new police cars or emergency repairs. In 2022, the unassigned reserve was $15.1 million, which was 45% of the budget. Though the 2023 fiscal year is not over, the City expects it will once again run a positive operating margin, adding to the reserves.
My opponent gets it wrong about the City’s debt.
Like any organization, the City uses debt financing for capital improvements. Both Standard & Poor’s and Moody’s Investment Services are credit rating agencies that have given Brookhaven AAA bond ratings, thus the “double” AAA rating, which is a rating that only six cities in Georgia have, and is a better credit rating than the US Government. Our coveted double AAA bond rating means Brookhaven is well run, fiscally sound and manages its debt well.
Moody’s Investor Services’ report states: “The Aaa issuer rating reflects the city’s exceptionally strong financial position that is supported by a rapidly growing and affluent tax base, competitive location within the dynamic Atlanta (Aa1 stable) metropolitan area, and prudent budget management.”
A good summary of the City’s debt can be found on pages 83-84 of the City’s annual financial report. As you will see, debt has funded many of our beloved projects, including the Peachtree Creek Greenway, park improvements, green space acquisitions and others. The only item financed by homeowner property taxes, via a bond, was the 2018 park bond overwhelmingly passed by residents, which currently is about $2.2 million a year and well within the means of our tax digest.
Revenues from our state-required hotel/motel tax means visitors at Brookhaven hotels finance 100% of the Peachtree Creek Greenway debt and commercial properties in the Special Services Tax District, “SSD”, pay the Urban Redevelopment Authority debt, which finances 100% of our new City Centre.
Once issued, accounting and auditing legal standards require copious disclosure and public reporting (as they should). Every year, the City is independently audited and that audit is reviewed by the State of Georgia. In addition to a AAA bond rating, the City has received the Excellence in Financial Reporting Award from the Government Finance Officers Association for the past eight years.
Resources
Brookhaven’s financial documents are always available for viewing on the City’s website:
City Hall
There has been alot of misinformation spread around about our new City Centre and therefore many questions asked.
FAQs:
- How much is the actual construction cost?
The maximum construction cost will be $63 million, which includes near-term construction cost increases. $13 million was budgeted for “soft” costs such as furnishings and fixtures, landscaping, and security.Construction cannot go over budget as we have a Construction Manager at Risk (“CMAR”), with Guaranteed Maximum. If over budget, the CMAR will eat the cost.
- How are we paying for it? Will my taxes be raised?
No residential property taxes will be used to fund the new City Centre; I would have fought the plan if it were funded with city taxes. Your property taxes will remain the lowest in DeKalb County, and homesteaded property owners will still continue to receive a tax cut for the fifth year in a row.
We are using the same funding mechanism as the Westside beltline, where commercial properties pay into a special services district (“SSD”) to fund a Urban Redevelopment Authority (“URA”), which can only use these funds for things that increase economic activity (can not be used for city operations). This includes:
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- public space, such as meeting and event spaces and outdoor gathering places,
- multi-use paths,
- bridges,
- right of way beautification, and,
- construction of linear parks like the Peachtree Creek Greenway.
Although increased commercial taxes can indirectly affect us, we were careful to make sure Brookhaven businesses still pay lower taxes than they would if their business was located in unincorporated DeKalb.
Our new City Hall will feature more than 6,000 square feet of revenue-generating community space, available to the public for rental and community functions, including a rooftop top terrace, an atrium and adjacent event space with catering kitchen. The rooftop terrace will have beautiful views of Brookhaven, Buckhead, and Stone Mountain.
Not only will it house City administration, which is currently in a rented, cramped, and outdated building, it will house Explore Brookhaven, which is currently renting space in Town Brookhaven. In addition, DeKalb County is constructing, with funds provided by Brookhaven, a new library across the street at Apple Valley and North Druid Hills (not part of this project). Coupled with the convenience of the MARTA station, having all of these public service buildings close to each other realizes residents’ desire to have a true City Center.
- Why can’t we build somewhere else cheaper?
Commercial property values, along with residential property values, have skyrocketed in Brookhaven. For years, we have looked and entered into discussions with different building or land owners, which were not feasible due to either prohibitive costs or unsuitability for our purposes.
We faced the same problem with the building of our new Public Safety building, but with creative thinking, we were able to purchase commercially unusable land next to the Peachtree Creek Greenway. The public safety building’s challenging site required some innovative engineering approaches, but we purchased this land for less than fair market value and built an economically and environmentally friendly world-class building. It just opened, you should go check it out next time you visit the Peachtree Creek Greenway (another innovative project).
Furthermore, the Brookhaven-Oglethorpe MARTA station is at the heart of our city. Building on the MARTA property provides the opportunity to be a catalyst for proper development of an activity center on the rest of the Marta property, along with creating multi-model connections from the station to Dresden Dr, Apple Valley Rd, Town Brookhaven, and Oglethorpe (which will be paid for by the SSD). Plus, there were no other areas found that were suitable for the SSD funding mechanism.
- Chamblee built their City Hall for $20 million, why does our hall cost so much more?
Our city hall and event center is twice the size of Chamblee’s city hall, and our building will include 60% public space, and will not be built using residential taxpayer funds.However, it’s not just the size and purpose of these buildings that are different. Factored into Brookhaven’s City Hall and Event Center’s $63 million price tag include:
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- Since 2019 there has been over 30% construction inflation. Chamblee’s Mayor was quoted in the AJC as saying that if they built their city hall today it would have cost $40 million. And it is forecasted to continue to rise. The local construction price index has risen 8.3% in the past year. The Brookhaven City Hall project estimate accounts for near-term construction cost increases. Finally, construction cannot go over budget as we have a Construction Manager at Risk (“CMAR”), with Guaranteed Maximum. If over budget, the CMAR will eat the cost.
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- We are building on a challenging lot. The underground parking alone cost over $10 million due to required shoring up against the MARTA tracks and Peachtree Rd. The architectural elements of the dome and public art that were designed with substantial public input, and requested by the Brookhaven Arts Council, account for about 3 percent of the total cost. The rest stemmed from the engineering and design challenges inherent to the location.
- I encourage you to view the plans here: https://www.brookhavenga.gov/publicworks/page/city-hall-project
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Park To Be Next Brookhaven Mayor
Former Brookhaven City Councilmember John Park will be the city's next mayor after winning a runoff.
Also, Brookhaven Councilmember Linley Jones has been defeated in a runoff by Michael Diaz. #gapol