City of Stockbridge/Facebook, enhanced by CityLab

This would be the de-gentrification of the city of Stockbridge, with its wealthy areas carved away for a new city while remaining residents pick up the substantial tab left behind.

Last week, Georgia Governor Nathan Deal signed two bills that invite a future where the state’s cities can be shattered into pieces, along hyper-segregated lines. The bills allow the state of Georgia to take land away from the city of Stockbridge to form a new adjacent city called Eagle’s Landing. But Stockbridge, which sits in the Henry County suburbs just south of Atlanta, does not want to give up any of its land for Eagle’s Landing and for good reason—the neighborhoods slated for secession are some of Stockbridge’s wealthiest communities and include one of its major commercial corridors.

There has never been a situation in Georgia where land and property have been swiped—de-annexed is the term of art here—from one city to produce a new city. But these are the new normals of metro Atlanta as its controversial cityhood movement continues to bend and cross all kinds of municipal, racial, and financial lines.

This is why Moody’s Investors Service is flagging the Eagle’s Landing play, saying that this would cause “a potential blow” to cities across the state. A credit forecast analysis released by Moody’s this week said the Eagle’s Landing legislation that Gov. Deal signed would likely negatively impact all local governments across Georgia, “because they establish a precedent that the state can act to divide local tax bases, potentially lowering the credit quality of one city for the benefit of another.”

One of the major problems with this deal is that Stockbridge currently holds millions of dollars in bond debt. Eagle’s Landing stands to take more than half of the city’s industrial and commercial properties, including all of its hotels. Much of Stockbridge’s economic output comes from a stream of retail outlets, restaurants, and grocery stores along Eagle’s Landing Parkway—all of which the city would lose to Eagle’s Landing, along with a third of its population.

“What it amounts to is that this particular de-annexation is looking to take that primary economic corridor out of our city limits and put it in this other city, and that would be revenue we no longer have to pay off our debts that we owe,” said Stockbridge Mayor Anthony Ford. “If it goes through, we would have to impose a property tax on the remaining folks, and we don't have a property tax right now. Our budget is roughly just over $9 million and $5 million of that comes out of this primary economic corridor.”

Stockbridge does not look like your average city. It has no contiguous border or anything that even resembles a shape. It looks more like a paint splattering, particularly something out of the Jackson Pollock mold. Eagle’s Landing basically wants to absorb a bunch of the splats from what’s considered the southern portion of Stockbridge, along with some unincorporated areas lying amidst the blotches.

City of Stockbridge

However, when looking at the economic landscape, there are some clear differences between the areas Eagle’s Landing is claiming  compared to the areas it wants to leave behind. Here’s Moody’s tally of that:

With the de-annexation, Stockbridge’s median family income (MFI) would likely decline and be well below that of Eagle’s Landing. The de-annexation process would divide up 431 census blocks with an MFI of $50,000 — $90,000 in 2016. Eagle’s Landing would include 69 of the 70 census blocks with an MFI of $74,000 or more. In contrast, 85 percent of the 253 census blocks with an MFI below $56,000 would fall within Stockbridge’s boundaries.

The Eagle’s Landing legislation doesn’t contain any language that would obligate the new city to help pay off Stockbridge’s debts. Nor do Eagle’s Landing’s architects feel it necessary to have the new city help pay the old city’s debts. Vicki Consiglio, chairman of the Eagles Landing Educational Research Committee, said the concerns around her new city project are “public hysteria,” and that financial institutions like Moody’s are “perpetuating this illusion.”

According to a letter written by Allison Halron, who sits on the committee with Consiglio, the de-annexation of Eagle’s Landing won’t affect Stockbridge’s bond repayments because those debts are paid from a revenue stream that does not include the residents and businesses included in the blueprint for the new city. Repayment of those bonds and loans are not dependent upon the assessed property values of the areas leaving Stockbridge, said Halron, because Stockbridge doesn’t collect a property tax.

Stockbridge’s revenues are collected mostly from sales taxes and fees imposed on residents for things like utilities and insurance. A feasibility study conducted by the University of Georgia’s Carl Vinson Institute of Government, backs up Halron’s claim that repayment of Stockbridge bonds won’t be affected by the Eagle’s Landing de-annexation. However, it does state that the city would lose a considerable amount of revenue it uses for paying general operational costs based off the volume of property and people taken away from it. Reads the Vinson Institute study, released last November:

We estimated that if the study area is de-annexed, Stockbridge will lose $4,199,033 in gross revenues. ... The city receives local option sales taxes (LOST) and operates under a current agreement with Henry County, which runs through 2022. LOST revenue is a significant revenue source and a new agreement will need to be re-negotiated if de-annexation occurs. The loss from this revenue stream could be as high as $3,785,414, which would drive the total revenue loss up to $6,149,557.

Moody’s analysis reflects the overall financial health of the city, which is based on the economic profile of the city of Stockbridge in its current state. If Stockbridge suddenly could not pay its bills and debts, then it would need, as the mayor said, to impose a new property tax on its residents to fulfill its contractual obligations to bondholders and beyond. That would be a tremendous financial burden on the residents left behind by Eagle’s Landing. This would be the de-gentrification of Stockbridge, with residents effectively taxed for not being fortunate enough to live within the boundaries of the new city.

“It is not clear how Stockbridge and, in turn, Henry County, would be affected if de-annexation proceeds and there is a shortfall,” reads the Moody’s report. “De-annexation would leave Stockbridge with a smaller and less wealthy tax base and may force it to renegotiate its contractual obligations.”

This is exactly what other financial analysts told Gov. Deal before he signed the bills, as did Mayor Ford and his staff. But Deal signed them anyway, now putting the credit rating of all cities across Georgia at risk. Consiglio was unperturbed by this, telling CityLab that such financial forecasts were “spun” out of misinformation.

“Obviously the governor didn't see a problem with this, and neither did the legislature, and they knew about it,” said Consiglio. “Everybody is crying wolf, when there's not a problem.”

Ford announced today that Stockbridge is filing a lawsuit to stop the formation of Eagle’s Landing from happening. The outcome of that case will determine the future of cityhood in Georgia. There’s long been speculation that the wealthy residents of the neighborhood of Buckhead have wanted to secede from the city of Atlanta. A ruling in favor of Eagle’s Landing would allow that to happen.

Such secessions are as much about race as they are about wealth. The Eagle’s Landing de-annexation is happening just as Stockbridge is being led by its first black mayor and its first all-black city council in its near-100 years of existence. Many of the other cities formed around metro Atlanta came when county governments became led by African Americans in recent years as well.

“I don't think it’s racially neutral at all,” says Dan Immergluck, a professor in Georgia State University’s Urban Studies Institute who’s been following issues of race and property around metro Atlanta. “This is an issue of the power shifting in Henry County in general and there is this broader context of a county that has gone from majority white to—I don't know if it’s majority African-American yet but it's going that way. So, I think there is a political fear of who's rising into power.”

The vote to officialize the municipalization of Eagle’s Landing will take place this coming November, but the only people who get to vote are those who live within the proposed Eagle’s Landing boundaries. Meaning, the residents of Stockbridge have no say in the plans to take huge chunks of Stockbridge away from them—de facto disenfranchisement. No matter how much power is shifting to new black mayors and city council members, white and wealthy residents are finding ways to maintain their own sovereignty regardless. Mayor Ford remains optimistic, though.

“When it’s all said and done we will remain unified,” says Ford. “So many things have been done wrong in this unprecedented ordeal here, but we will overcome this and then have the opportunity to mend the community back together and move the city forward. We have several more months to go.”

Editor’s note: Eagle’s Landing is written with and without an apostrophe in official documents, names of streets and local organizations. CityLab uses the apostrophe unless referring to an organization or entity that does not.

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