How Atlanta suddenly found $177 million for its troubled water system

ATLANTA — As Atlanta faces the daunting and expensive task of updating its aging water system, a new influx of cash is coming to help — and it’s from a surprising source.

In mid-June, days after a crippling series of water main breaks became national news, the City Council approved an amendment to an ordinance which freed up $177 million from what is essentially a savings account for the Department of Watershed Management. The accounting maneuver to tap the bond reserve fund comes with some potential risk, but it will boost the department’s budget by nearly a quarter.

The move comes amid new urgency to find money to improve Atlanta’s water system. The water main breaks that affected more than half the city in late May and early June put a harsh spotlight on city leaders who have often invested more in Atlanta’s troubled sewers than its creaky drinking water system.

The reserves are there as a backstop for bondholders and the ratepayers, but the city’s top financial officer said he’s confident watershed management has sufficient revenue and reserve funds it can access. Atlanta Mayor Andre Dickens, meanwhile, has said he will seek federal funds to help with what could be a multibillion-dollar plumbing problem.

In the near term, watershed management will soon have millions more it can pour into its capital improvement projects.

“We understand that the utility’s fighting many different fights in terms of its infrastructure needs and its capital needs,” Mohamed Balla, the city’s chief financial officer, told The Atlanta Journal-Constitution.

“It has more work than it can handle … We want to do all our efforts before we have to go back and raise rates,” said Balla, who was previously the deputy commissioner and CFO of the city’s watershed management department.

‘Best interest’

In the late 1990s, Atlanta entered into two consent decrees with the federal government that mandated improvements to the city’s sewers because they routinely overflowed and polluted the Chattahoochee and South rivers.

The improvements were costly, but the consent decrees didn’t come with any funding to pay for the updates. The city didn’t have the cash on hand, so it borrowed about $3 billion by selling bonds, Balla said.

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