Steve Tumlin has it right on the proposed restructuring of debt on the Hilton Atlanta/Marietta Hotel & Conference Center, the city-owned pink elephant.

The City Council is supposed to vote today on a complicated deal to pay off the outstanding $30 million bond debt on the property and issue up to $35.5 million in new bonds through the Downtown Marietta Development Authority.

Talk about fast tracking. The plan was handed to the council just last Thursday and is set for a vote today.

Tumlin, the leading candidate to succeed Mayor Bill Dunaway, wants the council to slow down, take another look, get advice from independent sources and even hear from concerned citizens. What an idea!

In a letter that ran in Monday's MDJ, Tumlin said extending and increasing "once again, the city's long-term indebtedness in whatever form for the Conference Center facility would be a penny wise and pound foolish decision."

Absolutely.

The objective of the new plan is to reduce monthly bond payments that are supposed to be covered by income from the company managing the hotel-conference center. When rates on bonds jumped last fall, the city faced a yearly shortfall of $300,000 between income from the property and the bond payments, forcing the city to use money from its general fund, i.e., taxpayers.

The new deal would require the city to pay a staggering penalty of up to $4.5 million for prepaying the existing $30 million debt. In addition, the city would have to pay a $350,000 commission to bond advisor Gordon Mortin of Morgan Keegan - on top of $300,000 paid last year to refinance the bonds, subsequently withdrawn because of high interest rates.

Tumlin boiled all this down to an example that exposes the fallacy of the latest debt plan for the ever more costly hotel and conference center. He suggested not many, if any, Marietta homeowners with such a short time for consideration would "be willing to pay a $40,000 up front penalty with a $3,500 broker's fee in order to save $250 a month on their mortgage payment on a $295,000 principal and less than 20 years remaining on the mortgage." It would take more than 13 years to reach "the break-even point of paying the penalty."

Similarly, this proposed new deal would cost the city around $4 million "to save $25,000 a month in conference center bond payments," Tumlin said.

And again the taxpayer is left out of the loop.

"Given the financial woes associated with that 1996 non-taxpayer approved bond, it would have been prudent to learn from our past and go back to the taxpayer for approval," Tumlin wrote.

Tumlin also hit the nail squarely on the head in calling on the council to find a bond consultant not involved in underwriting the bonds - as Mortin is - or seek an advisory opinion on the deal from the state attorney general's office. It should be both, not either/or.

No way should the City Council vote on this deal today.

dmckee9613@aol.com