The process to develop and finance Atlanta's BeltLine, a proposed 22-mile loop of transit, green space and mixed-use development, has not been an easy one. But in December, lawyers from three Atlanta firms—Hunton & Williams, Greenberg Traurig and Murray Barnes Finister—worked on various aspects of the deal that resulted in a $78.1 million bond issuance that refinances some of the BeltLine's debt on more favorable terms.

Douglass P. Selby, a Hunton & Williams municipal finance partner, represented the city of Atlanta and Atlanta BeltLine Inc. in the reissuance of $64.5 million in Series 2008 BeltLine tax-exempt tax allocation district (TAD) bonds, which were remarketed to new investors. Selby also worked on the issuance of about $13.6 million in new TAD bonds.

The transaction, said Selby, refinances a private placement done in October 2008—right around the time Lehman Brothers collapsed—when credit markets were anything but favorable.

“It was the worst of all possible times,” said Selby. But, he explained, the BeltLine needed the money to acquire what's known as the Northeast corridor property, 4.5-mile section of the proposed BeltLine that was purchased from Gwinnett developer Wayne Mason. “SunTrust and Wachovia were kind enough to extend credit during that time,” Selby said. “The 2008 structure was always meant to be a temporary sort of placeholder.”

Now that credit markets have recovered a bit, he said, the BeltLine was able to reissue the bonds “without the burdensome call features that the 2008 financing had attendant to it … . The 2008 holders could put their bonds, requiring the city to refinance them. The new financing is more traditional long-term financing,” he said.

The new debt, which has an average yield of about 7.5 percent, matures in 2031, he said. Nine investors purchased the new issuance, which Selby said was oversubscribed.

“It was a very good sign, the fact that there were more buyers interested in buying the paper than there were bonds,” he said. He also said that the BeltLine project likely will go back to market later this year with an issue for new money purposes that will include city, county and school board increments.

Selby said his team, which also included tax partner William H. McBride in the firm's Raleigh, N.C., and Washington offices and Atlanta public finance associate Rachel L. Devenow, began working on the issuance with the leader of the investment banking syndicate, Wachovia (now Wells Fargo) in October. SunTrust and Jackson Securities also were part of the syndicate, which was represented by Teresa P. Finister of Murray Barnes Finister. Kenneth M. Neighbors from Greenberg Traurig served as disclosure counsel to the city. Veronica C. Jones, general counsel of the Atlanta Development Authority, the implementing agency for the BeltLine project, could not be reached for comment by press time.

Kilpatrick Stockton lawyers served as Delta Air Lines bond counsel in the company’s recent plan for two private debt offerings worth $1 billion.

Partner Benjamin W. Barkley confirmed that he and partner David M. Eaton, along with attorneys in the firm’s tax, employee benefits and environmental groups worked on the deal.

The offerings, which have not yet closed, are structured as high-yield private placements under Rule 144A of the Securities Act. The first $500 million in senior secured notes will be due in 2014; the additional $500 million in second-lien notes will be due in 2015. Both are part of the airline’s plan to refinance some $1.5 billion in debt, including repayment of outstanding debt under Northwest Airlines’ senior corporate credit facility. Delta and Northwest merged last year.

The unusual aspect of the deal, said Barkley, is the way it is secured. Rather than being secured by equipment or airplanes, he said, “These bonds are secured … by Delta’s Pacific route system, so basically it is their authority from the U.S. and Japanese governments to fly to Japan and Asia and places like that; and their slots—the right to fly at a particular time and in a particular airspace; and then their gates, which is the right to fly into a particular space.”

Barkley said Delta used similar securitization when it acquired Northwest. “It’s been done before,” he said, “but it is just sort of unusual.”

Davis Polk & Wardwell in New York also worked on the deal, handling aspects of the loan for Delta.

Though the financial crisis has managed to gut some practice areas—venture capital, anyone?—it’s proving a boon to others.

One beneficiary is bond work created when cash-strapped banks decide not to renew letters of credit. That’s the situation that pushed the Atlanta City Council on Monday to adopt a Series 2009 bond ordinance for funds not to exceed $750 million. A portion of that money will be used to refinance commercial paper issued for the city’s water and sewer department.

“That’s an example,” says Earle R. Taylor III, a partner in Kilpatrick Stockton’s public finance practice and counsel for the city on this deal. “The financial crisis has really been the majority of what I’ve worked on in the past year.”

He explains that three primary situations resulting from the credit crisis have boosted the need for refinancings. “It’s either the market for the bonds, in the case of auction-rate paper—the city had some of that—and the market seized up,” he says. “Or you’ve got bonds backed by an insurance company or a bank that gets into financial trouble and gets their credit rating downgraded and investors no longer want them, so the bonds get put back [to the lender]. Or you get a letter of credit that is not renewed or is terminated simply because capital is scarce and banks aren’t interested in providing those products anymore.”

In the case of the city’s water-sewer deal, he says Atlanta’s near junk-bond rating was not a factor in the banks’ decision not to renew their letters of credit. Rather, he says, just the availability and price of credit changed.

The banks which elected not to renew their letters of credit on the city’s water-sewer deal are J.P. Morgan Chase NA; Bank of America NA; Dexia Crédit Local and Lloyds Bank TSB plc.

Taylor says he hopes the bonds, which are slated to be sold in June, will bring in $600 million to $700 million.

Another recession-fueled deal: The city had about $441 million in variable rate demand bonds backed by a liquidity facility from Dexia, a European bank, Taylor says. But the renewal date was Friday, and Dexia elected not to renew. The bonds were set to amortize over 40 years, Taylor says, and if the city can’t get them refinanced, the amortization will shrink to a seven-year term starting in November. A shorter term would mean much higher payments for the city.

He says the city plans to remarket those bonds as long-term, fixed-rate bonds later this summer.

Taylor inked another credit-crisis-related deal because of an insurer’s downgraded rating.

In that deal, municipal bond insurer Ambac Financial Group was AAA rated when it insured the Georgia State University Foundation’s deal to purchase the old SunTrust headquarters at Five Points.

The deal was financed by variable rate demand bonds backed by Ambac, says Taylor, with J.P. Morgan Chase under a standby bond purchase agreement.

“Ambac is now downgraded as junk because of the financial crisis,” Taylor says. “So all those bonds are back at J.P. Morgan and bonds payable over 30 years are now due in five.”

Taylor says he’s in the middle of trying to restructure that $70 million to $80 million deal and get it refinanced. He says he hopes to close in early June.

“These are perfect examples of things we never thought would have happened in a million years, and they’ve happened,” he says. “It’s caused us to look at our documents and contracts in ways we never thought we would.”