Savage v. State of Georgia , 297 Ga. 627 ( 2015 )

In the Supreme Court of Georgia
Decided: June 29, 2015
S15A0277. LARRY SAVAGE v. STATE OF GEORGIA et al.
S15A0278. RICHARD A. PELLEGRINO v. STATE OF GEORGIA et al.
S15A0279. T. TUCKER HOBGOOD v. STATE OF GEORGIA et al.
NAHMIAS, Justice.
Appellants Larry Savage, Richard Pellegrino, and Tucker Hobgood
challenge the trial court’s validation of revenue bonds that will be used to help
finance a new stadium in Cobb County for the Atlanta Braves major league
baseball team. The bonds for the stadium project are to be issued pursuant to an
intergovernmental agreement between Cobb County and the Cobb-Marietta
Coliseum and Exhibit Hall Authority, under which the Authority agrees to issue
bonds to cover much of the cost of constructing the stadium and the County
agrees to pay the Authority amounts sufficient to cover the bond payments not
covered by the licensing fees paid by the Braves. In these consolidated appeals,
we conclude that the intergovernmental contract is valid; that the issuance of the
bonds will not violate the Georgia Constitution’s debt limitation clause,
gratuities clause, or lending clause or Georgia’s revenue bond laws; and that the
process used to validate the bonds was not deficient. We therefore affirm the
trial court’s judgment validating the stadium project bonds.
1. The Cobb-Marietta Coliseum and Exhibit Hall Authority was
created in 1980 as “an instrumentality and a subordinate public corporation of
the State of Georgia” for the purpose of “development and promotion in this
state of the cultural growth, public welfare, education, and recreation of the
people of this state.” Ga. L. 1980, p. 4093, § 2. Since its creation, the Authority
has overseen the construction of the Cobb Galleria Centre, Galleria Specialty
Mall, and Cobb Energy Performing Arts Centre, and it continues to oversee the
management of those complexes. In 2013, representatives from the Authority,
Cobb County, and the Atlanta National League Baseball Club, Inc. (the Club)
began to discuss building a new 41,500-seat stadium for the Braves in Cobb
County.1 Those discussions resulted in a Memorandum of Understanding,
which was presented to and approved by the Authority on November 25, 2013.
Based on that memorandum, the County, the Authority, and the Braves parties
1
The Braves have played their home games in the City of Atlanta since moving from
Milwaukee, playing at Atlanta-Fulton County Stadium from 1966 to 1996 and at Turner Field since
1997.
2
executed a number of documents on May 27, 2014, which form the basis of the
stadium project.2 The five main agreements are as follows:
(a) The Development Agreement: The Development Agreement
provides that the Braves parties will oversee the construction of the stadium
project with approval and oversight by the County. The Braves parties, who
own the land on which the stadium will be built, will convey to the Authority
the “stadium site,” which will consist of the footprint of the stadium and any
Authority parking areas. The Authority will retain title to the stadium site, and
the Authority will also own “all real property constructed, installed and placed
on the site,” including the stadium, the public infrastructure, and “all items
permanently affixed thereto and therein.” The Braves parties will retain
ownership of “certain specific Improvements, fixtures, furnishings, equipment,
other . . . personal property to be placed in or upon the stadium and related
property, and other tangible property,” including items such as seating,
scoreboards, lockers, and carpet. The Braves parties will also own and manage
a “private stadium parking area of not less than 6,000 spaces.” In addition, the
2
The “Braves parties” consist of the Club, the Braves Stadium Company, LLC, the Braves
Construction Company, LLC, and BRED Co., LLC. Although these entities are not all parties to
every agreement, we will refer to them collectively for convenience.
3
Braves parties will own the land surrounding the stadium, where they intend to
develop a mixed-use retail, entertainment, residential, hospitality, and office
district.
The total cost of the stadium project is anticipated to be $622 million, with
a maximum cost of $672 million. Revenue bonds issued by the Authority will
pay for $368 million (about 55 to 60%) of the project. The Cumberland
Community Improvement District will contribute $10 million to the project, and
the County will contribute $14 million for transportation improvements.3 The
remaining cost will be paid by the Braves parties, with a contribution of at least
$230 million and the option to increase that amount by $50 million as necessary.
The Development Agreement specifies that none of the money coming from the
government entities will be used for the “improvement or alteration of any
privately-owned property.” The project is scheduled to be completed by
February 1, 2017.
(b) The Operating Agreement: The Operating Agreement grants
the Braves parties a license for exclusive use of the stadium site, the stadium,
3
These additional government expenditures are not at issue in this case, which involves only
the validation of the bonds.
4
and the Authority’s parking areas from May 27, 2014 until December 31, 2046,
with an option to extend the license through December 31, 2051.4 During this
period, the Braves parties may lease or license use of these areas to third parties,
and the County may hold three events per year at the stadium, totaling up to ten
days per year. At the end of their license, the Braves parties must surrender the
stadium site to the Authority or County but have the right to remove property
owned by them unless such removal would result in the stadium “not being
susceptible to use in its normal and customary manner as a multi-use sports
facility.”
During the period of the license, the Braves parties have a right to all
revenues from the stadium, including from the Authority’s parking areas and
from advertising in the stadium and on any marquees built on the stadium site
or on County land. The Braves parties also may sell the naming rights to the
stadium and keep the resulting revenues. Beginning in 2017 and continuing as
long as they retain the license, the Braves parties will pay the Authority a yearly
license fee of $3 million, and during the 30-year term from the expected
4
The Braves parties also entered a Non-Relocation Agreement, committing the team to play
their home games at the new stadium from project completion in 2017 through the 2046 major
league baseball season.
5
completion date in 2017 to the end of 2046, the Braves parties will pay an
additional annual license fee of $3.1 million. When the Operating Agreement
terminates, the Braves parties have the exclusive option to buy the stadium,
stadium site, and/or Authority’s parking areas for 50% of fair market value. The
Operating Agreement states that the County and the Authority “believe that the
development and construction of the Stadium will provide a significant and
much needed catalyst for revitalization and continuing redevelopment of the
property in the vicinity of the Stadium.”
(c) The Bond Resolution: The Bond Resolution, which was
approved in nearly identical versions by the Authority and the County
Commission, authorizes the Authority to issue revenue bonds for up to $397
million to finance the stadium project and cover the cost of issuing the bonds.
The maximum principal and interest payment on the bonds shall not exceed $25
million per year, and the final maturity date of the bonds will be no later than 30
years after issuance, which coincides with the end of the Braves’s initial license
term.
The bonds are limited obligations of the Authority and “shall not
constitute . . . an obligation, debt or a pledge of the faith and credit of the
6
County or the State of Georgia, nor shall the County or the State be subject to
any pecuniary liability thereon.” The Bond Resolution further explains that the
bonds are payable only from the pledged security, which includes the stadium
site assets owned by the Authority and the payments made under the
Intergovernmental Agreement. The Bond Resolution recites that “[a]fter careful
study and investigation, the Authority hereby determines that the Project is
permitted by the [Authority’s enabling act] and that financing, acquisition,
construction, and equipping of the Project will be in furtherance of the
Authority’s public purpose.” In the County’s approval of the Bond Resolution,
the County Commission recites its findings that the County’s citizens will get
“continuing recreational and other benefits from the Project” and that “the
Project will promote tourism, promote the economy, and bring other benefits to
the County and the State.”
(d) The Intergovernmental Agreement: To provide security for the
bonds, the Authority and the County entered into the Intergovernmental
Agreement (IGA). Under the IGA, the Authority agrees to issue the bonds, and
the County in turn agrees to pay an amount sufficient to cover the principal and
interest on the bonds as well as the administration costs and other reasonable
7
fees incurred by the Authority in connection with the bonds and the stadium
project. The County will do so using “any funds lawfully available to it,” and
to the extent those funds do not cover the payments, the County agrees to levy
ad valorem property taxes as necessary.5 The license fees the Authority receives
from the Braves parties will also be put toward payment of the bonds.
In the IGA, the Authority appoints the County as its agent and
representative for constructing the project on the Authority’s behalf, and the
County agrees to take responsibility for all project-related duties, including
overseeing the Braves parties as outlined in the Development and Operating
Agreements.6 The IGA recites that its term will not exceed 50 years and that
when the bonds are no longer outstanding and the Operating Agreement has
terminated, the County will have the right to acquire title to the Authority’s
5
The County’s financing plan submitted with the Memorandum of Understanding indicates
that the County plans to use hotel/motel and rental car taxes as well as reallocation of ongoing annual
revenue to make the payments.
6
The County’s responsibilities include selecting a construction manager, who will be
obligated to ensure that the stadium project is constructed and equipped within the budget and time
set out in the project documents. The County will also designate a project manager, who will
oversee the project and review and approve each application for payment of construction costs from
the trust. The Braves parties will submit stadium design documents to the County for review and
comment, and when the County requests, the Braves parties must provide a list of all contractors and
subcontractors working on the project.
8
property in the project.
(e) The Trust Indenture: The Trust Indenture is an agreement
between the Authority as the bond issuer and the U.S. Bank National
Association establishing a trust. The trustee is assigned the right to receive the
payments made by the County under the IGA and the license fees paid by the
Braves parties, and also holds a security interest in the stadium project’s
property. The agreement defines the bonds as limited obligations of the
Authority payable solely from the trust estate, and the trustee promises to pay
the amount of the bonds only from the trust estate. If the Authority defaults on
its obligations, the trustee is given the rights and remedies that the Authority has
against the project under the IGA.
2. After all of these agreements were entered, the Authority notified
the Cobb County district attorney that it proposed to issue the revenue bonds.
A bond validation hearing was then scheduled in the Cobb County Superior
Court, and after notice was published on June 27 and July 4, 2014 in the
Marietta Daily Journal, the hearing was held on July 7. By the time of the
hearing, the court had received 16 motions to intervene from Cobb County
residents, including the three Appellants in this case; nine of the residents,
9
including the three Appellants, appeared at the hearing and were permitted to
intervene and present evidence and oral argument. At the hearing, the State
proffered the relevant documents, and Hobgood called witnesses and proffered
other evidence. Some of Hobgood’s proffered evidence related to the
negotiations between the County, Authority, and Braves parties, but the trial
court sustained the Authority’s objections that the negotiations were not relevant
to the validity of the bonds. On July 25, 2014, the trial court issued a 38-page
order confirming and validating the stadium project bonds. Each Appellant filed
a timely notice of appeal, and the three appeals were consolidated for decision
by this Court. The Court heard oral arguments on February 3, 2015.7
3. “[W]hether a proposal to issue bonds is sound, feasible, and
reasonable is a question for the trial court, and its findings about soundness,
feasibility, and reasonableness must be sustained on appeal if there is any
evidence to support them.” Greene County Dev. Auth. v. State, 296 Ga. 725,
726 (770 SE2d 595) (2015). Of course, if the issuance of the bonds would be
illegal, they cannot be validated. See Nations v. Downtown Dev. Auth. of the
7
At the bond validation hearing, all of the intervenors appeared pro se. On appeal, Savage
and Hobgood (who is an attorney) are representing themselves. Pellegrino is now represented by
attorney Gary Pelphrey, who was an intervenor in the trial court but did not appeal.
10
City of Atlanta, 255 Ga. 324, 328 (338 SE2d 240) (1986) (Nations I)
(invalidating two provisions of a bond resolution because they violated the
Georgia Constitution). Compare Reed v. State, 265 Ga. 458, 459 (458 SE2d
113) (1995) (“Because the contractual payments [guaranteeing the bonds] are
a lawful source of income, and the trial court had the contract before it, there
was evidence to support the trial court’s findings of feasibility.”).
There is no dispute that the bonds for the stadium project are adequately
secured by the County’s pledge under the Intergovernmental Agreement to
cover all bond costs not covered by the license fees paid by the Braves parties.
The challenges to the bond proposal instead rest on claims, made by the three
Appellants in various combinations, that the IGA is not a valid
intergovernmental contract under the Georgia Constitution, and that the issuance
of the bonds violates the Constitution’s debt limitation clause, gratuities clause,
and lending clause, as well as Georgia’s revenue bond laws. For the reasons
discussed below, these arguments fail, and we therefore conclude that the trial
court did not err in validating the bonds. Pellegrino and Hobgood also raise
several challenges to the procedures used in validating the bonds, all of which
we conclude are meritless.
11
4. We begin by addressing whether the Intergovernmental Agreement
between the County and the Authority is a constitutionally valid
intergovernmental contract. See Ga. Const. of 1983, Art. IX, Sec. III, Par. I (a).8
The Constitution establishes four main requirements for such contracts, and the
IGA clearly meets the first two: it is a contract between “political subdivision[s]
of the state” and it is for a period “not exceeding 50 years.” Id. Savage and
Hobgood argue, however, that the IGA fails to meet the other two requirements,
asserting that it is not for “joint services, for the provision of services, or for the
joint or separate use of facilities or equipment,” and that it does not “deal with
activities, services, or facilities which the contracting parties are authorized by
law to undertake or provide.” Id. They are incorrect.
8
The intergovernmental contracts clause says, in relevant part:
The state, or any institution, department, or other agency thereof, and any county,
municipality, school district, or other political subdivision of the state may contract
for any period not exceeding 50 years with each other or with any other public
agency, public corporation, or public authority for joint services, for the provision of
services, or for the joint or separate use of facilities or equipment; but such contracts
must deal with activities, services, or facilities which the contracting parties are
authorized by law to undertake or provide. By way of specific instance and not
limitation, a mutual undertaking by a local government entity to borrow and an
undertaking by the state or a state authority to lend funds from and to one another for
water or sewerage facilities or systems or for regional or multijurisdictional solid
waste recycling or solid waste facilities or systems pursuant to law shall be a
provision for services and an activity within the meaning of this Paragraph.
12
(a) We first consider the Intergovernmental Agreement’s subject
matter. Unlike the local authorities in cases like Frazer v. City of Albany, 245
Ga. 399 (265 SE2d 581) (1980), and Nations v. Downtown Development
Authority of the City of Atlanta, 256 Ga. 158 (345 SE2d 581) (1986) (Nations
II), the Authority here will not be leasing the stadium to the County for its own
primary use; instead, the facility is being licensed exclusively to the Braves
parties for at least the first 30 years after completion. Thus, the IGA is not for
the joint or separate use of facilities by the government parties. However, the
IGA does qualify as a contract for services. The Authority agrees to issue the
bonds, to acquire and hold title to the real property involved in the stadium
project, and to license the property to the Braves parties. And the County agrees
to appoint construction and project managers and to oversee the design and
construction of the stadium that the Authority will own for at least as long as the
bonds are outstanding.
Savage and Hobgood argue that the services provided by the Authority are
insufficient. It is true that the IGA differs from the contracts considered in
previous cases in which the local authority provided more extensive services,
such as managing the construction or operation of the project. See, e.g., Avery
13
v. State, 295 Ga. 630, 630 (761 SE2d 56) (2014) (“The IGA obligates the
Airport Authority to operate, maintain, and provide the facilities necessary to
use the improved taxiway.”); Frazer, 245 Ga. at 399-400 (explaining that the
Albany-Dougherty Inner-City Authority would acquire the land for a civic hall,
lease it to the city, and hire a manager to oversee construction).
This difference, however, does not render the IGA invalid. The Authority
is providing services that it is authorized to provide, as discussed below, and
those services are proper subjects for an intergovernmental contract. See
Nations I, 255 Ga. at 328 (indicating that a contract “for the issuance of the
bonds” would be a contract for services within the meaning of the
intergovernmental contract clause); Frazer, 245 Ga. at 400 (discussing a contract
under which a local authority provided the “service of issuing revenue bonds”).
See also Ga. Const. of 1983, Art. IX, Sec. III, Par. I (a) (“By way of specific
instance and not limitation, a mutual undertaking by a local government entity
to borrow and an undertaking by the state or a state authority to lend funds from
and to one another for water or sewerage facilities or systems or for regional or
multijurisdictional solid waste recycling or solid waste facilities or systems
pursuant to law shall be a provision for services and an activity within the
14
meaning of this [intergovernmental contracts] Paragraph.”). Moreover, the
County is also providing services that are proper subjects of an
intergovernmental contract, a point that Savage and Hobgood do not address.
(b) We next consider whether the Intergovernmental Agreement
“deal[s] with activities, services, or facilities which the contracting parties are
authorized by law to undertake or provide.” The laws creating and governing
the Cobb Coliseum and Exhibit Hall Authority authorize it to undertake
“projects,” which are defined to include
the acquisition, construction, equipping, maintenance and operation
of multi-use coliseum and civic center type facilities to be used for
athletic contests, games, meetings, trade fairs, expositions, political
conventions, agricultural events, . . . theatrical and musical
performances, conventions and other public entertainments, and the
usual facilities related thereto, including, without limitation,
refreshment stands and restaurants, and facilities for the purveying
of foods, beverages, publications, souvenirs, novelties and goods of
all kinds, whether operated or purveyed directly or indirectly
through concessions, licenses, leases or otherwise, parking facilities
or parking areas in connection therewith, recreational centers and
areas including, but not limited to, gymnasium and athletic facilities
and related buildings, and the usual and convenient facilities
appertaining to such undertakings and the extension and
improvements of such facilities, acquiring the necessary property
therefore, both real and personal and the lease, sale and licensing of
any part or all of such facilities, including real and personal
property, to any persons, firms or corporations whether public or
private so as to assure the efficient and proper development,
15
maintenance and operation of such facilities and areas, deemed by
the authority to be necessary, convenient, or desirable.
Ga. L. 1980, p. 4096, § 5 (2). The Authority is also empowered to issue revenue
bonds to pay the costs of “the acquisition, construction, reconstruction,
improvement, addition to, or extension of such project.” Id., p. 4100, § 6 (7).
Accord Cobb County Ord. § 2-187 (7). Thus, the Authority is plainly
authorized to acquire and license the stadium site, including the stadium,
infrastructure, and other improvements made to it, which will be used for
“athletic contests,” “games,” and “other public entertainments,” and to issue
bonds to cover the costs of this “project.”
As for the County, the Constitution authorizes it to provide “[p]arks,
recreational areas, programs, and facilities.” Ga. Const. of 1983, Art. IX, Sec.
II, Par. III (a) (5). Savage and Hobgood argue that the proposed stadium does
not qualify as a “park” or a “recreational” facility, relying on Anderson v.
Atlanta Committee for the Olympic Games, Inc., 273 Ga. 113 (537 SE2d 345)
(2000). But that case actually cuts against their argument.
In Anderson, this Court rejected a constitutional vagueness challenge to
the term “recreational purposes” as used in the Recreational Property Act,
16
OCGA §§ 51-3-20 to 51-3-26, by looking to the ordinary meaning of the term
“recreation,” which is “any amusement, play or other form of relaxation which
refreshes the mind or body.” See Anderson, 273 Ga. at 115 (citing Ballentine’s
Law Dictionary 1071 (3rd ed. 1969)). See also Webster’s Third New
International Dictionary 1899 (1966) (defining “recreation” as “refreshment of
the strength and spirits after toil” and “a means of getting diversion or
entertainment”). We similarly presume that the words used in the Constitution
bear their ordinary meanings at the time those words were included. See Warren
v. State, 294 Ga. 589, 590 (755 SE2d 171) (2014).
Under the ordinary meaning of “recreational,” a stadium and surrounding
area designed for people to gather together to watch and enjoy baseball games
– our traditional “national pastime” – and other athletic and entertainment
performances certainly qualifies as a “recreational area” and a “recreational
facility.” See Youngblood v. State, 259 Ga. 864, 867 (388 SE2d 671) (1990)
(describing the proposed Georgia Dome as a “facility for recreational use and
benefit of the citizens”). See also New Jersey Sports & Exposition Auth. v.
McCrane, 292 A2d 580, 595 (N.J. 1971) (“‘A sports stadium is for the
recreation of the public and is hence for a public purpose . . . .’” (citation
17
omitted)). The County is therefore authorized to provide such a stadium,
directly or through contracts with public or private entities. See Mesteller v.
Gwinnett County, 292 Ga. 675, 676-677 (740 SE2d 605) (2013) (explaining that
a county may choose to provide a constitutionally authorized service through a
contract with a private company). And the County may use any revenue at its
disposal to provide the funding for that permissible project, including its general
tax revenue. See Clayton County Airport Auth. v. State, 265 Ga. 24, 26 (453
SE2d 8) (1995) (“The pledge of the County’s ‘taxing power is permissible under
the intergovernmental contracts clause.’” (quoting Nations II, 256 Ga. at 162)).9
(c) Finally, Savage and Hobgood argue that even if the Authority
and the County are authorized to provide a stadium, they are not authorized to
provide this stadium, because it will not benefit the public. They point to the
laws governing the Authority, which require that its projects “shall be for the
development and promotion in this state of the cultural growth, public welfare,
9
The subsequent portions of Anderson to which Savage and Hobgood point, which discuss
how courts should distinguish between recreational and commercial purposes in determining the tort
immunity of property owners who have made their property available to the public for “recreational
purposes” as that term is used in OCGA § 51-3-20, see Anderson, 273 Ga. at 115-117, are not
relevant to the issue presented here, and we render no opinion as to whether and under what
conditions the County, the Authority, or the Braves parties might be protected by the Recreational
Property Act.
18
education, and recreation of the people of this state.” Ga. L. 1980, p. 4099, § 6
(5); Cobb County Ord. § 2-187 (5). Similarly, the Constitution says that the
County “may expend public funds to perform any public service or public
function as authorized by this Constitution or by law or to perform any other
service or function as authorized by this Constitution or by general law.” Ga.
Const. of 1983, Art. IX, Sec. IV, Par. II.
Savage and Hobgood maintain that the stadium project is not for public
benefit because it will be used exclusively by the Braves parties for at least the
first 30 years after completion.10 As reflected in the Operating Agreement,
however, the Authority and the County made a specific determination that this
project will benefit the public by providing “a significant and much needed
catalyst for revitalization and continuing redevelopment of the property in the
vicinity of the stadium.” Further, in approving the Bond Resolution, the
Authority determined that “the financing, acquisition, construction, and
equipping of the Project will be in furtherance of the Authority’s public
purpose,” and the County determined that the project will provide its citizens
10
In fact, while the Braves parties will control almost all use, the County will have direct
use of the stadium three times a year for up to 10 days.
19
“continuing recreational benefit and other benefits” and “will promote tourism,
promote the economy, and bring other benefits to the County and the State.”
Savage and Hobgood do not dispute that the stadium project will provide
these anticipated benefits to the public. Instead, they assert that the private
benefits conferred on the Braves parties somehow eliminate any public benefits.
The public benefits anticipated here are similar to the benefits anticipated by
Paulding County and the Paulding County Airport Authority in deciding to fund
and issue bonds to expand the county airport’s taxiway. See Avery, 295 Ga. at
632. Although the authority in Avery planned to lease a large part of the airport
terminal to a commercial airline that would use the expanded taxiway, and that
airline (like the Braves parties) planned to benefit by charging citizens for
tickets, this Court concluded that the project could be undertaken because the
expansion would provide public benefits to the county including a safer airport
and new jobs – much like the increased tourism and other economic benefits that
are reasonably anticipated from the stadium project. See id. at 632-633.
Nor does it matter that some of the benefits to the public will be directly
provided by the Braves parties rather than by the government parties, since it is
well-established in Georgia law that government entities may contract with
20
private entities to provide public services. See Mesteller, 292 Ga. at 676(upholding contract between a county and a private company to provide garbage
collection services); Strykr v. Long County Bd. of Commrs., 277 Ga. 624, 626
(593 SE2d 348) (2004) (same). See also Smith v. Board of Commrs. of Roads
& Revenues of Hall County, 244 Ga. 133, 141 (259 SE2d 74) (1979) (“The fact
that the private contractor is paid for its services and may make a profit under
such a contract does not invalidate the contract provided the county or its
residents receive the services required.”). Likewise, the fact that admission fees
will be charged does not prevent the stadium from providing public benefits.
Indeed, the admission fees may help fund the jobs and other economic benefits
that the County and Authority expect the project to create. See Nations II, 256
Ga. at 159-161 (approving an intergovernmental contract and bonds to develop
Underground Atlanta, with plans to lease the buildings to private businesses);
Youngblood, 259 Ga. at 866-867 (upholding an intergovernmental agreement
between a city, county, and local authority, and approving bonds for
construction and operation of the Georgia Dome).
We will defer to the express findings of the Authority and the County that
the stadium project will provide public benefits, particularly where those
21
findings do not appear unreasonable and Appellants have presented no actual
evidence to the contrary.
Whether the contract now in question is one which will benefit the
taxpayers . . . is a question properly for determination in the first
instance by the County Commission and finally by actual
experience. We are bound by the appellate decisions holding that
unless there is an abuse of discretion . . . courts should not
substitute their judgment or interfere with governing authorities in
the proper exercise of their judgment concerning such matters.
Smith, 244 Ga. at 141 (emphasis removed).
For these reasons, the Intergovernmental Agreement is valid under the
intergovernmental contracts clause of the Constitution.
5. Savage and Hobgood next contend that even if the
Intergovernmental Agreement meets the requirements of the intergovernmental
contract clause, the issuance of the stadium project bonds violates the
Constitution’s debt limitation clause, which says in relevant part:
The debt incurred by any county, municipality, or other political
subdivision of this state, including debt incurred on behalf of any
special district, shall never exceed 10 percent of the assessed value
of all taxable property within such county, municipality, or political
subdivision; and no such county, municipality, or other political
subdivision shall incur any new debt without the assent of a
majority of the qualified voters of such county, municipality, or
political subdivision voting in an election held for that purpose as
provided by law.
22
Ga. Const. of 1983, Art. IX, Sec. V, Par. I (a). Appellants do not contend that
the bonds will cause the County or the Authority to exceed the total debt limit,
but they allege that the bond issuance violates the second portion of the clause
because no referendum will be held for the County’s voters to approve (or
disapprove) new debt. We disagree.
(a) We consider first whether the Authority would violate the debt
limitation clause by issuing these revenue bonds.11 The revenue bond provision
of the Constitution says unequivocally: “The obligation represented by revenue
bonds shall be repayable only out of the revenue derived from the project and
shall not be deemed to be a debt of the issuing political subdivision.” Ga. Const.
of 1983, Art. IX, Sec. VI, Par. I. The revenue bond statute drives this point
home, stating that the issuing government body will not be subject to any
pecuniary liability because “[r]evenue bonds issued under this article shall not
be payable from or charged upon any funds other than the revenue pledged to
the payment thereof,” and
[n]o holder or holders of any such bonds shall ever have the right
to compel any exercise of the taxing power of the [issuing]
11
We address the validity of the stadium project bonds as revenue bonds in Division 8
below.
23
governmental body to pay any such bonds or the interest thereon,
nor to enforce payment thereof against any property of the
governmental body; nor shall any such bonds constitute a charge,
lien, or encumbrance, legal or equitable, upon any property of the
governmental body.
OCGA § 36-82-66.
In line with the revenue bond laws, the Bond Resolution specifically
recites that the stadium project bonds are limited obligations of the Authority,
payable only from the pledged security, and the Trust Indenture similarly
provides that the bonds are to be paid only with funds pledged to the trust estate.
If the Authority defaults on the bonds, the bond holders’ only recourse is to step
into the shoes of the Authority as to the stadium project; only the project
property and the revenues from the IGA and the Braves parties’ license fees are
pledged as security for the bonds. In sum, the Authority clearly will not violate
the debt limitation clause by issuing the bonds.
(b) Our conclusion that the County is also not violating the debt
limitation clause requires more extensive explanation. The County has no direct
liability for the stadium project bonds; indeed, the Bond Resolution expressly
declares that the bonds “shall not constitute . . . an obligation, debt, or a pledge
of the faith and credit of the County or the State of Georgia, nor shall the County
24
or the State be subject to any pecuniary liability thereon.” Thus, a bondholder
could not sue the County directly for payment on the bonds or directly compel
any exercise of the County’s taxing power.
Unlike the Authority, however, the County is not avoiding debt entirely,
because under the terms of the Intergovernmental Agreement, the County agrees
to pay the Authority up to $25 million per year for the next 30 years to cover the
principal, interest, and other costs of the bonds not covered by the Braves
parties’ license fees. By contractually pledging its funds to pay for the bonds,
the County is incurring a new liability. But this debt is not controlled by the
debt limitation clause, because the County’s pledge is made through a valid
intergovernmental contract. And this Court has squarely held in multiple
decisions, under each of the last three Georgia Constitutions and in each of the
last seven decades, that debt incurred under a valid intergovernmental contract
is not subject to the debt limitation clause.
We first held this when construing the 1945 Constitution in Sheffield v.
State School Building Authority, 208 Ga. 575 (68 SE2d 590) (1952). The Court
harmonized the intergovernmental contract clause with the debt limitation clause
by concluding that debts incurred pursuant to intergovernmental contracts are
25
governed by the clause regulating those contracts and are not subject to the debt
limitation clause. See id. at 581-582. The holding in Sheffield was followed in
State v. Georgia Rural Roads Authority, 211 Ga. 808, 811-812 (89 SE2d 204)
(1955); Stephenson v. State, 219 Ga. 652, 652-653 (135 SE2d 380) (1964); and
Thompson v. Municipal Electric Authority of Georgia, 238 Ga. 19, 20-21 (231
SE2d 720) (1976) (applying the 1945 Constitution). After the 1976 Constitution
took effect, the Court twice again held that a local government’s agreement to
pay money made in a valid intergovernmental contract is not a debt subject to
the debt limitation clause. See Frazer, 245 Ga. at 400-401; Building Auth. of
Fulton County v. State of Georgia, 253 Ga. 242, 249 (321 SE2d 97) (1984).
Shortly after our current Constitution took effect in 1983, this Court again
adhered to our holding reconciling the intergovernmental contracts and debt
limitation clauses, explaining that the intergovernmental contracts clause
“carves out exceptions” to the debt limitation clause. Nations I, 255 Ga. at 327.
See also Nations II, 256 Ga. at 160 (“It is clear a municipality may enter into
a contract authorized by the intergovernmental contracts clause for the future
expenditure of funds without violating the debt clause of Art. IX, Sec. V, Par.
I (a) [of the 1983 Constitution].”). We have confirmed this holding under the
26
1983 Constitution on numerous occasions, including just a year ago. See Avery,
295 Ga. at 631-632; City of Decatur v. Dekalb County, 289 Ga. 612, 614 (713
SE2d 846) (2011); Reed, 265 Ga. at 459; Clayton County Airport Auth., 265
Ga. at 24-25; Ambac Indem. Corp. v. Akridge, 262 Ga. 773, 775 (425 SE2d
637) (1993); Youngblood, 259 Ga. at 867.
Savage alone argues that we should ignore all of this precedent and
instead follow DeJarnette v. Hospital Authority of Albany, 195 Ga. 189 (23
SE2d 716) (1942), which held that intergovernmental contracts were subject to
the requirements of the debt limitation clause. See id. at 204-205. That holding
in DeJarnette, however, was expressly distinguished in Sheffield and has not
been followed since, because its reasoning is no longer applicable. DeJarnette
relied on the fact that the provision for intergovernmental contracts that was
added to the Constitution of 1877 in 1941 was an amendment to the section of
the Constitution relating to the powers of counties to levy taxes; thus, the Court
reasoned, the provision was not meant to “relax or affect the existing
constitutional provisions and limitations as to the incurring of debts by political
subdivisions.” DeJarnette, 195 Ga. at 190. When a similar issue was raised
under the 1945 Constitution in Sheffield, however, the Court rejected
27
DeJarnette, holding that because the intergovernmental contracts clause and the
debt limitation clause were now both original portions of the Constitution, they
were entitled to “equal dignity and effect” and must be read in harmony with
each other. Sheffield, 208 Ga. at 581. The practical reality was (and is) that if
a public referendum was required every time one government entity wanted to
enter a contract with another government entity promising to pay any amount
of money, the intergovernmental contracts clause would be rendered almost
nugatory.
Savage’s argument that we should return to DeJarnette notes a change to
the language of the debt limitation clause that occurred with the enactment of
the 1983 Constitution. The 1945 and 1976 versions of the clause applied to any
“debt hereafter incurred by any county, municipal corporation or political
division of this State except as in this Constitution provided for.” Ga. Const. of
1945, Art. VII, Sec. VII, Par. I; Ga. Const. of 1976, Art. IX, Sec. VII, Par. I.
The italicized phrase was removed in the 1983 Constitution, but the substance
of the clause was not modified in any way relevant here, and this Court’s
interpretation of the clause in relation to the intergovernmental contracts clause
– which remained a full-fledged portion of the Constitution – was not changed.
28
While the Sheffield Court noted the removed phrase in support of its
holding, we have found – and Savage has identified – nothing in the drafting
history of the 1983 Constitution or the public debate over its ratification that
indicates that the understanding of the interaction between the debt limitation
clause and the intergovernmental contracts clause established in Sheffield and
followed in subsequent cases was meant to be altered. Indeed, the evidence we
have found indicates the opposite – that no substantive change of this nature was
intended. See Select Committee on Constitutional Revision, 1977-1981,
Legislative Overview Committee, Vol. I, Transcript of Meeting of June 30,
1981, p. 61 (describing changes to the debt limitation clause as “principally an
editorial revision” and characterizing the relevant paragraph in the new
Constitution as “a restatement of the present constitutional provision”).
Moreover, the doctrine of stare decisis strongly counsels adherence to our
longstanding, consistent, and workable precedents on this issue. See Ga. Dept.
of Natural Resources v. Center for a Sustainable Coast, Inc., 294 Ga. 593, 601
(755 SE2d 184) (2014) (discussing stare decisis considerations). While the
doctrine is less compelling with regard to our constitutional decisions, which are
harder for the democratic process to correct than our interpretations of statutes,
29
see id., stare decisis is especially important where judicial decisions create
substantial reliance interests, as is most common with rulings involving contract
and property rights. See State v. Hudson, 293 Ga. 656, 661 (748 SE2d 910)
(2013); Rogers v. Carmichael, 184 Ga. 496, 511 (192 SE 39) (1937) (“[T]he
rule of stare decisis is usually considered as one more appropriately applied to
vested property rights.”); Robinson v. Colonial Discount Co., Inc., 106 Ga. App.
274, 276 (126 SE2d 824) (1962) (“‘The court has found adherence to the settled
rule especially desirable in cases involving the security of contracts, property
interests, wills and trusts and commercial transactions in general.’” (citation
omitted)).
That is the situation here. A ruling that intergovernmental contracts are
no longer an exception to the debt limitation clause would affect every
intergovernmental agreement in which any political subdivision of this State
agrees to pay any amount of money for a facility or service, not just the
relatively few contracts like the IGA here that involve payments used to defray
revenue bonds issued by the counter-party. Because no intergovernmental
contract would be valid without the approval of a majority of the voters in the
political subdivision, overruling our precedents would cast into doubt countless
30
existing contracts entered without a referendum, as well as plans for future
contracts, for a wide variety of facilities and services ranging from hospitals,
roads, and recreation facilities to police, fire, animal control, and other public
safety services. See, e.g., Ga. Const. of 1983, Art. IX, Sec. III, Par. I (c)
(providing that counties and municipalities may contract with public agencies,
corporations, or authorities “for the care, maintenance, and hospitalization of its
indigent sick and may as part of such contract agree to pay for the cost of
acquisition, construction, modernization, or repairs”); Butler v. Carlisle, 299 Ga.
App. 815, 816 (683 SE2d 882) (2009) (discussing services provided to the City
of Dawsonville by the Dawson County Sheriff’s Department pursuant to an
intergovernmental agreement); Op. Atty. Gen. 2012-7 (discussing
intergovernmental agreements between a city and county for probation services).
For all of these reasons, we adhere to the holding of Sheffield and its
many progeny and conclude that the County’s promise to pay for the stadium
project bonds is not a debt regulated by the Constitution’s debt limitation clause
because the promise was made as part of a constitutionally valid
intergovernmental contract.
6. Under the Intergovernmental Agreement, it is clear that the services
31
the Authority will provide constitute contractual consideration to the County,
meaning that, contrary to another claim by Savage and Hobgood, the IGA does
not violate the Constitution’s gratuities clause. See Ga. Const. of 1983, Art. III,
Sec. VI, Par. VI (a) (1) (“Except as otherwise provided in the Constitution, (1)
the General Assembly shall not have the power to grant any donation or gratuity
or to forgive any debt or obligation owing to the public . . . .” ); City of Lithia
Springs v. Turley, 241 Ga. App. 472, 475 (526 SE2d 364) (1999) (applying this
provision to the actions of counties and cities). This Court has repeatedly held
that an impermissible gratuity is not provided when a political subdivision
receives a substantial benefit in exchange for its payments. See, e.g., Avery, 295
Ga. at 633. See also Building Auth. of Fulton County, 253 Ga. at 249 (holding
that the gratuities clause is not violated when “the payments are to be made
pursuant to binding agreements and in return for bargained-for consideration”).
The County found the Authority’s services to be sufficient consideration for the
promised payments. To the extent Savage and Hobgood contend that the
County will not receive enough benefits from the IGA – that the County did not
drive the best bargain – “[t]his court cannot decide whether the [County]
commissioners made the correct decision, but only whether it was a lawful one.”
32
Smith, 244 Ga. at 138.
7. The Intergovernmental Agreement also does not violate the
Constitution’s lending clause, which says that a county is prohibited “through
taxation, contribution or otherwise, to appropriate money for or lend its credit
to any person or to any nonpublic corporation or association except for purely
charitable purposes.” Ga. Const. of 1983, Art. IX, Sec. II, Par. VIII. The
County is not paying, with appropriated funds or credit, for anything to be
owned by the Braves parties; the stadium and stadium site will be owned by the
Authority, with the Braves paying license fees to the Authority, for at least 30
years, at the end of which the bonds the County is helping to pay off will be
fully redeemed. In fact, the Development Agreement specifies that no money
coming from the government entities will be used for the “improvement or
alteration of any privately-owned property.” See Smith, 244 Ga. at 140-141(rejecting the argument that the county was extending its credit to a private fire
services company where “[t]he County is simply paying the debt it incurred to
purchase and construct the properties, and is allowing the use of those properties
as partial consideration for [the private company’s] promise to provide fire
protection”).
33
8. Savage and Pellegrino argue that the bonds should not be validated
because they do not comply with the requirements set forth in the constitutional
provision and statutes governing revenue bonds. The Constitution provides that
a “political subdivision of this state may issue revenue bonds as provided by
general law.” Ga. Const. of 1983, Art. IX, Sec. VI, Par. I. The revenue bond
law authorizes political subdivisions “[t]o issue revenue bonds to finance, in
whole or in part, the cost of the acquisition, construction, reconstruction,
improvement, betterment, or extension of any undertaking.” OCGA § 36-82-62
(a) (3) (A). An “undertaking” is defined as “revenue-producing undertakings”
including, among many other things, “athletic fields, grandstands and stadiums;
[and] buildings to be used for various types of sports, including baseball and
football.” OCGA § 36-82-61 (4) (E). The stadium project fits squarely within
this definition. See Cottrell v. Atlanta Dev. Auth., Case No. S14A1874, slip op.
at 15-16 (decided Mar. 16, 2015) (approving revenue bonds issued to fund a
new stadium in the City of Atlanta for the Atlanta Falcons professional football
team).
Revenue bonds must be funded solely from “the revenue pledged to the
payment thereof,” OCGA § 36-82-66, which is defined as “all revenues, income,
34
and earnings arising out of or in connection with the operation or ownership of
the undertaking . . . .” OCGA § 36-82-61 (3). See also Ga. Const. of 1983, Art.
IX, Sec. VI, Par. I (“The obligation represented by revenue bonds shall be
repayable only out of the revenue derived from the project and shall not be
deemed to be a debt of the issuing political subdivision.”). The bonds at issue
here meet this requirement. The license fees paid by the Braves parties to use
the stadium will cover part of the bond payments, and the remainder will come
from payments made by the County under the Intergovernmental Agreement.
This Court has repeatedly held that when revenue bonds are contemplated as
part of a valid intergovernmental contract, payments made under the contract
constitute project revenue. See, e.g., Reed, 265 Ga. at 459 (“So long as the
intergovernmental contract is for a purpose authorized by the Constitution, it is
a valid means of providing revenue to the Authority to be used to pay the
bonds.”); Clayton County Airport Auth., 265 Ga. at 24-25 (holding that the
county’s promise to pay “amounts sufficient to enable the Authority to pay the
principal and interest on” the revenue bonds, made pursuant to a valid
intergovernmental contract, “represents the Authority’s lawful ‘revenue pledged
35
to the payment of’ its bonds”).12
Although the County promises to levy ad valorem taxes if necessary to
satisfy its commitments under the IGA, that promise does not make the bonds
general obligation rather than revenue bonds. See OCGA §§ 36-82-1 to 36-82-
10 (establishing the requirements for general obligation bonds). The County’s
liability here is under a contract, not a bond, and it is well-established that the
County may pledge its full faith and credit to meet such contractual obligations.
As this Court explained in Clayton County Airport Authority:
Although the bonds are obligations of the Authority and the County
cannot pledge its full faith and credit to pay them, the County does
have the “authority under [the intergovernmental clause of] the
Constitution, to enter into contracts with the Authority and to
pledge [its] full faith and credit and levy taxes to meet [its]
contractual obligations pursuant to the law of contracts.”
265 Ga. at 26 (citations omitted).
9. Finally, Pellegrino, joined by Hobgood on one point, presents
several challenges to the validity of the bond validation proceeding, none of
12
This reasoning also dispenses with Savage’s contention, made under the similar local law,
that the Authority cannot undertake the stadium project because the project is not self-liquidating.
See Ga. L. 1980, p. 4091 § 5 (5) (requiring that any project undertaken by the Authority be “self-
liquidating” and defining “self-liquidating” projects as those in which “the revenues and earnings
to be derived by the authority therefrom . . . will be sufficient to pay the principal and interest of the
revenue bonds which may be issued to finance . . . the cost of such project or projects.”).
36
which are persuasive.
(a) Pellegrino argues first that there was not sufficient notice of
the validation hearing. The hearing was held on Monday, July 7, 2014. As
required by the revenue bond law, notice of the hearing was provided in the
Marietta Daily Journal the preceding two weeks, on June 27 and July 4. See
OCGA § 36-82-76 (requiring that notice informing the public of the date of the
bond validation hearing be published in the official organ of the county “once
during each of the two successive weeks immediately preceding the week in
which the hearing is to be held”).
Shortly after the first notice was published, the judge of the Cobb County
Superior Court to whom the case was originally assigned, and who was listed
in the June 27 notice as the judge who would be presiding, recused himself. The
case was then assigned to another judge of the same court, whose name and
courtroom number were included in the July 4 notice, which also expressly
noted the change in courtroom. On the day of the hearing, the new judge
ensured that signs were mounted throughout the courthouse complex, including
on the original judge’s courtroom door, directing people to the correct
courtroom for the hearing. Thus, any potential confusion about the location of
37
the hearing caused by the change in the presiding judge was sufficiently
addressed, and indeed all three Appellants made it to the right courtroom at the
right time for the hearing. Moreover, OCGA § 36-82-76 does not require that
the hearing notices identify which individual judge will preside over the hearing.
“‘If the notice is sufficient to put the individual citizen on notice that the
municipality, county, or political division of which he is a resident is seeking to
validate bonds, and the time of hearing of the proceeding, the statutory purpose
has been subserved.’” Avery, 295 Ga. at 634 (citation omitted). The notice of
the hearing in this case was sufficient.
(b) Pellegrino argues next that the Authority did not fulfill its duty
under OCGA § 36-82-75 because it failed to show why the stadium project
bonds should not be validated. When, as required by OCGA § 36-82-74, a
government body notifies the appropriate district attorney that it desires to issue
revenue bonds, the district attorney must file a petition setting out details of the
bonds, including their amount and purpose, in the superior court of the county
issuing the bonds. See OCGA § 36-82-75. The court must then issue an order
directing the government body that will be issuing the bonds to show cause
“why the bonds and the security for the payment thereof should not be
38
confirmed and validated.” Id. Thus, the role of showing why the bonds should
not be validated is assigned to the same entity that proposes to issue them.
That is surely an unusual scheme, but the fact that the issuing entity does
not argue against validation does not render the proceeding invalid. See Lilly
v. Crisp County School System, 117 Ga. App. 868, 869-870 (162 SE2d 456)
(1968) (explaining that a bond validation proceeding “was not advisory,
collusive or nonjusticiable merely because the defendant [issuing government
entity] in its answer admitted the allegations of the petition and offered no
showing of cause why the bonds should not be confirmed”). The more
significant and realistic protection against improper validation of revenue bonds
is provided by the statutory right of any resident of the affected jurisdiction to
intervene in the proceedings to present objections and then to appeal the trial
court’s validation decision. See OCGA § 36-82-77; Greene County Dev. Auth.,
296 Ga. at 726; Nations I, 255 Ga. at 325, 332.13
13
OCGA § 36-82-77 says:
Any citizen of this state who is a resident of the governmental body which desires to
issue such bonds may become a party to the proceedings at or before the time set for
the hearing and any party thereto who is dissatisfied with the judgment of the court
confirming and validating the issuance of the bonds or refusing to confirm and
validate the issuance of the bonds and the security therefor may appeal from the
judgment under the procedure provided by law in cases of injunction.
39
Unsurprisingly, the Authority asserts that it did not present any reasons
why the bonds should not be issued because it did not have any good reasons.
Pellegrino makes no colorable claim that this decision was the result of improper
professional conduct by the government’s attorneys. Indeed, all of the
arguments that he – and the other intervenors – offered against validation of the
bonds were considered by the trial court and were held to lack merit, and we
have affirmed the rulings challenged on appeal. In sum, the failure of the
Authority to oppose the stadium project bonds did not make the validation
proceeding improper. 14
(c) Pellegrino and Hobgood both argue that the trial court erred
during the hearing by refusing to admit into evidence documents and testimony
they offered regarding the negotiations between the Braves parties, the County,
and the Authority. But the court did not abuse its discretion by excluding this
evidence. In a bond validation proceeding, “a trial court must consider whether
the proposal to issue those bonds is ‘sound, feasible, and reasonable.’” Greene
14
Pellegrino’s additional argument that the intervenors were not given copies of the
Authority’s pleadings is undermined by the transcript of the hearing, which shows that on the day
of the hearing, all residents who were granted intervenor status were given copies of the Authority’s
answer, and no intervenor requested a continuance of the hearing.
40
County Dev. Auth., 296 Ga. at 726 (citation omitted). Appellants have not
shown how the proffered evidence about the negotiations between the
government parties and the Braves parties would be relevant to those questions,
because the unambiguous financing documents discussed in Division I above
are controlling, not the discussions that led up to them. Nor have Appellants
shown how the exclusion of this evidence was harmful. See OCGA § 24-1-103
(a) (“Error shall not be predicated upon a ruling which admits or excludes
evidence unless a substantial right of the party is affected . . . .”).
(d) Last, Pellegrino complains that after the hearing, the trial court
erred by failing to make specific written findings, even though Hobgood filed
a pretrial motion for findings of fact and conclusions of law and reiterated that
request at the hearing. Pellegrino, however, did not join in those requests or
make a post-judgment motion for such findings, see OCGA § 9-11-52 (c), and
he therefore waived review of this complaint. See Cook v. Smith, 288 Ga. 409,
411 (705 SE2d 847) (2010).
In any event, Pellegrino’s complaint is meritless. He takes issue with the
statement in the court’s order overruling “any and all other objections.” Beyond
that blanket statement, however, the order said: “The Intervenors presented
41
various objections which the Court has consolidated into the following twelve
(12) issues addressed in this Section III. The Court fully considered the
evidence and testimony the Intervenors presented at the bond hearing.” The
order then addressed each of those 12 issues, which include all of the
substantive objections raised by the three Appellants at the hearing and on
appeal here. The trial court’s approach was appropriate and sufficient, and
Pellegrino fails to identify any objection that got short shrift.
10. In conclusion, after considering as a whole the documents described
in Division 1 above, it is evident that the lawyers and officials for Cobb County,
the Cobb-Marietta Coliseum and Exhibit Hall Authority, and the Braves parties
relied on the prior decisions of this Court interpreting Georgia’s Constitution
and revenue bond law when structuring the financing for the new Braves
stadium project, including in particular the issuance of revenue bonds by the
Authority secured in part by an intergovernmental contract with the County.
There is nothing wrong with that: local governments, businesses, and
individuals are entitled to rely on our precedents, particularly in organizing their
contractual and financial affairs. While aspects of the deal structure at issue
may push the law about as far as it can go, it does not cross the line into
42
illegality.
In so holding, we do not discount the concerns Appellants have raised
about the wisdom of the stadium project and the commitments Cobb County has
made to entice the Braves to move there. But those concerns lie predominantly
in the realm of public policy entrusted to the County’s elected officials for
decision, not in the realm of constitutional or statutory law. And to the extent
the concerns affect whether the bond proposal is sound, feasible, and reasonable,
we defer to the trial court’s findings on those factors, which were supported by
evidence in the record. Compare Greene County Dev. Auth., 296 Ga. at 727-
728 (affirming the trial court’s refusal to validate bonds, where evidence
presented at the validation hearing permitted the court to find that the proposal
was not sound, feasible, and reasonable). If the stadium deal does not fulfill the
high expectations that have been set for it, there may be a significant political
price to pay for those who negotiated and signed onto it. But under the law of
Georgia as construed in the precedents of this Court, we cannot say that the trial
court erred in validating the bonds or that the validation process was deficient.
Accordingly, we affirm the trial court’s judgment.
Judgment affirmed. All the Justices concur.
43