Avery v. State of Georgia

In the Supreme Court of Georgia
Decided: June 30, 2014
S14A0792. AVERY et al. v. STATE OF GEORGIA et al.
MELTON, Justice.
This case regards the superior court’s validation of a $3.6 million bond,
known as the Paulding County Airport Authority Revenue Bond. The bond will
be issued by the Paulding County Airport Authority, and the proceeds will be
used to widen and extend the taxiway at the Paulding County Airport to
accommodate commercial passenger jets. Pursuant to the bond resolution, the
Airport Authority, which manages the Airport, and Paulding County will enter
into an intergovernmental agreement (“IGA”). Under the terms of this ten-year
IGA, Paulding County and the Airport Authority will cooperate to construct the
expanded taxiway, which is located on property owned by both the Airport
Authority and Paulding County. The IGA obligates the Airport Authority to
operate, maintain, and provide the facilities necessary to use the improved
taxiway. In exchange, Paulding County is required to pay the principal and
interest payments on the bond. Paulding County is also obligated to use its
taxing power to raise money, should there be any shortfall in and for payments.
In addition, on October 22, 2013, the Airport Authority and Silver Comet,
a commercial aviation company leasing a large portion of the airport terminal
for twenty years, entered into a separate agreement regarding the expansion of
the airport taxiway. The Silver Comet agreement states that Silver Comet
“wishes to provide the [Airport] Authority with an incentive to issue revenue
bonds for the purpose of expanding the taxiways at the Airport.” That incentive
is Silver Comet’s agreement to pay the Authority “the principal amount of the
Bonded Indebtedness as well as any interest associated with repayment of the
Bonded Indebtedness” until it is paid in full. This agreement does not, however,
eliminate the County’s obligation to pay principal and interest on the issued
bonds.
Procedurally, at a September 18, 2013 meeting, the Airport Authority
unanimously approved a resolution authorizing the issuance of the bond. The
Airport Authority also approved the IGA. This meeting occurred at the Airport
Authority’s regular meeting place and was open to the public. A portion of the
September 18, 2013 meeting, however, was conducted in executive session. It
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appears that the bond was approved prior to the beginning of the executive
session. At an open meeting on October 22, 2013, the Airport Authority
supplemented the bond proposal through a supplemental resolution. The Airport
Authority also ratified all of its prior actions taken at the September 18, 2013
meeting during its October 22, 2013 meeting. Paulding County approved the
terms of the bond resolution and also approved the IGA with the Airport
Authority at its regular meeting on October 8, 2013. The October 8, 2013
meeting was open to the public and notice of the meeting was posted publicly.
The County approved the supplemental bond resolution during its regular
meeting on October 22, 2013, which was also open to the public. Paulding
County later petitioned the superior court to validate the bond pursuant to
OCGA § 36–82–75, and after the notice of the validation proceeding was
published, Anthony Avery and Susan M. Wilkins (collectively Avery) were
allowed to intervene and raise opposition to the bond. Among other things,
Avery contends that the bond would violate both the Debt Clause and the
Lending Clause of the Georgia Constitution. The trial court disagreed, and
entered an order validating the bond. Avery appeals this ruling.
1. Avery contends that the trial court erred in its determination that the
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contract between Paulding County and the Airport Authority qualifies as an
enforceable intergovernmental agreement. We disagree.
Article IX, Section V, Paragraph I (a) of the 1983 Georgia Constitution,
sometimes referred to as the Debt Clause, sets certain debt limitations for
governmental entities, and provides that these entities may not incur a “new
debt” without the consent of a majority of qualified voters.1 Nonetheless, an
exception2 to this rule is set forth in Art. IX, Sec. III, Par. I (a) of the 1983
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1983 Georgia Constitution, Art. IX, Sec. V, Par. I (a) provides:
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.
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“The [intergovernmental contracts] clause does not supersede other
provisions of the Constitution, such as the debt clause, which places limitations
on the powers of government. It merely carves out exceptions. Mulkey v.
Quillian, 213 Ga. 507 (100 SE2d 268) (1957).” Nations v. Downtown
Development Authority of City of Atlanta, 255 Ga. 324, 327 (2) (a) (338 SE2d
240) (1985) (“Nations I”). 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). Nations
v. Downtown Development Authority of City of Atlanta, 256 Ga. 158 (1) (345
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Constitution, which provides:
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.
The prerequisites for such an intergovenmental contract are satisfied in this case.
It is evident that the IGA is between appropriate governmental entities, and its
term does not exceed fifty years. In addition, the agreement relates to both the
provision of services and the joint use of facilities. The Airport Authority agrees
to manage and maintain the expanded taxiway, and Paulding County, in return,
agrees to provide funding and manage the debt required to be incurred to
complete the expansion. In addition, the expansion, itself, allows Paulding
County to reap the benefit of commercial flight service.3 The record includes
SE2d 581) (1986) (Nations II).
3
Indeed, Section 5.2 of the IGA states that the Airport Authority “agrees
to provide airport facilities and service for the citizens of the County through the
operation of the [expanded taxiway.]”
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testimony that these benefits may include, among other things, a safer airport
and economic benefits along with new jobs. Finally, the agreement deals with
services and facilities about which Paulding County has the authority to enter
contracts.
Pursuant to Art. IX, Sec. II, Par. III (a) (9) of our constitution,
[Paulding] County is authorized generally to undertake to provide
for “[p]ublic transportation” and, pursuant to OCGA § 48–5–220
(14), [Paulding] County is authorized specifically to expend tax
revenues to provide for an airport facility. [Paulding] County's
contract [regarding] the use of the airport facility to be acquired and
expanded by the Authority is, therefore, a valid intergovernmental
contract.
Clayton County Airport Authority v. State, 265 Ga. 24, 25 (1) (453 SE2d 8)
(1995).
2. Avery argues that the bond issuance provides an improper benefit to
Silver Comet, thereby violating both the Lending Clause and the Gratuities
Clause of the Georgia Constitution. There is no violation of either clause.
(a) Counties and some other governmental entities are limited in the
extension of their credit to others. Art. IX, Sec. II, Par. VIII of the 1983 Georgia
Constitution provides, “The General Assembly shall not authorize any county,
municipality, or other political subdivision of this state, through taxation,
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contribution or otherwise, to appropriate money for or to lend its credit to any
person or to any nonpublic corporation or association except for purely
charitable purposes.” Avery maintains that the bond resolution acts to extend
Paulding County’s credit to Silver Comet. It does not. The bond resolution and
the IGA require Paulding County to extend its credit for its own purposes,
namely the benefit of the taxiway expansion. The agreement between the
Airport Authority and Silver Comet does not alter this result. Under this
agreement, Silver Comet is, at best, extending its credit to Paulding County. As
a result, the trial court did not err by rejecting Avery’s claim based on the
Lending Clause.
The bond resolution also does not violate the Gratuities Clause of the
Georgia Constitution.
The gratuities clause in the Georgia Constitution provides that “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.”
Ga. Const. [of 1983], Art. III, sec. VI, para. VI.] The United States
Supreme Court has interpreted this provision as not applying to a
“conveyance in aid of a public purpose from which great benefits
are expected.” See McLucas v. State Bridge Bldg. Auth., 210 Ga.
1, 11 (77 SE2d 531) (1953) (quoting Georgia v. Cincinnati So. Ry.,
248 U.S. 26 (39 SCt 14, 63 LE 104) (1928))]. Similarly, this Court
has repeatedly held that there is no gratuity when the state receives
a substantial benefit in exchange for the use of public property. See,
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e.g., Garden Club of Ga. v. Shackelford, 274 Ga. 653, 654 (560
SE2d 522) (2001).
Campbell v. State Road & Tollway Authority, 276 Ga. 714, 718 (2) (583 SE2d
32) (2003).
Contrary to Avery’s characterization of the facts of this case, Paulding
County and the Airport Authority have not extended a gratuity to Silver Comet.
As discussed above, Paulding County’s issuance of the bond creates a
substantial benefit for the county, namely the presence and use of an airport
which can accommodate commercial passenger flights. This is a direct benefit
to the Airport Authority and Paulding County, and the fact that Silver Comet
receives a secondary benefit as being the commercial airline service renting part
of the terminal and landing flights on the expanded taxiway does not change this
result. See, e.g., Nations v. Downtown Development Authority of City of
Atlanta, 256 Ga. 158 (345 SE2d 581) (1986) (Nations II).
3. Avery contends that the trial court erred in its determination that
sufficient public notice was given for the bond validation hearing. OCGA §
36-82-76 provides:
Prior to the hearing of [a bond validation] case, the clerk of the
superior court of the county in which it is to be heard shall publish,
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once during each of the two successive weeks immediately
preceding the week in which the hearing is to be held, a notice to
the public that on the day specified in the order providing for the
hearing of the case the same will be heard. Such publication shall
be in the newspaper which is the official organ of the county in
which the sheriff's advertisements appear.
This notice “is designed to give information to the citizens of the municipality,
county, or political division about to issue bonds, of the pending proceeding to
confirm and validate the same. . . . 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.” Rhodes v. City of
Louisville, 121 Ga. 551, 553-554 (49 S.E. 681) (1904).
The public notice issued for the bond resolution states that, on October 28,
2013, the superior court would hear the case of the “STATE OF GEORGIA v.
PAULDING COUNTY AIRPORT AUTHORITY and PAULDING COUNTY
GEORGIA, Civil Action File No. 13CV003741TB.” In a scrivener’s error, the
notice goes on to state that the proceeding would regard the validation of a bond
issued by the Paulding Industrial Building Authority. Avery argues that, because
of this scrivener’s error, the notice was insufficient. The notice makes clear,
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however, that it is meant to refer to a case (including the civil action number)
involving the Airport Authority, not the Industrial Building Authority. While the
scrivener’s error might have created some confusion, it cannot be said that the
trial court erred in its determination that notice was sufficient, as the record
supports a finding of substantial compliance. Id.
4. Finally, Avery contends that the trial court erred in its determination
that the Airport Authority did not violate the Georgia Open Meetings Act when
it entered into an executive session at its meeting on September 18, 2013.4 The
Open Meetings Act, OCGA 50-14-4, provides:
(a) When any meeting of an agency is closed to the public pursuant
to any provision of this chapter, the specific reasons for such
closure shall be entered upon the official minutes, the meeting shall
not be closed to the public except by a majority vote of a quorum
present for the meeting, the minutes shall reflect the names of the
members present and the names of those voting for closure, and that
part of the minutes shall be made available to the public as any
other minutes. . . . (b) (1) When any meeting of an agency is closed
to the public pursuant to subsection (a) of this Code section, the
person presiding over such meeting or, if the agency's policy so
provides, each member of the governing body of the agency
attending such meeting, shall execute and file with the official
minutes of the meeting a notarized affidavit stating under oath that
4
The bond was not discussed during the executive session. This finding
is supported by a notarized affidavit of the Chairman of the Airport Authority.
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the subject matter of the meeting or the closed portion thereof was
devoted to matters within the exceptions provided by law and
identifying the specific relevant exception.
Pretermitting the question of whether the Airport Authority properly went into
an executive session at the September 18, 2013 meeting, the bond and a
supplemental resolution to it were considered at a subsequent meeting on
October 22, 2013. At this meeting the bond, as modified by the supplemental
resolution was approved, and no executive session occurred. Since the bond
action was discussed and acted upon at the subsequent open meeting, Avery’s
contentions regarding problems with the prior meeting do not affect the validity
of the Authority’s ultimate decision to issue the revised bond. See Schoen v.
Cherokee County, 242 Ga. App. 501 (2) (530 SE2d 226) (2000).
Judgment affirmed. All the Justices concur, except Nahmias, J., not
participating.
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