COTTRELL Et Al. v. ATLANTA DEVELOPMENT AUTHORITY Et Al.
297 Ga. 1
Ga.2015Background
- Invest Atlanta and the Georgia World Congress Center Authority (Congress Center Authority) planned a new stadium (NSP) for the Atlanta Falcons; Invest Atlanta sought validation of ~$200M revenue bonds (2014 NSP Bonds) secured by an extension of Atlanta’s Hotel/Motel tax.
- The General Assembly amended OCGA § 48-13-51(a)(5) in 2010 to allow jurisdictions that previously levied the 7% hotel/motel tax for a domed stadium to extend collection through 2050 for a certified “successor facility” (subsection (B)), with specific expenditure and certification requirements.
- City Resolution 13-R-0615 authorized the Mayor to enter a Hotel/Motel Tax Funding Agreement with Invest Atlanta and an O&M Agreement with the Congress Center Authority; 39.3% of the first 7% tax would fund the NSP.
- Structure: City collects tax → pays NSP Tax Proceeds to Invest Atlanta (pledged to Trustee) → trustee pays debt service on bonds → bond proceeds flow to Congress Center Authority to build/own NSP; StadCo/Club provide additional funding and operate under long-term use commitments.
- Cottrell intervened and raised multiple challenges in the Fulton superior court contesting: (1) constitutionality of the 2010 subsection (B) as a special/local law; (2) whether statutory certification required direct contract with certifying state authority; (3) whether Invest Atlanta could issue revenue bonds without owning/operating the project; (4) validity/timing of the City resolution and the O&M Agreement. Trial court validated the bonds; Supreme Court of Georgia affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutionality of OCGA § 48-13-51(a)(5)(B) (special/local law) | Cottrell: subsection (B) is a special law violating Uniformity Clause | State/Entities: subsection (B) is a general-law exception that uniformly applies to the defined class and is reasonable | Court: subsection (B) is constitutional; it operates uniformly on the class and classification is not arbitrary |
| Requirement that expenditures be "expended only through a contract with the certifying state authority" | Cottrell: City’s Hotel/Motel Tax Funding Agreement with Invest Atlanta fails statutory requirement because it is not a contract with the certifying state authority | State/Entities: funding agreement plus Bond Proceeds Funding and Development Agreement together ensure funds are expended through contract with certifying authority (Congress Center Authority) | Court: arrangement complies with statute; combined agreements satisfy "expended only through a contract with the certifying state authority" requirement |
| Revenue bond limits — must revenue derive from the project; must issuer own/operate project? | Cottrell: Invest Atlanta does not own/operate NSP, so tax payments to Invest Atlanta are not "revenue derived from the project" under revenue-bond law/constitution | State/Entities: revenue includes revenues arising in connection with operation/ownership; tax proceeds collected in connection with Congress Center Authority’s ownership/operation qualify as revenue regardless of Invest Atlanta ownership | Court: revenue definition covers these tax proceeds; Invest Atlanta need not own or operate the NSP to issue revenue bonds secured by those proceeds |
| Authority under Development Authorities Law / Intergovernmental Contracts Clause | Cottrell: NSP is a project of Congress Center Authority, not Invest Atlanta; therefore not an authorized Invest Atlanta project or permissible intergovernmental arrangement | State/Entities: Developmental Authorities Law authorizes authorities to issue bonds and use proceeds to pay costs of any project; intergovernmental contracts allowed among public entities | Court: Invest Atlanta authorized to finance the project; use of proceeds to fund another public entity’s project is permissible |
| Validity/timing of City Resolution 13-R-0615 (passed before certification) | Cottrell: resolution enacted before Congress Center Authority’s certification is void under subsection (B) | State/Entities: statute permits resolution and certification requirements but does not render prior resolution void; both requirements were met before continued tax collection | Court: resolution is valid; lack of absolute chronological sequencing does not void resolution and certification was provided before final validation |
| Validity and scope of O&M Agreement (and reimbursement to StadCo) | Cottrell: O&M Agreement not proper security or violates Intergovernmental Contracts Clause because it allows reimbursement to private StadCo and contains StadCo-approval clause | State/Entities: O&M is an intergovernmental agreement between City and Congress Center Authority, within 50-year limit and authorized purposes; StadCo reimbursement is payment for operations and does not invalidate the agreement; approval clause is severable | Court: trial court properly adjudicated O&M validity; O&M complies with constitutional intergovernmental-contracts requirements and any StadCo-related clause would be severable |
Key Cases Cited
- Lasseter v. Georgia Public Service Com'n, 253 Ga. 227 (state constitutional uniformity/party classification) (discussed uniformity test)
- Youngblood v. State, 259 Ga. 864 (upholding OCGA § 48-13-51(a)(5)(A) as a proper general-law exception)
- State v. Martin, 266 Ga. 244 (clarifying uniformity means uniform operation on designated class)
- McAllister v. American Nat'l Red Cross, 240 Ga. 246 (legislature may exclude certain persons/things from general law)
- Berry v. [unnamed], 277 Ga. App. 650 (role of trial court in bond validation hearings; determine whether bond proposal is sound and security adequate)