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Cottrell v. Atlanta Development Authority

Supreme Court of Georgia

March 16, 2015


Reconsiderations denied April 9 and 14, 2015.

Page 617

OCGA § 48-13-51 (a) (5) (B); constitutional question. Fulton Superior Court. Before Judge Glanville.

Thelma W. Cummings Moore; John F. Woodham, for appellants.

Paul L. Howard, Jr., District Attorney; Samuel S. Olens, Attorney General, Denise E. Whiting-Pack, Senior Assistant Attorney General; Hunton & Williams, Matthew J. Calvert, Douglass P. Selby, Ashley F. Cummings; Sutherland, Asbill & Brennan, Thomas W. Curvin, Matthew W. Nichols, for appellees.

MELTON, Justice. All the Justices concur.


Page 618

Melton, Justice.

This case concerns the Superior Court of Fulton County's validation of roughly $200 million in municipal bonds (the " 2014 NSP Bonds" ) to be issued by the Atlanta Development Authority d/b/a Invest Atlanta (" Invest Atlanta" ). Invest Atlanta and the Geo. L. Smith II Georgia World Congress Center Authority (" Congress Center Authority" ) (collectively, the " New Stadium Entities" ) propose to have the 2014 NSP Bonds issued for the purpose of funding a portion of the cost of developing, constructing, and operating a new stadium facility in downtown Atlanta (the " New Stadium Project" or " NSP" ) for the Atlanta Falcons professional football team. Additional funding for the NSP will be provided by the Atlanta Falcons Stadium Company, LLC (" StadCo" ), a Georgia limited liability company associated with the Atlanta Falcons Football Club, LLC (the " Club" ), as well as through the sale of personal seat licenses. The NSP is a successor facility to the over twenty-year-old Georgia Dome, and it will be owned by the Congress Center Authority, which also owns the Georgia Dome.

Procedurally, on February 4, 2014, the State of Georgia filed a Petition for Bond Validation in the superior court to authorize the issuance of the 2014 NSP Bonds. A notice to the public was filed on that same day, as well as a Rule Nisi Order setting the bond validation hearing for February 17, 2014. Notice of the proceeding was published in the Fulton County Daily Report on February 7, 2014 and [297 Ga. 2] February 14, 2014 as required by OCGA § 36-82-76. Rev. William L. Cottrell, Sr., Mamie Lee Moore, Tracy Y. Bates, John H. Lewis III, and Joe Henry Beasley (hereinafter collectively " Cottrell" ) moved to intervene in the proceedings to file objections to the bond validation, and the trial court allowed them to do so. Among other things, Cottrell contended that OCGA § 48-13-51 (a) (5) (B), which allows for an extended time period in which a county or municipality may levy a Hotel/Motel tax for purposes of funding a " successor facility" to an existing " multipurpose domed stadium facility," was an unconstitutional special law. See Ga. Const. of 1983, Art. III, Sec. VI, Par. IV (a). The bond hearing was continued until April 10, 2014, and the trial court entered a Consolidated Pre-Trial Order on April 8, 2014. Following the April 10, 2014 hearing, the trial court entered a May 8, 2014 Validation Order and Final Judgment validating the 2014 NSP Bonds and overruling all objections. Cottrell appeals from this ruling, and, for the reasons that follow, we affirm.

By way of background, the Georgia Dome was, and the NSP is to be, funded in part by a Hotel/Motel tax levied under OCGA § 48-13-51 (a) (5).[1] Generally, Hotel/Motel taxes

Page 619

can only be levied at a rate of three percent or less. See OCGA § 48-13-51 (a) (1) (D) (" Except as provided in paragraphs (2.1), (2.2), (3), (3.1), (3.2), (3.3), (3.4), (3.5), (3.7), (4), (4.1), (4.2), (4.3), (4.4), (4.5), (4.6), (4.7), (5), (5.1), (5.2), and (5.3) of this subsection, no tax levied pursuant to this Code section shall be levied or collected at a rate exceeding 3 percent of the charge to the public for the furnishings." ). However, OCGA § 48-13-51 (a) (5) (A) provides an exception to this three percent ceiling for Hotel/Motel taxes by allowing counties and municipalities to levy a seven percent Hotel/Motel tax as long as a designated portion of the collected tax [297 Ga. 3] proceeds is used to fund a multipurpose domed stadium facility. Before 2010, taxes imposed under Paragraph (a) (5) of OCGA § 48-13-51 were required to have a stated expiration date " not later than December 31, 2020." OCGA § 48-13-51 (a) (5) (A) (ii). However, the General Assembly amended Paragraph (a) (5) in 2010 to add a new subsection (B), which allowed those taxing jurisdictions that had previously levied a tax under Paragraph (a) (5) to extend the stated expiration date to December 31, 2050, so long as the same portion of the proceeds that had been used to fund the original multipurpose domed facility was expended to fund a " successor facility" during the extended period. Pursuant to OCGA § 48-13-51 (a) (5) (B):

Notwithstanding the [December 31, 2020] termination date stated in division (ii) of subparagraph (A) of this paragraph ... a tax levied under this paragraph may be extended by resolution of the levying county or municipality and continue to be collected through December 31, 2050, if a state authority certifies: (i) that the same portion of the proceeds will be used to fund a successor facility to the multipurpose domed facility as is currently required to fund the multipurpose domed facility under division (ii) of subparagraph (A) of this paragraph; (ii) that such successor facility will be located on property owned by the state authority; and (iii) that the state authority has entered into a contract with a national football league team for use of the successor facility by the national football league team through the end of the new extended period of the tax collection.

In order to structure the deal and issue the 2014 NSP Bonds for the New Stadium Project, the New Stadium Entities created various agreements and took several steps:

o Based on the 2010 subsection (B) amendment to OCGA § 48-13-51 (a) (5) allowing for an extended period to collect a Hotel/Motel tax as long as a certain percentage of the proceeds collected during the extended period were expended to fund a " successor facility," in March 2013, the City passed City Resolution 13-R-0615, which authorized
the Mayor to execute (1) a Hotel/Motel Tax Funding Agreement with [Invest Atlanta], as consideration for Invest Atlanta agreeing to provide for the development, construction, equipping, and funding of [297 Ga. 4] the publicly financed portion of the cost of a multi-purpose operable roof stadium through its issuance of revenue bonds necessary to provide such services and facilities and the [City] agreeing to make payments from certain Hotel/Motel Taxes collected under such agreement to be pledged as security for the [2014 NSP Bonds] (2) a Hotel/Motel Tax Operation and Maintenance Agreement [" O& M Agreement" ] with [the] Congress Center Authority for the use of funds in excess of the amount necessary for payments due under the Hotel/Motel Tax Funding Agreement to provide for operation and maintenance services for the new stadium, all in accordance with OCGA [§ ] 48-13-51 (a) (5) [(B)]; and for other purposes.
The City prepared a Hotel/Motel Tax Funding Agreement with Invest Atlanta and an O& M Agreement with the Congress Center Authority consistent with City Resolution 13-R-0615. The City currently levies a Hotel/Motel Tax, and 39.3 percent of the first seven percent of the ...

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