Bene v. State
| Decision Date | 27 October 2021 |
| Docket Number | A21A1143, A21A1144, A21A1145, A21A1146 |
| Citation | 362 Ga.App. 73,865 S.E.2d 249 |
| Parties | BENE v. STATE of Georgia et al. (four cases) |
| Court | Georgia Court of Appeals |
John Floyd Woodham, Atlanta, for Appellant.
Fani T. Willis, Daniel M. McRae, Sandra Zagier Zayac, Henry Chalmers, Atlanta, for Appellee in A21A1143.
Fani T. Willis, Atlanta, David Clayton Howeel, Sandra Zagier Zayac, Henry Chalmers, Atlanta, for Appellee in A21A1144.
Fani T. Willis, James Robert Woodward, Sandra Zagier Zayac, Henry Chalmers, Atlanta, for Appellee in A21A1145.
Andrew Donald Egan, Fani T. Willis, Sandra Zagier Zayac, Cary Ichter, Henry Chalmers, Atlanta, for Appellee A21A1146.
In these related appeals, the State brought bond validation petitions seeking a judgment confirming and validating the Fulton County Development Authority's (the "Authority") (the State and the Authority are collectively referred to as the "appellees") issuance of proposed taxable revenue bonds and related security intended to finance four development projects in Fulton County. Julian Bene, a Fulton County resident, intervened in the proceedings and filed objections. The superior court subsequently entered orders validating and confirming the bonds and bond security, and Bene appeals. For the reasons explained more fully below, we affirm the superior court's orders validating the bonds.
The bonds at issue in these appeals relate to the following four economic development projects in and around Atlanta, Fulton County: (1) $85.5 million to fund the construction of a hotel complex with a retail component located in Atlantic Station (Case No. A21A1143); (2) $55 million to fund the construction of a mixed use commercial development located at 1246 Allene Avenue, Atlanta (Case No. A21A1144); (3) $78 million to fund the construction of a multifamily housing facility and economic development project located in Fulton County (Case No. A21A1145); and (4) $115 million to fund the construction of a mixed use (office and retail) development located at Northside Drive and Ethel Street, Atlanta (Case No. A21A1146).1
The transactions share a common structure, and this structure is relevant to the issues on appeal. Specifically, the petitions sought to create a bond transaction leasehold estate, where, in consideration for the issuance of the bonds, the Companies agree to transfer fee simple title in the projects to the Authority, and the Authority and the Companies agree to execute a lease agreement under which the Companies would have the right to possession of the respective projects for a term of ten years. During the term of the lease, the Authority's interest in the projects will be exempt from ad valorem taxation; only the Companies’ leasehold interest is subject to taxation. In connection with the transactions, the Authority and the Companies executed "Memoranda of Agreement" ("MOA") establishing the valuation methodology to be used in assessing ad valorem taxes on the leasehold estates. The percentage of value for each year for taxation purposes is set forth in the MOAs, starting at 50 percent of the fair market value in the first year after completion of the construction and ramping up to 95 percent of the fair market value in the tenth year following construction. At the conclusion of the lease term, the Companies would have the right to purchase the projects for nominal consideration of $10 pursuant to the terms of the lease agreement.
After Bene intervened in the proceedings and filed objections, the superior court conducted a hearing and subsequently entered orders validating and confirming the bonds and bond security as required by the Development Authorities Law ( OCGA § 36-62-1 et seq. ).2 Specifically, in its comprehensive orders, the superior court concluded that (1) the projects are "sufficiently definite and concrete;" (2) the Authority may operate within the City of Atlanta, and the City's municipal charter is not a bar to the Authority's operation there; (3) the bonds are not subject to the Redevelopment Powers Law ( OCGA § 36-44-1 et seq. ); (4) the methodology the Authority used to value the leasehold estates is proper; (5) the MOAs do not restrict the Fulton County Board of Assessors’ ( leasehold interests is proper; and (11) the bond transactions do not violate the Georgia Constitution's Gratuities Clause (Art. III, Sec. VI, Par VI (a) (1)).3 The superior court also rejected Bene's arguments that the bond transactions involve political questions best left to the political branches; and the transactions are "sham[s]," and their only purpose is to provide tax breaks to private companies. These appeals followed.
Because the parties agree that the underlying facts are not in dispute, we "conduct[ ] a de novo review of the record in determining whether the [superior] court committed plain legal error." Sherman v. Dev. Auth. of Fulton County , 317 Ga. App. 345, 346, 730 S.E.2d 113 (2012) (" Sherman I ") (citation and punctuation omitted).
Bene raises the same or similar arguments in each appeal, as set forth below.
1. In related arguments, Bene argues that the superior court erred in validating the bonds because the appellees failed to make out a prima facie case as to the purpose of the bonds. As further described below, we find no reversible error.
OCGA § 36-82-75 requires the bond validation petitions to state "for what purpose the bonds are to be issued." Though the petitions, bond resolutions, and lease agreements allege that the purpose of the bonds is to provide financing for the projects and to support the public interest, Bene argues that the appellees failed to prove that the purpose of the bonds was as stated in the petition. Further, he claims that the purpose of the bonds in fact differs from what was stated in the petition.
More specifically, Bene asserts that his denial of the allegations concerning the bonds’ purpose placed the burden on the appellees to come forward with evidence sufficient to establish a prima facie case that the purpose of the bonds was as stated in the petitions. He takes issue with the superior court's ultimate finding that the proceeds of the bonds will be used to finance the projects, arguing that there was no evidence presented to support such a finding. In addition to the appellees’ alleged failure to come forward with this evidence, (which Bene claims is sufficient, standing alone, to warrant reversal of the validation orders), he further asserts that testimony from Al Nash, the Authority's Executive Director, expressly demonstrates that the bonds will not actually finance the projects. Instead, the Company will pay for the projects via separate loans from third-party lenders. Additionally, Bene cites the Authority's trial brief and statements during oral argument wherein it affirmed that the purpose of the bond transaction is to provide a tax break for the Company.
At the hearing, the superior court heard evidence that the bonds will serve the public interest as set forth in the petition. Specifically, there was evidence that the issuance of the bonds will improve the community, provide jobs, attract other developments, pay for improvements to old infrastructure (including decaying sewer and water lines), cleanup of a public health hazard and an environmental site, and create affordable housing. Thus, there is evidence that the "proposal to issue bonds is sound, feasible, and reasonable," and given the "any evidence" standard, the superior court's "findings about soundness, feasibility, and reasonableness must be sustained on appeal[.]" Savage v. State , 297 Ga. 627, 631-632 (3), 774 S.E.2d 624 (2015).
Bene suggests that we must vacate the validation orders because the only purpose alleged in the petition, financing the projects, was not the same as that proven at the hearing. While, as conceded by the appellees, the language in the petitions may be "imprecise" in certain allegations, the petitions actually allege, as...
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