Franzen v. City of Atlanta

• Decision Date: 29 March 2021
• Docket Number: A21A0259, A21A0267
• Citation: 359 Ga.App. 462,857 S.E.2d 237
• Court: Georgia Court of Appeals
• Parties: FRANZEN et al. v. CITY OF ATLANTA (two cases).

359 Ga.App. 462

857 S.E.2d 237

FRANZEN et al.

v.CITY OF ATLANTA (two cases).

A21A0259, A21A0267

Court of Appeals of Georgia.

March 29, 2021

Reconsideration Denied May 18, 2021

Woodham Law, John F. Woodham ; The Pryor Firm, Carranza M. Pryor, for appellants.

Hunton Andrews Kurth, Douglass P. Selby, Matthew J. Calvert, Laura T. Wagner ; The Kendall Law Firm, Alvin L. Kendall ; Holland & Knight, Robert S. Highsmith, Jr., Keith M. Wiener ; Rodgers & Hardin, Richard H. Sinkfield, for appellee.

Rickman, Presiding Judge.

This case involves two of three related bond validation proceedings, "all of which concern the redevelopment of an area of downtown Atlanta commonly referred to as ‘The Gulch.’ " Franzen v. Downtown Dev. Auth. of Atlanta , 309 Ga. 411, 411, 845 S.E.2d 539 (2020) (" Franzen I ").¹ The Appellants opposed the bond validation below primarily by arguing that the Atlanta Board of Education and the Fulton County Board of Commissioners did not have the authority to commit educational tax dollars derived from certain tax allocation districts to the use of the proposed Gulch developer for the Gulch redevelopment. Because we find that these arguments have no merit, we affirm the trial court's validation of the related bonds.

"Whether 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." (Citation and punctuation omitted.) Savage v. State of Ga. , 297 Ga. 627, 631-32 (3), 774 S.E.2d 624 (2015).

"The relevant facts show that, in 1998, the City of Atlanta (‘City’), through its City Council, adopted a Westside Redevelopment Plan that expressly declared the City's goal of redeveloping The Gulch, which had been blighted and underdeveloped for some time.’’ Franzen I , 309 Ga. at 411 (1), 845 S.E.2d 539. According to the plan,

The Railroad Gulch – The ravine created in Atlanta by the railroads has long been a nuisance to the citizens of Atlanta as it has visually, socially, and physically divided the area since the early 1900s. To overcome these conditions[,] the infusion of capital and the assistance of government is needed to redevelop this 150 acre area.... With the impending development of the new Atlanta Arena, [Tax Allocation District] funds could be used to help fill development gaps for tourism uses, ... office and retail uses, and other redevelopment needs and uses that might exist. Such developments offer Atlanta the best opportunity to redevelop the "[G]ulch" since the founding of the city over 150 years ago.

Id. at 411–12 (1), 845 S.E.2d 539.

The Redevelopment Powers Law encourages redevelopment of "economically and socially depressed areas" because "these areas contribute to or cause unemployment, limit the tax resources of counties and municipalities, and create a greater demand for governmental services and, in general, have a deleterious effect upon the public health, safety, morals, and welfare." OCGA §§ 36-44-1 ; 36-44-2. "To encourage such redevelopment, it is essential that the counties and municipalities of this state have additional powers to form a more effective partnership with private enterprise to overcome economic limitations that have previously impeded or prohibited redevelopment of such areas." OCGA § 36-44-2.

A political subdivision

may exercise any powers necessary or convenient to carry out the purposes of [the Redevelopment Powers Law], including, but not limited to, the power to: ... [c]ause redevelopment plans to be prepared, to approve by resolution the plans, and to implement the provisions and effectuate the purposes of the plans; ... [c]reate within redevelopment areas tax allocation districts and define the boundaries thereof or designate an entire redevelopment area as a tax allocation district; ... [i]ssue tax allocation bonds[.]

OCGA § 36-44-5 (a) (2), (3), and (5).

A ‘‘tax allocation district’’ is defined as "a contiguous geographic area within a redevelopment area which is defined and created by resolution of the local legislative body of a political subdivision ... for the purpose of issuing tax allocation bonds to finance, wholly or partly, redevelopment costs within the area." OCGA § 36-44-3 (13). Tax allocation bonds are "one or more series of bonds ... issued by a political subdivision to finance, wholly or partly, redevelopment costs within a tax allocation district and which are issued on the basis of pledging for the payment or security for payment of such bonds positive tax allocation increments rederived from the tax allocation district[.]" OCGA § 36-44-3 (12). Tax allocation increments are derived from an increase in ad valorem property tax² revenues resulting from redevelopment. See OCGA § 36-44-3 (14).

In 1998, the City created the Westside Tax Allocation District ("TAD") when it adopted the Westside Development Plan. Thereafter, the Atlanta Board of Education passed a resolution consenting to the inclusion of its ad valorem real property taxes in the computation of the tax allocation increments for the Westside TAD. Likewise, the Fulton County Board of Commissioners passed a similar resolution, consenting to the inclusion of its ad valorem real property taxes in the computation of the tax allocation increments for the Westside TAD through 2023.

Twenty years later, in 2008, the City Council passed a resolution amending the termination date of the Westside TAD from December 31, 2023 to December 31, 2038. Fulton County then amended its 1998 resolution and extended its consent through 2038, with certain conditions.

After the bond validation proceedings were initiated in both of these cases, the Atlanta Board of Education adopted the 2018 resolution which stated that "[n]o further use of the ad valorem tax increments authorized by the School Board in the 1998 Resolution ... shall be permitted without the School Board's prior written consent, except to pay the debt service on the currently outstanding Bonds secured thereby."

One month later, the Atlanta Board of Education passed another Resolution ("the 2019 Resolution"), ratifying its continued consent to use of its tax increments from the Westside TAD:

Effective upon the Atlanta City Council's approval of the Agreement,³ the School Board hereby ratifies its continued consent to the inclusion of educational ad valorem property tax increment derived from the Westside TAD for the payment of redevelopment costs in the Westside TAD through December 31, 2038 and as security for the payment of the Prior Westside TAD Bonds, as such bonds may be refunded, restructured and or restated; provided that the maturity of such bonds shall not be extended beyond December 31, 2037.

Additionally, the 2019 Resolution provided that the School Board consented "to the inclusion of its educational ad valorem property tax increment generated solely within the Gulch Area of the Westside TAD for the payment of Redevelopment Costs in the Gulch Area and tax allocation bonds issued for the Gulch Project but only through December 31, 2038[.]" Finally, the 2019 Resolution clarified that it "shall supersede any conflicting provision in the [2018 Resolution] related to City tax allocation districts."

On the first day of the bond validation hearings, four citizens of the City (the "Intervenors"), the appellants in these cases, moved to intervene, and filed an answer and objections to the bond validations.⁴ The trial court granted the motions to intervene and the bond validation hearings took place over several days.

In Case No. A21A0259, the trial court issued orders both denying the Intervenors’ objections and validating the issuance of the Westside TAD Gulch Area Bonds in an amount not to exceed 40 million dollars. In Case No. A21A0267, the trial court issued orders both denying the Intervenors’ objections and validating "the issuance by [the City] of a series of restated bonds originally issued as part of redevelopment work in the City's Westside Tax Allocation District."⁵ The Intervenors appeal from these four orders.⁶ Many of the enumerated errors in A21A0259 and A210267 involve the same issues so we will consider both cases jointly.

1. The Intervenors contend that the trial court erred by holding that the Atlanta School Board could not limit its participation in the Westside TAD pursuant to the 2018 resolution.

This holding that the Intervenors challenge was an alternate holding. The trial court held that, in the 2019 resolution, the Atlanta School Board consented to the inclusion of educational ad valorem property tax dollars as a basis for computing the tax allocation increment for the Westside TAD. Furthermore, the trial court held that even without the 2019 resolution, "there was never a time limit on [the Atlanta School Board's] commitment to pledging its share of ad valorem tax dollars in the Westside TAD, dating back to its original consent in 1998." Alternatively, the trial court held that once the City passed the Gulch Project Resolution in 2018, the Atlanta School Board could not revoke its consent.

The 2019 resolution expressly stated that the Atlanta School Board consented "to the inclusion of its educational ad valorem property tax increment generated solely within the Gulch Area of the Westside TAD for the payment of Redevelopment Costs in the Gulch Area and tax allocation bonds issued for the Gulch Project[.]" And regardless of the validity of the 2018 resolution, the trial court properly held that the Atlanta School Board expressly reinstated its consent to the inclusion of any educational ad valorem property tax dollars as a basis for computing the tax allocation increment for the Westside TAD in the 2019 resolution.

2. The Intervenors contend that the trial court erred by failing to grant their motion for judgment on the pleadings.

"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." OCGA §...