Copyright 2014 The Atlanta Journal-Constitution
The Atlanta Journal-Constitution
About a dozen Cobb County residents sought to block the public financing plan for the new Braves stadium in a court hearing Monday on the county's intention to issue up to $397 million in bonds for the project.
The bond validation hearing, which began at 1:30 p.m. and lasted more than six hours, ended with Cobb Superior Court Judge Robert Leonard making no ruling. Under Georgia law, court validation is required before a government agency can issue bonds.
"I have a lot to consider and will take the matter under advisement," Leonard said, adding that he hopes to issue a ruling by the end of July.
Residents of a city or county seeking bond validation are permitted to argue against it in court. By the start of Monday's hearing, 13 Cobb residents had filed motions to intervene in the case, objecting to the issuance of the bonds on a variety of legal grounds. Rarely are such challenges successful. Nine of the 13 were in the courtroom.
Attorneys for Cobb County and the Cobb-Marietta Coliseum & Exhibit Hall Authority argued that the proposed bond issue meets legal and financial requirements and should be validated.
Cobb resident T. Tucker Hobgood, an attorney who filed a motion to intervene on his own behalf, led the way in arguments against the bond issue.
He contended validation should be denied because the underlying stadium transactions violate the intergovernmental contracts clause and gratuity provisions of the Georgia Constitution, represent an "invalid basis" for issuing revenue bonds and would result in tax money being spent on a private facility.
He said that, because the Braves will control the stadium and its revenue streams, it effectively will be a private facility even though the Cobb-Marietta Coliseum & Exhibit Hall Authority will own it.
"This isn't a public facility and isn't intended to be," Hobgood said. "... They (county officials) are putting $390 million into a private facility."
Hobgood subpoenaed Cobb Board of Commissioners Chairman Tim Lee to testify at the hearing. Asked by Hobgood if the stadium will be a public or private facility, Lee said it will be public-private.
Hobgood pressed Lee to elaborate on many aspects of the stadium agreements. Lee repeatedly indicated the agreements speak for themselves. One exchange between Hobgood and Lee drew laughter in the courtroom, followed by a quick rebuke from Leonard.
"This is not going to turn into a spectacle for the media," the judge said. "I am here to determine the legality of the bond."
Another Cobb County resident objecting to the bond issue, Chris Peters, told the judge "there is no substantial public benefit" in the stadium.
Larry Savage, also an objector, argued that the intergovernmental agreement between the Coliseum & Exhibit Hall Authority, which would issue the bonds, and the county exists only to "shield" the county from needing a public referendum on the stadium project.
But Blake Sharpton, a lawyer for the county, said the project "is certainly consistent with the enabling legislation of the Authority."
The opponents of the bond issue touched on many aspects of the stadium deal that might go beyond the intent of Monday's hearing.
"You want me to go back and Monday-morning-quarterback the whole negotiation, and that is not my role," Leonard said at one point.
Validation hearings are meant to assure investors that bonds issued by a government agency are legal and binding.
Similar hearings were held in Fulton County Superior Court earlier this year regarding Atlanta's plan to issue up to $278 million in bonds to partially finance the new Falcons stadium downtown. In that case, Judge Ural Glanville validated the bonds, rejecting objections by a group of five residents of neighborhoods near the stadium site. The residents last month filed a notice of appeal to the Georgia Supreme Court, halting the issuance of bonds for the Falcons stadium until the appeal is resolved.
HOW THE DEAL BREAKS DOWN
Stadium construction budget: $622 million
Braves contribution: $230 million, which can be increased to $280 million at the team's discretion. The Braves will also pay more than $180 million --- $6.1 million a year --- over the life of the team's 30-year lease.
Public contribution: $392 million
* $368 million bond issuance *
* $14 million in transportation sales tax
* $10 million cash from businesses in the Cumberland Community Improvement District
*The maximum amount the county would borrow is $397 million. The bond issuance is larger than the public contribution because the county is also borrowing money to pay the first 15 months of interest on the debt, and all of the borrowing costs. The interest rate at the time of the issuance will determine the exact amount borrowed.
THE DEBT PAYMENTS
Cobb County's annual payment: $25 million**
**This is the maximum annual payment the county could make. The exact amount will depend on interest rates at the time of the bond issuance.
HOW COBB WILL MAKE THOSE PAYMENTS
* Renewal of county-wide property tax levy: $8.6 million
* Braves rent: $6.1 million
* New property tax from Cumberland-area businesses: $5.1 million
* New nightly hotel room fee: $2.7 million
* Existing hotel-motel tax: $940,000
* New rental car tax in unincorporated Cobb: $400,000