By: Matt Weiss

February 23, 2015

In 2013, the Atlanta Braves and Cobb County, Georgia jointly announced that the team would be moving to a new stadium in Cobb County called Sun Trust Park for the 2017 baseball season. This news came as a surprise to residents because Turner Field, the stadium in which the Braves currently play their home games, opened less than 20 years ago.

Photo Credit: Braves.com

The Braves caused further uproar when they revealed last summer that the stadium would be financed substantially by revenue bonds[1] rather than general obligation bonds.[2] In doing so, Cobb County was able to avoid holding a public referendum on the issuance of the bonds. Three Cobb County residents subsequently intervened in the bond validation hearing because of the county’s slick maneuver.[3] A Cobb County Superior Court Judge validated the bonds on July 25th despite the challenge, so on August 22nd, the three interveners filed an appeal to the Georgia Supreme Court.[4] The court heard oral arguments from both sides on February 3rd.[5]

The appellants based their argument on the idea that what Cobb County wants to do violates the Georgia Constitution.[6] Cobb County contracted with the Cobb-Marietta Coliseum and Exhibit Hall Authority such that the Exhibit Hall Authority would issue $397 million in bonds to the Braves rather than the county itself.[7] However, the $24 million annual payment on the bonds would be split between the county and the team, with the county paying 75% of the debt.[8] Therefore, Cobb County has in effect promised almost $18 million per year of taxpayer money to the Braves, but has no obligation to hold a public referendum on the subject because the county is not actually issuing the bonds itself.

Under Georgia state law, a county must hold a public referendum before issuing any “new debt.”[9] The appellants have argued throughout their challenge that despite the fact that Cobb County is not planning on issuing these bonds, it is still issuing new debt under the statutory definition.[10] Unfortunately for the interveners, the Georgia Supreme Court has upheld very similar arrangements in the past, and the county has argued this same point.[11]

Another point the challengers of the bonds argued is that, even if the court does not feel as though the county issued new debt, the Exhibit Hall Authority can only issue revenue bonds for specific purposes, and the construction of a baseball stadium is not one of those purposes.[12] The Braves themselves submitted an amicus brief in support of the Exhibit Hall Authority in which they argued that the construction of a stadium is a recreational purpose for which the Exhibit Hall Authority can issue bonds.[13] This is because, according to the Braves, “[t]he Stadium, although providing the Atlanta Braves with a venue to play their home games, will benefit the constituents of the County and State in a variety of ways.”[14] Further, “Courts have repeatedly found recreation – and by extension stadiums and other sports facilities – to be within the broad scope of ‘public purpose.'”[15]

Based on judicial history, the appellants would seem to be climbing an up-“Tal’s Hill” battle with respect to the Georgia Supreme Court’s willingness to deem the bonds invalid.[16] Of course, even if the court decides to rule in favor of the interveners, it could merely require the Braves to finance more of the stadium themselves while still allowing the Exhibit Hall Authority to issue the bonds. There is also the possibility that the court mandates a public referendum but the residents of Cobb County vote in favor of the issuance of new debt. Regardless, the three people challenging the bonds may not care about the final outcome; they really just want their voices to be heard.


 

[1] Revenue Bonds are bonds “supported by the revenue from a specific project . . . .” Revenue Bond, Investopedia (2015), http://www.investopedia.com/terms/r/revenuebond.asp. In this case, Cobb County will pay back the revenue bondholders once the stadium is in use and revenue is being generated. General obligation bonds require the bond issuer to pay the specified coupon amount at designated times, even potentially before any revenue is generated.

[2] Andy Clark, Braves Stadium Bond Challenge to be Heard in Georgia Supreme Court, Andy Clark Law (last updated February 3, 2015), http://andyclarklaw.com/braves-stadium-bond-challenge-heard-georgia-supreme-court/.

[3] Id.

[4] Ricky Leroux, Appeals Filed Against $397 Million in Bonds for Braves Stadium, The Marietta Daily Journal (August 26, 2014), http://mdjonline.com/pages/full_story/push?article-Appeals+filed+against+%24397M+in+bonds+for+Braves+stadium%20&id=25672941.

[5] Max Blau, Cobb Residents Take Challenge of Nearly $400 Million in Braves Stadium Bonds to Georgia Supreme Court, Creative Loafing Atlanta (February 3, 2015), http://clatl.com/freshloaf/archives/2015/02/03/cobb-residents-challenge-nearly-400-million-in-braves-stadium-bonds.

[6] Nathaniel Grow, Georgia Supreme Court Hears Legal Challenge to New Braves Stadium, Fangraphs (February 5, 2015), http://www.fangraphs.com/blogs/georgia-supreme-court-hears-legal-challenge-to-new-braves-stadium/.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Andy Clark, Braves Stadium Bond Challenge to be Heard in Georgia Supreme Court, Andy Clark Law (last updated February 3, 2015), http://andyclarklaw.com/braves-stadium-bond-challenge-heard-georgia-supreme-court/.

[13] Amicus Brief of Atlanta National League Baseball Club Supporting Appellees, Savage v. Cobb-Marietta Coliseum and Exhibit Hall Authority, 2015 WL 264804 at 9 (Ga.).

[14] Id. at 10.

[15] Id.

[16] Tal’s Hill is the iconic hill in Minute Maid Park where the Houston Astros play.

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