Supreme Court of Georgia Affirms Denial of Bond Issue for Lake Oconee Academy
In a 6-to-1 decision, the Supreme Court of Georgia upheld a Greene County Superior Court ruling denying the validation of revenue bonds to build additional facilities for Lake Oconee Academy (the “Academy”) in Greene County (the “County”). The Greene County Development Authority (the “Authority”), the Academy and the County had appealed the lower court ruling, arguing the lower court erred in a number of ways, including by denying validation of the bonds because they failed to “show that the proposed project is reasonable, sound or feasible.” The Court affirmed the lower court’s ruling on evidentiary grounds.
In considering the appeal, the Court stated “[w]hen presented with a petition for the validation of revenue bonds, a trial court must consider whether the proposal to issue those bonds is ‘sound, feasible, and reasonable.’” The Court went on to state “[a]s this Court has explained before, 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.”
Although the Court noted that the trial judge did not explain in his order exactly why he concluded the proposal was unsound, the Court stated that “we can glean from the record some concerns about the proposal that the trial court may have had.” For example, proponents of the bond issue stated that the purpose of the project was to promote economic development, but the Court noted that the expert witness “offered only scant and conclusory testimony…about the particular impact upon economic development that construction of the proposed facility for the use of the Academy might be expected to have.” The Court went on to note that “the trial court did express at the hearing a concern about the extent to which the Authority’s proposal would, in fact, benefit the citizens of Greene County. In addition, the trial court seemed to have concerns about several aspects of the way in which the project was proposed to be structured, noting the limited involvement of the Board of Education,” and the ability of the Academy to purchase the facilities for only $1 after the indebtedness on the bonds was paid.
The Court summed its holding up by stating “[t]aken together, all these concerns would have permitted the trial court to find, as it did, that the Authority’s proposal to issue $14 million in revenue bonds was not a sound, feasible, and reasonable one, especially considering the cost to the taxpayers of Greene County and that the evidence about the economic benefit of the proposal was not overwhelming.”