Court Opinion

ID: 9602333
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:53:09.369272+00
Date Added: 2024-06-11T18:02:02.626012
License: Public Domain

Hill, Chief Justice,
concurring.
I write separately because the City of Atlanta and others urge that this financing plan is no different from those plans approved in the line of cases in which Building Auth. of Fulton County v. State of Ga., 253 Ga. 242 (321 SE2d 97) (1984), is the most recent.1
The typical authority financing plan, exemplified by the Building Auth. of Fulton County case, is as follows:
A. The authority owns the property. It issues revenue bonds and uses the proceeds of the bonds to construct the project.
B. The state, county, city or private industry leases the property from the authority for a period of years, and agrees to pay rent annually to the authority in amounts necessary to retire the revenue bonds issued by the authority.
The financing plan presently before us is different in the following particulars:
A. The city owns, or will acquire and own, the property. The authority proposes to issue revenue bonds, the proceeds of which are to finance construction of the project and repay the city for part of its *333acquisition costs.
B. The authority leases the property from the city and subleases its commercial portions to a private developer; the developer subleases to subtenants who will occupy the property. The subtenants pay the developer which in turn pays the authority. The rent received by the authority from the developer will be paid to the city. The city has assigned its interest in its lease with the authority to the trustee to retire the revenue bonds issued by the authority.
C. The city (in section 5.4 (b) of its lease to the authority) promises to pay the authority, by deposit with the trustee for the authority’s benefit, up to 90% of any shortfall which exists because payments by the private developer to the authority are inadequate to pay the bondholders.2
That is to say, the city — the owner of the property, the landlord — agrees to pay its tenant, the authority, if the authority’s rental payments to the city are inadequate to pay the bondholders.3 No case has been cited by the parties and we have found none in which this court has approved an authority financing plan in which the city, or county, or state, as landlord or tenant, has agreed to guarantee that a private developer’s rental payments to an authority will be sufficient to pay the bondholders. Compare Sigman v. Brunswick Port Auth., 214 Ga. 332 (1) (104 SE2d 467) (1958). This financing plan is different from the typical authority financing plan which this court approves. The real question is whether this difference renders this plan invalid.
In the typical authority financing plan, the tenant’s rental payments are sufficient to retire the bonds; the tenant may be a city paying rent. Here the city is not paying rent; it has agreed to guarantee the private developer’s rental payments to the authority. This the city cannot do. See State Ports Auth. v. Arnall, 201 Ga. 713 (1) (41 SE2d 246) (1947); Sigman v. Brunswick Port Auth., supra; Rich v. State of Ga., 237 Ga. 291, 300-302 (227 SE2d 761) (1976). Although the intergovernmental contracts clause of the Constitution, Art. IX, Sec. Ill, Par. I, authorizes a city to contract with, an authority, “such contracts must deal with activities, services, or facilities which the contracting parties are authorized by law to undertake or provide,”4 and the Constitution also provides that the General Assembly shall not authorize any municipality “through taxation, contribution, or otherwise, to ap*334propriate money for or to lend its credit to any person or to any nonpublic corporation or association except for purely charitable purposes.” Art. IX, Sec. II, Par. VIII.5 Hence, the city cannot appropriate money for or lend its credit to a private developer.6
The following statement from the Encyclopedia of Georgia Law, 3 EGL, Authority Financing, § 25, p. 50 (1975), is well established: “. . . [0]ur courts, in deciding authority questions, draw a sharp distinction between, on the one hand, a ‘debt,’ that is to say, a provision requiring the state or its subdivisions to subsidize an authority with cash, as is prohibited under the State Ports Authority case [supra], and, on the other hand, a right to contract with the authority for its services, which may be done, even though the state is thereby obligated to undertake the future expenditure of funds. Under these holdings, the state [or a city] may become indebted to the authority for goods and services, but it cannot become indebted to the bondholders of the authority or to the general public for any default of the authority.” (Matter in brackets added.)
For the foregoing reasons, I concur in the majority opinion.
I am authorized to state that Presiding Justice Marshall joins in this concurrence.

 For the beginning of this line of cases, see Sheffield v. State School Building Auth., 208 Ga. 575 (68 SE2d 590) (1952).

 In addition, the city agrees to include in its budget each year an amount sufficient to pay any sums anticipated to be paid during such year pursuant to section 5.4 (b).

 Landlords collect rent; they do not normally guarantee their tenants’ ability to pay rent.

 Insofar as Building Auth. of Fulton County, supra, involved the “Government Center Undertaking,” Pulton County was authorized to perform those activities and services for itself and hence could contract with the authority to do so. The Pulton County contract contained no provision similar to section 5.4 (b) in issue here.

 It may be that there is not much monetary difference between a city’s agreement to pay rent for a period of years and a city’s agreement to guarantee that an authority will pay rent. Nevertheless, it is a difference recognized by our Constitution and therefore one which we are not at liberty to ignore.

 It might be argued that the city is lending its credit to the authority, not to the private developer. Such an argument would be full of holes, holes big enough for city funds to run through. Unlike a private business, the city is not authorized to insure the authority’s bonds. Moreover, OCGA § 36-42-12 provides that no holder of downtown development authority bonds “shall ever have the right to compel any exercise of the taxing power of the state or any county, municipal corporation, or political subdivision thereof, nor to enforce the payment thereof against the state or any such county, municipal corporation, or political subdivision.”