Georgia governor signs bills permitting de-annexation from city

Register now

Gov. Nathan Deal signed two bills into law Tuesday that could slice the city of Stockbridge in half to create the city of Eagle's Landing.

The new city would not be responsible for any of Stockbridge's debt, which would have to be serviced by the smaller, remaining part of Stockbridge.

Deal said he signed the measures after conducting a thorough review, and giving “careful consideration” of the legislation and meeting with Stockbridge’s elected officials and authors of Senate bills 262 and 263.

“I’ve determined the de-annexation of Eagle's Landing from the city of Stockbridge is ultimately a local issue and should not affect Georgia’s AAA rating,” Deal said in a statement.

Deal also said that given the increasing number of annexation and de-annexation bills considered by the legislature each year, and the issues that continue to arise with individual "cityhood" movements, there is a need for new legislation.

“I call on the General Assembly to take up de-annexation reform in the next session so as to ensure a comprehensive, detailed and uniform process in the future,” said Deal, who is term-limited out of office this year and can’t run for re-election.

Deal did not explain what he found wrong with the process.

The de-annexation is involuntary for the city of Stockbridge and neither bill apportions Stockbridge’s outstanding debt.

Mike Williams, attorney for Stockbridge, said city officials are “very disappointed.”

The city will release more information Wednesday about litigation to challenge the new laws, he said. Stockbridge has hired three outside law firms to work on potential suits.

SB 262 would de-annex about 51% of Stockbridge’s assessable residential and commercial property value to pave the way for the new city of Eagle's Landing. SB 263 authorizes the creation of Eagle's Landing, which voters in the prospective city would then have to approve.

Vikki Consiglio, organizer of the Eagles Landing Educational Research Committee advocating for incorporation, contended there were misleading pronouncements about the legislation and its impact on Stockbridge, including “alleged issues” with the city’s municipal bonds.

“We are thankful for the Henry County delegation who worked so hard getting these bills through both chambers and for the governor who took the time to meet with all sides to get the facts surrounding SB 262 and 263,” Consiglio said in a release. “We are humbled by the support of the citizens in the area and those at the capitol.”

Consiglio also said proponents of incorporating Eagle's Landing followed all the processes set out by lawmakers.

A referendum on creating the new city will be held in November among residents within the proposed city limits.

If de-annexation occurs, the much smaller remainder of Stockbridge still would be obligated to pay off about $13.02 million of privately placed Urban Redevelopment Agency lease-revenue bonds and $1.5 million of water and sewer notes issued through the Georgia Environmental Facilities Authority. Both have final maturities in 2031.

The lease-revenue bonds, issued in 2005 and 2006 for projects including buying land and building city hall, are backed by general fund revenues and the city’s taxing power, if needed, even though the city doesn’t currently assess a property tax.

The bonds are owned by Capital One Public Funding LLC. President Jonathan Lewis could not immediately be reached for comment on the bill signings. Lewis had warned Deal in an April 6 letter about potential legal problems with the legislation because both bills failed to apportion the bonds between the city of Stockbridge and Eagle’s Landing.

That failure would infringe on Capital One’s constitutional rights under the contracts clause of the U.S. Constitution and the Georgia Constitution because it removes a significant portion of the security and source of repayment for the city’s bonds, Lewis said.

Nearly 100 Georgia cities passed resolutions opposing the bills, citing concerns about the procedure lawmakers used as well as their own future bonding capacity.

In Atlanta, the City Council voted 12-2 on Feb. 19 to oppose the legislation, saying in its resolution that it would be “inconsistent with the 2018 legislative policies adopted by the Georgia Municipal Association.”

“De-annexation of existing municipalities negatively affects the tax base, economic development, and bond capacity developed by cities over years,” said Atlanta’s resolution. It also said existing municipalities may experience adverse effects to the delivery of services, the transfer of city-owned assets, and their credit ratings.

Deal did not say who he consulted to determine that the legislation would not impact Georgia’s triple-A ratings.

Larry Kidwell, a municipal advisor and president of Brentwood, Tenn.-based Kidwell & Co., said in a November letter to Stockbridge that if the legislation was signed by the governor he believed it could potentially affect the state’s credit ratings. Kidwell's firm is registered to do business in Georgia.

“If Stockbridge can be broken up by the Georgia Legislature, what would prohibit the Legislature from doing the same thing to other cities of the state?” Kidwell said. “The passage of the proposed legislation would set the precedent for further destabilization to occur within the state.”

For reprint and licensing requests for this article, click here.
Government finance Revenue bonds Lawsuits Ratings State of Georgia Georgia