Stockbridge loses one round in fight to avoid de-annexation

A Georgia judge Wednesday denied the city of Stockbridge’s request for a declaratory judgment seeking to strike down legislation that would cut the city’s assessable property value in half through an involuntary de-annexation.

Henry County Superior Court Judge Arch McGarity ruled from the bench that two bills signed by Gov. Nathan Deal in May – one cutting Stockbridge in half and another allowing for a referendum to create the new city of Eagle’s Landing – did not violate the state’s constitution.

Stockbridge, Ga., city hall opened in 2009 and was financed with revenue bonds.

If voters within the proposed city limits of Eagle’s Landing approve the referendum Nov. 6, the new municipality will be created mostly from land that lies in Stockbridge. A small portion would be annexed from unincorporated Henry County.

Stockbridge Mayor Anthony Ford said he and the city council members were disappointed with the ruling but remain confident that “justice will prevail.”

“We believe in the merits of our argument that all community members should have a voice and representation,” Ford said. “We never asked for this unique situation that advocates that a select group of voters get to decide the ultimate fate of a legendary city with valuable heritage and great vision.”

Residents who would remain in the smaller, less wealthy Stockbridge won’t get to vote in the referendum. They also would be left to pay the city’s debt, which wasn’t apportioned in the legislation.

The city will appeal Wednesday’s ruling, said Stockbridge attorney Mike Williams.

“It was a final adjudication so we can immediately appeal to the [Georgia] Supreme Court,” he said.

Williams also said that outside attorneys are pursuing a separate complaint alleging civil rights violations that will be filed in federal court.

An attorney for the proposed city of Eagle’s Landing did not immediately respond to a request for comment regarding Wednesday’s ruling.

Deal approved Senate Bill 262, which amends Stockbridge’s boundaries without the city’s consent, and SB 263 setting the stage for November’s referendum and authorizing the new city of Eagle’s Landing to be created.

Stockbridge stands to lose much of its high-value commercial and residential property if the de-annexation occurs, according to city officials and a city-commissioned fiscal study from the Carl Vinson Institute of Government at the University of Georgia.

Stockbridge 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.

Although Stockbridge’s debt is not rated, two rating agencies warned that the Georgia laws could negatively impact other municipalities in the state.

S&P Global Ratings said in May that the laws raise concern regarding the credit stability of debt issued by Georgia cities.

“While Stockbridge may continue to service its debt obligations without interruption following the potential de-annexation, the legislation is significant, in our opinion, as it could result in a sudden and dramatic change in the city's credit profile,” said S&P analyst Randy Layman. “While incorporation and de-annexation in the state are relatively common and vary in size and credit implications, it is our opinion that the acceptance of this particular case could encourage similar efforts statewide.”

Moody's Investors Service had similar concerns.

The bills are credit negative for Stockbridge and local governments generally because they establish a precedent that the state can act to divide local tax bases, potentially lowering the credit quality of one city for the benefit of another, Moody’s Investors Service analyst Nisha Rajan said in May.

“This legislation marks the first time that portions of a city are de-annexed in Georgia to create a new city,” Rajan said.

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