A federal judge on Friday declined to halt a referendum to make Eagle’s Landing a city, four days after the Georgia Supreme Court also decided not to stop the vote.
But U.S. District Court Judge Leigh Martin May clarified that the new town, if incorporated, would be responsible for a portion of its former community’s municipal debt.
U.S. District Court Judge Leigh Martin May found that the state acts that allowed Eagle’s Landing residents to decide Nov. 6 whether they want to break away from Henry County’s biggest city also included language that passed on debts.
“The court agrees with plaintiffs that if the General Assembly had allowed a new city, which at the time of its creation served as collateral for a bond obligation, to be completely relieved of that prior bond obligation without any input from the bondholder, such a measure would likely have violated the contract clauses,” May wrote in her ruling. “But ... the General Assembly properly assigned the debt agreement to Eagle’s Landing.”
Stockbridge and Capital One Public Funding, the municipal bonding arm of banking giant Capital One, sought to stop the vote because they argued that the state had failed to create a mechanism for Eagle's Landing to pay a share of about $17 million in bonds owed by Stockbridge.
About half of Stockbridge would be de-annexed and ceded to Eagle's Landing if the referendum is successful, meaning property tax debt taken out on those residents to pay back the bonds would need to be transferred, Stockbridge and Capital One said.
Vikki Consigilo, a leader in the cityhood movement, said Capital One had failed to do its due diligence when it took on the Stockbridge debt — which the financial institution bought from Wells Fargo.
“It surprised me that Capital One did not realize when they purchased the loan from Wells Fargo in 2017 that legislation (SB 263) had already been introduced for the de-annexation of portions of the city of Stockbridge into the city of Eagle’s Landing” and that the legislation already addressed their concerns over the debt, she said in a statement. “And furthermore it saddens me to think that bond reporting agencies would write articles indicating bond harm for cities across Georgia when clearly the Georgia Legislature had made provisions for these things.”
However, she added, “There are many media reports stating that the federal judge ordered the city of Eagle’s Landing to pay the debt of the city of Stockbridge when that is not the case.”
May's decision not to stop the referendum comes just days after the Georgia Supreme Court on Monday also declined to halt the vote in a 7-2 decision.
Eagle’s Landing, a well-heeled community in Stockbridge’s southern end, is seeking to secede to chart its own destiny, including improving city services and economic development. Stockbridge leaders have said those efforts could be better achieved as one city.
The city of Stockbridge also has sought to stop the referendum on grounds that it violates the Voting Rights Act of 1965 and the equal protection clause of the 14th Amendment.
“While we had argued for an injunction of the referendum, the judge opted to allow the ballot question to remain in place,” said Chris Anulewicz, an attorney for Stockbridge. “We are disappointed in the preliminary injunction ruling yet Stockbridge continues to believe it should ultimately prevail on the merits of its constitutional challenge.”
