Thursday, October 2nd, 2014

Archive of Kasim Reed fact-check on stadium spending

Editor's Note: PolitiFact Georgia sometimes reconsiders its rulings when additional information is presented. We conducted another round of research and reporting on this statement and revised our rating to True. The revised fact-check can be found here.

"State law says that once the state appraises a piece of property, they can only pay it a certain amount above appraisal."
Kasim Reed on Wednesday, August 7th, 2013 in an interview
Headline: Mayor's stadium claim gets flagged for lack of specifics
False

Plans to build a new $1 billion stadium in downtown Atlanta may sound like a project with limitless cash. But there are boundaries concerning what can be spent, according to a key player in the effort.

Atlanta Mayor Kasim Reed recently took to the radio to discuss the fractured negotiations with Mount Vernon Baptist Church’s leaders to buy its property. The land on which that historic church sits is necessary to build the new sports facility on a preferred site.

State officials have said they cannot offer any more than the highest appraised value it receives, $6.2 million in this case. The church initially said a fair price is about $20 million. But the mayor announced Friday that Mount Vernon has lowered its asking price to $15.5 million.

The mayor said the state, specifically the Georgia World Congress Center Authority, which is in charge of negotiations with the church, can only offer a certain amount of money. Reed explained during an Aug. 7 interview with Sports Radio 680 The Fan.

"The state has some limitations on what they can pay above the appraised price. ... We’re not going to be able to pay Mount Vernon $19.5 million because of the constraints that the state has in what they can pay," Reed said on the station’s The Front Row program.

The mayor went into more detail about a minute later during the interview.

"State law says that once the state appraises a piece of property, they can only pay it a certain amount above appraisal," Reed said.

PolitiFact Georgia wondered whether the mayor is correct. Is the state limited on how far it can move the financial goal posts to strike a deal with the church, as the mayor said?

An attorney for Mount Vernon said such limitations may hamper the negotiations.

"You have stated that the Authority is constrained by law and can only offer appraised fair market value for land which it acquires. ... Consequently, unless the Authority is prepared to obtain from private sources sufficient supplemental funds to pay a realistic price for the Church property, I believe further negotiations would not be fruitful," the attorney, Bill Montgomery, wrote in an email to Senior Assistant Attorney General Denise Whiting-Pack.

For those who’ve just joined this saga in progress, the Atlanta Falcons have been working with the city, the Georgia World Congress Center Authority and others on a deal to build a new stadium, replacing the Georgia Dome, which is owned by the state.

The city would prefer to build the new stadium on land south of the Dome in large part because of its accessibility to MARTA rail lines. In order to build on that site the city would need land where two longtime churches stand, Friendship Baptist Church and Mount Vernon. Mount Vernon was established in 1915. Friendship Baptist was established in 1862.

The initial deadline to work out a deal with the churches was Aug. 1. Although the city struck a deal with Friendship Baptist Church, the GWCCA was unable to do so with Mount Vernon. Reed held a news conference Aug. 6 asking all involved to continue the discussions.

The land acquisition process in Georgia seems simple. A state or local agency does research on the property’s value and offers a price. The landowner takes it or leaves it. That’s unless the government really wants the land. In that case the government can buy it whether the property owner wants to sell or not under the powers of eminent domain.

Reed’s communications director, Sonji Jacobs, referred to language in the state constitution to explain the mayor’s point. State Properties Commission spokeswoman Cindy Presto referenced the same language in the constitution -- Article III, Section VI, Paragraph VI(a) -- when we contacted the agency seeking help.

It reads:

"Except as otherwise provided in the Constitution, (1) the General Assembly shall not have the power to grant any donation or gratuity or to forgive any debt or obligation owing to the public, and (2) the General Assembly shall not grant or authorize extra compensation to any public officer, agent, or contractor after the service has been rendered or the contract entered into."

Said Jacobs: "Basically, if the state does not pay appraised value, it could be thought to be providing an unearned benefit which is not allowed under Georgia law. Based on Mayor Reed's long tenure in the Georgia General Assembly (11 years), in his experience, lawmakers have not paid more than 10 percent above appraised value as a matter of custom and practice if they do make an exception due to the furthering of a public purpose."

Jacobs said Monday that Reed had based his statement largely on information from the GWCCA.

The state has referenced this section of the constitution before on a similar topic. In 1995, the Georgia Board of Regents asked the state Attorney General’s Office for guidance on whether it could trade a lease of its land in return for the endowment of a research chair if the endowment equals the fair-market value of the lease. An assistant attorney general cited the clause in a written legal opinion.

The Attorney General’s Office forwarded the opinion to another Atlanta Journal-Constitution reporter working on an article about the stadium negotiations in response to the same question we had about whether state law prohibits state agencies from offering more than appraised fair-market value for property acquisition.

"In summary, it is my official opinion that Regents may lease its lands in return for the endowment of a research chair if the endowment is equal to the fair market value of the lease and the term of the lease is reasonable," wrote the assistant attorney general, Cheryl Janson.

PolitiFact Georgia contacted officials within the Georgia Association of Assessing Officials. They were unaware of any state rules limiting purchase price when the government buys land. Private real estate attorneys we contacted were also unaware of any state limits.

"I know of no such restriction, and certainly the public press accounts on this issue do not seem to disclose a public restriction," Hugh Wood, a partner with Wood & Meredith, a law firm that handles real estate litigation, told us in an email.

The Georgia Department of Transportation, which buys as much land as anyone in the state, sent us its booklet on right-of-way acquisitions. The booklet mentions that the state agency cannot offer less that an appraiser’s estimate of the property’s fair-market value. It does not mention whether GDOT can offer more money than the appraisal.

"Keep in mind GDOT policy is regulated ... and other state agencies (GWCC) are not," GDOT spokeswoman Natalie Dale told us via email. "So it’s not really apples to apples. What might bind them may not have an impact on us and vice versa."

Reed’s statement is based on an interpretation of a portion of the Georgia Constitution, purportedly long-held best practices and an almost two-decade-old attorney general’s opinion on property leases. The mayor and others have turned to the opinion and language in the state constitution as case law.

The mayor, however, specifically said this: "State law says that once the state appraises a piece of property, they can only pay it a certain amount above appraisal."

That’s a precise statement. And our research found no laws establishing this limit.

We rated Reed’s claim False.