Fairgreen Capital LLC v. City of Canton

The written agreement between the property developer and the city, under which the developer advanced the city over half a million dollars for the construction of a road, was void as a matter of law because it required voter approval, which did not occur.

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Fairgreen Capital, LLC, a property developer, sued the City of Canton for breach of contract claiming the City failed to repay $564,312.44 in funds that Fairgreen advanced to the City under a written agreement governing construction of a public road on City property benefitting a Fairgreen development. The trial court granted summary judgment in favor of the City on grounds that, under the Georgia Constitution Art. IX, Sec. V, Par. I, the funds owed by the City under the agreement constituted an illegal and void debt.1 Fairgreen appeals. For the following reasons, we affirm in part and reverse in part.

1. Article IX, Section V, Paragraph I a of the Georgia Constitution prohibits any county, municipality, or other political subdivision of Georgia from incurring liability for any new debt without the assent of a majority of the qualified voters of such county, municipality, or political subdivision voting in an election held for that purpose as provided by law. Under this provision, new debt is a liability that is not to be discharged by money already in the treasury, or by taxes to be levied during the year in which the contract under which the liability arose was made. Greene County School Dist. v. Circle Y Constr., Inc., 291 Ga. 111, 112 728 SE2d 184 2012. Therefore, if a municipality undertakes an obligation that extends beyond a single fiscal year, then a new ‘debt’ has been incurred within the meaning of the Georgia Constitution and requires voter approval. Barkley v. City of Rome, 259 Ga. 355, 355 381 SE2d 34 1989. A contract incurring such new debt, which is entered into by a municipality without voter approval, is void as a matter of law. Greene County School Dist., 291 Ga. at 112.

Fairgreen Capital LLC v. City of Canton

The written agreement between the property developer and the city, under which the developer advanced the city over half a million dollars for the construction of a road, was void as a matter of law because it required voter approval, which did not occur.

Share with Email

Thank you for sharing!

Trending Stories

More From ALM

Subscribe to Daily Report