Appeals court sides with Development Authority against Pezold companies

This parking lot adjacent to the downtown Marriott hotel in the 800 block of Broadway is owned by the Development Authority of Columbus and being marketed as a potential hotel site.
This parking lot adjacent to the downtown Marriott hotel in the 800 block of Broadway is owned by the Development Authority of Columbus and being marketed as a potential hotel site. chwilliams@ledger-enquirer.com

A three-judge Georgia Court of Appeals panel has sided with the Development Authority of Columbus and against a local hotel developer in a ruling that was released late Thursday.

In a unanimous decision the appellate court reversed an April 2016 ruling by Superior Court Judge Gil McBride that stated the Development Authority of Columbus could not close a deal with Vision Hospitality, a Chattanooga, Tenn., company, for a proposed a 125-room hotel on 1.75 acres next to the downtown Marriott in the 800 block of Broadway.

The temporary restraining order was sought by Four JS Family LLLP, a partnership controlled by Columbus businessman Jack Pezold, who owns Valley Hospitality, a local hotel and restaurant operator.

“This unanimous decision is a complete vindication of the Development Authority’s position from the beginning,” said Columbus attorney Jerry Buchanan, who represented the Development Authority, a quasi-city board that operates out of the Greater Columbus Chamber of Commerce. “The lawsuit should never have been filed, and the sale of the land to the hotel developer should never have been enjoined.”

The legal victory comes too late for the Development Authority to benefit from the recent move to locate hotels in the downtown area. While the matter has been tied up in the Court of Appeals, two downtown hotels, both in the 1200 block of Broadway, have been announced.

Pezold plans to build an 88-room Hampton Inn, which is a Hilton property, and Columbus-based RAM Hotels, has purchased the old Raymond Rowe building is planning a 125-room AC Hotel on that site. AC Hotel is affiliated with Marriott.

The Hampton Inn in the 1200 block of Broad is being built by the Pezold companies. It is moving forward and will not be impacted by this legal ruling, Pezold Management Chief Operating Officer Tracy Sayers said Friday morning.

“Unfortunately, this vindication comes a year after the deal for the new downtown hotel was stopped,” Buchanan said. “Evidence introduced at the hearing almost a year ago showed that the long range benefit to the Columbus economy of the proposed new hotel next to the Convention Center would have been in the range of $30-$80 million. That economic benefit is now lost. Even so, the members of the Development Authority continue to work for the good of Columbus.”

In a deal reached on Jan. 7, 2016, the Development Authority agreed to sell the property, which is currently used as the Marriott parking lot, for $50,000 to Vision Hospitality. During testimony at a hearing last month, Pezold Management Chief Operating Officer Tracy Sayers stated the land between Broadway and Front Avenue at Eighth Street was worth between $500,000 and $750,000 per acre.

Morris Mullin of Waldrep, Mullin & Callahan LLC represents Four JS Family LLLP and Pezold. He said they were still evaluating the ruling.

“We have not made a decision on whether or not we will appeal,” Mullin said. “We have forwarded the ruling to our client.”

During the hearing in front of McBride, Pezold’s attorneys argued that under state law the Development Authority, an arm of the Columbus Consolidated Government charged with economic development, could not sell land for less than fair-market value.

Buchanan, with Buchanan & Land LLP, argued that state code did allow for development authorities across the state to sell property at below fair-market value to spark economic development and create jobs. He cites deals in Columbus for new Blue Cross/Blue Shield and Aflac campuses as examples of what Development Authorities do.

The appeals court agreed with Buchanan’s assertion.

“In resolving this question, ‘we look to the literal language of the statute, the rules of statutory construction and rules of reason and logic, the most important of which is to construe the statute so as to give effect to the legislature’s intent,’” the Court of Appeals ruling stated. “... The purposes of the Act ‘are to develop and promote trade, commerce, industry, and employment opportunities for the public good and the general welfare and to promote the general welfare of the state.’”

Chuck Williams: 706-571-8510, @chuckwilliams