Jackson-Shaw Co. v. Jacksonville Aviation Authority

SC07-2235

THE NEXT CASE ON THE COURT'S
AGENDA IS JACKSON-SHAH COMPANY
VERSUS JACKSONVILLE AVIATION
AUTHORITY.
>> MAY IT PLEASE THE COURT.
GOOD MORNING.
I'M JOHN MILLS OF MILLS, CREED,
AND GOUDY ON BEHALF OF JACKSON
SHAH COMPANY.
WITH ME AT COUNSEL IS MICHAEL
TANNER.
>> MR.^MILLS, BEFORIOBEGIN I
WONDER IF YOU ALL HAVE
DISCUSSED OR CONSIDERED WHETHER
INDEED THIS IS THE TRADITIONAL
APPROPRIATE QUESTION TO BE
CERTIFIED.
FROM THE CIRCUIT COURT OF
APPEALS.
WHERE THEY ARE SAYING WE DON'T
KNOW WHAT THE LAW OF FLORIDA IS
AND WOULD YOU JUST GIVE US A
STATEMENT OF THE LAW OF FLORIDA
SO WE CAN APPLY IT TO OUR CASE.

SEEMS TO TAKE THAT SECOND STEP
TOO.
DECIDE THE CASE FOR US.
YOU KNOW, THE LAW OF FLORIDA IS
SET OUT IN THE CONSTITUTION OR
WHATEVER AND WOULD YOU PLEASE
APPLY THE LAW OF FLORIDA TO THE
FACTUAL QUESTION THAT WE HAVE
BEFORE US, AND WE, WE GET A
NUMBER OF CERTIFIED QUESTIONS
FROM THE CIRCUIT COURT OF
APPEALS BUT THIS ONE SEEMS TO
COME THE CLOSEST TO RESOLVING
THE CASE AS OPPOSED TO JUST
GIVING A CLARIFICATION OR
STATEMENT OF THE LAW OF
FLORIDA.
DO YOU HAVE A VIEW OF THAT.
>> I DO AND MY VIEW IS
CONSISTENT WITH WHAT YOU'RE
EXPRESSING.
WE DID NOT ASK FOR
CERTIFICATION.
IN FACT A YEAR AGO TODAY WE
ARGUED THIS CASE IN THE 11th
CIRCUIT AND THE QUESTION CAME
UP SHOULD WE CERTIFY THIS
AND MY RESPONSE WAS NO YOU
SHOULDN'T THE BANNON AND WEST
PALM BEACH CASES SAID IF IT'S A
LEASE WITH FINANCIAL
RESPONSIBILITIES IT'S
PROHIBITED.
AND THAT'S WHAT WE HAVE.
>> THERE YOUR POSITION THAT
THERE'S CONTROLLING PRECEDENT
BUT IT'S A MISAPPLICATION BY
THE DISTRICT COURT.
>> IT IS NOW I DID FOLLOW UP
THAT UP IF YOU HAVE ANY DOUBT
IF THAT LANGUAGE DOESN'T SEEM
CLEAR ENOUGH TO YOU THEN YOU
CAN CERTIFY IT.
>> BUT THE DISTURBING THING IS
THAT AT THE END OF -- FIRST OF
ALL, THERE'S -- NOT IN YOUR
FAVOR BUT WHAT I CONSIDER A
VERY COMPREHENSIVE
WELL-WRITTEN, WELL-REASONED
OPINION AFTER A FOUR-DAY TRIAL
BY THE FEDERAL DISTRICT COURT
JUDGE THAT SEEMS TO HAVE GONE
INTO WHETHER THERE IS INCURRING
EVENT AND WHETHER THERE'S A
MONETARY OBLIGATION BUT THEN
THE 11th CIRCUIT AT THE END
SAYS THERE'S A QUESTION OF
WHETHER THEY INCURRED A
MONETARY OBLIGATION.
THAT SEEMS TO ME THAT THEY'RE
NOT EVEN ASKING JUST SORT OF
DOVETAILING ON WHAT YOU'VE
SAID.
THAT WOULD BE US REVIEWING
JUDGE CORGON'S ORDER TO DECIDE
WHETHER UNDER THE FACTS OF THIS
CASE IT WAS A MONETARY
OBLIGATION OR NOT.
WHERE --
>> I THINK YOU'RE
MISINTERPRETING BOTH THE
LANGUAGE OF THE DISTRICT JUDGE
AND THE 11th CIRCUIT WHEN THEY
ARE TALKING ABOUT WAS THERE A
FINANCIAL OBLIGATION.
THERE WAS A VERY DETAILED ORDER
AND WE ACCEPT EVERY FINDING OF
FACT IN THAT ORDER AND THE
FINDINGS OF FACT WERE INCLUDED
THAT THE JACKSONVILLE AVIATION
AUTHORITY IS GIVING 328 ACRES
OF LAND FOR NOTHING INITIALLY.
THEY MAY GET ZERO OUT OF THIS.
>> BUT THAT WAS ALREADY
LITIGATED AND YOU'RE JUST
SAYING YOU'RE A COMPETITIVE
THAT WANTED THIS PROPERTY AND
YOU DON'T LIKE THIS DEAL.
>> NO I AM SAYING -- I AM
SAYING THAT THAT FACT, THE FACT
THAT THEY HAVE CONTRACTUALLY
BOUND THEMSELVES TO BUILD A
$750,000 ROAD.
>> DIDN'T THEY ALREADY HAVE TO
DO THAT?
>> NO, THEY DID NOT.
THEY HAD BUDGETED IT TO DO IT
ANYWAY, BUT THEY HAD NO
CONTRACTUAL OBLIGATION.
IF THE COST OF JET FUEL SOARED
AS IT HAS, AND THEY DECIDED
THEY NEEDED TO MAKE CONCESSIONS
TO THE AIRLINES TO KEEP
AIRPORTS FLOWING.
BUT NOW THEY HAVE CONTRACTUALLY
BOUND THEMSELVES TO PUT MONEY
INTO THIS PROJECT.
>> HAS THIS COURT DECIDED A
CASE ON THIS CONSTITUTIONAL
PROVISION?
>> THE COURT HAS DECIDED TWO
CASES THAT INVOLVE LEASES BUT
THEY WERE STRAIGHT LEASES WITH
FIXED RENT, AND IN BOTH CASES,
THE COURT MADE CLEAR IF THERE
WAS AN ADDITIONAL FINANCIAL
OBLIGATION, ANY KIND OF AN
OBLIGATION ON BEHALF OF THE
LEASER, THAT WOULD VIOLATE THE
CONSTITUTION OR AT LEAST
POTENTIALLY RAISE THE PUBLIC
PARAMOUNT PURPOSE REQUIREMENT.
>> WHAT HAPPENS IF
[INAUDIBLE]
AVIATION AUTHORITY --.
>> WELL, THEY CAN BE SUED.
THEY DON'T HAVE ANY -- THE,
THERE IS PROTECTION FOR THE,
FOR MAJESTIC IN THAT THE ONLY
THING THEY CAN BE SUED FOR THE
VALUE OF THEIR INTEREST IN THE
PROPERTY.
WHICH COULD BE, COULD BE
NOTHING.
IF THEY'RE IN DEFAULT.
>> DOESN'T THAT MEAN THE
LEASE -- [INAUDIBLE]
>> NO I DON'T KNOW IF YOU COULD
GET SPECIFIC PERFORMANCE BUT I
THINK THEY COULD GET A MONEY
JUDGMENT FOR $750,000 AND BUILD
THE ROAD THEMSELVES.
THERE'S CERTAINLY NOTHING TO
SUGGEST THEY COULD NOT.
THIS IS A CONTRACTUAL AGREEMENT
TO DO THAT AND THE POINT I WAS
TRY TOOK MAKE TO YOU, JUSTICE
PARIENTE IS THAT THE FINDINGS
OF FACT ARE THAT THESE THREE
THINGS ARE REQUIRED BY THIS
AGREEMENT.
YOU PUT THE LAND, BANK THE LAND
AWAY FOR UP TO 15 YEARS.
YOU BUILT A $750,000 ROAD AND
THEY OFFERED UP 1.8 MILLION
WORTH OF OTHER PROPERTY TO
OFFSET AS WETLANDS MITIGATION.
THE LEAGUE QUESTION THAT THE
JUDGE QUESTIONED THAT IS NOT
THE KIND OF FINANCIAL
OBLIGATION THIS COURT WAS
TALKING ABOUT.
THE 11th CIRCUIT SAID THAT'S
NOT CLEAR TO US.
AND MY ARGUMENT IS THAT IT IS.
>> THERE'S TWO PARTS.
THERE'S THE JOINT OWNER PART.
JACKSONVILLE AVIATION AUTHORITY
IS THE OWNER OF THIS PROPERTY,
AND THEY ARE THE LEASER.
THE TENANT.
CORRECT?
>> THERE IS A LANDLORD AND
MAJESTIC IS THE TENTANT.
>> YOU SEE -- SO LET ME MAKE
SURE BECAUSE THAT'S PART OF IT
I THOUGHT SO JOINT OWNTHER
ISSUE OF JOINT OWNER IS NOT
BEFORE US.
>> NO IT ABSOLUTELY IS BEFORE
YOU, YOUR HONOR.
WE ARE NOT SAYING THEIR JOINT
OWNERS OF THE PROPERTY PER SE.
THEY DO HAVE SOME RIGHTS IN
COMMON IN THE PROPERTY.
THEY ARE JOINT OWNERS OF THE
BUSINESS OF THE PROFITS.
THEY SPLIT THE PROFITS.
THERE IS A REVENUE STREAM THAT
COMES OUT OF THIS PROPERTY.
>> WHAT'S THEIR OBLIGATION WITH
THE REVENUES?
DO THEY HAVE -- IF THERE'S
LOSSES DO THEY HAVE TO
CONTRIBUTE TO THE LOSSES?
>> OUT OF THE REVENUE 100%,
50%.
EVERY DOLLAR THAT IS SPENT BY
MAJESTIC REDUCES THE RENT DOWN
TO THE --
>> THAT'S NOT -- THEY ARE NOT
INCURRING DEBT THROUGH THIS.
THEY ARE NOT GOING TO HAVE TO
-- IF THERE'S A LOSS THEY GET
NO LESS OR LESS RENT ISN'T THAT
WHAT JUDGE CORGON FOUND.
>> THAT IS CORRECT AND OUR
POSITION IS THAT THAT IS A
LOSS.
IT IS NOT A LOSS, IF THEY GO
SOUTH, THE AVIATION AUTHORITY
DOESN'T HAVE TO COME OUT OF
POCKET AND PAY MONEY.
IT IS ALREADY PAID THE
EQUIVALENT OF MONEY.
IT IS PUTTING VALUABLE PROPERTY
THAT IT COULD BE EARNING INCOME
OFF OF IT AND IT IS EARNING NO
INCOME OFF OF IT AT ALL FOR THE
FIRST FIVE YEARS.
>> NOW WHEN YOU SAY THAT IT
SEEMS TO ME THAT YOU ARE
LOOKING AT AND JUDGE -- IT'S
NOT BEFORE US WHETHER THIS WAS
IN THE CHARTER WHETHER THIS
SHOULD'VE BEEN OUT TO BID.
WHETHER IT'S A GOOD DEAL OR
NOT.
>> I AM NOT SAYING THAT,
JUSTICE PARIENTE.
WHAT I AM SAYING IS THAT WHEN
THEY DO THAT, THEY ARE
INVESTING PUBLIC RESOURCES.
INTO THIS PROJECT.
THAT'S PART OF THE EQUATION.
THEY ARE PUTTING -- THEY HAVE
UNDER TAKEN A FINANCIAL
OBLIGATION TO HELP THIS GO
ALONG.
>> IF FOR EXAMPLE, SOMEBODY
GOES AHEAD AND THEY LEASE
PROPERTY AND CAN SOMEONE MAKE
THE ARGUMENT, OH, THERE
SHOULD'VE BEEN SOMEBODY ELSE
THEY COULD'VE GOTEN A HIGHER
RENT?
IS THAT NOW GOING TO BE
UNCONSTITUTIONAL THAT EVERY
DECISION MADE BY A GOVERNMENTAL
ENTITY AS TO WHAT THE RENT IS
GOING TO BE CHALLENGED UNDER
THIS CONSTITUTIONAL PROVISION?
>> NO, I THINK UNLESS THE RENT
WERE NOMINAL OR ZERO LENT THERE
WOULD NOT BE AN ARGUMENT IF
THERE WAS A FIXED RENT
COMPONENT BECAUSE THAT IS JUST
LIKE SELLING THE PROPERTY THEY
HAVE THE RIGHT TO SELL THE
PROPERTY AND WHATEVER PRICE WE
CAN'T COME IN AND SAY WELL THAT
WAS TOO CHEAP A PRICE.
IF THEY GIVE THE PROPERTY AWAY,
WHERE THEY ARE AIDING, THEY ARE
USING PUBLIC FUNDS AND PUBLIC
PROPERTY TO AID A PRIVATE
CORPORATION, AND IT'S NOT AN
ARMS LENGTH TRANSACTION ACTION
WHERE THERE IS A PURCHASE OR
LEASE, THAT'S WHEN THIS
CONSTITUTIONAL PROVISION IS
TRIGGERED THEY ARE HELPING THIS
DEVELOPMENT AND THEY ARE
PUTTING THEIR INVESTMENT AT
RISK.
THEY ARE GOING TO GET BETWEEN
ZERO DOLLARS AND, JUST UNDER A
BILLION DOLLARS OVER 65 YEARS.

AND WHETHER IT'S ZERO, A
BILLION, OR SOMEWHERE IN
BETWEEN, DEPENDS ENTIRELY ON
ONE THING, AND THAT IS
MAJESTIC'S PROFITABILITY.
>> JUSTICE ANSTEAD HAS A
QUESTION.
>> SORRY.
>> GOING BACK TO YOU'RE LEADING
WITH THE, THE BUILDING OF THE
ROAD, $750,000.
HOW IS THAT ANY DIFFERENT FROM
ANY LANDLORD MAKING
IMPROVEMENTS TO PROPERTY?
BEFORE OR LEASING THE PROPERTY
TO THE LESSEE.
>> I THINK IF THAT'S ALL YOU
HAD IN THIS CASE AND YOU HAD
FIXED RENT ON THE BACK END, IT
WOULD BE NO DIFFERENT BUT THE
POINT IS HERE THE AVIATION
AUTHORITY IS PUTTING ITS
RESOURCES IN EXCHANGE FOR
PROFITS.
THE PROFITS.
THE PROFITS YOU HAVE GOT TO
HAVE BOTH AND THAT'S THE VERY
IMPORTANT POINT.
I REALLY WANT TO STRESS IS THAT
THE RETURN ON THE INVESTMENT
WHEN A LANDLORD PUTS MONEY INTO
HIS PROPERTY OF THE LEASE THAT
IS AN INVESTMENT.
HE IS HOPING TO MAKE MONEY
COMING OUT OF IT.
IF IT'S FIXED RENT COMING BACK,
THAT'S MORE LIKE AN ARM'S
LENGTH PROVISION.
ONCE YOU ARE PARTICIPATING IN
THE PROFITS NOW YOUR RETURN IS
NOT FIXED IT IS NOT SOMETHING
YOU HAVE NEGOTIATED AND YOUR
RETURN DEPENDS ON THE SUCCESS
OF THE PRIVATE VENTURE.
THAT IS PRECISELY WHY THIS
CONSTITUTIONAL PROVISION WAS
PUT INTO THE CONSTITUTION OVER
100 YEARS AGO.
>> THE CONSTITUTIONAL PROVISION
DOES SPEAK IN TERMS OF BEING A
JOINT OWNER.
DOESN'T TALK ABOUT BEING JOINT
VENCHERS AND OTHER, ALL OF THE
MULTITUDE OF WAYS THAT CREATIVE
MINDS HAVE FOR WORKING AND SO
YOU, I'M NOT SURE WHAT YOUR
FINAL ANSWER TO JUSTICE
PARIENTE'S QUESTION WAS, WHEN
YOU ACKNOWLEDGED THAT THEY
WEREN'T A JOINT OWNER BUT THEN
YOU SAID THAT'S NOT THE END OF
THE QUESTION.
HELP ME.
>> THEY ARE NOT A JOINT OWNER
OF THE PROPERTY AND THEY'RE NOT
A JOINT OWNER OF THE
CORPORATION.
THEY ARE A JOINT OWNER OF THE
REVENUE STREAM.
THAT IS OUR ARGUMENT.
>> SOWHERE IN THE
CONSTITUTIONAL PROVISION IS
THERE A PROHIBITION OF THEM
BEING INTITLED JOINTLY TO A
VENTURE STREAM IN A VENTURE
LIKE THIS.
>> THE CONSTITUTION FORBIDS
THEM FROM DOING THIS.
>> WHAT IS THE SPECIFIC
LANGUAGE, IS IT THE JOINT OWNER
LANGUAGE?
>> YES, I THINK IT IS THE JOINT
OWNER LANGUAGE.
THEY CAN'T BE A JOINTOBER WITH
A ENTERPRISE IN ANYTHING.
>> REALLY SEEMS TO BE YOUR
ARGUMENT --
[INAUDIBLE]
IT SEEMS TO ME THOUGH THAT --
[INAUDIBLE]
[INAUDIBLE]
IS GOING TO GET A PERCENTAGE
OF, OF REVENUES.
AND THE BUSINESS DOESN'T
THRIVE, THEY GET NOTHING.
BUT THAT DOESN'T MAKE THEM A
JOINT VENTURE.
EVEN THOUGH THEIR RENT'S GOING
TO BE DETERMINED SOMETHING BY
THE FLOW OF REVENUE.
SO THAT'S WHAT TROUBLES ME.
>> IT DOESN'T MAKE THEM A
JOINT VENTURE BUT WHEN IT'S A
GOVERNMENT ENTITY TVIOLATES
THIS CONSTITUTIONAL PROVISION
BECAUSE THE PURPOSE OF THE
CONSTITUTIONAL PROVISION, AND
IN THE DADE COUNTY PUBLIC
CONSTRUCTION BOARD THEY SAY WE
ARE NOT GOING TO LOOK AT JUST
IS IT A STOCKHOLDER OR NOT WE
ARE GOING TO LOOK AT THE
CHARACTER OF THE RELATIONSHIP.

>> YOU WOULD SAY YOUR BOTTOM
LINE IS THAT A GOVERNMENTAL
ENTITY COULD NEVER ENTER INTO A
GROSS REVENUE OR A PERCENTAGE
OF REVENUE TYPE LEASE
ARRANGEMENT BECAUSE THAT'S
ALWAYS SUBJECT TO BEING ZERO
DEPENDING ON UPON THE
MATHEMATICAL CALCULATIONS IT
SEEMS.
>> I THINK THAT'S ABSOLUTELY
CORRECT.
>> THAT'S WHATS YOUR RISAYING?
>> I THINK THAT'S CORRECT.
IT'S WORSE HERE BECAUSE WE ARE
TALKING ABOUT NET REVENUES AS
OPPOSED TO GROSS REVENUES.
>> DOESN'T THIS ALSO HAVE A
BASE LUMP SUM OR FLAT FEE?
>> SURE, IT HAS A --
>> IT'S JUST NOT ENOUGH.
>> IT'S ONE-16th OF HOW --
HERE'S HOW, LET ME CAST IT IN
MAYBE A DIFFERENT LIGHT SO YOU
CAN SEE THE LOSS OF THE
JACKSONVILLE AVIATION
AUTHORITY.
YOU READ THEIR BRIEF.
THEY SAY WE AGREED TO THIS,
WHICH WE DON'T THEY SAY THIS IS
AN AGREEMENT WHEREBY THEY WILL
MAKE $900 MILLION OVER 65
YEARS.
THAT'S WHAT THEY ANTICIPATE.
THAT'S WHAT THE PRO FORMA.
THAT'S WHY THEY DID THIS
BECAUSE THEY WANT TO MAKE $900
MILLION OVER THE TERM OF THIS
LEASE.
THEY'RE NOT GOING TO.
UNLESS IT IS FULLY PROFITABLE
TO ALL THE OPTIMISTIC
EXPECTATIONS OF THE PRIVATE
DEVELOPER.
SO EVERY MISTAKE OR
MISCALCULATION BY MAJESTIC,
ANYTHING FROM THE PRIVATE
MARKET THAT AFFECTS IT, THEY
GET A BAD INTEREST RATE, THEY
MAKE A WRONG DECISION, THEY
HIRE A BAD CONTRACTOR, THEY
CAN'T LEASE IT UP, ANY OF THOSE
THINGS THAT HAPPEN, THAT $900
MILLION THAT THE JACKSONVILLE
AVIATION AUTHORITY IS COUNTING
ON GETTING OUT OF THIS --
>> GOVERNMENT LIKE EVERYBODY
ELSE IS ENTITLED TO ENTER INTO
A BAD DEAL.
WE, WE DON'T SUPERVISE THE
DEALS THAT THEY MAKE.
>> IT'S NOT THAT IT'S A BAD
DEAL.
>> THEY CAN ENTER INTO, YOU
KNOW, THERE'S ANOTHER ANSWER TO
THAT SOMEPLACE ELSE.
BUT SO I'M NOT -- HAVING
TROUBLE WITH YOU CRITIQUING
THIS.
>> I DON'T --
>> MAYBE AN ABSOLUTELY PERFECT
CRITIQUE OF, YOU KNOW, OF WHAT
THEY'RE DOING AND DOWN THE
ROAD, HEADS MAY ROLL OR
UNFORTUNATELY MAYBE HEADS WON'T
ROLL BUT THAT, THAT'S NOT
REALLY A, AN ISSUE THAT THE
CONSTITUTION'S CONCERNED WITH.
>> IT IS AND IT ISN'T.
MAKING A BAD DEAL IS NOT.
MAKING A DEAL WHERE YOU ARE
PUTTING PUBLIC PROPERTY AT RISK
IN A PRIVATE ENTITY, AND
PRIVATE ENTERPRISE, IS EXACTLY
WHAT THE CONSTITUTION FORBIDS.
>> EVERY TIME GOVERNMENT LEASES
PROPERTY AND BUYS IN TO THE,
THE, THE PRIVATE DEVELOPERS
CONCEPT OF, OH,, YOU KNOW, WHAT
A WONDERFUL THING.
IT'S --
>> IT'S NOT AGREEING TO ANY
RISK THERE.
IT'S AGREEING TO RECEIVE RENT.
>> HOW DO YOU DISTINGUISH THIS.
>> YOU DISTINGUISH IT THIS WAY,
JUSTICE ANSTEAD.
IF IT'S A FIXED RENT YOUR
AGREEMENT IS YOU GUYS ARE GOING
TO PAY ME THIS AMOUNT OF MONEY
AND I KNOW I AM GOING TO HAVE
T. NOW THEY CAN BREACH THE
AGREEMENT.
THERE'S RISK IN ANY AGREEMENT
JUST LIKE WHEN YOU SELL.
THERE'S RISK THAT THEY ARE NOT
GOING TO CLOSE.
>> YOU'RE SAYING --
>> THEY CAN ONLY ENTER INTO
FIXED RENT DEALS?
THAT IS THAT THE AMOUNT OR
CONTINGENCY OF THE RENT CAN'T
DEPEND ON THE SUCCESS OF THE
VENCHER?
>> THAT IS MY ARGUMENT
ABSOLUTELY.
>> OKAY.
AND THAT'S THE NET -- THAT IS
YOUR NET ARGUMENT, IS THAT
RIGHT.
>> WELL, HOW ABOUT ENAN
AIRPORT?
>> GO AHEAD.
>> IS THERE A CASE THAT YOU'RE
RELYING ON FOR THAT
PROPOSITION.
>> WELL, I RELY ON THE PURPOSE
BEHIND THE CONSTITUTION AS THIS
COURT HAS SAID IN BANNON AND IN
THE WEST PALM CASE AND IN BOTH
OF THOSE CASES THEY SAID THE
PURPOSE IS TO AVOID PUTTING THE
MONEY INTO THE MARKET.
>> IS WHAT YOUR ARGUMENT IS IS
THAT THE DISTRICT COURT,
MISAPPLIED BANNON?
>> YES.
DIDN'T APPLY BANNON.
I MEAN, WELL, IT MISAPPLIED IT
TO THE EXTENT --
>> BECAUSE BANNON S IN YOUR
VIEW, SUBTLE PRECEDENT ON THIS
ISSUE.
THAT'S WHAT I UNDERSTAND THIS
CASE TO BE ABOUT AND I WANT TO
UNDERSTAND --
>> I'M NOT TRYING TO UNDO
BANNON.
I THINK IF IT'S FIXED RENT THAT
IS, THAT IS AN ARM'S LENGTH
TRANSACTION.
WE ARE NOT PARTICIPATING IN THE
SUCCESS OF YOUR BUSINESS.

IT'S TRUE IF THEIR BUSINESS
FAILS AND THEY DON'T PAY THE
RENT, IT'S GONE SOUTH, BUT YOU
HAVE A LEGAL REMEDY THERE.
HERE YOU HAVE AN AGREEMENT WHERE
IF THEY DON'T PAY THE RENT YOU
EXPECT, YOU CAN'T SUE THEM.
THAT WAS YOUR AGREEMENT.
YOU AGREED TO ASSUME THE RISK
THAT IT WAS GOING TO BE
SUBSTANTIALLY LESS THAN $900
MILLION.
IF IT'S THE FIXED RENT COMPONENT
HERE, THE 1380, IF YOU MULTIPLY
THAT OUT FOR ALL OF THE PROPERTY
OVER 65 YEARS, THAT'S $300
MILLION DOLLARS, SO OVER HALF A
BILLION IS AT RISK AND IS AT
RISK DEPENDING ON THE
PROFITABILITY OF THIS
ENTERPRISE.
>> BUT JUDGE CORRIGAN DISAGREED
WITH YOUR ANALYSIS.
>> HE'S WRONG.
>> BECAUSE HE WAS APPLYING WHAT
HE CONSIDERED TO BE THE
PRECEDENT, CORRECT?
>> HE WAS APPLYING JOINT VENTURE
LAW ON THE QUESTION.
AND JOINT VENTURE LAW REQUIRES A
SHOWING OF CONTROL AMONG OTHER
THINGS.
THERE IS VERY LITTLE CONTROL --
>> AND HE SPECIFICALLY
DISTINGUISHED ON THIS POINT, THE
BANNON DECISION, SO IT REALLY
BOILS DOWN TO WHETHER HE WAS
RIGHT OR WRONG ON THE
APPLICATION OF BANNON.
>> YES, SIR.
>> LET ME FOLLOW THROUGH WITH
THE QUESTION WITH REGARD TO THIS
FIXED RENT AND PERCENTAGE OF
REVENUES.
LET'S MOVE THIS INSIDE THE
JACKSONVILLE AIRPORT FACILITY,
AND YOU'VE GOT TWO GROUPS THAT
ARE LOOKING TO PUT A RESTAURANT
IN.
ONE'S GOING TO GIVE YOU FIXED
DOLLARS, THE OTHER IS NOT SURE
WHAT THEY'RE GOING TO DO, AND
IT'S AN XYZ RESTAURANT, MAYBE
IT'S GOING TO SUCCEED, BUT
THEY'RE SAYING AFTER WE GET TO A
CERTAIN POINT WHERE WE GET TO
OUR COST OF BUILDING OUT THE
SPACE, THAT WE'RE GOING TO GIVE
YOU 25 PERCENT OF ALL REVENUES.
THAT WOULD BE ILLEGAL, THEN,
BECAUSE YOU'RE NOT ALLOWING IT
TO BE BASED UPON A PERCENTAGE OF
WHAT HAPPENS ON THE PROPERTY,
THAT IT MUST BE FIXED.
>> THAT IS UNCONSTITUTIONAL
BECAUSE THE AIRPORT AUTHORITY
WOULD BE PARTICIPATING IN --
>> YOU'RE LETTING ESSENTIALLY
THE PROPERTY STAND AS CREDIT FOR
THE VENTURE ITSELF.
I MEAN, THAT'S THE BOTTOM LINE
WE SEPARATE THROUGH THIS STUFF.
>> YEAH.
I THINK THAT'S THE BOTTOM LINE.
I THINK THAT THE MOST IMPORTANT
FACT IN THIS CASE IS THAT THEY
ARE PUTTING RESOURCES AT RISK,
AND THE RETURN THEY WILL GET ON
THOSE RESOURCES DEPENDS ENTIRELY
ON THE MANAGEMENT.
IF YOU LOOK BACK TO BAILEY WHEN
THE COURT FIRST ADDRESSED THIS
AMENDMENT, I QUOTE THIS IN MY
BRIEF.
THEY SAY THEY BECAME OWNERS OR
OTHERWISE INVOLVED IN PRIVATE
ENTERPRISE.
IT WAS RAILROADS, BANKS, AND
OTHER COMMERCIAL INSTITUTIONS.
MANY OF THESE INSTITUTIONS WERE
POORLY MANAGED AND EITHER FAILED
OR BECAME HEAVILY INVOLVED, AND
AS A RESULT THE STATE, COUNTIES,
AND CITIES INTERESTED IN THEM
BECAME RESPONSIBLE FOR THEIR
DEBTS AND OTHER OBLIGATIONS.
SO HERE THEY'RE NOT BECOMING
RESPONSIBLE FOR PAYING THE DEBTS
DIRECTLY, BUT THOSE DEBTS COME
RIGHT OUT OF ITS RENT.
AND A VERY IMPORTANT THING, AND
MAYBE I DIDN'T MAKE THIS STRONG
ENOUGH EMPHASIS IN MY BRIEF, BUT
THEY HAVE THE RIGHT UNDER THIS
AGREEMENT, MAJESTIC DOES, TO
PLEDGE ITS INTEREST, ITS
LEASE-HOLD INTEREST WHICH IS ONE
OF THE STICKS THAT THE
JACKSONVILLE AVIATION AUTHORITY
SOLD TO THEM.
MAJESTIC CAN THEN TAKE THAT
LEASE-HOLD INTEREST, PLEDGE IT
TO A CREDITOR, AND IF THEY
DEFAULT ON THEIR LOAN TO THAT
CREDITOR, THE CREDITOR CAN
FORECLOSE, AND NOW JACKSONVILLE
AVIATION AUTHORITY ITS
OBLIGATIONS TO PROVIDE ITS LAND
ARE NO LONGER TO MAJESTIC, THEY
ARE TO WHOEVER BUYS IT AT A
FORECLOSURE SALE.
AND NOT ONLY THAT, THE COST OF
RENT IS ABATED TO THE MINIMUM
RENT.
YOU GET NO REVENUE RENT DURING
THOSE PROCEEDINGS, AND AFTER
THAT WHOEVER BUYS IT GETS TO
RECOUP ALL THEIR COLLECTION
COSTS.
>> SO YOUR BASIC PREMISE, THE
BOTTOM LINE IS IT'S A TOTAL
STRAW MAN ARGUMENT ABOUT JOINT
VENTURES REALLY.
YOU LOOK AT THE FINANCIAL
STRUCTURE OF THIS, AND THERE'S
NOTHING LESS THAN GOVERNMENT
PROPERTY BEING USED TO SUBSIDIZE
THE PROFITABILITY OF THE
DEVELOPER.
>> THAT'S RIGHT.
>> -- HAVE TO ACCEPT THAT.
>> THAT WAS THE TEST, THEN THIS
COURT'S OPINIONS IN BANNON WOULD
HAVE BEEN DIFFERENT.
THEY WOULD HAVE NEVER HAD TO SAY
THERE'S NO FINANCIAL OBLIGATION.
YOU'D SAY YOU'RE NOT JOINT
OWNERS, YOU'RE A LESSOR AND A
LESSEE.
THAT'S DIFFERENT.
BUT IF THERE WERE A FINANCIAL
OBLIGATION, I THINK THE NEXT
STEP IS ARE YOU PUTTING IT AT
RISK?
>> AND WITH THAT, YOU HAVE USED
ALL OF YOUR TIME.
>> THANK YOU.
>> I'LL GIVE YOU A MINUTE FOR
REBUTTAL.
>> THANK YOU VERY MUCH, I'D
APPRECIATE IT.

>> GOOD MORNING.
>> GOOD MORNING.
CINDY LAQUIDARA ON BEHALF OF THE
JACKSONVILLE --
>> WHY IS YOUR --
>> YES.
>> YOUR OPPONENT SAYS
ESSENTIALLY YOU CAN'T USE
PERCENTAGE OF REVENUE,
PROFIT-TYPE DEALS IN DEALING
WITH GOVERNMENT PROPERTY ON A
LEASE-TYPE SITUATION.
WHY IS HE WRONG ON THAT?
>> HE'S WRONG -- THANK YOU,
MR. JUSTICE.
HE'S WRONG BECAUSE WE'RE HERE
ONLY ABOUT ARTICLE 7, SECTION 10
OF THE FLORIDA CONSTITUTION.
AND IT WAS APTLY QUOTED BY
OPPOSING COUNSEL, AND THAT'S
CORRECT.
THE LAW, THE PASSAGE OF ARTICLE
7, SECTION 10 WAS TO PREVENT US
NOT FROM MAKING BAD, STUPID
DECISIONS, BUT THAT WE COULD,
CAN'T DO THAT UNDER
CONSTITUTIONAL LAW.
WHAT WE CAN DO IS PREVENT A
GOVERNMENT AGENCY FROM TAKING
ITS MONEY AND ITS RIGHTS AND
OBLIGATIONS, ITS GOOD CREDIT AND
PUTTING IT AT RISK TO PAY THE
DEBTS OF OTHERS.
AND IF ONE READS BAILEY
CAREFULLY, IF ONE READS BANNON,
IF ONE READS DADE, THEN WHAT
THIS COURT HAS CONSISTENTLY
LOOKED FOR IS WHETHER THE
GOVERNMENT PAYS NOT JUST ITS OWN
DEBT -- IT CAN MAKE MONEY, IT
CAN LOSE MONEY ON ITS PUBLIC
INTERESTS -- IS IT DOING IT FOR
SOMEBODY ELSE?
>> IS IT YOUR POSITION --
>> -- AN ELECTRIC BILL OF A
PRIVATE ENTITY.
NO, IT'S NOT.
>> IS IT YOUR POSITION --
>> YES.
>> SO YOUR POSITION IS THERE'S
SETTLED PRECEDENT THAT CONTROLS
THIS ISSUE?
>> ABSOLUTELY.
I READ BANNON TO DIRECTLY
ADDRESS THIS ISSUE, AND WHEN THE
COURT --
>> LET ME ASK YOU THIS
QUESTION --
>> YES, SIR.
>> -- THAT JUSTICE ANSTEAD
STARTED OFF WITH.
WHY SHOULD THIS COURT DECIDE
THIS CASE?
WHERE THE CONSTITUTION
SPECIFICALLY SAYS THAT WE ONLY
HAVE JURISDICTION TO DECIDE
ISSUES CERTIFIED BY THE UNITED
STATES SUPREME COURT OR THE
CIRCUIT COURT OF APPEAL, FEDERAL
CIRCUIT COURT OF APPEALS IN IT'S
A QUESTION THAT IS DECISIVE ON
THE CASE HAVING TO DO WITH
UNSETTLED PRECEDENT.

>> YES, MR. JUSTICE.
I HAVE, AS DID OPPOSING COUNSEL,
WE BOTH ARGUED CERTIFICATION.
THE UNDERSTANDING THAT I HAVE
AND THE REASON THAT WE'RE HERE
TODAY IS IF THIS COURT DOES SEE
A QUESTION IN APPLYING BANNON TO
A PARTICIPATING GROUND LEASE, IT
WOULD, COULD DEFINITIVELY
RESOLVE THE ISSUE.
REGARDLESS OF WHAT THE FLORIDA,
THE 11TH CIRCUIT STATED, IT
COULD WREAK HAVOC AMONG PUBLIC
GOVERNMENT CONTRACTING IF IT
INTERPRETED WHAT IT THOUGHT TO
BE BANNON.
>> LET ME ASK YOU THIS --
>> THAT'S THE BEST I CAN DO ON
THE CERTIFICATION.
>> YOUR OPPONENT'S ARGUMENT, TO
ME, SEEMS TO BREAK DOWN TO THIS:
THE GOVERNMENT HERE, THE
JACKSONVILLE AVIATION AUTHORITY
HERE, ONLY GETS ANY RENT OR
WHATEVER YOU WANT TO CALL IT
AFTER THIS PRIVATE ENTITY HAS
PAID ITS DEBT SERVICE, HAS PAID
THAT ELECTRICITY THAT YOU WERE
TALKING ABOUT, AND DONE ALL OF
THIS.
AND SO, IN ESSENCE, THE
GOVERNMENTAL ENTITY IS, IN FACT,
PAYING THE DEBTS OF THIS PRIVATE
CORPORATION.

>> MADAM CHIEF JUSTICE, IT IS,
IT ISN'T PAYING SOMEONE ELSE'S
DEBT.
IT HAS PLACED --
>> BUT DON'T YOU THINK THERE'S A
DIFFERENCE IN, OKAY, I ENTER
INTO AN AGREEMENT WITH YOU, AND
YOU'RE GOING TO PAY ME WHATEVER,
A SET AMOUNT OF MONEY FOR MY
PROPERTY?
YOU'RE LEASING MY PROPERTY,
YOU'RE GOING TO PAY ME A SET
AMOUNT OF MONEY AS OPPOSED TO
YOU'RE GOING TO LEASE MY
PROPERTY, AND I ONLY GET
ANYTHING IF YOU HAVE SOME
PROFIT.
>> IRONICALLY, THIS WAS DONE BY
THE AIRPORT WHICH IS PART OF THE
REASON IT'S FRUSTRATING TO THEM,
IT WAS DONE BY THE AIRPORT TO
AVOID THE RISK.
AS MR. CLARK TESTIFIED, AS JUDGE
CORRIGAN SO FOUND THEY DID NOT
WANT TO PUT THE $8-$12 MILLION
-- PARDON ME, THAT'S MR. ROSSI'S
TESTIMONY.
$8-$12 MILLION DOLLARS OF
INFRASTRUCTURE NECESSARY TO THEN
ENTER INTO THE TYPE OF LEASE
THAT JACKSON-SHAW WAS OFFERING.
JACKSON-SHAW SAID BUILD OUT THAT
INFRASTRUCTURE, SPEND THE PUBLIC
MONEY TO BUILD AN
INFRASTRUCTURE, AND THEN WE'LL
PAY YOU $28,000 FOR 70 ACRES.
WELL, DO THE MATH, AND IT'S
AWFULLY FAVORABLE TO US.
AS MR. CLARK TESTIFIED, WE DON'T
WANT TO BE IN THE BUSINESS OF
SPENDING THE LIMITED DOLLARS WE
HAVE TO RUN, OPERATE, AND SECURE
AN AIRPORT.
>> SO WHAT HAPPENS HERE IS --
>> WE COULD HAVE NOTHING.
>> -- IF YOU CARRY IT OUT TO ITS
EXTREME, THEY HAVE, WHAT, A
35-YEAR LEASE ON THIS PROPERTY?
>> THEY HAVE, IT COULD GO AS
HIGH AS 80 YEARS --
>> OKAY.
>> NOW, THERE IS A FIXED RENT ON
THIS.
>> IF THIS BUSINESS NEVER MAKES
A PROFIT, THEN WHAT WE HAVE IS
THEY HAVE USED THIS PROPERTY FOR
ALL OF THOSE YEARS --
>> NO.
>> -- AND THE JACKSONVILLE
AVIATION AUTHORITY GETS NOTHING.
>> NO.
MADAM JUSTICE, A COUPLE OF
FACTORS.
FIRST OF ALL, THERE IS NOTHING
IN THE CONSTITUTION REQUIRING
THE JACKSONVILLE AVIATION
AUTHORITY TO MAKE A PROFIT.
>> WELL --
>> THE PROHIBITION --
>> BUT ISN'T THIS ABOUT USING
$10 MILLION WORTH OF GOVERNMENT
LAND THAT SOMEBODY ELSE GETS TO
USE, AND WHAT DOES THE
GOVERNMENT GET OUT OF IT?
>> THE SAME DOLLAR THAT PERHAPS
IN 19, I THINK IT WAS 56, THAT
THE CITY OF, I BELIEVE IT WAS
TAMPA, GAVE YOU.

>> BUT WAIT, LET'S JUST GO BACK
TO THIS BECAUSE -- EXCUSE ME.
BECAUSE I THINK YOUR VOICE WAS
DROPPING.

>> I'M SORRY.
>> THERE'S PRECEDENT FROM THIS
COURT THAT DEFINES THE CREDIT OF
WHAT THE CREDIT OF THE STATE
SHALL NOT BE PLEDGED OR LOANED.
WE'RE TALKING NOW ABOUT CREDIT
OF THE STATE, AND WE HAVE SAID
REPEATEDLY THAT THE CREDIT OF
THE STATE IS, REQUIRES A NEW
FINANCIAL LIABILITY TO THE STATE
OF THE SUBDIVISION OR THE
LENDING MEANS THE ASSUMPTION BY
THE PUBLIC BODY OF SOME DEGREE
OF DIRECT OR INDIRECT OBLIGATION
TO PAY A DEBT OF THE THIRD
PARTY.
>> CORRECT.
>> THAT'S THE, THAT'S, WE'VE
SAID THAT AS RECENTLY AS STATE
V. OSCEOLA COUNTY.
>> CORRECT.
AND WE ARE NOT OWNING THE
BUILDINGS.
THAT IS THEIR DEBT AND THEIR
MONEY.
THEY'RE BORROWING MONEY BUILDING
A BUILDING.
WE ARE OWNING REAL PROPERTY.
IF WE ARE GET -- IF A GOVERNMENT
AGENCY MUST BE GUARANTEED A
PROFIT IN ORDER TO DO A DEAL,
THEN I DON'T KNOW HOW ANYBODY
OPERATES THAT WAY.
>> WELL, WAIT A SECOND, LET'S
JUST GO BACK OVER THIS NOW.
IS IT TRUE -- DO WE KNOW WHETHER
LEASES THROUGHOUT THE STATE OF
FLORIDA, ARE THEY ALL FIXED-RENT
LEASES?
>> WE HAVE NO IDEA.
THAT EVIDENCE WAS NOT PRESENTED
AT TRIAL.
WE DO HAVE THE EVIDENCE OF THE
JACKSONVILLE AVIATION AUTHORITY,
ITS BOARD OF DIRECTORS, AND THE
JACKSON-SHAW PEOPLE PUTTING UP
ALTERNATIVE WAYS OF FINANCING
CONSTRUCTION.
ONE OF WHICH REQUIRES THE
AIRPORT TO SPEND ITS MONEY AND
PUT IT AT RISK.
IF IT SPENDS ITS MONEY AND THEN
NOBODY CAME OR WE GOT $28,000
FOR THE FIRST ACRES AND WE SPENT
$12 MILLION, NOW THERE'S A RISK.
THERE'S CREDIT, THERE'S BONDS,
THERE'S MONEY.
THERE ARE NO BONDS HERE, THERE'S
NO MONEY.
WE HAVE LAND THAT'S BEEN SITTING
THERE FOR 40 YEARS, AND OUR RISK
IS IT WILL SIT THERE FOR ANOTHER
NUMBER OF YEARS, AND IT DEPENDS
ON THE AUCTION UP TO --
>> BUT THEY ARE OBLIGATED TO
EXTEND THAT ROAD, TO SPEND
$750,000 AT A VERY MINIMUM --
>> TO BUILD --
>> TO BUILD THIS ROAD ADDITION,
CORRECT.
>> TO BUILD A PUBLIC ROAD, YES.
>> BUT THEY'RE NOT OBLIGATED
OTHERWISE TO BUILD THIS ROAD
EXCEPT FOR THIS AGREEMENT THAT
THEY HAVE --
>> CORRECT.
THEY'RE NOT, BUT THEY ARE
BUILDING A PUBLIC ROAD, AND IT
WOULD BE CERTAINLY A WATERSHED
OPINION FOR THIS COURT TO
DETERMINE THAT A PUBLIC AGENCY
CANNOT OBLIGATE ITSELF TO BUILD
A PUBLIC ROAD.
THE ENTIRE FDOT FAIR-SHARE LAW
IS DESIGNED FOR THE FDOT TO SAY
I'LL BUILD X PART OF THE ROAD,
YOU BUILD Y PART OF THE ROAD.
THAT'S BEEN PART OF THE LAW OF
THE STATE OF FLORIDA FOR A
DECADE.
SO I CAN'T ANTICIPATE THAT THIS
COURT LOOKING AT EACH OBLIGATION
OF A PUBLIC AGENCY TO BUILD A
PUBLIC ROAD AND SAYING, WELL,
GEE, SHOULD THEY OR NOT, AND
THAT WOULD BE THE ONLY STANDARD
ONE COULD APPLY IF I WANTED TO
QUESTION --
>> WELL, IT'S NOT A MATTER OF
WHETHER THEY SHOULD BUILD IT OR
NOT.
WE'RE LOOKING AT THIS IN THE
CONTEXT OF WHETHER OR NOT -- AT
LEAST I'M LOOKING AT IT IN THE
CONTEXT OF WHETHER OR NOT THIS
GOVERNMENTAL ENTITY IS EXPENDING
MONEY, EXPENDING THE RESOURCES
OF THE STATE, MONEY AND THE
LAND, AND FOR WHAT?
>> ONE DOES NOT EXPEND THE LAND
UNDER THE DECISIONS --
>> NO.
I DON'T MEAN LITERALLY SPEND THE
LAND, I MEAN LETTING SOMEONE
ELSE USE, LETTING A PRIVATE
ENTITY USE PUBLIC LAND.
AND WHAT IS THE GOVERNMENT
GETTING IN RETURN?
THAT'S MY BASIC QUESTION.
>> OKAY.
>> WHAT IS THE GOVERNMENT
GETTING IN RETURN FOR BUILDING
THIS ROAD AND LETTING SOMEONE
USE THE LAND?
>> AS TESTIFIED TO BY MR. CLARK,
IT IS GETTING A DEVELOPMENT, AND
THERE'S NO REASON TO ASSUME THAT
THE LARGEST PRIVATELY-HELD
INDUSTRIAL WAREHOUSE DEVELOPER
WHO, AS ALSO TESTIFIED BY
MR. CLARK, HAS DONE THIS IN
SEVERAL AIRPORTS IS GOING TO
FAIL, THAT THEY'RE NOT GOING TO
MAKE ANY MONEY ON THIS.
IF THEY DO TAKE PROPERTY, IF WE
DO, IF THEY DO EXERCISE AN
OPTION AND, BY THE WAY, WE DON'T
BUILD A ROAD, IT'S TIME WE BUILT
IT PRIOR TO TIME THEY HAVE TO
EXERCISE AN OPTION, SO IT'S TIED
IN WITH -- BUT THAT'S A BUSINESS
POINT AS OPPOSED TO A
CONSTITUTIONAL POINT.
THEY, SO THE JACKSONVILLE
AVIATION AUTHORITY GETS AT A
MINIMUM IF MAJESTIC FOR SOME
REASON IS UNABLE TO PERFORM ON
THIS SALE, $1350 AN ACRE.
NOW, OPPOSING COUNSEL HAS SAID
THAT'S NOT ENOUGH.
THIS COURT, AGAIN, IS NOT GOING
TO EVALUATE HOW MUCH MONEY IS --
>> ARE WE SLIPPING NOW INTO
WHETHER IT SERVES -- IF THEY'RE
NOT PLEDGING CREDIT, THE
TRANSACTION NEED ONLY SERVE A
PUBLIC PURPOSE.
>> CORRECT.
>> AND JUDGE CORRIGAN MADE
FINDINGS AS TO WHY THIS WAS A
PUBLIC PURPOSE, AND I DIDN'T
THINK THAT WAS ONE OF THE
CERTIFIED QUESTIONS.
>> I DON'T BELIEVE --
>> BUT YOU THINK THAT, I MEAN,
BECAUSE IT SAYS HE SPECIFICALLY
FINDS THAT THE EXTENSION OF THIS
ROAD SERVES A PUBLIC PURPOSE.
THE AUTHORITY HAD PREVIOUSLY
BUDGETED THE ROAD IMPROVEMENT AS
A PLANNED CAPITAL PROJECT IN
ACCORDANCE WITH ITS POWER, AND
IT WILL RETAIN OWNERSHIP.
THAT WAS A FINDING OF FACT.
>> YES.
WE THINK THAT --
>> WOULD YOU RESPOND TO YOUR
OPPONENT'S STATEMENT THAT THE
LEASE-HOLD INTEREST HERE WILL BE
EXPOSED --
>> CERTAINLY.
>> -- TO CREDITORS OF THE
PRIVATE ENTITY?
>> CERTAINLY.
IN COMMERCIAL LAW THIS IS A
BENEFIT, NOT A DETRIMENT.
AS TESTIFIED TO BY HIS EXPERT,
MR. CANTRELL, TYPICALLY WHAT THE
MORTGAGE LENDER WANTS IF YOU'RE
GOING TO BUILD A LARGE
DEVELOPMENT, THERE'S A LENDER.
WHAT THE LENDER WANTS IS TO BE
ABLE TO FORECLOSE ON THE LAND TO
TAKE A SUPERIOR POSITION TO THE
PROPERTY OWNER ON THIS
PARTICIPATING GROUND LEASE.
THAT WAS NOT PROVIDED IN THIS.
TO THE, TO THE AIRPORT'S
ADVANTAGE, AGAIN, THIS IS A
BUSINESS POINT AND UNDER CHAPTER
315 LEFT AT THE DISCRETION OF
THE BOARD.
BUT IT IS FOR THE MORTGAGE
LENDER TO BE ABLE TO COME IN IN
DEFAULT AND RUN THE BUSINESS,
THAT IS WHAT A BORROWER WANTS.
>> WHAT DOES THE AIRPORT
AUTHORITY GET IF THAT HAPPENS?
>> THE, AGAIN, THE NET RENTALS
AFTER THESE ADDITIONAL COSTS.
THE AIRPORT AUTHORITY DOESN'T
RUN WAREHOUSES.
MR. CLARK TESTIFIED THEY TRIED
TO DO THAT, THEY TRIED TO SPEC A
WAREHOUSE.
SO WHAT WOULD HAPPEN UNDER THIS
ANTICIPATED SITUATION IS IF
MAJESTIC WERE TO FAIL AND TO GO
INTO FORECLOSURE WITH ITS LENDER
RATHER THAN THE AIRPORT HAVING
TO FIND SOMEBODY TO RUN AND TRY
TO MAKE A PROFIT WHO'S MOTIVATED
FOR THE PROFIT, THE LENDER, THE
LENDER COMES IN AND OPERATES
THEIR PROJECT.
AND IN ORDER TO OBTAIN FINANCING
FOR THIS, THIS IS A STANDARD
PROVISION.
THE LAND, AS HELD BY JUDGE
CORRIGAN, THE LAND REMAINS THIS
VACANT LAND WHICH TODAY IS
MAKING NOTHING.
IT'S STILL VACANT --
>> IS IT STILL VACANT?
I MEAN --
>> YES.
>> SO NOTHING'S HAPPENED?
>> NO.
NO.
IT'S STILL VACANT LAND, AND HE'S
TRYING TO TAKE A VACANT, A PIECE
OF VACANT LAND OUT OF
4,000-6,000 ACRES AND TO PUT IT
IN A MECHANISM TO CREATE JOBS
AND WAREHOUSE AND POTENTIAL
INCOME TO SUPPLEMENT THE
MERCURIAL APPROACH OF CONGRESS
FOR FUNDING AIRPORTS WITHOUT
GOING OUT OF POCKET WITH THIS.
>> IF IT'S STILL VACANT AND
MAJESTIC ISN'T A PARTY TO THIS
LAWSUIT, YOU KNOW, WITH THE
DOWNTURN IN THE MARKET, YOU
KNOW, WHAT WOULD HAPPEN?
CAN MAJESTIC GET OUT OF THIS
DEAL AND THEN JACKSON-SHAW'S
FREE TO NEGOTIATE WHATEVER THEY
WANT?
>> THERE ARE A NUMBER OF YEARS
THAT MAJESTIC HAS TO DETERMINE
WHEN TO COMMENCE THE MARKET.
THEY'RE THE EXPERT.
WE KNOW WHEN THEY BELIEVE THEY
CAN MAKE MONEY, THEY'LL COME.
AND THERE'S A PERIOD OF TIME, A
NUMBER OF YEARS --
>> IT COULD BE UP TO NINE YEARS,
CORRECT?
>> AND THEN THERE'S ONE
ADDITIONAL YEAR BEFORE WE GO OUT
AND RENT ON THAT.
SO THAT ADDITIONAL YEAR TO THE
PRESENT 40 COULD GO.
IF THE MARKET, AGAIN, IS NOT
READY, WE'RE LEAVING IT TO THE
EXPERTS TO DETERMINE WHEN THE
MARKET IS READY RATHER THAN
SPENDING MILLIONS BUILDING OUT
AN INFRASTRUCTURE AND GETTING A
LITTLE BIT OF RENT AND THEN
HAVING THE MARKET STOP FOR A
NUMBER OF YEARS.
IT'S ACTUALLY RISK-AVERSE.
SO UNDER ARTICLE 7, SECTION 10,
THERE IS NO LENDING OF CREDIT
FOR THE BENEFIT OF THE THIRD
PARTY.
THERE IS NO RISK AS WAS STATED
IN BAILEY THAT THE GOVERNMENT
ENTITIES WERE TAKING BEFORE
OBLIGATING ITSELF TO PAY DEBTS
INCURRED BY RAILROADS AND OTHER
ENTITIES ON MATTERS UNRELATED TO
THE TAXPAYERS.
AND THAT, IN THIS INSTANCE, IT'S
MERELY VACANT PROPERTY PLACED IN
A PUBLIC ROAD.
AND IF WE CAN'T HAVE VACANT
PROPERTY IN A PUBLIC ROAD UNDER
ARTICLE 7, SECTION 10, THEN THAT
WOULD BE A SIGNIFICANT CHANGE IN
THE PRECEDENT OF THIS COURT
WHICH HAS FOUND IF THERE'S A
PUBLIC PURPOSE, THE LEASE TERMS
ARE UP TO THE GOVERNMENT ENTITY,
AND THE LENDING OF CREDIT IS FOR
A THIRD PARTY FOR A PRIVATE
BENEFIT AND ACTUAL RISK TAKING.
AND A GREAT EXAMPLE, IF I MAY GO
TO IT, IS POE FOR THE TAMPA
FOOTBALL STADIUM.
MONEY WAS BORROWED BY A PUBLIC
ENTITY, THE TSA, OVER $100
MILLION BORROWED.
AND THAT WAS DETERMINED TO
ACTUALLY BE FOR A PARAMOUNT
PURPOSE.
BUT THEY BORROWED THE FUNDS, AND
IF THE RENTALS, IF THE ADMISSION
TICKETS, IF THE MATTERS PLEDGED
TO THOSE BONDS WEREN'T PAID,
THEN THAT TSA WAS RESPONSIBLE
FOR THE DEBT.
IN HERE IF THESE BILLS AREN'T
PAID AS FOUND BY JUDGE CORRIGAN
AFTER FOUR DAYS OF TESTIMONY,
THEN WE HAVE OUR LAND.
THE SAME VACANT LAND THAT'S NOT
MAKING MONEY TODAY WE STILL
HAVE.
THAT DOES NOT PLACE THE
TAXPAYERS AT RISK.
THE ONLY THING THE TAXPAYERS ARE
AT RISK FOR TODAY IS NOT MAKING
ENOUGH MONEY.
SAYING IS IT $900 MILLION, IS IT
$300 MILLION UNDER THE FIXED
RENT, AND THAT'S THE IMPORTANT
POINT THAT WAS ADDRESSED, THERE
IS FIXED RENT.
IT TOTALS $300 MILLION --
>> AND HOW'S THAT FIXED RENT
PAID?
>> IT IS PAID BASED ON, IT'S
THE -- IT'S A TAKEDOWN OF
100,000 SQUARE FEET AT A TIME.
THEY PAY EITHER THE LOWER OF THE
$1350, I BELIEVE IT IS, OR THE
NET PROCEEDS.
SO, I'M SORRY, THE HIGHER OF THE
TWO.
SO THE MINIMUM RENT IS THE FIXED
RENT.
IT DOES TOTAL UP TO $300
MILLION, AND SO THERE IS IF THE
COURT WERE TO FIND THAT WE HAVE
LENT OUR CREDIT OR, I GUESS,
UNDER THIS A JOINT OWNER BECAUSE
WE WOULDN'T BE MAKING AS MUCH
MONEY, IT WOULD PLACE THE COURT
IN THE SEAT OF DECIDING IS $1350
ENOUGH?
IS THE 8,500 ENOUGH UNDER THE
DEAL JACKSON-SHAW TESTIFIED TO?
WHAT IS THAT MONTHLY INCOME?
AND AT WHAT POINT IN THE JOB
MARKET, IS IT FIVE YEARS FOR AN
OPTION?
IS IT ONE YEAR FOR AN OPTION?
THESE ARE NOT WITHIN THE PURVIEW
OF ARTICLE 7, SECTION 10.

>> WE THANK YOU VERY MUCH FOR
YOUR ARGUMENT.
>> THANK YOU.
>> MR. MILLS, YOU HAVE ONE
MOMENT, ONE MINUTE, AND LET ME
ASK YOU THIS: WHAT ABOUT HER
ARGUMENT THAT THERE IS REALLY A
MINIMUM RENT HERE, AND SO WHAT
YOUR ARGUMENT REALLY BREAKS DOWN
TO IS YOU THINK THAT'S NOT
ENOUGH?
>> NO, IT ISN'T.
IF THAT WERE THE FIXED RENT, IF
IT WERE 1380, WE WOULDN'T HAVE A
CASE.
THEY SOLD THIS, THEY DID THIS
BECAUSE THEY WANT TO GET 900
MILLION.
BUT IF THEY GOT A BAD DEAL AND
IT WAS FIXED RENT, WE COULD NOT
COME IN AND SAY THAT'S NOT
ENOUGH.
ONLY MAYBE IF IT WAS ZERO, WE
WOULDN'T HAVE A PROBLEM.
>> WHERE IS THIS MONEY THAT
SHE'S TALKING ABOUT?
IF YOU SAY THAT'S NOT MINIMUM
RENT, WHAT IS IT?
>> NO, IT IS MINIMUM RENT.
IF THAT'S ALL THEY WERE GETTING
AND THAT'S THE DEAL, THEY'RE NOT
EXPOSING THEMSELVES TO RISK.
HERE THEY'RE EXPECTING TO GET
MORE THAN THAT.
NOBODY IN A SANE MIND WOULD SAY
THAT 1380 WAS A GOOD DEAL.
THEY WOULD NEVER HAVE DONE IT IF
THAT'S WHAT THE RENT WAS FOR.
THAT'S THE KIND OF BAD BUSINESS
DECISION THAT A COURT CAN'T
SECOND GUESS.
THE PEOPLE CAN --
>> BUT IF THEY ARE OBLIGATED TO
PAY THAT, WHY ISN'T THAT A
FIXED-RENT AMOUNT WHETHER IT'S A
GOOD DEAL OR A BAD DEAL?
>> IT IS A MINIMUM RENT, IT IS
VARIABLE RENT.
THE AMOUNT OF RENT DEPENDS
ENTIRELY ON THE SUCCESS OF THE
VENTURE.
IT DOES HAVE A FLOOR.
THE FLOOR ONLY KICKS IN AFTER
TEN YEARS, SO IT'S ALL AT RISK.
THEY CAN GET ZERO IF MAJESTIC
HAS THEM BUILD THE ROADS, BUILD
THE WETLANDS, DO EVERYTHING AND
ON THE NINTH YEAR, THE 350TH
DAY, THEY GET ZERO.
>> OF COURSE [INAUDIBLE]
>> THEY DO, BUT THEY HAVE OTHER
PEOPLE WHO WANT TO RENT IT.
>> AREN'T THEY JUST TRYING TO
MAKE A DEAL WHERE THEY CAN MAKE
MONEY AND GENERATE REVENUE?
>> I'M NOT SAYING IT'S A BAD
IDEA FOR THEM TO DO IT.
IN OTHER STATES PARTICIPATING
GROUND LEASES HAPPEN ALL THE
TIME.
THEY DON'T HAVE A CONSTITUTION
OF THE STATE PUTTING FUNDS AT
RISK.
IT'S THAT RISK THAT IS KEY HERE.
>> IF YOU WOULD GIVE US YOUR
CONCLUDING STATEMENT, YOU'VE
USED UP YOUR MINUTE.

>> IN THE CONSTITUTION IN THIS
PROVISION IT TELLS YOU THERE'S
ONE WAY THEY CAN SHARE IN RENT,
THAT'S AIRPORT BONDS WHERE THE
MONEY COMES OUT OF THE REVENUE.
THERE'S A SPECIFIC EXCEPTION FOR
THAT.
WE ASK THAT YOU ANSWER, REPHRASE
THE CERTIFIED QUESTION AS WE
SUGGESTED, AND ANSWER IT AS
WE'VE ASKED.
THANK YOU.
>> THANK YOU VERY MUCH.
THANK BOTH OF YOU FOR YOUR
ARGUMENTS.
THE COURT WILL BE IN RECESS FOR
TEN MINUTES.

>> PLEASE RISE.