Board of Directors of the Industrial Development Board of the City of Gonzales, Louisiana, Inc. v. All Taxpayers, Property Owners, Citizens of the City of Gonzales

The City of Gonzales and the State of Louisiana, in order to promote economic development, entered into agreements to issue tax-increment-revenue bonds to help fund a project for a Cabela’s Retail Center and Sportsman Park Center. In a special election, voters approved the rededication of a total of 1.5 percent of the sales-and-use tax to be collected in the economic-development district created for the area where the project would be located. After this approval, the Industrial Development Board of the City of Gonzales (board) (defendant) entered agreements with Cabela’s Retail LA, LLC (Cabela) and Carlisle Resort, LLC (Carlisle), the state, and the city. The terms of the agreements provided for acquisition of real estate for the project and the construction of a Cabela’s retail outlet, a museum, the Sportsman Park Center, and related public infrastructure. Cabela and Carlisle were to be responsible for the acquisition of property and construction of these projects. Cabela was to transfer title to the property to the city upon issuance of the bonds and lease the property back from the city with an option to purchase the property from the city. Under the terms of the agreements, Cabela was obligated to finance the completion of the retail center to cover more of the costs than the proceeds of the bonds. Cabela was also obligated to ensure continuous operation of the retail store for a certain time and pay substantial rent to the board for the lease. Additionally, Cabela was obligated to use reasonable best efforts to purchase materials and equipment from local businesses and employ city residents. Further, Cabela was required to manage and maintain the museum and other public facilities included in the project. Notably, the agreements contained a provision that the cost of the project to the city and state was collectively less than the financial benefits to Cabela and Carlisle, so the agreements were not gratuitous promises to Cabela and Carlisle. Further, another provision stated that the economic development resulting from the project would exceed the value of the state’s obligations, and thus the project served a public purpose. After the agreements were executed, the board filed a petition for a motion for judgment under the Bond Validation Act for a judicial declaration that the project was valid and legal. Two residents who owned local sporting-goods businesses intervened.