City of Winder v. Barrow Cty.

899 S.E.2d 157

CITY OF WINDER

v.BARROW COUNTY.

S23G0341

Supreme Court of Georgia.

Decided: March 5, 2024

Harold David Melton, Troutman Pepper Hamilton Sanders LLP, 600 Peachtree Street NE, Suite 3000, Atlanta Georgia 30308, John Elwin Stell Jr., Stell, Smith & Mattison, P.C., P.O. Box 644, Winder Georgia 30680, Andrew (Andy) J. Welch III, Warren Michael Tillery, Brandon Filson Palmer, Smith, Welch, Webb & White, LLC, P.O. Box 10, McDonough Georgia 30253, Grant E. McBride, Smith, Welch, Webb & White LLC, P.O. Box 10, McDonough Georgia 30253, for Appellant.

Angela Edwards Davis, County Attorney, Gregory Aaron Meyer, Jarrard & Davis, LLP, 222 Webb Street, Cumming Georgia 30040, for Appellee.

Rusi Chandrashkhar Patel, Kevin H. Jeselnik, Ryan Robert Bowersox, Georgia Municipal Association, 201 Pryor Street, SW, Atlanta Georgia 30303, David N. Dreyer, Quinton G. Washington, Washington Dreyer & Associates, LLC, 270 Peachtree Street, NW, Suite 1040, Atlanta Georgia 30303, Keith Robert Blackwell, Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree Street, Suite 4900, Atlanta Georgia 30309, for Amicus Appellant.

Ernest Ronald Bennett Jr., Carothers & Mitchell, LLC, 1809 Buford Highway, Buford Georgia 30518, Jody Charles Campbell, Blum & Campbell, LLC, 3000 Langford Road, Building 100, Peachtree Comers Georgia 30071, Gregory David Jay, Chandler, Britt, Jay & Beck, LLC, 4350 South Lee Street, Buford Georgia 30518, Robert Jackson Wilson, Webb Tanner Powell Mertz & Wilson LLP, 10 Lumpkin Street, Lawrenceville Georgia 30046, Kenneth James Lewis, Lewis Law, 102 West Athens Street, Winder Georgia 30680, for Other Party.

Jeffrey Shelton Akins, Bulloch County Board of Commissioners, 115 North Main Street, Statesboro Georgia 30458, David D. Gottlieb, County Attorney, Walker County, Georgia Government, 101 S. Duke Street, Lafayette Georgia 30728, Kenneth Edward Jarrard, Patrick DeBorde Jaugstetter, Jarrard & Davis, LLP, 222 Webb Street, Cumming Georgia 30040, Nancy Ladson Rowan, Assistant County Attorney, Squire Patton Boggs (US) LLP, 1201 W. Peachtree Street, NW, Suite 3150, Atlanta Georgia 30309, Michael Peter Ludwiczak, Gwinnett County Department of Law, 75 Langley Drive, Lawrenceville Georgia 30046-6935, Lawrence Allyn Stockton Jr., Stockton & Stockton, LLC, P.O. Box 1550, Clayton Georgia 30525, Joy Lynn Edelberg, Horne & Edelberg P.C., 215 Morrison Moore Pkwy E., Dahlonega Georgia 30533, Walter Gus Elliott II, Elliott Blackburn PC, 3016 North Patterson Street, Valdosta Georgia 31602, Larry Wayne Ramsey Jr., General Counsel, G. Joseph Scheuer, Association County Commissioners of Georgia, 191 Peachtree Street, NE, Suite 700, Atlanta Georgia 30303, for Amicus Appellee.

McMillian, Justice.

This case addresses three issues of first impression involving the interpretation and application of the Services Delivery Strategy ("SDS") Act (the "Act"), OCGA § 36-70-20 et seq.,¹ in connection with disputes between the City of Winder (the "City") and Barrow County (the "County") about the delivery of services to County and City residents and property owners and how those services are to be funded.² As we explain below, we conclude that whether the maintenance of county roads primarily benefits the unincorporated area of a county requires consideration of the totality of the circumstances involved and cannot be resolved as a mate of law; that services that primarily benefit the unincorporated area of the county must be funded through the mechanisms delineated in, the Act; and that the proceeding set out in the Act for resolution of SDS disputes does not permit the County to challenge whether water rates charged by the City are an illegal tax and whether the City may transfer profits from providing water service into its general fund.

In 1999, Barrow County and the municipalities located within the County—the cities of Winder, Auburn, and Statham and the towns of Bethlehem, Braselton, and Carl—entered into a comprehensive SDS Agreement for the provision of a number of services to County and municipal residents and property owners including road maintenance and water utility service. That Agreement was extended several times and was set to expire on February 28, 2019. In advance of that deadline and in an effort to avoid sanctions under the Act,³ the parties attempted to come to a consensus on a new SDS Agreement, but the negotiations between the parties did not successfully resolve all of their issues. As a result, in 2018 and 2019, the County, City, and other municipalities within the County participated in voluntary mediation under the Act. See OCGA § 36-70-25.1 (c).⁴ The parties were able to settle all but two of forty-one service issues in dispute through mediation.

To resolve the remaining conflicts, the County filed a three-count petition pursuant to OCGA § 36-70-25.1 (d)⁵ seeking court- ordered mediation and/or a judicial resolution of the disputes. The petition identified the remaining service issues as relating to (1) the funding for the County’s road maintenance and (2) the water utility service, including "(a) the arbitrariness of the water rate differentials charged by [the City] to customers located inside and outside of [the] city limits and (b) [the] County’s authority to provide water service to all customers located in the unincorporated area of the County."

The County later amended its petition to add another count ("Count IV") alleging that the City’s water service charges for residents in unincorporated areas of the County or in another municipality (the "Outside Customers") amounted to an illegal tax on such residents based on the differential in the rates the City charged its own residents and those it charged the Outside Customers. Under the previous SDS Agreement between the County and the City, the City provided exclusive water service to an area that included the City but also the Outside Customers. The County alleged that, between 2012 and 2017, the City overcharged the Outside Customers to generate a total of over $13 million in profit above the actual cost of providing the service through what it characterized as arbitrary, excessive, and abusive water rates and that the City transferred these profits to its general fund. The County also alleged that throughout the SDS mediation process, the County demanded that the City discontinue monetary transfers out of its water fund into the general fund. Count IV "requests that the Court enter an order finding that the establishment of Outside Customer water rates and fees at a level designed to generate a profit from Outside Customers constitutes an illegal tax on Outside Customers and that the City [ ] does not have the legal authority to transfer profits collected from the sale of water to Outside Customers out of its Water Fund and into its General Fund except to recover the cost of bona fide support provided to the Water Fund by other governmental funds."

After the parties participated in court-ordered mediation, which again failed to resolve the outstanding service delivery issues, they began to engage in discovery. Prior to the completion of that process, the County and the City filed cross-motions for partial summary judgment on the legal issue of what standard should be used under OCGA § 36-70-24 (3) (A)⁶ to determine whether residents, individuals, and property owners of the incorporated areas of the County could be charged for the costs of road maintenance for county roads located in unincorporated areas of the County. The City argued that under OCGA § 36-70-24 (3) (A), the geographic location of the roads, which necessarily is where the money would be spent to perform maintenance on the roads determined which County residents, individuals, and property owners could be charged for the maintenance,⁷ while the County argued that road maintenance funding depended, instead, on who had access to and used the roads. Thus, the County contended that municipal residents could also be charged for maintenance of county roads. The City later filed a second motion for partial summary judgment, contending that the County’s source of revenue to fund services for the unincorporated areas was limited to the mechanisms spelled out in OCGA § 36-70-24 (3) (B): "property taxes, insurance premium taxes, assessments, or user fees."⁸ In addition, the City filed a motion to dismiss Count IV, arguing that the issues of whether the City’s water rate charges to Outside Custom- ers amounted to an illegal tax and whether the City could transfer any profits gleaned from the excess charges to its general fund were beyond the scope of the statutory proceeding prescribed in OCGA § 36-70-25.1 (d).

Following a hearing, the superior court granted the County’s cross-motion for partial summary judgment on the road maintenance funding issue and, denied the City’s motion, concluding as a matter of law that road maintenance funding "is focused solely on those ‘that receive the service.’" The court also denied the City’s second motion for partial summary judgment that sought to limit the sources of revenue for funding services primarily for the benefit of the unincorporated areas to property taxes, insurance premium taxes, assessments, or user fees under OCGA § 36-70-24 (3) (B). In addition, the court denied the City’s motion to dismiss Count IV of the petition.

The City appealed the superior court’s orders to the Court of Appeals, which affirmed the superior court’s rulings in a split decision. See City of Winder v. Barrow County, 365 Ga. App. 832, 880 S.E.2d 323 (2022).

We granted the City’s petition for certiorari to consider the Court of Appeals’s rulings on three questions:

(1) Is the maintenance of county roads in an unincorporated area of the County, which connect to roads within the City, "primarily for the benefit of the unincorporated area" as that phrase is used in OCGA § 36-70-24 (3) (A)?

(2) Does OCGA § 36-70-24 (3) (B) require that funding for services provided primarily for the...