Significant Service Delivery Strategy Ruling Handed Down

March 6, 2024

Gavel and law books.

The Georgia Supreme Court delivered a significant ruling on Tuesday, March 5, in favor of the City of Winder in its Services Delivery Strategy (SDS) legal battle with Barrow County. 

The case originated from a dispute over service delivery matters following the expiration of the SDS agreement between the city and county in February 2019. Despite voluntary mediation resolving most issues, disagreements regarding funding for county road maintenance and water utility service remained. 

Barrow County initiated a civil action against Winder in 2019 seeking judicial resolution of these disputes. Both parties presented motions for partial summary judgment, focusing on three key legal questions: 

  1. Whether those in the county's incorporated areas could be held responsible for the expenses of maintaining county roads in unincorporated areas. 

  1. Whether services primarily benefiting the unincorporated area must be funded from the limited funding sources outlined in state law. 

  1. Whether a county has the authority to contest the legality of water rates imposed by a city and if the city can transfer funds from its water service operations to the general fund. 

The heart of the matter on the first issue revolved around interpretations of Georgia Code § 36-70-24(3)(A). Winder argued that charges should be determined by the geographic location of roads, while the county contended charges should be based on availability and usage.  

After initial rulings in favor of the county at the trial and appellate levels, the Georgia Supreme Court, in a unanimous decision led by Justice Carla Wong McMillian, overturned these lower court judgments.

“We see nothing in the text of OCGA § 36-70-24 (3)(A) that supports the county’s argument that the correct standard for determining the primary beneficiary of a service turns solely on who uses the service,” the Court wrote. 

The Court emphasized the need for a comprehensive evaluation of circumstances to determine the primary beneficiary of services, rejecting one-factor approaches such as geography or usage.  

The second critical issue centered on how to interpret Georgia Code § 36-70-24(3)(B), which requires that funding for services mainly benefiting the unincorporated area come from "property taxes, insurance premium taxes, assessments, or user fees" within a special service district, or through an agreed-upon funding mechanism by the involved parties. 

The county argued that the terms "assessments" and "property taxes" were not restrictive and could encompass a wider range of revenues. This interpretation would allow the county to use funds from broader categories, including those contributed by city residents. This argument prevailed at both the trial court and the Georgia Court of Appeals. 

However, the Supreme Court disagreed with this interpretation and ruled that unless there was a specific agreement between the parties stating otherwise, state law limited the funding sources within special districts. These sources were defined as ad valorem property taxes, insurance premium taxes, assessments not otherwise considered a tax or fee, and user fees. 

Finally, the Court clarified that the SDS Act doesn't cover the negotiation or judicial review of a city's water rates, effectively concluding that state courts lack jurisdiction in this matter.  

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