320 Ga. 239 FINAL COPY
S24A0652. JONES v. CITY OF ATLANTA.
COLVIN, Justice.
Appellant A. Thomas Jones contends that the City of Atlanta
(the “City”) imposes unlawful taxes on him and other customers of
its Department of Watershed Management (“DWM”) by means of
two City ordinances. City ordinances 98-O-1920 and 98-O-1921
(collectively, the “Ordinances”) levy charges on DWM’s revenue and
property that are deposited in the City’s General Fund. The recitals
of each ordinance suggest that the charge levied therein is meant to
compensate the City for certain costs to it from its operations
through DWM.
Appellant is a resident of the City and a DWM customer. He
alleges in his complaint that the sums collected pursuant to the
Ordinances (the “Disputed Charges”) are paid by DWM customers,
that these sums grossly exceed the costs for which they purportedly
compensate the City (the “Associated Costs”), and that these costs are instead satisfied by other monetary transfers from DWM. As
such, Appellant alleges that the Disputed Charges are taxes which
violate various provisions of the United States Constitution, the
Georgia Constitution, the Georgia Code, and the City’s Charter.
Accordingly, Appellant filed suit against the City seeking
declaratory and injunctive relief, as well as a tax refund and
damages for himself and a putative class of other DWM customers
with service addresses within the City’s territorial limits.
The trial court initially dismissed Appellant’s suit on
procedural grounds, but that ruling was reversed in part by the
Court of Appeals. See Jones v. City of Atlanta, 360 Ga. App. 152 (860
SE2d 833) (2021). Following remand, the City moved for judgment
on the pleadings, and Appellant filed two motions for partial
summary judgment. The trial court granted the City’s motion and
denied Appellant’s motions in a single omnibus order. Appellant
appeals the grant of the City’s motion for judgment on the pleadings
and the denial of his motions for partial summary judgment,
asserting numerous errors. These enumerations raise three central
2 issues: (1) whether the Disputed Charges are paid by Appellant or
DWM; (2) whether the Disputed Charges constitute taxes; and (3) if
so, whether the Ordinances are lawful. As explained further below,
we conclude that the trial court erred in granting the City’s motion,
but that it was correct to deny Appellant’s motions for partial
summary judgment. We accordingly affirm in part, vacate in part,
and remand for further proceedings.
I. Allegations in the Complaint.
On review of the City’s motion for judgment on the pleadings,1
we begin with Appellant’s allegations, as made in his Second
Amended Complaint (the “SAC”) and as supplemented by his first
amendment to the SAC. We refer to these pleadings collectively as
Appellant’s “Complaint,” which alleges the following.
A. The parties and the Ordinances.
Appellant is a resident of the City, and, at all times relevant to
this litigation, he has been a retail water and sewer customer of
1 Appellant’s motions for partial summary judgment are treated separately in Division III, infra. 3 DWM with a service address within the City’s territorial limits.
As a customer of DWM, Appellant receives a monthly water
and sewer bill. This bill contains a fixed “base charge” of $6.56 for
water services and a separate base charge of $6.56 for sewer
services. These monthly bills also include variable water and sewer
charges determined by the amount of the customer’s water and
sewer usage, respectively. Because of the base charges, DWM
customers within the City’s limits are billed at least $13.12 even
when they use no water or sewer services whatsoever, such as when
the property is vacant. Appellant further alleges that property
owners within the City may not avoid paying the Disputed Charges
because, as a general matter, City Ordinances compel property
owners to connect to the City’s sewer system wherever such
connection is available. See, e.g., City of Atlanta Code of Ordinances
(“City Code”), § 154-277 (f).2
2 City Code § 154-277 (f) provides:
Where the commissioner determines that sewer service is available to any lot, parcel of land, premises, or facility, 60 days’ notice will be given to the owner of such lot, parcel of land,
4 The City is a Georgia municipal corporation and DWM is one
of its departments. DWM operates the City’s water and sewer
systems as an “enterprise fund” within the meaning of OCGA §
36-81-2 (7).3 It is the sole utility providing water and sewer services
to City residents.
City Ordinance 98-O-1920 (the “Franchise Fee Ordinance”)
levies a five percent charge on DWM’s gross revenue (the “Franchise
Fee”). The Franchise Fee Ordinance’s recitals state that the
amounts collected compensate the City for the costs to it associated
premises, or facility directing connection to available sewer, and billing as provided in subparagraphs (a) through (e) above will thereafter be initiated unless an exemption is authorized as set forth in subparagraph (g) below.
3 OCGA § 36-81-2 (7) defines an “enterprise fund” as
a fund used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent of the governing authority is that the costs of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges or where the governing authority has decided that periodic determination of revenues earned, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. For purposes of this paragraph, the term “costs” means expenses, including depreciation.
5 with DWM’s use of “the City’s rights[-]of-way and streets for their
lines, cables, pipes, etc[.]” Ordinance 98-O-1920, Recitals. Its recitals
note that DWM is similar to private utilities, such as Georgia Power,
Atlanta Gas Light, and BellSouth, insofar as each utility uses the
City’s streets and rights-of-way. See id. The City, the recitals note,
“has executed franchise agreements with each of these [private]
utilities for a franchise fee on the gross revenues of the utility as
compensation to the City” for such use, and the City “should be
compensated for the use of its streets and rights-of-way by the water
and sewer system the same as it is compensated by other utilities.”
Id.
City Ordinance 98-O-1921 (the “PILOT Ordinance”) levies “an
annual Payment in Lieu of Tax” on real property owned by DWM
(the “PILOT”). Because DWM’s real property is public, and therefore
exempt from ad valorem taxation, see OCGA § 48-5-41 (a) (1) (A),4
the City levies a payment in lieu of tax on DWM “in the same amount
4 OCGA § 48-5-41 (a) provides that “all public property” is “exempt from
all ad valorem property taxes in this state,” except as specified therein. 6 that would have been assessed for property tax if [the water and
sewer system] had been a private[ly]-owned entity.” Ordinance 98-
O-1921, § 1. The recitals state that DWM, as an owner of real
property within the City, “utilize[s] facilities and services provided
by the General Fund,”5 and that the imposition of a PILOT “to
recover the cost of services provided” is “a common approach utilized
by” other cities. Id.
B. Attachments to the Complaint and Appellant’s related allegations.
Appellant attached to his Complaint numerous exhibits that
he contends show the Franchise Fee and PILOT are taxes. Among
other things, these exhibits include excerpts from an audit
performed by the City’s internal auditor in 2003 (the “Audit”),
excerpts from the City’s Revenue Manual for fiscal year 2014 (the
“2014 Revenue Manual”), excerpts of two transcripts containing
testimony from financial officer Mohamed Balla on behalf of the City
and documentation related to the City’s water and wastewater
5 The City contends that the services funded by the PILOT include police
and fire protection. 7 revenue bonds and their validation by the Superior Court of Fulton
County.
1. The 2003 Performance Audit.
In January 2003, the City’s Office of the City Internal Auditor
(the “Internal Auditor”) published an audit analyzing DWM’s
finances from 1999 to 2001. On the basis of this Audit and the City’s
“silence” in response thereto Appellant’s Complaint alleges that
DWM “already pays customary administrative and indirect costs to
the City’s General Fund . . . such that the subject [F]ranchise [F]ees
and PILOT payments . . . are above and beyond, and grossly in
excess of, any General Fund expenses actually incurred by and
appropriately allocated to” DWM.
The Audit explained that DWM paid the amounts collected
from the Franchise Fee and the PILOT to the General Fund “as a
single combined annual payment” of $9.8 million annually, for a
total of $29.4 million from 1999 through 2001. From this data, the
Internal Auditor “identified an issue . . . that merits a separate
discussion.” The Audit expressed worry that “the rationale for the
8 PILOT and its relationship to other charges for direct and indirect
administrative support from the City’s general fund is unclear.”
The Audit further explained that the Disputed Charges “are
intended to take the place of property taxes and franchise fees paid
by privately-owned utilities.” But, the Audit noted, “[t]he basis for
the annual payment is unclear because of the other payments from
the water and sewer fund to the general fund.”
2. The City’s 2014 Revenue Manual.
Appellant also attached to his Complaint excerpts from the
City’s 2014 Revenue Manual. The 2014 Revenue Manual divides the
City’s “revenues and sources of income” into various categories,
including “taxes” and “charges for services,” and it categorizes the
PILOT and Franchise Fee as taxes. The 2014 Revenue Manual
further provides that, separate and apart from the PILOT and
Franchise Fee, DWM allocates funds to the City to compensate the
City for its “indirect costs” which are attributable to DWM.
3. The City’s Water and Wastewater Revenue Bonds.
In 1999, the City adopted a Master Bond Ordinance (Ordinance
9 99-O-0399) “providing for the issuance by the City of Atlanta” of
certain “Water and Wastewater Revenue Bonds[.]” Appellant
attached excerpts of this Ordinance to his Complaint. Its terms
expressly define the “Expenses of Operation and Maintenance” as
“all expenses reasonably incurred in connection with the operation
and maintenance of the System . . . exclud[ing] Franchise and
P[ILOT] Payments.” The “System” is defined as “the combined
drinking water, sanitary sewer, and wastewater system of the
City[.]” The 1999 Master Bond Ordinance was adjudicated and
validated by the Superior Court of Fulton County pursuant to
Georgia’s Revenue Bond Law, OCGA § 36-82-60 et seq. This
validation was essentially renewed when, in 2021, the Fulton
County Superior Court issued an order validating subsequent water
and wastewater revenue bonds. In the 2021 order, the Fulton
County Superior Court took “[j]udicial notice . . . that the [1999]
Master Bond Ordinance, as supplemented and amended . . . ha[s]
been adjudicated by judgment of this Court to be valid and binding
upon the Defendant City, and the terms and provisions thereof have
10 been in each and every respect, confirmed and validated[.]”
Appellant’s Complaint alleges that, pursuant to these orders, the
Fulton County Superior Court “has already held, as a matter of fact
and law . . . that the PILOT and franchise charges are not expenses
of the water and sewer department reasonably incurred in
connection with the operation and maintenance of the City’s water
and sewer system[.]” Appellant further alleges that because these
bonds have been validated, they are “forever conclusive upon the
City” under Georgia law.6
4. Testimony of Mohamed Balla on behalf of the City.
In further support of his claims, Appellant attached to his
Complaint two excerpts of testimony by Mohamed Balla regarding
DWM’s finances. The first excerpt contains Balla’s testimony before
6 Though “the judgment of the superior court confirming and validating
the issuance of the bonds and the security therefor shall be forever conclusive against the governmental body upon the validity of such bond and the security therefor,” OCGA § 36-82-78, we have made clear that “this restriction only attaches to those matters that are referenced and adjudicated in the bond proceedings.” Columbus Bd. of Tax Assessors v. Med. Center Hosp. Auth., 302 Ga. 358, 362-363 (2) (806 SE2d 525) (2017) (citation and punctuation omitted) (holding that a prior bond validation did not establish whether a particular property interest was public for tax purposes because such issue was “separate and distinct” from the issues presented in the bond validation proceeding). 11 the Water and Sewer Appeals Board from an administration action
Appellant filed prior to bringing the suit at issue here. At the time
this testimony was given — November 2017 — Balla was the Chief
Financial Officer for DWM. The second excerpt contains deposition
testimony Balla gave in an unrelated case7 in May 2019, when Balla
was the Deputy Commissioner for the City’s Office of Financial
Administration.
In his November 2017 testimony before the Appeals Board,
Balla testified that “the PILOT . . . is a tax, essentially, on real
property that’s owned by [DWM].” The amount of the PILOT, Balla
explained, is “the same” as the amount of property taxes that would
otherwise be paid if DWM’s property were subject to property tax.
Balla described the Franchise Fee as “a [five] percent sales tax fee.”
During cross-examination, Balla testified that the money
transferred from DWM to the City’s General Fund “is collected from
. . . water revenues.” He explained that “[five] percent” of each
7 City of Sandy Springs, Ga. v. City of Atlanta, Ga., Superior Court of
Fulton County, Case No. 2018-CV-313783. 12 customer’s bill who lived within the City’s territorial limits 8 “was a
[F]ranchise [F]ee,” but it “would be a lot more difficult” to determine
the portion of a City resident’s bill that was attributed to the PILOT.
During Balla’s deposition testimony in the unrelated 2019
case, he explained that DWM pays “a PILOT fee, a Franchise Fee,
direct cost and indirect cost to the [G]eneral [F]und.”
5. Appellant’s claims for relief.
Based on the allegations and documents described above,
Appellant brought 23 claims for relief. His Complaint includes four
claims for a tax refund under OCGA § 48-5-380 (Counts 6, 8, 13 and
14); ten claims seeking declarations under OCGA § 9-4-1 et seq. that
the Ordinances violate various provisions of the Georgia
Constitution, the Georgia Code, and the City Charter (Counts 1-5,
7, 9-12); five claims seeking damages for violations of the Due
Process and Takings Clauses found in the United States and
Georgia Constitutions (Counts 15-20); one claim for money had and
8 DWM has some customers outside the City’s territorial limits. The Franchise Fee is not assessed on those customers, so Appellant’s putative class includes only DWM customers that have service addresses within the City. 13 received (Count 20); one claim for unjust enrichment (Count 21); one
claim seeking a permanent injunction under OCGA § 9-4-3 (a) and
42 USC § 1983 (Count 22); and one claim seeking that funds
collected pursuant to the Ordinances during the pendency of the
litigation be paid into the registry of the trial court and that his
attorney fees be paid from these funds (Count 23).
II. Review of the City’s motion for judgment on the pleadings.
The trial court granted the City’s motion for judgment on the
pleadings with respect to each of Appellant’s 23 claims for relief.
Appellant argues that in doing so, the trial court erred by: (1)
misapplying the standard of review applicable to motions for
judgments on the pleadings, (2) failing to consider certain exhibits
to the Complaint, (3) holding that Appellant was not entitled to a
tax refund under OCGA § 48-5-380, (4) holding that the Ordinances
were lawful exercises of the City’s Supplementary Powers, (5) giving
undue deference to the statements of legislative intent found in the
Ordinance’s recitals, and (6) holding that the Disputed Charges
were not taxes as a matter of law.
14 Chief among these alleged errors is Appellant’s first
enumeration: the trial court’s alleged failure to correctly apply the
standard applicable to motions for judgment on the pleadings. As
explained further below, this standard generally requires the court
to treat the factual allegations of the non-moving party as true. See
Trop, Inc. v. City of Brookhaven, 296 Ga. 85, 86 (1) (764 SE2d 398)
(2014). Appellant argues that, notwithstanding this rule, the trial
court failed to take as true his allegations (1) that he pays and has
paid the Disputed Charges via his monthly bill, (2) that the revenue
generated from the Disputed Charges grossly exceeds the costs to
the City for which they purportedly serve as compensation, and (3)
that the City is compensated for the Associated Costs by means of
other monetary transfers to the City’s General Fund, such that the
Disputed Charges serve solely to generate general revenue.
For the reasons we set out below, we agree that the trial court
erred by failing to treat these allegations as true. This error affected
not only the court’s analysis of whether Appellant could bring a tax
refund action under OCGA § 48-5-380 and of whether the Disputed
15 Charges are taxes or fees, but some or all of Appellant’s other claims
as well.9 We accordingly vacate the trial court’s judgment on the
pleadings, as expressed in Divisions I-V of its omnibus order10 and
remand for reconsideration of Appellant’s claims. Because we vacate
the trial court’s judgment on the pleadings for this reason, we do not
reach Appellant’s other enumerations of error regarding the motion
for judgment on the pleadings.
A. Standard of Review.
“Our review of a trial court’s decision on a motion for judgment
on the pleadings is de novo.” McBrayer v. Scarbrough, 317 Ga. 387,
388 (1) (893 SE2d 660) (2023). “A motion for judgment on the
pleadings should be granted only if the moving party is clearly
9 The trial court’s failure to treat Appellant’s allegations as true concerns, at a minimum, Appellant’s statutory claims for a tax refund. But it is difficult to discern with certainty which of the trial court’s denials of Appellant’s other claims were determined by its failure to treat these allegations as true and by conclusions which resulted from this failure (such as its conclusion that the Disputed Charges were not taxes). We accordingly leave it for the trial court on remand to reassess each of Appellant’s 23 claims using the proper standard of review. 10 The trial court’s order contained six divisions, the first five of which
denied each of Appellant’s 23 claims pursuant to the City’s motion for judgment on the pleadings. In the sixth division, the trial court denied Appellant’s two motions for partial summary judgment. 16 entitled to judgment.” Trop, Inc., 296 Ga. at 87 (1) (citation and
punctuation omitted). “[I]n reviewing such motions, all well-pleaded
material allegations of the opposing party’s pleading are to be taken
as true, and all allegations of the moving party which have been
denied are taken as false.” Hamon v. Connell, 315 Ga. 760, 760 (1)
(883 SE2d 785) (2023) (citation and punctuation omitted). That said,
a trial court “is not required to accept the legal conclusions the non-
[moving ]party suggests that those facts dictate.” Oasis Goodtime
Emporium I v. City of Doraville, 297 Ga. 513, 522 (3) (a) (773 SE2d
728) (2015) (citation and punctuation omitted).
B. The trial court erred on review of the City’s motion for judgment on the pleadings by concluding that Appellant did not pay the Disputed Charges.
1. OCGA § 48-5-380 (b) provides in pertinent part that “[a]ny
taxpayer from whom a tax . . . was collected who alleges that such
tax . . . was collected illegally or erroneously may file a claim for a
refund with the governing authority of the county or municipality[.]”
The trial court held that Appellant is not entitled to a tax refund
17 under this statute11 because, among other reasons, he does not pay
the Disputed Charges. We disagree.
2. Appellant alleged that he paid the Disputed Charges, but the
trial court, citing Parr Realty Co. v. Carroll, 131 Ga. App. 549 (206
SE2d 550) (1974), discredited this allegation based on what it
believed were conflicts with the text of the Ordinances and with
Appellant’s water and sewer bill, which were attached to the
Complaint. See id. at 549 (1) (“Where exhibits attached to a
complaint conflict with the allegations[,] the exhibits are
controlling.”). Because there is no such conflict, however, the rule in
Parr does not apply, and the trial court erred by failing to treat
Appellant’s allegation as true, as explained below.
The Ordinances provide that the Disputed Charges are levied
11 While Georgia’s appellate courts have sometimes referred to the ability
to bring a statutory cause of action as “statutory standing,” this concept is distinct from constitutional standing, and “unlike the constitutional doctrine of standing, statutory standing does not implicate a court’s power to adjudicate a case.” Oldham v. Landrum, 363 Ga. App. 284, 291 (870 SE2d 82) (2022) (Pinson, J., concurring in part and dissenting in part). See also Cobb County v. Floam, 319 Ga. 89, 93 (1) n.3 (901 SE2d 512) (2024) (distinguishing between constitutional standing and statutory standing); Sons of Confederate Veterans v. Henry County Bd. of Commrs., 315 Ga. 39, 63-64 (2) (d) (880 SE2d 168) (2022) (same). 18 on DWM and that DWM shall deposit the revenue resulting from
these charges in the City’s General Fund. See Ordinance 98-O-1920,
§ 2; Ordinance 98-O-1921, § 2. Appellant alleges that DWM satisfies
its obligations to the City’s General Fund by surreptitiously passing
on the Disputed Charges to DWM’s customers via their monthly
bills. Appellant’s allegation acknowledges, rather than conflicts
with, the text of the Ordinances. And the fact that Appellant’s bill
fails to include itemized charges corresponding to the Franchise Fee
and the PILOT does not conflict with Appellant’s allegation that the
City has imposed hidden taxes on DWM customers. Because
Appellant alleged that he paid the Disputed Charges and that
allegation was not inconsistent with the exhibits, the trial court was
required to treat this allegation as true. It erred by failing to do so
and by concluding that Appellant was unable to bring a tax refund
claim under OCGA § 48-5-380 for that reason.
3. Moreover, the trial court failed to afford due consideration to
the fact that DWM is a department of the City with no separate legal
existence of its own. Brownlee v. Dalton Bd. of Water, Light, and
19 Sinking-Fund Commrs., 59 Ga. App. 538, 538-539 (1 SE2d 599)
(1939) (“A department of a city government, created by the city’s
charter, and which is authorized to discharge duties primarily
resting upon a municipality, is an agency or instrumentality of the
city government for the performance, for the municipality, of the
duties imposed upon it. Such department is not a separate and
distinct corporate entity which is subject to suit for its failure to
perform, or for the violation of, any duty resting upon it unless it is
so created by clear legislative intent.”). Thus, to the extent the
Franchise Fee Ordinance levies a charge “on the gross revenues of
the water and sewer operations derived from fees and charges for
the provision of services,” Ordinance 98-O-1920, § 1, and DWM pays
the Franchise Fee to the City from those gross revenues, it is
allegedly levying a charge on the DWM customers who generate
those revenues by paying for DWM’s services. Though the PILOT
Ordinance levies a charge on DWM’s real property rather than its
revenue, the testimony of DWM’s own financial officer makes clear
that the Disputed Charges, including the PILOT, are “collected
20 from . . . water revenues.” DWM, as a department of the City, is
merely the means by which the City assesses and collects the
Disputed Charges from DWM’s customers. As alleged, a payment to
DWM then is a payment to the City. Because the Complaint alleges
that Appellant pays the Disputed Charges to the City, it was error
for the trial court to hold that he did not and to deny his statutory
tax refund claim on that basis.
C. The trial court also failed to treat as true other key allegations in Appellant’s Complaint.
As stated above, Appellant alleged (1) that the revenue
generated from the Disputed Charges grossly exceeds the Associated
Costs and (2) that DWM compensates the City for the Associated
Costs through other monetary transfers to the General Fund. As
such, Appellant alleges, the Disputed Charges serve solely to raise
general funds rather than as compensation for the Associated Costs.
The trial court did not credit these allegations. Instead, in both
its factual findings and in its analysis, the trial court stated that the
Disputed Charges “allow the City to recoup costs related to DWM’s
21 use of the City’s streets and rights-of-way . . . and for City Services
provided to DWM just like other privately owned utilities[.]” In
making this finding, the trial court said that it relied on “the plain
language of the enacting Ordinances[.]” But the precatory language
to which the trial court refers is found in the Ordinances’ recitals,
rather than its operative sections. Neither Ordinance mandates that
use of the Disputed Charges is restricted to compensating the City
for the Associated Costs. Compare Bellsouth Telecommunications v.
Cobb County, 305 Ga. 144, 147 (1) (824 SE2d 233) (2019) (explaining
that the Georgia Emergency Telephone Number 911 Service Act,
OCGA § 46-5-120 et seq. (the “911 Act”), restricts use of the funds
generated pursuant thereto to pay specific costs enumerated in the
911 Act). And so, while the recitals may express the City Council’s
intention that the Disputed Charges be used to cover certain
expenses, nothing from the text of the Ordinances themselves tells
us how that revenue is used in practice. Because the operative
provisions of the Ordinances do not conflict with Appellant’s
allegations that the Disputed Charges function differently in
22 practice, the trial court was required to treat them as true.
The trial court’s failure to credit Appellant’s factual allegations
permeated its analysis of the issues presented. We accordingly
vacate its judgment on the pleadings as expressed in Divisions I
through V of its order and remand for reconsideration of Appellant’s
claims under the standard applicable to motions for judgment on the
pleadings.
III. The trial court correctly denied Appellant’s two motions for partial summary judgment.
In addition to contesting the City’s motion for judgment on the
pleadings, Appellant filed two separate motions — one for each of
the two Ordinances — seeking partial summary judgment. In these
motions, which were based on evidence previously attached to the
Complaint,12 Appellant sought a declaration that the Ordinances
impose taxes on him in violation of certain provisions of the Georgia
Constitution, the Georgia Code, and the City Charter. In the final
12 The City’s responses also relied exclusively on evidence attached to
Appellant’s Complaint, except that its excerpts of Balla’s testimony included some portions of the transcript not included with the Complaint. 23 division of the trial court’s omnibus order, it denied Appellant’s
motions based on its prior conclusion that the Disputed Charges
were fees paid by DWM. The trial court further held that even if it
had not reached this conclusion, Appellant was still not entitled to
summary judgment because he had failed to demonstrate that no
genuine disputes of material fact remain.
On appeal, Appellant argues (1) that the evidence presented
conclusively establishes the truth of his allegations and (2) that,
even when considered without these allegations, the Franchise Fee
is a tax under this Court’s precedent. We disagree. After close review
of the record and the applicable case law, we conclude that Appellant
has failed to meet his burden on summary judgment. We accordingly
affirm the trial court’s denial of Appellant’s motions for partial
summary judgment.
Like our review of the City’s motion for judgment on the
pleadings, our review of Appellant’s motions for summary judgment
is de novo. See Prodigies Child Care Mgmt. v. Cotton, 317 Ga. 371,
372 (1) (893 SE2d 640) (2023). But unlike review of a defendant’s
24 motion for judgment on the pleadings, we do not simply accept the
nonmoving party’s allegations as true. Instead, to prevail on a
motion for summary judgment, “the moving party must demonstrate
that there is no genuine issue of material fact and that the
undisputed facts, viewed in the light most favorable to the
nonmoving party, warrant judgment as a matter of law.” First
Acceptance Ins. Co. of Ga. v. Hughes, 305 Ga. 489, 490 (826 SE2d 71)
(2019) (citation and punctuation omitted). See also OCGA
§ 9-11-56 (c).
A. Two key allegations appear material to Appellant’s theory
of the tax-versus-fee issue: (1) Appellant’s claim that the revenue
generated by the Disputed Charges grossly exceeds the Associated
Costs and (2) his claim that the Associated Costs for which the
Disputed Charges purportedly compensate the City are in fact
satisfied by other direct and indirect cost transfers from DWM to the
City’s General Fund. The City disputes these material allegations.
Thus, if Appellant’s theory is correct — an issue on which this Court
expresses no opinion — Appellant also has the burden of
25 demonstrating that these disputes are not genuine disputes of
material fact. A review of the evidence shows that Appellant has
failed to do so.
First, we consider briefly Appellant’s allegation that the
Disputed Charges grossly exceed the purported costs to the City. In
support of this allegation, Appellant’s Complaint attached his open
records request to and the joint response from DWM and the City’s
Department of Finance.13 These exhibits include spreadsheets
prepared and produced by the City showing that it collected between
$19.4 million and $21 million per year pursuant to the Ordinances
for fiscal years 2014 through 2022, except for fiscal year 2016.14
In addition to documents regarding the revenue collected,
Appellant also requested documents regarding the corresponding
costs to the City for which the Disputed Charges served as
13 These exhibits were attached to Appellant’s first amendment to the
SAC, which was filed after the parties filed their dispositive motions but before the trial court ruled on them. This filing occurred after briefing was complete on the City’s motion for judgment on the pleadings, but just prior to the filing of Appellant’s reply briefs on his partial motions for summary judgment. 14 It is unclear whether the custodian’s response omitted records relating
to fiscal year 2016 or if those records were produced but inadvertently omitted from the record on appeal. 26 compensation, but the City’s departments produced no such records.
The parties’ correspondence shows that Appellant requested “all
records demonstrating the amount of actual costs and expenses
actually incurred by the City’s General Fund as a result of the use
of the City’s streets and rights-of way by [DWM]” which were
recovered through payments made to the General Fund pursuant to
the Franchise Fee Ordinance, rather than other direct and indirect
cost transfers from DWM to the General Fund. The custodians to
whom Appellant directed his open records request responded that
“[t]here are no records in the custody of the Departments of Finance
or Watershed Management which are responsive to this request.”
Appellant requested the same records with respect to the PILOT and
received the same response.
Appellant alleges that revenue generated from the Disputed
Charges grossly exceeds costs. But he has only provided evidence
establishing the revenue generated. There is no evidence in the
appellate record — none — showing the costs the City incurs
associated with DWM’s use of its streets and rights-of-way or its
27 provision of police and fire protection to DWM’s real properties. And
since Appellant has not presented evidence concerning these
expenses, we cannot determine whether revenue exceeds costs or
vice versa. Appellant has accordingly failed to demonstrate that the
City’s denial of this allegation is not a genuine dispute of material
fact.
We consider next Appellant’s allegation that the costs to the
City for which the Disputed Charges purportedly serve as
compensation are in fact covered by other cost transfers, such that
Disputed Charges serve purely as a source of general revenue for the
City. In support of this allegation, Appellant relies on the 2014
Revenue Manual and the City’s response to Appellant’s open records
request. We consider each of these documents in turn.
Appellant claims that the 2014 Revenue Manual establishes
that, separate and apart from the Disputed Charges, DWM makes
other transfers to the City to compensate it for its indirect costs
associated with DWM. But while the 2014 Revenue Manual does
reference other indirect cost transfers, the description of these costs
28 does not include the costs described in the Ordinances. Instead,
these transfers cover “purchasing, accounting, budgeting, [and]
human resources administration,” among other things. Thus, the
2014 Revenue Manual does not support Appellant’s allegations.
As recounted above, Appellant submitted an open records
request to DWM and the City’s Department of Finance requesting
any document demonstrating the costs to the City referenced in the
Ordinances which were covered by the Disputed Charges, rather
than by other payments. In response, the records custodians stated
that there were no documents within the custody of the Department
of Finance or Department of Watershed Management that were
responsive to Appellant’s request. Pretermitting whether we can
consider this response, as it is included only in a supplemental
pleading filed after briefing on Appellant’s motions was complete, it
still fails to demonstrate the absence of a dispute of genuine
material fact. An absence of evidence is not necessarily evidence of
absence. It could be, as Appellant contends, that the City produced
no documents because there are no such costs. But it could also be
29 that the documents are possessed by other City departments, such
as the Department of Public Works, or that the City has some
objection to Appellant’s request which would need to be resolved
through motions to compel discovery or litigation arising from
allegedly incomplete responses to open records requests. In any
event, Appellant has not identified any other specific cost transfer
which compensates the City for the costs referenced in the
Ordinances. Appellant has given only the vaguest of references to
transfers that in fact cover other expenses. As such, Appellant has
failed to meet his burden on summary judgment.
B. Appellant also argues that the Franchise Fee Ordinance is
a tax as a matter of law, notwithstanding any factual disputes
between the parties. Appellant argues that, under this Court’s
precedent, charges imposed by the government which are calculated
as a percentage of the payor’s gross revenue are taxes and that the
Franchise Fee Ordinance is a tax because it is just such a charge.
See, e.g., Cotton States Mut. Ins. Co. v. DeKalb County, 251 Ga. 309,
309-310 (1) (304 SE2d 386) (1983) (holding that a county charge on
30 insurance underwriting companies in the amount of three percent of
the gross premiums received during the preceding year was a tax);
DeKalb County v. Atlanta Gas Light Co., 228 Ga. 512, 512-513 (1)
(186 SE2d 732) (1972) (holding that an ordinance requiring certain
utilities to obtain a license for the use of the county’s rights-of-way
by paying a fee calculated in part as a “percentage of non-industrial
gross revenue” was a tax). Pretermitting whether Appellant has
read this case law correctly, the cases cited are distinguishable.
Though the Franchise Fee Ordinance imposes a charge based on
DWM’s gross revenues, similar to the cases above, Appellant claims
that he, rather than DWM, ultimately pays the Franchise Fee. To
the extent he does so, it is not based on a percentage of his gross
revenue but passed onto him as a percentage of his water and sewer
bill, which is comprised of a flat base charge and a variable portion
based on the services he uses. These cases are therefore not
controlling on the tax-versus-fee issue, and this argument fails.
Judgment affirmed in part and vacated in part, and case remanded. All the Justices concur.
31 BETHEL, Justice, concurring.
I join the opinion of the Court in full. I write separately to offer
my perspective on an issue addressed in part by the trial court but
not reached in the majority opinion, that is, the question of whether
the Disputed Charges are taxes, fees, or something else altogether.
More specifically, I write to briefly explore what I see as analytical
gaps in the resolution of that issue below in hopes that, on remand,
the parties and the trial court will engage in a more detailed
consideration and application of our precedent on municipal utility
charges and any other relevant aspect of our law to the specific facts
of this case.
Through its implementation of the Disputed Charges, which
consist of the so-called “franchise fee” and “PILOT,” the City claims
it is recovering the general fund costs associated with the operation
of the DWM that are borne by the City’s other departments.
Appellant’s basic argument is that the City, through the DWM, is
charging him not only for the water and wastewater services the
DWM provides, but also has added further charges — the Disputed
32 Charges (or some portion thereof) — that are unrelated to the
operation of the DWM and instead fund the City’s general
government operations without any relation to the delivery of water
and wastewater services. Appellant claims this additional amount
is, de facto and de jure, a tax unauthorized by Georgia law. The City,
however, argues that it treats the DWM like a public utility
operating within the City. So, the City maintains, the Disputed
Charges are not a tax but instead compensate the City for the
benefit to the DWM of using the City’s right-of-way (the franchise
fee) and replace property tax revenue the City would collect if the
DWM were a private entity (the PILOT). To the extent the funds
raised by the Disputed Charges exceed even those costs, the City, in
effect, seeks to operate the DWM at what the private sector would
call a profit and to use that profit to subsidize other operations.
The trial court treated the parties’ dispute as raising a
straightforward tax-versus-fee issue that could be resolved simply
by assessing whether the Disputed Charges are more akin to
charges deemed fees for services or to those deemed taxes under this
33 Court’s precedent.15 The trial court also looked to opinions from this
Court that recognize a broad power in local governments to set rates
for the administration of utilities provided by those governments.
But in conducting its analysis, the trial court neither took into
account the specific underlying facts and circumstances of this case
nor grappled with the principles underlying this Court’s precedent
and their applicability to this case. That strikes me as problematic.
As the majority opinion explains, the DWM is the City. So what
the City labels as a “payment in lieu of taxes” does not really fit when
there is no private interest that might otherwise have a tax
liability.16 Likewise, franchise fees are designed to compensate the
general public for the use by private entities of publicly owned land.
But, here, the City, and, by extension, the DWM, owns the right-of-
way. We don’t often think of compensating ourselves for using what
15 The trial court’s order was prepared by counsel for the City. 16 Compare an economic development project where a private developer
and a public entity agree to allow the public entity to hold title to property to gain the benefit of a tax exemption while the private developer makes some designated payment in lieu of taxes that would otherwise be due if it held title to the property. 34 we own. From an internal accounting perspective, we might expect
departments within a larger organization to allocate costs among
themselves to reflect the true cost of operations. And though the City
says that its assessment of the franchise fee and the PILOT against
the DWM is consistent with how other municipalities treat their
public works department, no record has been developed at this stage
in the proceedings on that point nor has the City endeavored to
explain how that fact, if proven, would be relevant to the question of
legal authorization for the City’s course of conduct.17 In my
experience, public works departments do not ordinarily charge, for
example, police and fire departments for wear and tear on the roads,
and public safety departments generally do not charge for the
protection they provide the other. Of course, the feature that most
distinguishes the DWM from the other departments of a municipal
government is its status as an enterprise fund18 with a dedicated
17 “Everyone else is doing it” has a mixed record of success in legal arguments. 18 OCGA § 36-81-2 (7) defines “enterprise fund” as follows:
[A] fund used to account for operations that are financed and
35 stream of income derived from the provision of services to customers
and a directive to operate that fund, at a minimum, in a manner that
covers its own costs.
In light of these facts, it seems to me that whether the City has
the power to implement the Disputed Charges in the name of cost
recovery and, as alleged, to operate the DWM at an apparent profit,
how the City may do either of those things, under what restrictions,
and whether and how the City must prove or demonstrate cost
recovery are all significant questions bound to require ultimate and
clear resolution. And as best I can tell, this Court’s precedent does
not squarely resolve these questions.
In assessing the applicability of this Court’s prior decisions to
this case, then, it is essential that the trial court contend with the
operated in a manner similar to private business enterprises where the intent of the governing authority is that the costs of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges or where the governing authority has decided that periodic determination of revenues earned, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. (Emphasis supplied.) 36 factual differences, as well as the similarities, between the case at
hand and prior cases decided by this Court and, further, to search
out the source of the legal principles announced therein. It is
likewise important to evaluate whether other sources of Georgia law
might provide guidance on the applicability of the principles
underlying those cases. Further, as part of a comprehensive
evaluation, the lower court should assess what impact, if any, the
DWM’s status as an enterprise fund might have in resolving the
consideration of the propriety of the Disputed Charges.
In short, municipal utility transfer payments are an integral
component of the operation of many Georgia cities. The lawfulness
of these payments, and how their lawfulness should be determined,
could have an immense impact on communities across our shared
state. I have every expectation that the weighty questions found in
this case will return for our consideration, whether in this case or
another. I believe a robust record and thorough fleshing out of the
legal issues will, as always, be essential to our ability to discern the
correct state of our law. Moreover, to the extent there is ambiguity
37 in our laws, the General Assembly may see fit to provide clarity and
stability.
Decided October 31, 2024.
Municipal fees; constitutional question. Fulton Superior Court.
Before Judge Ingram.
Woodham Law, John F. Woodham; Hurt Stolz, James W. Hurt,
Jr., Irwin W. Stolz, Jr., for appellant.
Greenberg Traurig, Michael J. King, Richard J. Valladares,
Steven J. Rosenwasser, Ernest L. Greer; Joel A. Callins, for appellee.