## Facts

- DeKalb County voters approved the Homestead Option Sales and Use Tax (HOST) under OCGA § 48-8-100 et seq.
- DeKalb County and several municipalities (including the City of Decatur) executed a 49-year intergovernmental agreement (IGA) governing distribution of certain HOST revenues.
- The IGA set a formula under which portions of HOST revenues generated in unincorporated DeKalb County would be distributed to the cities.
- A dispute arose over the calculation and distribution of funds under the IGA.
- The cities sued the county asserting breach of the IGA, conversion, and attorney fees.
- Earlier appellate proceedings resulted in remand for determination whether the IGA fit within the Georgia Constitution’s Intergovernmental Contracts Clause, which authorizes intergovernmental contracts (up to 50 years) for joint services, provision of services, or joint/separate use of facilities or equipment.
- On remand, the trial court granted summary judgment to the county, concluding the IGA was an unconstitutional revenue-sharing agreement rather than a contract for services or facilities.

## Issues

1. Whether the HOST IGA qualified as a constitutionally authorized intergovernmental contract “for services” or for the joint or separate use of facilities or equipment under Ga. Const. art. IX, sec. III, para. I(a), or instead was an unauthorized revenue-sharing contract.
2. If the IGA was not constitutionally authorized, whether the cities could maintain claims for breach of contract, conversion, and attorney fees based on the IGA.

## Decision

- The Supreme Court of Georgia affirmed summary judgment for DeKalb County.
- The Court held the IGA was not a valid intergovernmental contract because it did not require provision of services or grant use of facilities or equipment.
- The Court characterized the agreement as a revenue-sharing arrangement allocating tax proceeds, which falls outside the subject matter authorized by the Intergovernmental Contracts Clause.
- Because the IGA was constitutionally unauthorized, it was void and unenforceable, defeating the cities’ contract-based and related claims.

## Legal Principles

- Intergovernmental contracts in Georgia exist only within the express authorization of Ga. Const. art. IX, sec. III, para. I(a) and must concern joint services, provision of services, or joint/separate use of facilities or equipment, for no more than 50 years.
- Courts determine whether an agreement qualifies as an intergovernmental contract by examining its substance and purpose, not the parties’ label.
- An agreement whose primary purpose is to allocate or redistribute tax revenues between political subdivisions is not a contract “for services” or “for the use of facilities or equipment” within the constitutional clause.
- The fact that redistributed revenues may ultimately fund governmental services does not convert a revenue-allocation agreement into a constitutionally authorized services contract.
- A constitutionally unauthorized intergovernmental agreement is void and unenforceable; claims dependent on that agreement (including breach and related remedies) fail as a matter of law.

## Conclusion

The Georgia Supreme Court held that a long-term HOST distribution agreement that merely sets a formula for sharing tax proceeds between a county and municipalities is an unauthorized revenue-sharing contract, not a constitutionally permitted intergovernmental contract for services or facilities, and is therefore void and unenforceable.


City of Decatur v. DeKalb County, 289 Ga. 612, 713 S.E.2d 846 (Ga. 2011)