City of Atlanta v. City of Coll. Park City of Atlanta v. City of Coll. Park

• Citation: 311 Ga.App. 62,11 FCDR 1961,715 S.E.2d 158
• Decision Date: 18 July 2011
• Docket Number: Nos. A10A2054,A10A2055.,s. A10A2054
• Parties: CITY OF ATLANTAv.CITY OF COLLEGE PARK et al.City of Atlantav.City of College Park et al.
• Court: United States Court of Appeals (Georgia)

311 Ga.App. 62

715 S.E.2d 158

11 FCDR 1961

CITY OF ATLANTA

v.CITY OF COLLEGE PARK et al.City of Atlanta

v.City of College Park et al.

Nos. A10A2054

A10A2055.

Court of Appeals of Georgia.

June 23, 2011.Reconsideration Denied July 18, 2011.

Michael Stuart Fineman, Hunton & Williams, Matthew J. Calvert, Cherie A. Phears, Atlanta, for appellant.Fincher, Denmark & Williams, Steven Martin Fincher, Winston A. Denmark, Michael Joseph Williams, Jonesboro, Emilia Cassandra Walker, L'Erin Frances Barnes, Jonesboro, for appellee.ELLINGTON, Chief Judge.

In this declaratory judgment action pending in the Superior Court of Fulton County, the City of Atlanta and the City of College Park each claim the right to tax businesses that operate in the parts of the Hartsfield–Jackson Atlanta International Airport that lie within the city limits of College Park. After a hearing on the parties' cross-motions for partial summary judgment, the trial court determined that only College Park is authorized to levy, assess, and collect an occupation tax on businesses operating at the airport within its city limits. The trial court also determined that only College Park is authorized to impose and collect taxes on the sale, storage, and distribution of alcoholic beverages at the airport within its city limits. Accordingly, the trial court granted a declaratory judgment in favor of College Park on these issues. The trial court determined, however, that Atlanta is a local authority that is statutorily exempt from liability for any occupation tax for its proprietary business operations within College Park's city limits. Accordingly, the trial court granted a declaratory judgment in favor of Atlanta on this issue. In Case No. A10A2054, Atlanta appeals the trial court's rulings regarding College Park's authority to collect alcoholic beverage and occupation taxes on activities at the airport, and, in Case No. A10A2055, College Park cross-appeals the trial court's determination that Atlanta is exempt from any occupation tax for its proprietary activities. In Case No. A10A2054, for the reasons explained below, we affirm in part (see Division 1, infra) and vacate in part (see Division 3, infra). In Case No. A10A2055, we reverse in part (see Division 2, infra).¹

The following facts are undisputed. In 1969, College Park conveyed land to Atlanta, in connection with Atlanta's expansion of the airport, which it owns and operates. The cities agreed, in Section 18 of that contract, as follows:

With respect to any and all buildings and structures located or constructed on property of the Atlanta Airport, exclusive jurisdiction over the issuance of permits, the collection of license and occupation taxes and fees, the inspection of properties, the enforcement of building codes and fire codes, and all similar matters shall vest in the City of Atlanta. Personal property, inventory and leasehold interest in property lying within the corporate limits of the City of College Park and belonging to parties other than the City of Atlanta, however, shall be subject to reasonable ad valorem tax by the City of College Park, to the extent permitted by law.

Thereafter, Atlanta collected an occupation tax, which is a local tax on professional and business activities,² from the rental car companies and other businesses that operated on airport property located in College Park.

In 2007, College Park reviewed the issue of its authority to collect occupation and alcoholic beverage taxes and concluded that it is the sole proper authority to levy and collect these taxes within its city limits. College Park notified Atlanta that it intended to begin assessing and collecting an occupation tax from businesses operating at the airport in College Park, including from the City of Atlanta itself for revenues generated from its proprietary operations at the airport. After College Park notified a few of the affected businesses about the tax, Atlanta filed suit against College Park and its city manager in his official capacity, seeking a declaratory judgment, an injunction, and other relief.

On the issue of the occupation tax, Atlanta, in Count 1 of its complaint, as amended, asked the trial court to declare

that the 1969 Agreement controls the collection of occupation taxes from businesses operating in the portion of the Airport located within the corporate boundaries of College Park and that College Park's attempt to collect occupation taxes from these businesses constitutes a violation of the terms of the 1969 Agreement.³

In Count 1 of College Park's counterclaim, it asked the court to declare, instead, that it is “the proper authority for the assessment and collection of occupation taxes on businesses operating in the portion of the Airport located within the corporate limits of the City of College Park[,]” that portions of the 1969 Agreement are “illegal, unenforceable, of no current legal [e]ffect [,] and not binding upon the parties[,]” and that “Section 7–105(f) of the Charter for the City of Atlanta ⁴ ... is unconstitutional, illegal[,] and unenforceable.” In Count 3, College Park asked the court to declare that “Atlanta is subject to College Park's occupation tax on [Atlanta's] proprietary operations at the Airport that occur within the corporate limits of College Park.”

On the issue of alcoholic beverage taxes, College Park asked the court to declare, in Count 6 of its counterclaim, that it “is the sole legitimate authority for the levying and collection of all taxes related to the sale, storage, or distribution of alcoholic beverages in the portions of [the Airport] that are within the corporate limits of the City of College Park.”

On the issue of the occupation tax, the trial court determined that the 1969 Agreement is unenforceable to the extent it purports to authorize Atlanta to collect taxes outside of its territorial limits. In addition, the trial court concluded that Section 7–105(f) of Atlanta's charter is unconstitutional to the extent it purports to remove from College Park the authority to collect an occupation tax from businesses within its city limits but located on airport property. Based on these conclusions, the trial court declared that only College Park is authorized to levy, assess, and collect an occupation tax from businesses operating at the airport within its city limits. The trial court granted partial summary judgment in favor of College Park on Count 1 of its counterclaim and on Counts 1 and 4 of Atlanta's amended complaint, and denied Atlanta's corresponding motion for partial summary judgment. The trial court determined, however, that Atlanta is a “local authority” and, therefore, that it is statutorily exempt from liability to College Park for any occupation tax for its (Atlanta's) proprietary business operations. Accordingly, the trial court granted partial summary judgment in favor of Atlanta on Count 3 of College Park's counterclaim and denied College Park's motion for partial summary judgment on that issue.

On the issue of alcoholic beverage taxes, the trial court determined that only College Park is authorized to impose and collect taxes on the sale, storage, and distribution of alcoholic beverages at the airport within its city limits. The trial court granted partial summary judgment in favor of College Park on Count 6 of its counterclaim. The court ordered Atlanta to “refund amounts collected in error” for the years 2007 through 2010.⁵

1. Atlanta contends that the trial court erred in ruling that the 1969 Agreement is unenforceable and in ruling that only College Park is authorized to levy, assess, and collect an occupation tax from businesses operating at the airport within its city limits. We review the record de novo to determine whether the undisputed facts warrant summary judgment on this issue.⁶

(a) Under Georgia law, a municipal corporation can exercise the power of taxation only to the extent the power to do so is “plainly and unmistakably granted by the State[.]” (Citations omitted.) City of Atlanta v. Gower, 216 Ga. 368, 370, 116 S.E.2d 738 (1960). “[T]he burden is upon every political subdivision of the State which demands taxes from the people to show authority to exercise [the power of taxation] in the manner in which it has been imposed by a valid law of this State.” (Citations omitted.) Id. Georgia's Constitution specifies that, generally, such a grant of the power of taxation by a local government shall be by the “Constitution or by general law.” Ga. Const. of 1983, Art. IX, Sec. IV, Par. I(a).⁷ The General Assembly adopted such a general law regarding the so-called “occupation tax,” providing, in pertinent part, that

the governing authority of each municipal corporation is authorized but not required to provide by local ordinance or resolution for the levy, assessment, and collection of occupation tax on those businesses and practitioners of professions and occupations which have one or more locations or offices within the corporate limits [of the municipality].OCGA § 48–13–6(b).⁸ By its plain terms, OCGA § 48–13–6(b) authorizes a municipality to collect an occupation tax only on businesses and practitioners located within its city limits.

Despite this statutory language, Atlanta contends that it is authorized by the 1969 Agreement to collect an occupation tax on professional or business activities that are conducted at the airport even though the activities occur within College Park's city limits. A contract between municipalities, however, is not a general law. We find no basis for concluding that such a contract can vest the governing authority of a municipality with the power of extraterritorial taxation. See Ga. Const. of 1983, Art. IX, Sec. IV, Par. I(b)(2) (In the absence of a general law, a municipal governing authority may levy and collect taxes and fees only within the corporate limits of the municipality.).⁹ We conclude, therefore, that, to the extent the 1969 Agreement purported to vest in...