Collins v. City of Dalton

• Decision Date: 13 September 1991
• Docket Number: Nos. S91A0638,S91X0639,s. S91A0638
• Citation: 408 S.E.2d 106,261 Ga. 584
• Parties: , Util. L. Rep. P 26,125 COLLINS v. CITY OF DALTON. CITY OF DALTON v. COLLINS.
• Court: Georgia Supreme Court

Page 106

408 S.E.2d 106

261 Ga. 584, Util. L. Rep. P 26,125

COLLINS v. CITY OF DALTON.

CITY OF DALTON v. COLLINS.

Nos. S91A0638, S91X0639.

Supreme Court of Georgia.

Sept. 13, 1991.

Reconsideration Denied Oct. 3, 1991.

Michael J. Bowers, Atty. Gen., Warren R. Calvert, Asst. Atty. Gen., Atlanta, for City of Dalton.

David B. Poythress, Chilivis & Grindler, Atlanta, Carlton C. McCamy, McCamy, Phillips, Tuggle, Rollins & Fordham, Dalton, Nickolas P. Chilivis, Chilivis & Grindler, Atlanta, for Collins.

John K. Larkins, Jr., Chilivis & Grindler, Atlanta.

WELTNER, Justice.

1. (a) In 1977, the City of Dalton issued revenue bonds, and used the proceeds to purchase ownership interests in power plants and other facilities that were located outside of Whitfield County. ¹ At that time, Art. 9, Sec. 8, Par. 1, of the Constitution of Georgia of 1976 provided, in part:

[I]f municipalities, counties or other political subdivisions shall purchase, construct, or operate ... electric or gas utility plants from the proceeds of ... revenue certificates, and extend their services beyond the limits of the county in which the municipality or political subdivision is located, then its services rendered and property located outside said county shall be subject to taxation ... as are privately owned and operated utilities.

(b) In 1984, the Georgia Department of Revenue first issued notices for ad valorem taxes for property located outside Whitfield County pursuant to Art. 9, Sec. 6, Para. 2, of the Constitution of Georgia of 1983, which provides:

Where revenue bonds are issued by any county, municipality, or other political subdivision of this state in order to buy, construct, extend, operate, or maintain gas or electric generating or distribution systems and necessary appurtenances thereof and the gas or electric generating or distribution system extends beyond the limits of the county in which the municipality or other political subdivision is located, then its services rendered and property located outside said county shall be subject to taxation and regulation in the same manner as are privately owned and operated utilities.

The city brought suit against the revenue commissioner ², challenging the proposed ad valorem taxation. The trial court granted the city's motion for summary judgment on the issue of the interpretation of this constitutional provision, and the commissioner appeals.

2. The substance of each constitutional provision is to limit, as to certain utilities operated by municipal corporations, the exemption from ad valorem taxes that ordinarily pertains to publicly-owned property.

(a) The 1976 constitution denied exemption to property located elsewhere than within the county of the municipal corporation operating the utility if facilities were purchased, constructed, or operated through the proceeds of revenue bonds and if services were extended beyond the limits of the county of the municipal corporation. In that event, the property outside the county would be taxed "as are privately owned and operated utilities."

(b) The 1983 constitution provides that where a "distribution system extends beyond the limits of the county ... its services rendered and property located outside said county shall be subject to taxation ... in the same manner as are privately owned and operated utilities." Thus the substance of the exemption as to the distribution of services remains unchanged. However, the 1983 constitution added a new condition for the exemption, in that "generating ... systems" (along with distribution systems) that extend beyond the county of the municipal corporation also are to be taxed as privately owned utilities.

3. In this appeal, it is undisputed that revenue bonds have been issued to purchase generating facilities that are located outside of the county, and that this took place before the ratification of the 1983 constitution. Hence, there are two issues: whether the 1983 provision applies only in cases of the issuance of revenue bonds after its effective date; and whether a tax exemption that is created by our constitution may be abolished by constitutional amendment.

4. (a) In Mundy v. Van Hoose, 104 Ga. 292, 297, 30 S.E. 783 (1898), we held:

Taxation ... is the rule, and exemption from taxation the exception.... Athens City Waterworks Co. v. Mayor, etc. of Athens, 74 Ga. 413 [1885]. And exemptions are made, not to favor the individual owners of property, but in the advancement of the interests of the whole people. Exemption, being the exception to the general rule, is not favored; but every exemption, to be valid, must be expressed in clear and unambiguous terms, and, when found to exist, the enactment by which it is given will not be enlarged by construction, but, on the contrary, will be strictly construed. [Id. at 297, 30 S.E. 783.]

(b)...