Stormwater Utility Charges Are Fees, Not Taxes: Georgia Supreme Court Reaffirms Homewood I and Clarifies Takings Doctrine After Sheetz

Stormwater Utility Charges Are Fees, Not Taxes: Georgia Supreme Court Reaffirms Homewood I and Clarifies Takings Doctrine After Sheetz

Introduction

In Homewood Associates, Inc. et al. v. Unified Government of Athens-Clarke County, the Supreme Court of Georgia affirmed summary judgment for Athens-Clarke County (ACC), holding that ACC’s stormwater utility charge remains a fee—not a tax—thereby placing it outside Georgia’s constitutional taxation uniformity requirement. The Court also rejected Appellants’ takings claims under both the Georgia and federal constitutions and concluded the trial court properly applied the summary judgment standard. Chief Justice Peterson, joined by Justice Bethel, concurred to question the Court’s historical treatment of taxpayer protections and to suggest that even if stormwater charges were treated as taxes, they may be structured to satisfy the Constitution’s uniformity clause.

The dispute traces back to the Clean Water Act’s mandate that municipalities operating separate storm sewer systems (MS4s) obtain NPDES permits and implement programs to minimize pollutants in stormwater discharges. ACC adopted a stormwater management ordinance (June 2004) and a stormwater utility ordinance (December 2004) establishing a three-part user fee (base, quantity, and quality components), accompanied by credits for on-site stormwater controls and exemptions for public and private roads and sidewalks. After this Court’s 2013 decision in Homewood Village, LLC v. Unified Government of Athens-Clarke County (Homewood I) declared the ACC charge a fee, not a tax, Appellants (a collection of corporate and individual property owners) mounted a renewed state-court challenge, asserting the charge violates Georgia’s uniformity clause and the federal and Georgia Takings Clauses.

Summary of the Opinion

  • The stormwater utility charge is a fee, not a tax. Homewood I controls and will not be overruled. Consequently, Georgia’s taxation uniformity clause does not apply.
  • Appellants’ takings claims fail:
    • They did not brief a distinct state-constitutional takings analysis; the Court therefore analyzed only under the federal Takings Clause.
    • Under federal doctrine, user fees are not takings. The Court distinguished permit-exaction cases (Dolan, Koontz, Sheetz) and reaffirmed that taxes and user fees are not subject to per se takings analysis.
  • The trial court correctly applied the summary judgment standard and did not improperly resolve factual disputes or credit one side’s experts over the other.
  • Judgment affirmed.

Analysis

Precedents Cited and Their Influence

The Court’s disposition rests heavily on stare decisis, principally Homewood I (2013) and McLeod v. Columbia County (2004).

  • McLeod v. Columbia County, 278 Ga. 242 (2004): Upheld a stormwater fee structured on impervious surface area as a fee rather than a tax, defeating a uniformity challenge. This decision catalyzed local adoption of stormwater utilities statewide and provided the template for ACC’s ordinance.
  • Homewood I, 292 Ga. 514 (2013): Addressed this precise ACC ordinance. The Court determined that the charge is a user fee, not a tax, based on its structure (three-part fee tied to impervious area and pollutant load), credits for on-site controls, application only to developed properties, and a dedicated enterprise fund not tied to ad valorem taxation. The Court also held that charged properties receive a “special benefit” from the stormwater management services.
  • Stare decisis authorities:
    • Wasserman v. Franklin County (2025), Stephens v. State (2025), Fleming v. Rome (1908), Etkind v. Suarez (1999), Cooper Tire v. McCall (2021), Savage v. State (2015): Together, these decisions articulate that precedent is the default rule, should not be discarded absent clear error, and that reliance interests—particularly those affecting public finance—carry substantial weight.
  • Takings precedents:
    • Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013): Reaffirms that “taxes and user fees are not takings,” drawing a line between monetary exactions tied to permits and ordinary fees for services.
    • Sheetz v. County of El Dorado, 601 U.S. 267 (2024) and Dolan v. City of Tigard, 512 U.S. 374 (1994): Apply exactions scrutiny to monetary conditions attached to land-use permits. The Court explained these do not convert generally applicable service fees into takings.
    • Older “special assessment” cases (Norwood 1898; Myles Salt 1916) were distinguished because they addressed confiscatory special assessments not tethered to benefits—unlike the service-based fee here.
    • Tyler v. Hennepin County, 598 U.S. 631 (2023): Inapposite; it concerns the government’s retention of surplus equity from a tax sale, not the imposition of a user fee.
  • Procedural/standard-of-review authorities:
    • Rockdale County v. U.S. Enterprises, 312 Ga. 752 (2021): Presumption of constitutionality; challenger’s burden.
    • Morrell v. State, 318 Ga. 244 (2024): Absent distinct state-constitutional briefing, the Court analyzes only under federal analogs.

Legal Reasoning

1) Fee, not tax: stare decisis and special benefit

The Court framed the “dispositive issue” exactly as in Homewood I: Is ACC’s stormwater charge a fee or a tax? Because Appellants mounted a facial challenge to the identical ordinance and allege no material change since 2013, Homewood I controlled. The Court emphasized:

  • The charge funds a utility program compelled by federal law (NPDES compliance) and directed to specific services (pollution reduction, flood mitigation) that benefit the payors’ properties.
  • The amount is calibrated through:
    • A base fee to cover administrative costs;
    • A quantity fee keyed to impervious area and land-use (a proxy for runoff volume);
    • A quality fee keyed to pollutant load potential (reflecting treatment burden); and
    • Credits for on-site controls (recognizing avoided public costs).
  • Developed properties pay; undeveloped properties (which absorb runoff) are not charged; and roads/sidewalks are exempted by ordinance.
  • Dedicated enterprise accounting and capital reserves confine the funds to stormwater services.

Appellants tried to re-litigate “special benefit” as a factual matter, claiming new record evidence. The Court rejected that approach: Homewood I determined the fee structure confers special benefit as a matter of law for this ordinance. Because the ordinance is unchanged, that determination bound the Court and the trial court, regardless of evidentiary skirmishes presented in this record.

2) Stare decisis: No “clear wrong,” strong reliance

Even if some Justices harbored doubts about Homewood I’s analysis, the Court found no basis to overrule it. The legal landscape is unchanged, and ACC structured its funding in reliance on McLeod and Homewood I. Overruling would disrupt settled municipal finance arrangements. The decision underscores that precedent—particularly when it impacts public finance mechanisms—should be retained unless clearly erroneous.

3) Takings: User fees are not takings; Sheetz does not require parcel-by-parcel tailoring

The Court first held Appellants forfeited any distinct Georgia constitutional takings theory by failing to brief a separate analysis. Proceeding under federal doctrine, the Court reiterated that ordinary taxes and user fees are not takings (Koontz). It rejected Appellants’ argument that the absence of a wholly “voluntary” decision to receive services transforms the fee into a taking. Nor did Sheetz or Dolan apply; those cases govern permit conditions and exactions, not generally applicable utility charges. Sheetz expressly left open whether class-based schedules require individualized valuation, and the Court declined to extend exactions scrutiny here.

4) Summary judgment: No improper fact-finding

The Court carefully parsed the trial court’s order. It found no factual determination that undeveloped properties never generate runoff or that roadway contributions were “offset”—the trial court’s statements merely recognized standard stormwater engineering realities and system design. On “special benefit,” the trial court appropriately treated the matter as already resolved by Homewood I. The trial court’s references to expert disputes did not amount to credibility findings; it expressly stated it did not rely on ACC’s expert to grant summary judgment to the County.

Impact

1) For Georgia local governments

  • Legally durable financing: This decision confirms that stormwater utility charges structured like ACC’s remain stable user fees, not taxes, consistent with McLeod and Homewood I.
  • Post-Sheetz comfort: The Court cabined Sheetz to permit-exaction contexts, signaling that generally applicable class-based utility fees need not meet parcel-specific proportionality tests.
  • Program design guidance:
    • Maintain service-based calibration (impervious area, pollutant potential, land-use categories).
    • Offer credits for on-site controls to reflect avoided public costs and reinforce the fee’s service nexus.
    • Keep revenues in enterprise funds dedicated to stormwater services, including capital reserves for repair, replacement, and compliance.

2) For property owners challenging stormwater fees

  • Re-litigation barrier: When an ordinance has already been upheld as a fee, special benefit and fee status may be treated as legal conclusions under stare decisis absent changes to the ordinance.
  • Takings pathway narrowed: General user fees are unlikely to be takings. To invoke exactions scrutiny, a challenger would need a permit condition setting or similar coercive land-use context.
  • State-constitutional claims must be distinct: Litigants must fully brief why the Georgia Takings Clause diverges from federal doctrine; otherwise, the Court will apply federal analysis only.

3) The concurrence’s warning and roadmap

Chief Justice Peterson’s concurrence suggests a potential future shift in the fee-versus-tax boundary and encourages governments to craft stormwater charges that would satisfy the uniformity clause even if classified as taxes. He highlights:

  • Historic inconsistencies in Georgia’s fee/assessment jurisprudence and its interplay with uniformity.
  • The viability of classification schemes analogous to occupation-tax precedents—where reasonable, non-arbitrary subclassifications are allowed—while cautioning that exemptions may be problematic.
  • Particular scrutiny on exemptions for private roads and sidewalks; if developed properties are charged because they create runoff, exempting private roadways may lack a reasonable basis under uniformity principles.

The message to municipalities is clear: even though stormwater charges are presently secure as fees, future courts could revisit the taxonomy; structuring ordinances so they would also withstand uniformity scrutiny provides an added layer of constitutional resilience.

Complex Concepts Simplified

  • User fee vs. tax: A user fee is charged in exchange for a service, calibrated to the cost of providing that service to the payer (e.g., based on impervious area and pollutant load). A tax funds general public purposes and is subject to constitutional constraints like uniformity.
  • Special benefit: A benefit that accrues to the properties paying the fee (e.g., reduced flooding risk, compliance-driven water quality controls addressing runoff those properties generate). Homewood I treated the existence of special benefit as a legal conclusion for ACC’s ordinance.
  • Uniformity clause (Ga. Const. Art. VII, Sec. I, Par. III(a)): Requires that, barring specific exceptions, all taxation be uniform upon the same class of subjects within the jurisdiction. This clause generally does not apply to user fees.
  • NPDES permit: A federal permit under the Clean Water Act requiring municipalities with separate storm sewer systems to implement controls and best practices to reduce pollutant discharges to the “maximum extent practicable.”
  • Exactions vs. fees: Exactions (e.g., permit conditions that require money or land) are scrutinized under Nollan/Dolan/Koontz/Sheetz. Ordinary user fees for services are not analyzed as takings.
  • Stare decisis: The doctrine that courts should follow their prior decisions unless there is compelling reason to overturn them. Reliance interests and legal stability are key considerations.
  • Enterprise fund: An accounting mechanism that segregates revenue and expenditures for a specific utility or service to ensure funds are used only for that program.

Conclusion

The Supreme Court of Georgia’s decision in Homewood Associates underscores three durable propositions. First, longstanding precedent—specifically McLeod and Homewood I—continues to control the fee-versus-tax characterization of stormwater utility charges structured around service-related metrics and credits. Second, under federal takings doctrine, taxes and user fees are not takings; Sheetz does not convert generally applicable utility charges into exactions requiring parcel-specific proportionality. Third, as a matter of appellate process, litigants seeking distinct state constitutional analyses must distinctly brief them, or the Court will default to federal analogs.

The concurrence offers a forward-looking caution: Georgia’s historical carve-outs separating fees and assessments from the uniformity clause are not analytically tidy, and a future re-examination is possible. Municipalities can mitigate risk by designing stormwater financing mechanisms that would pass uniformity muster even if classified as taxes—most notably by ensuring that any exemptions are well-justified and not arbitrary, with particular attention to the treatment of private roads and sidewalks.

For now, Georgia’s municipalities may rely on this decision to maintain stormwater utility programs as fee-based enterprises aligned with federal Clean Water Act compliance and local infrastructure needs. For property owners, the path to successful challenges narrows to demonstrating material changes in ordinance design or mounting a fully developed state constitutional argument that persuasively diverges from federal takings law.

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