Voters Beware: Why Casting Your Ballot for Cityhood May Be a Vote for Eminent Domain or a Loss Of Property Right

By Christian F. Torgrimson

Georgia’s cityhood trend began with a 1993 Georgia statute establishing the minimum conditions necessary for a community to remain or become a municipality. In addition to performing at least three public services from a prescribed list, the municipality must hold at least six regular officially recorded public meetings each year and hold regular municipal elections. In metro Atlanta, the cityhood trend has thrived, leading to a surge of nearly 10 new cities across the beginning with Sandy Springs in 2005. It has been driven by several factors. Voters continue to want more for their tax dollars at a local level without higher tax bills. Many favor the idea of more localized control in government as they feel over-taxed and under-served by county governments that often are viewed as ineffective. By voting to incorporate and form a new city, they are rejecting the political leadership and withdrawing most of their resources from the county’s tax pool. The objective is to reprioritize and increase services to meet the needs of their constituencies, without raising taxes.For years a cityhood movement has been growing in Georgia as voters continue to support a unique trend of incorporating themselves into smaller cities in order to capture valuable resources and improve utilization of the tax base. With the General Assembly’s passing of Senate Bills 262 and 263 during this year’s legislative term, the new city of Eagle’s Landing became the latest. Come November, voters will decide whether they would like to be part of a new city, created from land taken in part from the almost 100-year old city of Stockbridge. The Eagle’s Landing Educational Research Committee said the group in favor of cityhood wants to establish a “tighter grip on services” in the area: additional police, a more responsive and updated zoning code to control development, and the addition of public use facilities such as a library and parks. While economic growth and redevelopment such as what is proposed at Eagle’s Landing are usually celebrated as signs of a healthy economy, many voters do not realize the potential downside when standing at the ballot box.

By a 94% pass rate, Sandy Springs voters decided overwhelmingly to incorporate after a 20-year effort wrought with legal challenges from those who opposed the move. As a core part of the redevelopment plan, Sandy Springs officials planned a new city center, comprised of a downtown area using administrative buildings and a police headquarters, as well as recreational areas such as parks, and corresponding roads and intersection improvements. However, the land needed for all these projects was owned by private property owners, requiring the use of eminent domain. Under this authority, the government has the power to expropriate or take and damage private property and interests for public use upon payment of compensation. Sandy Springs has exercised its authority to achieve its objective, acquiring or formally condemning acres of land, resulting in a loss of many of the area’s established, older businesses and a wholesale change to the area.

Other newly created cities have and are following suit, including John’s Creek (2006), Milton (2006), Chattahoochee Hills (2007), Dunwoody (2008), Brookhaven (2012), Peachtree Corners (2012), Stonecrest (2016), Tucker (2016), and South Fulton (2016). Other neighborhoods have attempted to gain entry to the ballot box: Greenhaven, LaVista, and Sharon Springs.

Along with the use of eminent domain, new zoning codes often are established to support these new cities, adding to the existing complexity of property ownership and use in these communities, and impacting a wide range of commercial and residential developments from permitting to signage to setbacks to certain types of commercial enterprises. These zoning codes seek to add a certain look or style to a downtown, pedestrian friendly area.

While existing businesses may be grandfathered in, others businesses may be restricted from coming to specific portions, leaving those businesses with few options. For example, Sandy Springs recently revised its zoning code to prohibit rental car companies from obtaining licenses to operate in certain zones.

While the cityhood movement has gone full speed ahead, a national tightening of eminent domain laws occurred, redefining the government’s ability to take private property after the U.S. Supreme Court’s widely unpopular decision in Kelo v. City of New London, 545 U.S. 469 (2005). This decision led to sweeping changes across the country, and Georgia responded quickly with reforms. At that time, 83 percent of Georgians sent a strong message to legislators that they were not in favor of the government seizing private property for city or downtown economic development projects involving private entities. Many Georgia laws were amended to provide a more robust process in favor of owners when governments take private property, leading to the Landowners Bill of Rights and Property Protection Act of 2006, O.C.G.A. §§ 22-1-9 through 22-1-14. The Act was passed to ensure good faith negotiations for compensation by requiring disclosure of information, prohibiting bad faith conduct, and inviting the owners to participate in the process, all part of an effort to avoid formal condemnation or litigation and ensure the payment of just and adequate compensation. Unfortunately, the broadening of property owner rights under the Landowners Bill of Rights did not translate fully to the process of acquiring and condemning property by all governing entities, whether city, county or the state. In October of 2017, the Georgia Supreme Court issued a direct decision in City of Marietta v. Summerour, 302 GA 645, 807 S.E.2d 324 (2017), upholding the Landowners Bill of Rights in full and applicable to all condemnation proceedings.

With the drive and excitement to incorporate, what many voters may not contemplate is that a vote for creating a municipality authorizes the new government to, and potentially increases, the exercise of that power against the very same voters. Impacted property owners often have no recourse to stop it. Although the use of eminent domain may bring much needed improvements and help vitalize the economy, it can create an unintended result of devastating individual interest in properties and businesses. Compensation in exchange for the use of eminent domain is intended to be based on fair market value. However, public funds are limited and often do not match true fair market value, leaving owners impacted by eminent domain without fair compensation.

A major point of opposition in these moves to incorporate – as with the Eagle’s Landing debate – is the question as to whether municipalities should be given the opportunity to remove portions of their current cities if they do not want them. What happens to those left behind – and worse, to those in the way? To start, less money in the pool requires them to raise taxes or provide fewer services. There is a perception that many of these new cities tend to leave poorer areas outside of their new boundaries, and yet the burden of paying for county-provided services steadily increases for those left behind in unincorporated areas.

Georgia Senate Bill 375 proposes write into law the process for incorporating new cities and new municipalities and require these groups to show their financial viability as well as the financial impact on unincorporated areas. The Bill – while passed by the Senate in 2016 – is still being considered by the House of Representatives. At the same time, there has been a resurgence this year in the Georgia Assembly of bills designed to foster economic growth through redevelopment. Old debates have been renewed because the economy and real estate market are back, and developers are active. But what does this mean for the local business owners who now face, again, the very real threat of governments taking property through eminent domain?

From an economic growth perspective, incorporating new cities unquestionably provides positive benefits to both taxpayers and businesses. However, in the rush to incorporate, voters should arm themselves with information about the short and long-term ramifications of doing so. The impact of new zoning codes, restrictions on development, and the property needs of the new government to affect its planning should all be considered carefully.

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Christian Torgrimson is a founding and managing partner of Pursley Friese Torgrimson in Atlanta. She has litigated eminent domain proceedings, private property disputes, and other real-estate-related matters for 19 years. She has extensive experience to all aspects of eminent domain proceedings brought by state, county and local governments throughout Georgia, representing a wide variety of owners and business operators, including shopping center owners, franchisors and franchisees, developers, and retail owners and operators.