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SPLOST lawsuit a wash for Gainesville, Hall

Judge orders Hall to keep making payouts, city to pay back excess

POSTED: August 12, 2013 1:15 p.m.

After a nearly six-month legal fight, the city of Gainesville on Monday essentially won the right to get additional tax revenue payments from Hall County, only to turn around and pay it right back.

Gainesville sued Hall in February for about $5.3 million, asserting the county breached a 2008 agreement to pay the city accelerated special purpose local option sales tax payments for the first four years of a six-year period, with the city paying back any excess funds during the last two years.

The county stopped the 48 scheduled payments at 39 because the city had already received about 14.79 percent of the total SPLOST VI revenues, which came in lower than originally expected.

The contract was about time, not money, retired Superior Court Judge Frank Mills told city and county officials.

“You wanted it on a timely basis because it meant something to you at the time,” Mills said, directing his comments to city officials. Gainesville wanted more money up front to save on financing its $20.4 million public safety complex on Queen City Parkway.

“That’s fine with us,” City Attorney James “Bubba” Palmour said to the judge.

Mills said he would require the county to pay the full 48 months of collections at $593,750, enforcing part of the 2008 agreement. However, the county is also allowed to start billing the city for excess money it got during those years.

“Under the court’s theory or inclination, at the end of this six-year period, based on projections, assuming they are accurate, are we not basically going to be handing them a check which they’re going to hand back to us over the next 24 months?” county attorney Bill Blalock asked Mills near the end of the hearing.

“Yes,” Mills said. “I mean that’s the way I see it. That was what that whole agreement was about.”

Mills told the parties he would leave it to them to work out settlement details along the outline he gave the lawyers, such as a disputed July 2009 payment, interest and reallocation charges, but if they can’t draft a compromise in the next 10 days, he would dictate the terms.

“It’s a wash,” Blalock said of the hearing. “It’s like kissing your sister.”

In the original court complaint, the city said it was still owed more than $5 million and asked the court to rule Gainesville was not responsible for extra money the county pays to the city that’s not offset by tax collection revenue because of the accelerated payments. However, the city abandoned that argument during the hearing.

Court documents said the city had collected about $23.15 million in SPLOST VI revenue as of March 30, which is about 14.88 percent of $162 million.

SPLOST VI started in 2009 and runs until July 2015. It was originally projected to collect about $240 million, but the economic downturn caused the projection to decline in 2011 to $162 million and go down again in March to $157 million. Hall County has now estimated it will total between $152 million and $155 million.

If the estimate had stayed at $240 million, the city would have been owed about $35.5 million.

The county stopped Gainesville’s payments in October 2012, the court documents stated.

Other officials for both the city and the county declined to comment as they left the courthouse. The agreement to settle the case must be received by Mills at 3 p.m. Aug. 23.


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