The city of Gainesville is suing Hall County over millions of dollars in special purpose local option sales tax payments that Mayor Danny Dunagan said the county owes the city.
The civil suit asserting breach of contract was filed in Hall County Superior Court on Tuesday. The dispute is over the interpretation of a 2008 intergovernmental agreement between the city and the county that spelled out the percentage of SPLOST VI revenues the city would receive and how it would be paid out.
The county said in a January letter to the city that unless SPLOST VI collections significantly increase, the city has gotten what it was entitled to.
Last week, City Council members and City Manager Kip Padgett said they were evaluating the letter and their position.
“The agreement was that they would pay us for four years $7.1 million a year,” Dunagan said Tuesday after the City Council meeting. “We were to pay them interest on that money over and above what normal collections would have been and they did not meet their obligation.”
SPLOST VI started in July 2009 and runs until June 2015. It was expected to collect about $240 million in revenue, but that was revised downward to a projected $162 million. The agreement said Hall County would give $7.125 million a year to Gainesville in monthly installments of almost $600,000. The payments were to continue for four years.
The payouts were accelerated to allow the city to save money on financing its $20.4 million public safety complex on Queen City Parkway that opened in 2010.
Gainesville would be entitled to 14.79 percent “of total SPLOST collections,” and the agreement was signed by then-mayor and current Councilwoman Myrtle Figueras.
Hall County Administrator Randy Knighton said it’s the county’s practice not to comment on active litigation. But in a memo dated Jan. 16, County Attorney Bill Blalock said it was “obvious” that Gainesville has “collected or substantially collected” the percentage of SPLOST revenue spelled out in the agreement.
Melody Marlowe, Gainesville administrative services director, said last week that the city has collected about $23.15 million in SPLOST VI revenue, which is about 14.29 percent of $162 million. If the estimate had stayed at $240 million, the city would have been owed about $35.5 million. However, the city still owes $6 million on the complex.
“Since the city has presently received what is estimated to be its total SPLOST proceeds, there will be no basis for continued SPLOST payments during the next thirty-two months remaining in the SPLOST VI collection period,” Blalock wrote.
Gainesville City Council members disagree.
“They agreed to pay us four years of installments, and they did not meet their obligation the last year,” Dunagan said.
City Attorney Bubba Palmour said he would imagine all the Hall County Superior Court judges will disqualify themselves from the suit and would ask for a senior judge or a judge from another circuit to hear the case.
Palmour will represent the city.
During Tuesday evening’s City Council meeting, the members voted to deny a rezoning request to convert a single-family home to a commercial office near the Riverside Commons neighborhood, one of the city’s oldest neighborhoods. All members voted to deny.