(Civil Code 1895, § 743; Civil Code 1910, § 892; Code 1933, § 69-202; Ga. L. 1979, p. 521, § 1; Ga. L. 1982, p. 2107, § 36; Ga. L. 1986, p. 841, § 1; Ga. L. 1987, p. 3, § 36; Ga. L. 1987, p. 175, § 1; Ga. L. 1987, p. 275, § 1; Ga. L. 1989, p. 1287, § 1; Ga. L. 1990, p. 286, § 1; Ga. L. 1991, p. 989, § 1; Ga. L. 1998, p. 1113, § 2; Ga. L. 2019, p. 605, § 2/SB 95.)
The 2019 amendment, effective July 1, 2019, rewrote paragraph (d)(1), which read: "No such contract shall be for a term in excess of ten years;".
Cross references.- Constitutional provisions placing limitations on debt which may be incurred by a county, municipality, or political subdivision, Ga. Const. 1983, Art. IX, Sec. V, Para. I.
Code Commission notes.- Pursuant to Code Section 28-9-5, in 1986, "United States" was substituted for "United State" in subsection (c).
Law reviews.- For article, "Local Government and Contracts that Bind," see 3 Ga. L. Rev. 546 (1969). For article, "Binding Contracts in Georgia Local Government Law: Recent Perspectives," see 11 Ga. St. B. J. 148 (1975). For article discussing the origin and construction of Georgia statute concerning the authority of a council to bind its successors, see 14 Ga. L. Rev. 239 (1980). For annual survey of local government law, see 38 Mercer L. Rev. 289 (1986). For article, "Binding Contracts in Georgia Local Government Law: Configurations of Codification," see 24 Ga. L. Rev. 95 (1989). For article, "The Georgia Supreme Court and Local Government Law: Two Sheets to the Wind," see 16 Ga. St. U. L. Rev. 361 (1999). For article, "Local Government Litigation: Some Pivotal Principles," see 55 Mercer L. Rev. 1 (2003). For annual survey of local government law, see 56 Mercer L. Rev. 351 (2004). For annual survey of local government law, see 57 Mercer L. Rev. 289 (2005). For survey article on local government law, see 60 Mercer L. Rev. 263 (2008). For annual survey on local government law, see 64 Mercer L. Rev. 213 (2012). For survey article on local government law, see 67 Mercer L. Rev. 147 (2015). For note on 1990 amendment of this Code section, see 7 Ga. St. U. L. Rev. 324 (1990).
JUDICIAL DECISIONSANALYSIS
General Consideration
Origin of section.
- This statute is not of statutory origin, and is not peculiar to Georgia. The statute is a codification of a principle which is applicable generally to legislative or governmental bodies. Aven v. Steiner Cancer Hosp., 189 Ga. 126, 5 S.E.2d 356 (1939).
Legislative intent.
- Framers of this section intended to preserve for municipal governments freedom from ordinances which bind and prevent free legislation in matters such as operating budgets. Brown v. City of E. Point, 152 Ga. App. 801, 264 S.E.2d 267 (1979), aff'd, 246 Ga. 144, 268 S.E.2d 912 (1980).
Standing of citizen-taxpayer.
- Absent expenditures of public revenue or performance of a duty owed to the public, a citizen-taxpayer has no standing in equity to challenge a council's action which allegedly binds future councils unless the citizen has special damages not shared by the general public. Juhan v. City of Lawrenceville, 251 Ga. 369, 306 S.E.2d 251 (1983).
Power to contract for future.
- All legislative bodies are limited in their legal capacity in such a manner as not to deprive succeeding bodies of the right to deal with matters involving the same questions as may arise from time to time in the future, and as the then present exigencies may require. But a municipal corporation may make a valid contract to continue for a reasonable time beyond the official term of the officers entering into the contract for the municipality. Horkan v. City of Moultrie, 136 Ga. 561, 71 S.E. 785 (1911).
No power to cede away governmental powers.
- Powers are conferred upon municipal corporations for public purposes, and as their legislative powers cannot be delegated, so they cannot be bargained or bartered away. Such corporations may make authorized contracts, but they have no power, as a party, to make contracts or pass bylaws which shall cede away, control, or embarrass their legislative or governmental powers, or which shall disable them from performing their public duties. Horkan v. City of Moultrie, 136 Ga. 561, 71 S.E. 785 (1911).
Effect of section.
- This section prohibits, as ultra vires, the enactment of ordinances or the execution of contracts which are effective beyond the term of the commissioners then in office. Ledbetter Bros. v. Floyd County, 237 Ga. 22, 226 S.E.2d 730 (1976).
Contract which restricts governmental or legislative functions of a city council has been traditionally held to be a nullity, ultra vires, and void even though it may present a trap for the unwary in dealing with municipal corporations; the municipality would not be estopped from asserting the invalidity of such a contract at any time. Brown v. City of East Point, 246 Ga. 144, 268 S.E.2d 912 (1980).
Action void as ultra vires.
- Settlement agreement entered into by a county and the county's board of commissioners was void as an ultra vires act because it purported to forever bind the hands of future boards of commissioners regarding land use and zoning decisions for certain property. Buckhorn Ventures, LLC v. Forsyth County, 262 Ga. App. 299, 585 S.E.2d 229 (2003).
Applicability to counties.
- Principle stated in O.C.G.A. § 36-30-3 applies to counties as well as to municipalities. Madden v. Bellew, 260 Ga. 530, 397 S.E.2d 687 (1990).
When power to grant franchises stems from Ga. L. 1976, p. 188, § 1 (see now O.C.G.A. § 36-34-2(7)), there was no violation of former Code 1933, § 69-202 (see now O.C.G.A. § 36-30-3). City of Lithonia v. Georgia Pub. Serv. Comm'n, 238 Ga. 339, 232 S.E.2d 832 (1977).
Section applicable to governmental, not proprietary functions.
- This section does not apply to a situation where a political subdivision is operating in a proprietary rather than a governmental capacity. Southern Airways Co. v. DeKalb County, 102 Ga. App. 850, 118 S.E.2d 234 (1960).
While long-term commitments which could be characterized as proprietary have been permitted, attempts at binding arrangements with respect to governmental functions have been prohibited. Brown v. City of E. Point, 152 Ga. App. 801, 264 S.E.2d 267 (1979), aff'd, 246 Ga. 144, 268 S.E.2d 912 (1980).
Rules of procedure passed by one legislative body are not binding upon subsequent legislative bodies operating within same jurisdiction; no legislative body can divest that body's successor of its legislative powers by passing ordinances or resolutions which deprive their successor of the power to exercise fully their legislative discretion, and each legislative body, when it meets, and unless restrained by the authority which created it, is without rules of procedure, and has inherent power to make its own rules without reference to the action of preceding bodies. South Ga. Power Co. v. Baumann, 169 Ga. 649, 151 S.E. 513 (1929).
Applicability to authorities.
- This section does not prohibit authorities, as distinguished from municipalities, from entering long-term contracts: there is no basis for the assertion that it applies to authorities. City of Jonesboro v. Clayton County Water Auth., 136 Ga. App. 768, 222 S.E.2d 76 (1975).
Dismissal of a probationer's claims, seeking to invalidate the service contract between the state court and the private company that contracted to supervise the court's probationers and for money had and received, was proper due to failure to state a claim because there was no challenge to the alternative ground that the district court had relied on. Keen v. Judicial Alternatives of Ga., Inc., F.3d (11th Cir. Dec. 17, 2015), cert. denied, 137 S. Ct. 55, 196 L. Ed. 2d 30 (U.S. 2016)(Unpublished).
If this section is too rigidly applied, there would be few contracts which municipalities could legally enter into, since contracts, by definition, must be binding, and many of the contracts, to be practical and effective, must extend beyond the existing councils' terms because of the nature of their subject matter. Jonesboro Area Athletic Ass'n v. Dickson, 227 Ga. 513, 181 S.E.2d 852 (1971).
One municipal council may not by ordinance bind itself or the council's successors so as to prevent free legislation in matters of municipal government. Aven v. Steiner Cancer Hosp., 189 Ga. 126, 5 S.E.2d 356 (1939); Lawson v. City of Moultrie, 194 Ga. 699, 22 S.E.2d 592 (1942).
What cannot be done by an ordinance cannot be done by a contract. Screws v. City of Atlanta, 189 Ga. 839, 8 S.E.2d 16 (1940).
Ratification of contracts by subsequent council.
- Future council may be bound by the terms of a contract if that council either approves the terms of the contract or ratifies the contract. Brown v. City of E. Point, 246 Ga. 144, 268 S.E.2d 912 (1980).
Duration of contracts.
- Municipal corporation may make a valid contract to continue for a reasonable time beyond the official term of the officers entering into the contract for the municipality. Jonesboro Area Athletic Ass'n v. Dickson, 227 Ga. 513, 181 S.E.2d 852 (1971).
O.C.G.A. § 36-30-3(a) does not prevent a contract from extending beyond the term of the commission in office at the time of the contract's execution. Unified Gov't v. North, 250 Ga. App. 432, 551 S.E.2d 798 (2001).
While a municipality is not estopped to deny the validity of a contract wholly beyond the municipality's powers, the municipality may be estopped by the exercise of contractual powers legally vested in the municipality, and even by the exercise of governmental powers, to prevent manifest injustice and wrongs to private persons, where the restraint placed upon a municipality to accomplish that purpose does not interfere with the exercise of governmental powers of the municipality. Brown v. City of E. Point, 246 Ga. 144, 268 S.E.2d 912 (1980).
Post-retirement benefits of Community Service Board's Executive Director not gratuities.
- After the community service board filed a declaratory judgment action against the board's former executive director, contending that the director's contract violated public policy and that the director was not entitled to payment and benefits for various reasons, and the director counterclaimed against the board, the trial court did not err in ruling in favor of the director because the board's broad powers encompassed all of the benefits paid to the director, and it did not show that any of the director's benefits fell outside of the provisions of the enabling legislation; the director was entitled to payment for any compensation related to performance already rendered; and the director's post-retirement benefits were not gratuities. Gateway Cmty. Serv. Bd. v. Bonati, 346 Ga. App. 653, 816 S.E.2d 743 (2018).
Cited in DeJarnette v. Hospital Auth., 195 Ga. 189, 23 S.E.2d 716 (1942); Mayor of Waynesboro v. McDowell, 213 Ga. 407, 99 S.E.2d 92 (1957); Smith v. Hayes, 217 Ga. 94, 121 S.E.2d 113 (1961); Glendale Estates, Inc. v. Mayor of Americus, 222 Ga. 610, 151 S.E.2d 142 (1966); McElmurray v. Richmond County, 223 Ga. 47, 153 S.E.2d 427 (1967); Housing Auth. v. Mercer, 123 Ga. App. 38, 179 S.E.2d 275 (1970); Pittman v. City of Jesup, 232 Ga. 635, 208 S.E.2d 456 (1974); Frazer v. City of Albany, 245 Ga. 399, 265 S.E.2d 581 (1980); Wilson v. Southerland, 258 Ga. 479, 371 S.E.2d 382 (1988); CSX Transp., Inc. v. City of Garden City, 196 F. Supp. 2d 1288 (S.D. Ga. 2002); Marlowe v. Colquitt County, 278 Ga. App. 184, 628 S.E.2d 622 (2006); CSX Transp., Inc. v. City of Garden City, 418 F. Supp. 2d 1366 (S.D. Ga. 2006); Sherman v. Dev. Auth., 320 Ga. App. 689, 740 S.E.2d 663 (2013).
Street Overpasses and Railroad Underpasses
Subsection (b) inapplicable to easement involving grade crossing.
- Subsection (b) of O.C.G.A. § 36-30-3, which speaks specifically of "the ownership, maintenance, construction, or reconstruction of street overpasses and underpasses of railroad properties," is inapplicable to an easement involving grade crossings. Chatham County Comm'rs v. Seaboard C.L.R.R., 169 Ga. App. 607, 314 S.E.2d 449 (1984).
Specific Contracts
Contracts made by virtue of express authority granted in the city charter are outside this prohibition. Brown v. City of E. Point, 246 Ga. 144, 268 S.E.2d 912 (1980).
Employment contracts.
- Provisions of county's personnel handbook regarding merit salary increases for employees could not bind the board of commissioners to approve the funding of future increases. International Bhd. of Police Officers Local 471 v. Chatham County, 232 Ga. App. 507, 502 S.E.2d 341 (1998).
Judgment in favor of former employee was reversed because the contract was renewed automatically and the severance package required the city to pay the employee the employee's salary and benefits for an entire year after the year in which the contract was terminated; as such, the contract was ultra vires and void under O.C.G.A. § 36-30-3(a). City of McDonough v. Campbell, 289 Ga. 216, 710 S.E.2d 537 (2011).
Ordinance providing severance pay for retiring city employees fell into express authority exception to O.C.G.A. § 36-30-3 in view of charter provisions conferring broad authority upon the city to establish a pension system upon such terms and conditions as the mayor and council deemed proper. City of Athens v. McGahee, 178 Ga. App. 76, 341 S.E.2d 855 (1986).
O.C.G.A. § 36-30-3 does not apply to construction contracts, which typically extend beyond the term of the officer entering into the contract for the municipality. City of Atlanta v. Brinderson Corp., 799 F.2d 1541 (11th Cir. 1986).
Construction of county buildings.
- Agreements authorized by the County Building Authority Act, in regard to the acquisition and construction of certain county buildings, were not in violation of O.C.G.A. § 36-30-3, for the necessary authority of the county and the building authority to enter into contracts for up to 50 years was contained in the intergovernmental contracts provision (Ga. Const., 1983, Art. IX, Sec. III, Para. I). Building Auth. v. State, 253 Ga. 242, 321 S.E.2d 97 (1984).
Construction of roads.
- O.C.G.A. § 36-30-3(a) did not prevent a unified government's liability on a contract with a developer to build a road diverting traffic from a water treatment plant away from the developer's subdivision after the road was not completed on time. Unified Gov't v. North, 250 Ga. App. 432, 551 S.E.2d 798 (2001).
Agreement to construct and maintain parking area and sidewalk.
- Agreement entered in 1954 between a city and an apartment owner for the construction of a parking lot and sidewalk to relieve traffic congestion was not subject to O.C.G.A. § 36-30-3(a)'s prohibition against binding successor councils because the construction and maintenance of the sidewalk and parking area were in the nature of a government's proprietary functions. Unified Gov't of Athens-Clarke Co. v. Stiles Apts., 295 Ga. 829, 764 S.E.2d 403 (2014).
Contracts limiting governmental powers.
- Restriction against one council binding itself or a successor also applies to contracts which limit a municipality's legislative or governmental powers. City of Jonesboro v. Clayton County Water Auth., 136 Ga. App. 768, 222 S.E.2d 76 (1975).
Provisions of Ga. L. 1937, p. 761, § 1 et seq. (see now O.C.G.A. § 36-82-60 et seq.), do not render meaningless the mandate of former Code 1933, § 69-202 (see now O.C.G.A. § 36-30-3). The express statutory authority for a municipality to contract with the bond holders as to specified future utility rates does not extend to contracts with the wholesaler of electrical power. Johnson v. State, 107 Ga. App. 16, 128 S.E.2d 651 (1962).
Each case must stand on the case's own peculiar factual situation. Jonesboro Area Athletic Ass'n v. Dickson, 227 Ga. 513, 181 S.E.2d 852 (1971).
This section does not prohibit a contract that will be completed within the term of the commissioners, even though the depreciable life of the property contracted for extends beyond the term of the commissioners. Ledbetter Bros. v. Floyd County, 237 Ga. 22, 226 S.E.2d 730 (1976).
Option to purchase land.
- Lease by city of parcel of land accompanied by ten-year option to purchase land at a fixed price did not bind council or the council's successors so as to prevent free legislation in matters of municipal government. Silver v. City of Rossville, 253 Ga. 13, 315 S.E.2d 898 (1984).
Lease of land for hospital.
- Lease of land owned by the city for a rental or consideration to the city in the form of medical and surgical treatment to be furnished to the poor by the lessee corporation would have the effect of preventing free legislation in a matter of municipal government and for this reason would be illegal and void. Aven v. Steiner Cancer Hosp., 189 Ga. 126, 5 S.E.2d 356 (1939).
Lease of property to airport.
- When a county through the county's proper authority leases property which the county owns for use as an airport, the county is engaging in a proprietary and not a governmental function. Southern Airways Co. v. DeKalb County, 102 Ga. App. 850, 118 S.E.2d 234 (1960).
Furnishing water to lessee.
- When a municipality leases certain property for a term of 25 years, a provision of such contract obligating the city to supply the leased premises with water free of charge during the term of the lease is ultra vires and void. Screws v. City of Atlanta, 189 Ga. 839, 8 S.E.2d 16 (1940).
Furnishing water and sewage facilities to airport.
- Provision in a contract requiring a county to furnish water and sewage facilities to airport leased to private party without charge during 15 years, to begin at an undetermined future date, is invalid. Southern Airways Co. v. DeKalb County, 102 Ga. App. 850, 118 S.E.2d 234 (1960).
Municipality's agreement to provide access to sewer system does not impair governmental function and therefore is not subject to subsection (a) of O.C.G.A. § 36-30-3, which prohibits a council from binding itself or others so as to prevent free legislation in matters of municipal government. City of Powder Springs v. WMM Properties, Inc., 253 Ga. 753, 325 S.E.2d 155 (1985).
Franchise granted by a city council to a public service corporation, under the charter powers of the city, constitutes a binding contract, and as such is not violative of this section. City of Summerville v. Georgia Power Co., 205 Ga. 843, 55 S.E.2d 540 (1949).
Rezoning is legislative in nature and one county commission cannot deprive or restrict a succeeding commission in the exercise of the commission's legislative power by the device of entering into a contract or agreement purporting to limit the authority of the county commission to legislate in this regard. Barton v. Atkinson, 228 Ga. 733, 187 S.E.2d 835 (1972).
Use of bond funds.
- County commission cannot limit the commission's successors in the exercise of legislative power by ordinance or by contract; however, this principle has no application to the legitimate use of bond funds for an authorized public purpose. Lindsey v. Guhl, 237 Ga. 567, 229 S.E.2d 354 (1976).
Holding title on easement to land.
- There is no inhibition against the acquisition by a municipality of title to or of an easement in land to be held in perpetuity for the public use such as streets, alleys, sidewalks, parks, water and sewerage systems, cemeteries, and the like. The power was recognized as inherent at common law and is generally provided specifically or in the general welfare provisions of the municipality's charter, for without it a municipality could not effectively function. City of Douglas v. Cartrett, 109 Ga. App. 683, 137 S.E.2d 358 (1964).
Municipal corporation acts in proprietary rather than governmental capacity in operating an electric distribution system.
- Restriction placed upon municipal corporations by this section relates only to its governmental functions. Therefore, there is generally no objection to a contract by a municipal corporation for a supply of electrical power which extends beyond the term of office of the officers making the contract. The only restriction is that it must be reasonable in length of time for which it is to extend. Johnson v. State, 107 Ga. App. 16, 128 S.E.2d 651 (1962).
Agreement to accept payment in lieu of ad valorem taxes void.
- Any agreement reached by plaintiff city that it would accept a reasonable annual amount from defendant in lieu of ad valorem taxes was void as an ultra vires act because the effect of the agreement would be to bind successive city commissions indefinitely. Georgia Presbyterian Homes, Inc. v. City of Decatur, 165 Ga. App. 395, 299 S.E.2d 900, aff'd, 251 Ga. 290, 304 S.E.2d 908 (1983).
No agreement as to schedule of payments to city.
- When a contract is fully executed by a city and the only remaining obligations are payments owed to the city by the other party to the contract, but there is no agreement as to the annual sum to be paid beyond a certain year, no contract exists; the fact that the other party expects to pay some amount to be agreed upon, and does pay a certain amount annually for several years, does not show an agreement by it to pay, or by the city to accept, that amount. City of Decatur v. Georgia Presbyterian Homes, Inc., 251 Ga. 290, 304 S.E.2d 908 (1983).
Power of a municipality to fix and regulate water rates is a legislative or governmental power and falls within the limitation placed upon councils of municipalities by this section. Screws v. City of Atlanta, 189 Ga. 839, 8 S.E.2d 16 (1940); City of Warm Springs v. Bulloch, 212 Ga. 149, 91 S.E.2d 13 (1956); Johnson v. State, 107 Ga. App. 16, 128 S.E.2d 651 (1962).
Contract for exemption from sewer assessments.
- Under the provisions of this section, a contract made by a municipality with property owners, to exempt the owners from future sewer assessments, is ultra vires, even though upon faith of the agreement the property owners conveyed rights of way to the city and the city accepted and entered upon the contract. Accordingly, a subsequent council of the municipality is not prevented from levying and enforcing proper sewer assessments against such property owners. J.S.H. Co. v. City of Atlanta, 193 Ga. 1, 17 S.E.2d 55 (1941).
An agreement whereby the city would aid plaintiff in collecting a "tap-on" fee to sewer and water mains constructed by plaintiff and hooked to the city lines would attempt to bind governing authorities and would therefore be illegal. Simmons v. City of Clarkesville, 234 Ga. 530, 216 S.E.2d 826 (1975).
Easement for effluent line.
- Collateral agreements in the grant of an easement to a municipality for the purpose of constructing and maintaining an effluent line which relate to the manner of the line's maintenance cannot be effective beyond the term of the mayor and council accepting the easement and making the agreements, and beyond that time are void. City of Douglas v. Cartrett, 109 Ga. App. 683, 137 S.E.2d 358 (1964).
Contract for placement of bus stop benches.
- Pretermitting the applicability of O.C.G.A. § 36-30-3(a) to counties, the subsection would not invalidate a county's contract with a company for the placement of bus benches at transit system stops. Board of Comm'rs v. Chatham Advertisers, 258 Ga. 498, 371 S.E.2d 850 (1988).
Employee pay raises.
- County employees could not establish a promissory estoppel claim that the county could not promise mandatory annual four percent pay raises. Johnson v. Fulton County, 235 Ga. App. 277, 509 S.E.2d 355 (1998).
City not bound by county's issuance of fifteen year alcohol license.
- Although a nude dancing business had entered into a 15-year contract with the newly-incorporated city's predecessor (the county) for an alcohol license, the city was not bound by the county's agreement pursuant to O.C.G.A. § 36-30-3(a). Trop, Inc. v. City of Brookhaven, 296 Ga. 85, 764 S.E.2d 398 (2014).
OPINIONS OF THE ATTORNEY GENERALActs which a city cannot do by an ordinance cannot be done by a contract. 1965-66 Op. Att'y Gen. No. 65-42.
Contract restricting governmental powers.- While a contract can be entered into which extends beyond the terms of office of a mayor and council members, the fact must be noted that a municipal corporation has no power to make contracts restricting or limiting the municipality's legislative or governmental powers, and a contract which restricts the legislative and governmental powers of future councils is ultra vires and void. 1965-66 Op. Att'y Gen. No. 65-42.
Water supply contract.- Municipalities may enter into a valid and binding contract to provide a system of water supply mutual to all for a period not to exceed 50 years; further, municipalities may not bind themselves by any agreement respecting the sewage system or regulation of the rates of water or sewage, for a period longer than the life of the present council. 1952-53 Op. Att'y Gen. p. 126.
Fixing of water rates is a legislative and governmental power, and one council may not, by contract or ordinance, deprive succeeding councils of this legislative or governmental power; the prohibition extends to counties as well as municipalities. 1969 Op. Att'y Gen. No. 69-336.
Waste water treatment services contracts.
- O.C.G.A. § 36-60-2, permitting municipalities to enter into multi-year contracts to provide industrial waste water treatment services, provides an explicit statutory exception to O.C.G.A. § 36-30-3 and allows contracts between municipalities and certain private entities for periods up to 50 years. The contract must enable the municipality to comply with the state and federal pollution standards and to receive public allotments. In addition, the contract must comply with the statutory requirement that the private corporation be charged a rate never less than the actual cost to the municipality. A contract meeting the above requirements would not violate the statutory prohibition against binding successors in office. 1992 Op. Att'y Gen. No. 92-4.
RESEARCH REFERENCES
Am. Jur. 2d.
- 56 Am. Jur. 2d, Municipal Corporations, Counties, and Other Political Subdivisions, § 137.
C.J.S.- 64 C.J.S., Municipal Corporations, § 1183.
ALR.
- Power of board to appoint officer or make contract extending beyond its own term, 70 A.L.R. 794; 149 A.L.R. 336.