Multiyear Lease, Purchase, or Lease-Purchase Contracts

  1. Law
  2. Georgia Code
  3. Local Government
  4. General Provisions
  5. Multiyear Lease, Purchase, or Lease-Purchase Contracts

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  1. Each county or municipality in this state shall be authorized to enter into multiyear lease, purchase, or lease-purchase contracts of all kinds for the acquisition of goods, materials, real and personal property, services, and supplies, provided that any such contract shall contain provisions for the following:
    1. The contract shall terminate absolutely and without further obligation on the part of the county or municipality at the close of the calendar or fiscal year in which it was executed and at the close of each succeeding calendar or fiscal year for which it may be renewed as provided in this Code section;
    2. The contract may provide for automatic renewal unless positive action is taken by the county or municipality to terminate such contract, and the nature of such action shall be determined by the county or municipality and specified in the contract;
    3. The contract shall state the total obligation of the county or municipality for the calendar or fiscal year of execution and shall further state the total obligation which will be incurred in each calendar or fiscal year renewal term, if renewed; and
    4. The contract shall provide that title to any supplies, materials, equipment, or other personal property shall remain in the vendor until fully paid for by the county or municipality.
  2. In addition to the provisions enumerated in subsection (a) of this Code section, any contract authorized by this Code section may include:
    1. A provision which requires that the contract will terminate immediately and absolutely at such time as appropriated and otherwise unobligated funds are no longer available to satisfy the obligations of the county or municipality under the contract; or
    2. Any other provision reasonably necessary to protect the interests of the county or municipality.
  3. Any contract developed under this Code section containing the provisions enumerated in subsection (a) of this Code section shall be deemed to obligate the county or municipality only for those sums payable during the calendar or fiscal year of execution or, in the event of a renewal by the county or municipality, for those sums payable in the individual calendar or fiscal year renewal term.
  4. No contract developed and executed pursuant to this Code section shall be deemed to create a debt of the county or municipality for the payment of any sum beyond the calendar or fiscal year of execution or, in the event of a renewal, beyond the calendar or fiscal year of such renewal.
  5. No contract developed and executed pursuant to this Code section may be delivered if the principal portion of such contract, when added to the amount of debt incurred by any county or municipality pursuant to Article IX, Section V, Paragraph I of the Constitution of Georgia, exceeds 10 percent of the assessed value of all taxable property within such county or municipality.
  6. No contract developed and executed pursuant to this Code section may be delivered if the real or personal property being so financed has been the subject of a referendum which failed to receive the approval of the voters of the county or municipality within the immediately preceding four calendar years, unless such real or personal property is required to be financed pursuant to a federal or state court order, or imminent threat thereof, as certified by the governing authority of the county or municipality.
  7. No contract developed and executed pursuant to this Code section with respect to the acquisition of real property may be delivered unless a public hearing has been held by the county or municipality after two weeks' notice published in a newspaper of general circulation within the county or municipality.
    1. On or after July 1, 2000, no contract developed and executed or renewed, refinanced, or restructured pursuant to this Code section with respect to real property may be delivered if the lesser of either of the following is exceeded:
      1. The average annual payments on the aggregate of all such outstanding contracts exceed 7.5 percent of the governmental fund revenues of the county or municipality for the calendar year preceding the delivery of such contract plus any available special county 1 percent sales and use tax proceeds collected pursuant to Code Section 48-8-111; or
      2. The outstanding principal balance on the aggregate of all such outstanding contracts exceeds $25 million; provided, however, that with respect to any county or municipality in which, prior to July 1, 2000, the outstanding principal balance on the aggregate of outstanding contracts exceeds $25 million, such outstanding contracts may be renewed, refinanced, or restructured, but no new contracts shall be developed and executed until the outstanding principal balance on such outstanding contracts has been reduced so that the $25 million limitation of this subparagraph, or the limitation in subparagraph (A) of this paragraph, whichever is lower, is not exceeded.
    2. Paragraph (1) of this subsection shall not apply to contracts developed and executed or renewed, refinanced, or restructured pursuant to this Code section which are for projects or facilities:
      1. For the housing of court services, where any other state law or laws authorize the project or facility to be financed and paid for from the collection of fines rather than from tax revenues; or
      2. Which have been previously approved in the most recent referendum calling for the levy of a special county 1 percent sales and use tax pursuant to Part 1 of Article 3 of Chapter 8 of Title 48.
  9. Any such contract may provide for the payment by the county or municipality of interest or the allocation of a portion of the contract payment to interest, provided that the contract is in compliance with this Code section.
  10. Nothing in this Code section shall restrict counties or municipalities from executing reasonable contracts arising out of their proprietary functions.

(Code 1981, §36-60-13, enacted by Ga. L. 1988, p. 1954, § 1; Ga. L. 1996, p. 441, § 1; Ga. L. 2000, p. 1443, § 1; Ga. L. 2012, p. 775, § 36/HB 942; Ga. L. 2013, p. 272, § 1/HB 473.)

Code Commission notes.

- Two 1988 Acts added a new Code Section 36-60-12. Pursuant to Code Section 28-9-5, the Code section enacted by Ga. L. 1988, p. 1847 has retained the Code Section 36-60-12 designation and the Code section enacted by Ga. L. 1988, p. 1954 has been redesignated as Code Section 36-60-13.

Pursuant to Code Section 28-9-5, in 1988, "Code section" was substituted for "Code Section" in the first occurrence of the words in the introductory language of subsection (b).

Editor's notes.

- Ga. L. 1990, p. 8, § 55, repealed Ga. L. 1988, p. 1954, § 2, providing for the terms and conditions under which counties or municipalities may enter into certain one year, or less, contracts. For present provisions, see Code Section 36-60-14.

Law reviews.

- For annual survey on local government law, see 42 Mercer L. Rev. 359 (1990). For annual survey of local government law, see 57 Mercer L. Rev. 289 (2005); and 58 Mercer L. Rev. 267 (2006). For survey article on local government law, see 67 Mercer L. Rev. 147 (2015).

JUDICIAL DECISIONS

Constitutionality.

- O.C.G.A. § 36-60-13 does not violate the constitutional debt limitations of Ga. Const. 1983, Art. IX, Sec. V, Para. I. Barkley v. City of Rome, 259 Ga. 355, 381 S.E.2d 34 (1989).

Contract under section is not debt.

- Contract which satisfies the requirements of O.C.G.A. § 36-60-13 does not constitute a "debt" within the meaning of Ga. Const. 1983, Art. IX, Sec. V, Para. I and therefore does not require voter approval. Barkley v. City of Rome, 259 Ga. 355, 381 S.E.2d 34 (1989).

Lease agreement is not debt.

- There is no distinction in O.C.G.A. § 36-60-13 between real and personal property and the strictures on leases for each class of property are the same; similarly, Ga. Const. 1983, Art. IX, Sec. V, Para. I(a), providing for a popular vote on the assumption of debt, makes no distinction between the two classes of property. Therefore, a county's decision to enter a lease purchase agreement with the Association of County Commissioners of Georgia to finance and construct a new courthouse was not a debt requiring a vote under Ga. Const. 1983, Art. IX, Sec. V, Para. I(a) and was in compliance with O.C.G.A. § 36-60-13 because it did not require future county commissioners to renew the contract, it allowed the county to terminate its financial obligations at the end of each calendar year, and it would never require the county to expend more than would be legally available under O.C.G.A. § 36-60-13. Bauerband v. Jackson County, 278 Ga. 222, 598 S.E.2d 444 (2004).

Contract as to provision of legal services.

- O.C.G.A. § 36-60-13 did not apply to regulate over contract between county commissioners and county attorney for the provision of legal services. Brennan v. Chatham County Comm'rs, 209 Ga. App. 177, 433 S.E.2d 597 (1993).

Requirements of section violated.

- Multi-year computer lease purchase agreement entered into by the county violated the requirements of O.C.G.A. § 36-60-13; therefore, the trial court properly granted the county's motion for summary judgment. Wasilkoff v. Douglas County, 227 Ga. App. 232, 488 S.E.2d 722 (1997) (events occurred prior to 1996 amendment).

Multiyear lease provision ambiguous.

- Multiyear lease provision allowing termination of the lease pursuant to O.C.G.A. § 36-60-13 was ambiguous and the record did not show whether a county and the county's lessee intended the provision to apply generally to the lease or only if § 36-60-13 became applicable (i.e., appropriated funds were no longer available to allow the county to perform the county's obligations under lease). Thus, the county's right to terminate the lease under that provision was a fact issue for the jury to resolve. Etowah Valley Sporting Clay Park, LLC v. Dawson County, 294 Ga. App. 586, 669 S.E.2d 436 (2008), cert. denied, No. S09C0464, 2009 Ga. LEXIS 266 (Ga. 2009).

Settlement agreement enforceable.

- Trial court erred in denying a property owner's motion for summary judgment in a county breach of contract action because a settlement agreement between the parties was enforceable; the county attorney had authority to make the settlement offer on behalf of the county board, and while a vote in a public meeting was a required formality to effectuate the purchase, the board's failure to complete that formality when voting in the public meeting could not destroy an already existing settlement agreement. Old Peachtree Partners, LLC v. Gwinnett County, 315 Ga. App. 342, 726 S.E.2d 437 (2012).

Cited in 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).


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