After more than a year of contesting service agreements and how county taxes are spent, Cherokee County and the cities within it have a mediation scheduled in August to settle on a county-wide service delivery strategy.

Service Delivery Strategy, or SDS, is a set of agreements designed to make sure residents aren't overtaxed for a duplication of county and city services. Georgia requires counties and cities to form these agreements once every 10 years.

Negotiations between the cities and county started early last year, but they missed an initial state deadline of Oct. 31 to reach agreement, and requested an extension from the Georgia Department of Community Affairs. The local governments received an extension through June 30, and are in non-compliance while another extension request is pending.

The cities, represented by attorney Andy Welch of Smith, Welch, Webb and White, argue that the current strategy has many city residents paying too much in county property taxes for services that primarily benefit unincorporated county residents, citing reports Cherokee County has submitted to the Georgia Department of Community Affairs.

Incorporated and unincorporated residents pay the same county millage rate.

According to County Commission Chairman Harry Johnston, the county's position is that unincorporated residents pay more than their fair share for county services, because they are charged separate taxes and fees for things like insurance premiums and title ad valorem taxes.

Welch also argues that Cherokee County violates state law in how it pays for many of its services. The law requires that unincorporated residents bear the cost of any service that "provides primarily for the benefit of the unincorporated area of the county."

The cities argue that the county can only pay for such services in one of four ways with unincorporated funds: assessments, insurance premium tax, taxes derived from unincorporated residents' property tax and a special tax district. County officials counter that those are just examples, and that it can use any revenue collected exclusively from unincorporated citizens.

Until a few years ago, Cherokee County had an "unincorporated fund" that was exclusively for revenue from unincorporated residents and property owners. Johnston said in an interview Friday the county had a failed attempt at an unincorporated fund, which he is willing to reinstate after making agreements with the cities.

There is some conflict about which services are for the exclusive or primary benefit of unincorporated county residents. The cities argue that roads and parks fall under this category, while the county claims they do not.

"If the county funds its roads out of the general fund, road maintenance, paving, things like that, they are paying for that out of the general fund, they don't pave roadways in the city limits," said Canton City Manager Billy Peppers. "A city taxpayer's dollars shouldn't be used to pave roadways outside the city limits, because they're already paving the roads inside the city limits. The argument might be, residents can use roads wherever, well, in my case in Canton, the only way you can get to the county courthouse is to drive on a city street. So my city residents are paying to maintain the roads to county facilities that county residents use. It doesn't necessarily work vice versa."

City leaders have also called for transparency in the county's spending and in the service delivery process. When the governments applied for their first extension early this year and were rejected, the county manager made changes to the document and resubmitted it without consulting representatives from the cities, said Woodstock city manager Jeff Moon.

The changes were a designated deadline rather than one written onto the form, as well as a recommendation from the state to remove services that weren't changing before the new deadline, but Moon said the lack of communication broke down trust between the parties.

"The problem is they didn't tell anyone. They didn't call and say, 'Hey, we've got a problem, here's what we need to do to fix it.' They just took a signature page, attached it to a different document, sent it in and didn't tell anybody from October to January. That creates a trust problem," Moon said. "How do we trust any document that you give us now when you would do this and not tell us?"

However, multiple city representatives noted that they had more engagement with the county when Johnston took office this year and became more involved in the process.

A mediation, which will be a public meeting with elected officials from Cherokee County, Canton, Holly Springs, Mountain Park, Waleska and Woodstock, is scheduled for Aug. 6, though a time and location haven't been set yet. Former Georgia Supreme Court Chief Justice Norman Fletcher is to serve as the mediator.

City and county officials were optimistic about the mediation.

"I'm positive that at least we're making some steps toward an agreement, whatever that means," said Holly Springs City Manager Rob Logan.

"I'm certainly hopeful," Johnston said. "We’re willing to work with the cities. I can see the merits of some of their points. The problem for their side is even if we concede those points that have merit, we still have a surplus on the unincorporated side. The unincorporated citizens are still paying too much."

Until the state's sanctions for non-compliance are lifted, Cherokee County and all the cities-including portions of those partially in the county are ineligible for state funding. The department has found the request to comply with state law and sanctions will be able to be lifted on Aug. 1, DCA spokesman Jon West said Friday.

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