The Law

Since 1988 in Chatham County Georgia, fire services had been delivered through 12 special districts served by municipal departments, volunteer departments or private providers.

One private provider, Southside Communities Fire Protection Inc., doing business as Chatham Emergency Services, or CES, served four districts. When roughly one‑third of property owners stopped paying CES directly, the company could no longer maintain its prior level of service. The county then contracted with CES and adopted a fire‑protection tax for the affected area.

In 2022, however, the county repealed that tax and adopted the Fire Protection Service Fee Ordinance. The ordinance created a Fire Service Area covering portions of unincorporated Chatham County that were not already billed by another fire‑service provider.

For the 2022‑23 fiscal year, the ordinance imposed a $100 charge per parcel plus a structure‑based charge that increased through 11 square‑footage brackets. The fee ranged from $75 for the smallest structures to $10,000 for structures of at least 50,000 square feet.

The county revised the formula the next year. Under the 2023 amendment, vacant parcels were charged a flat $100, while burnable structures were assessed $0.14 per square foot, with a $100 minimum. The charges were collected through June 30, 2024, when the county then assumed fire‑protection responsibility in the unincorporated special‑services district and incorporated the cost into the district’s millage rate.

The owners of property subject to the charge filed a class action. They contended that the so‑called fee was actually an illegal property tax because it was not assessed according to the property’s value. The trial court agreed, ordering refunds of $26,852,778.90 plus $3,274,595.33 in prejudgment interest. The Georgia Supreme Court affirmed.

The court first determined whether the charge was a tax or a fee. The name was not relevant.

A true fee is generally a charge for a particular service, tied to the payer’s contribution to the problem addressed or to a distinct benefit received. A tax, in contrast, is an enforced contribution collected to raise revenue for public or governmental purposes.

To distinguish the two, Georgia courts consider four major factors:

1. Whether the charge raises general revenue based on property ownership or ability to pay, without regard to direct benefits.
2. Whether the charge is mandatory.
3. Whether it is related to the payer’s use of, or burden on, the service.
4. Whether it gives the payer a special benefit not shared by people who do not pay.

1. The charge raised revenue to maintain the general availability of fire protection, rather than charging for a particular service used by an individual payer. The ordinance applied to all properties in the designated area and funded a broad range of expenses, including equipment, facilities, operating costs, contractual obligations, debt payments and reserves.

   The county argued that money was placed in a dedicated enterprise fund rather than the county’s general fund. But the court said earmarking revenue for a particular governmental function does not prevent a charge from being a tax.

2. The court found the charge was mandatory. The ordinance authorized late penalties of either $25 or 10% of the amount due, collection costs, attorney fees and court costs. It also allowed the county to pursue lawsuits and enforce liens resulting from judgments. Violations could carry fines of up to $500, up to 50 hours of community service for each day of violation, or both

   County officials said property owners could potentially avoid the charge by obtaining coverage from another recognized fire provider or seeking removal from the Fire Service Area. The court found that possibility too limited to make the program voluntary. The record showed that moving to a different fire‑service arrangement depended on location, fire‑station capacity and county action. There was no evidence that individual property owners had successfully used an alternative to avoid the charge.

3. The court said the fee did not correspond to a property owner’s burden on the fire‑protection system. It was based on parcel ownership and building square footage, not actual use of emergency services. County officials acknowledged that the charge was not tied to the consumption or use of fire services and that the square‑footage brackets were based on “common sense,” rather than fire data.

4. Finally, the court held that the charge provided no special benefit exclusive to payers. CES was required to respond to calls throughout the Fire Service Area regardless of whether a property owner had paid. Tenants, motorists and other members of the public could benefit from fire protection without being billed.

   The county argued that fire protection offered property‑specific advantages, such as higher property values, lower risk and lower insurance premiums. The court said those were incidental public benefits, not the kind of distinct benefit that would make the charge a fee. The ordinance itself recognized that reduced risk and lower insurance premiums could benefit properties throughout the county and surrounding areas.

The fee was calculated through flat per‑parcel charges and square footage, not property value. That made it non‑ad‑valorem, meaning it was not imposed according to value.

The applicable version of former OCGA § 36‑70‑24(3)(B) allowed services primarily benefiting unincorporated county areas to be funded through special service districts using property taxes, insurance‑premium taxes, assessments, user fees or another approved mechanism. Under earlier precedent, the court said “property taxes” in that statute means ad‑valorem property taxes and excludes non‑ad valorem taxes on property.

Because the fire charge was a tax on real property but was based on square footage and flat amounts rather than value, it did not qualify as a permitted property tax. Nor was it an assessment, user fee or another authorized funding mechanism, the court said.

The decision also concluded that the county could not use its special‑district authority to override the state statute. Georgia’s Constitution permits county ordinances creating special districts, but it bars those ordinances from superseding general laws enacted by the General Assembly under the relevant special‑district provision.

In practical terms, the court ruled that Chatham County could fund the service through an authorized mechanism, but could not relabel a non‑ad‑valorem property tax as a service fee.

Chatham County also argued on appeal that the lower court acted too soon because merits discovery had been stayed pending the class certification decision. The Supreme Court rejected that claim as unpreserved.

The record showed the parties conducted substantial discovery related to class certification, including depositions of county officials and CES’s fire chief. The county relied on that evidence while arguing the merits in summary judgment filings, did not request a continuance and did not submit the affidavit required to claim it lacked facts necessary to oppose summary judgment.

The county raised the prematurity argument for the first time on appeal, the court said, and therefore forfeited it.

For property owners, the case confirms that labels are not dispositive. A “service fee” can be challenged when its design and enforcement show that it operates as a tax.

The result in Chatham County was substantial: more than $30.1 million in refunds and prejudgment interest for the certified class. But the more lasting effect may be the court’s reaffirmation that public finance must follow legal substance, not merely administrative terminology.

(Chatham County v. Damon L. Smith et al. (Supreme Court of Georgia, Docket No: S26A0699))

Argued: April 2026
Decided: October 2026

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