HB1166: HB1166 Local government; zoning decisions shall not affect or be required for certain residential dwellings of 400 square feet or fewer; provide

The bill text in this version is a Senate committee substitute that no longer addresses the original House bill's topic (zoning rules for tiny homes). Instead it amends Georgia's law on inactive municipalities (O.C.G.A. Chapter 30 of Title 36) and adds a new process for handling 'distressed municipalities': cities that miss budget deadlines, fail to pay employees or creditors, default on bonds, or run large deficits. Under the new process, legislators can ask the Governor to appoint a review commission to investigate a city. If the commission finds the city is distressed, the Attorney General can petition a superior court to place the city into receivership. The court-appointed receiver, who must have at least five years of relevant experience, would develop and carry out a recovery plan covering city finances, contracts, and asset sales, with court oversight. Receiverships generally last up to two years, with possible two-year extensions, and the state also creates emergency procurement powers and a roster of financial turnaround specialists.

• Rewrites Georgia's inactive municipality law (O.C.G.A. § 36-30-7.1) to clarify that a certified listing of terminated or continuing municipal corporations is conclusive evidence usable in court.
• Creates a new legal definition of 'distressed municipality' based on missed budgets, unpaid debts, payroll failures, tax withholding lapses, or deficits exceeding 5 percent of revenue for two years.
• Sets up a review commission, appointed by the Governor at legislators' request, to investigate whether a city qualifies as distressed.
• Allows the Attorney General to petition a superior court to place a distressed municipality into receivership and appoint a court-named receiver to run a court-approved recovery plan.
• Limits what a receiver can do, barring unilateral new taxes, impairment of existing bonds, or interference with legally protected debt obligations.
• Directs the Department of Administrative Services to build a roster of local government financial turnaround specialists and allows emergency procurement of help for distressed cities.

City and town governments across Georgia, especially those facing serious financial trouble; municipal employees and elected officials whose actions could be overridden by a receiver; bondholders and creditors of struggling cities; and state offices including the Attorney General, the Department of Community Affairs, and the Department of Administrative Services.

If a Georgia city cannot pay its bills, employees, or debts, this bill would give the state a formal legal path to intervene, appointing an outside receiver with court backing to take over financial decisions, sell assets, or renegotiate contracts, rather than leaving the city to manage the crisis on its own.

• Section 1 revises O.C.G.A. § 36-30-7.1 so a certified listing from the Secretary of State is conclusive proof of whether a municipal corporation's existence continued or was terminated.
• Section 2 adds new O.C.G.A. § 36-30-7.2, defining 'distressed municipality' using nine specific financial and operational failure criteria.
• Section 2 establishes a Governor-appointed review commission, composed of the commissioner of community affairs and two outside municipal officials, to investigate distressed-municipality claims within 14 days.
• Section 2 lets the Attorney General petition a superior court for receivership; the court must hold a hearing within 30 days and rule within 60 days.
• Section 2 caps a receivership at two years, renewable in two-year increments, and requires the receiver to submit a recovery plan within 30 days of appointment.
• Section 2 restricts receivers from unilaterally raising taxes, impairing existing bonds or contractual debt protections, or diverting asset-sale proceeds away from paying down outstanding debt.
• Section 2 creates a state-wide roster of local government turnaround specialists maintained by the Department of Administrative Services, usable for expedited emergency procurement.
• Section 3 repeals all conflicting laws.

1. 2026-03-27Senate Read Second Time (Senate)
2. 2026-03-27Senate Committee Favorably Reported By Substitute (Senate)
3. 2026-03-09Senate Read and Referred (Senate)
4. 2026-03-06House Passed/Adopted By Substitute (House)
5. 2026-03-06House Third Readers (House)
6. 2026-02-26House Committee Favorably Reported By Substitute (House)
7. 2026-02-05House Second Readers (House)
8. 2026-02-04House First Readers (House)

• Tangie Herring (D, HD-145)Primary sponsor
• Mary Oliver (D, HD-084)
• Spencer Frye (D, HD-122)
• Dale Washburn (R, HD-144)
• Shea Roberts (D, HD-052)
• Anissa Jones (D, HD-143)
• Jason Anavitarte (R, SD-031)

1. PassedHouse voteMarch 6, 2026

   111 yea, 50 nay (5 not voting, 11 absent)

   Passage: House Vote #674

• municipal finance
• city receivership
• local government oversight
• distressed cities
• state and local governmental operations