UPDATE: A controversial referendum to make Eagle's Landing Henry County's fifth city was defeated on Tuesday.

The proposal would have created the town, in part, by de-annexing about half of Stockbridge. The de-annexation question was also defeated.

The defeat is a win for Stockbridge, which had tried to stop the referendum from happening in court, only to be rebuffed by both a federal court and the state Supreme Court.

Now the city will have to mend the rift that opened during the two-year old battle as well as find a way to address the complaints from Eagle’s Landing residents that created the cityhood movement.

In a statement, Stockbridge Mayor Anthony Ford said, "We are extremely excited and grateful. We are a strong team and we will continue to move forward united as one dynamic community made up of diverse Americans who proudly contribute to their society."

Backers of cityhood said while they lost at the polls, they are not defeated in spirit.

“There are thousands of citizens who still think something needs to happen,” the Eagles Landing Educational Research Committee said in a statement. “We still believe that the Eagle’s Landing Community can be a beacon for the southside of metro Atlanta. It will be up to the new District 4 commissioner and representative to see that happens.”

ORIGINAL STORY: Whether Eagle's Landing will become Henry County's fifth city was still up in the air late Tuesday as officials continued to count ballots in the controversial referendum authorizing the community's separation from Stockbridge.

Supporters of the cityhood movement say they want to chart their own course after years of neglect by Stockbridge. Left to their own devices, they say, they could do a better job providing government services such as libraries and parks and attracting economic development.

“For example, we do not have one hotel in our whole county that has room service. Think about how close we are to (Hartsfield-Jackson International Airport)” and the jobs and business opportunities the area is missing, said Vikki Consiglio, a leader in the cityhood movement. “We’ve already had businesses and developers contact us.”

Residents of the well-heeled Eagle’s Landing community in the southern end of Stockbridge voting today whether to become Henry County’s fifth city. LEON STAFFORD/AJC

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But even if cityhood is approved, Eagle’s Landing still faces lawsuits that could void the process. The litigation, brought by the city of Stockbridge, challenges the constitutionality of the referendum, partially on the grounds that it violates the Voting Rights Act of 1965 and the equal protection clause of the 14th Amendment.

Judges in both the Georgia Supreme Court and U.S. District Court allowed the referendum to proceed — a victory for Eagle's Landing cityhood supporters — while holding off on deciding the constitutionality question.

How Eagle’s Landing’s secession plays out is important in metro Atlanta because many believe other wealthier communities could use it as a template to break away from their home cities. For example, Buckhead could bolt from Atlanta.

Stockbridge Mayor Anthony Ford said the courts need to make sure that’s not possible.

“I think they need to make a decision so they can seal … the door so that it cannot be opened again,” he said.

City of Stockbridge City Manager Randy Knighton talks to residents of Moss Pointe Subdivision during a gathering at the home of Regina Lewis-Ward earlier this month about an upcoming ballot measure to make Eagle’s Landing a city. STEVE SCHAEFER / SPECIAL TO THE AJC

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If Eagle’s Landing incorporates, it will overturn decades of precedent on how towns are formed, which is usually done by annexing unincorporated parts of a county. Eagle’s Landing would take half of Stockbridge and combine it with parts of unincorporated Henry County to form the new city.

Sandy Springs led the incorporation movement in 2005 when residents voted to become a city. That was followed by a number of other incorporations, including South Fulton, Stonecrest, Milton, Brookhaven and Peachtree Corners.

The effort to create the new city has been controversial, with accusations of covert racism and class discrimination tossed around.

Currently, black residents make up 53 percent of Stockbridge’s voting-age population, while white residents make up 32 percent. In a city of Eagle’s Landing, however, black citizens would comprise 44 percent of the voting-age population, while white citizens would comprise 43 percent.

A referendum on the proposed city of Eagle’s Landing is moving forward.

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Stockbridge leaders have said many of the issues with services and economic development that Eagle’s Landing residents would like to see addressed could be handled without tearing the city apart.

They also argued that the Republican delegation to the Georgia Legislature steamrolled cityhood onto the ballot, despite concerns from cities across the state that it opens the door to future break-away attempts.

Consiglio has consistently countered the argument that racism is a driving force for those pushing for secession. She said the group behind cityhood is diverse. Consiglio, who is white and is considering running for mayor if Eagle’s Landing becomes a city, said the residential population of the new town will be majority minority: 47 percent black, 39 percent white, 8 percent Asian and 6 percent Latino.

But if Eagle's Landing becomes a city, it would still owe millions of dollars  for debts incurred before it split from Stockbridge. U.S. District Court Judge Leigh Martin May last month affirmed that the new city would inherit millions in municipal bond debt and other obligations contractually tied to the territory.