Case Title: Brandes v. City of Deerfield Beach

Citation: 186 So. 2d 6

Docket Number: 

State: florida

Court: Florida Supreme Court

Date: 1966-04-18T00:00:00Z

Document:
186 So. 2d 6 (1966)
Paul L. BRANDES et al., Appellants,
v.
CITY OF DEERFIELD BEACH, Appellee.
No. 34873.

Supreme Court of Florida.
April 18, 1966.
Rehearing Denied May 23, 1966.
*7 Delford P. Richey, Pompano Beach, for appellants.
Robert T. Carlile, Deerfield Beach, for appellee.
BARNS, PAUL D., Justice
This is a taxpayers' appeal from a final decree validating the proposed issuance of municipal bonds secured by pledge of certain tax revenues by the City of Deerfield Beach. We reverse.
The City, of a population of approximately 15,000 inhabitants, proposes issuance of $1,500,000 Excise Tax Improvement Bonds maturing over a period of 30 years, requiring an annual debt service of approximately $86,000.00. The Resolution authorizing the issuance of these bonds pledges as security for their payment its revenue derived from (1) "Cigarette Taxes", (2) "Franchise Taxes" from Florida Power & Light Co. and Southern Bell Telephone & Telegraph Company, (3) "Occupational License Taxes" and, (4) "Alcoholic Beverage Taxes".
On August 19, 1965, (the same day of the passage of a Resolution authorizing the issuance of the above mentioned bonds of $1,500,000.00) the City signed a lease with Deerstad, Inc., a corporation, reciting that Deerstad held an option to purchase a designated 40 acre tract of land which Deerstad would assign to the City and in turn the City would exercise the option and purchase the land and lease it to Deerstad and the City would construct thereon various buildings and structures and would furnish certain equipment, facilities and furnishings needed and required of Deerstad by its sub-lessee, the Pittsburg Athletic Company, Inc., a corporation (owner of the "Pittsburg Pirates" baseball team.).
The purpose of the bond issue is to obtain funds with which to acquire a parcel of land and to construct thereon facilities to be used as spring training headquarters for the Pittsburg Pirates, a major league *8 baseball team. One hundred forty thousand dollars ($140,000.00) of the proceeds will be placed in escrow to secure the payment of a prior bond issue to which the Cigarette Taxes of the City are presently pledged. It is necessary to secure the payment of the prior bonds in order that the Cigarette Taxes may be pledged to the payment of the $1,500,000.00 bond issue. The $1,360,000.00 balance of the proceeds will be used to acquire land and to construct spring training quarters for the Pirates. Once completed, the facility will be effectively leased to Deerstad; that corporation will, in turn, effectively lease the project to the Pirates.
The Lease Contract between the City and Deerstad (hereinafter referred to as "lease") provides that upon default or termination of the lease for any reason, the City may take over the obligations of Deerstad to the Pirates as follows:
These obligations are fixed by an Agreement and Lease between Deerstad and the Pirates (hereinafter referred to as "sublease").
The facilities to be provided by the City, as stated in the Bond Resolution, are as follows:
Exhibit A attached to the Lease sets out the details as to what the City will be required to furnish. Among other things, the City must furnish a stadium, four additional baseball fields, four movable batting cages, a sliding pit, running track, lighting for all fields, field maintenance house with observation tower, clubhouse, housing for 274 people (including furniture, bedding, etc.), dining room for 180 people, kitchen for 220 people (including utensils, dinnerware, silverware, and glassware), and parking facilities. All of the facilities are to be as agreed upon by the City and the Pirates. Should the Lease terminate, the City may be substituted for Deerstad in the sublease.
In operation of the project, it is estimated that the City must pay yearly the sum of $58,000.00 for all maintenance, including painting, plumbing and other major and minor repairs; all utilities, "including without limitation, water, electricity, gas, heat, garbage disposal and sewage", (except telephone and telegraph) furnished by the City; maintenance of the playing fields and related areas, including the concession *9 areas. Should the City for its protection be required to take over the obligations of Deerstad to the Pirates under the sublease, the City would then be obligated to "provide, pay and be responsible for all necessary ticket sellers, ticket takers, ushers, police, public address announcers, parking lot attendants and other necessary personnel [and] all necessary personnel to operate the concession stands, parking areas and all other activities * * *" and Deerstad's obligation to sell $18,000.00 in preseason tickets.
The term of the Lease between the City and Deerstad is five (5) years, with the City being obligated to proceed under Section 132 of its Charter to offer the property for a thirty-year lease. In such an offering, the City must require all bidders to agree to assume Deerstad's obligations under the sublease, must require capitalization of the bidder at least equal to that of Deerstad, and must offer the property at the same minimum terms as the present five-year lease.
As rental on this project, Deerstad is to pay an amount equal to the debt service on the $1,360,000.00 in bonds attributable to the project and fifty percent of the net profits in excess of prior years' losses. Deerstad will receive all rentals on the project and all concessions and other income-producing rights, except those reserved by the Pirates. In return for this rental, the City must acquire the land, construct the facility, furnish the equipment, maintain the project, provide free municipal occupational licenses and pay all ad valorem taxes, if any, and insure the project against casualty losses. Should Deerstad fail, the City would have to pay off the bonds, of course, and may take over Deerstad's rights and obligations to the Pirates in the protection of the City's interest.
The services to be rendered by the City (estimated annual cost of $58,000.00) is provided for in the City's lease to Deerstad as follows:
The City and the owners of the Pirates are in privity of contract with each other as to the Lease from Deerstad to the Pirates. The Lease of the City to Deerstad provides:
The City's initial lease to Deerstad is to be for a term of five years, which is permitted without competitive bids, but the City is prohibited by Section 132 of its Charter to "lease or grant concessions to private persons, firms or corporations for non-public purposes for a period of not more than fifty (50) years, any lands, improvements, public buildings, recreational parks or facilities", except on "competitive conditions for lease as desired" after public notice and subject to the proposed long-term lease of more than five years being disapproved upon a Referendum Election, provided for by Section 132, supra, as follows:
The City's five-year lease to Deerstad further provided that the City would offer for competitive bid a thirty-year lease of the leased premises and personal property, upon the same terms and conditions of the five-year lease, "immediately upon the validation of the Bond Issue and sale of the Bonds", which lease specifically recognized *11 the Pirates as a third-party beneficiary. The City's five-year lease to Deerstad provides:
The Lease from the City to Deerstad in recognition that the Pirates are in privity of contract with the City provides that in the event of default by Deerstad to pay its rent ("default in its obligations") to the City, then the City may notify the Pirates of such default and that if the Pirates pay to the City its rent due to Deerstad, such payments shall discharge the Pirates' obligations to Deerstad; and, in event of the termination of the City's Lease to Deerstad, the Pirates sublease "shall continue and remain in full force and effect until the expiration of the term thereof or earlier termination thereof in accordance with the provisions therein." The obligations of Deerstad to the City are not assumed by the Pirates in Deerstad's sublease to the Pirates, but the Pirates are a third-party beneficiary to the lease to Deerstad.
Article IX, Section 5, of the Constitution, provides that "The Legislature shall authorize * * * incorporated cities * * * to assess and improve taxes * * * for municipal purposes, and for no other purposes. * * *"; and Article IX, Section 10, of the Constitution prescribes that "The Legislature shall not authorize any * * * city * * * to loan its credit to any corporation, association, institution or individual."
*12 "Taxes for municipal purposes" means a public purpose as distinguished from a private or nongovernmental purpose; a purpose intended to embrace some of the functions of the governmental agency. The mere incidental advantage to the public resulting from a public aid in the promotion of private enterprise is not a public or municipal purpose; and the incidental benefits or advantages gained by private enterprise from expenditures made for a public purpose do not vitiate or diminish the public purpose.
Dade County Board of Public Instr. v. Michigan Mutual Liability Company, Fla., 174 So. 2d 3, in passing on the question of whether the school board was lending its credit in violation of Section 10 of Article IX of the Constitution, F.S.A., in purchasing liability insurance in a mutual company, the court in construing Section 10 stated:
It seems clear that purpose of the proposed bond issue is not for a public purpose or municipal purpose, and furthermore that the City, by the proposed services to be rendered by it, is lending its credit in contravention to the provisions of Sections 5 and 10, Article IX of the Constitution. City of Daytona Beach v. King, 132 Fla. 273, 181 So. 1; State v. Town of North Miami, Fla., 59 So. 2d 779; and, City of Clearwater v. Caldwell, Fla., 75 So. 2d 765.
The power of a municipality to levy taxes is founded on the right, duty and responsibility to maintain and administer all the functions of the municipality having a public municipal purpose; and such taxing power may not be used or pledged to the end that trade may be accelerated by an experiment in practical economics through a particular private enterprise of a nongovernmental nature.
The decree validating the bonds appealed from is 
Reversed.
THOMAS, O'CONNELL and CALDWELL, JJ., concur.
THORNAL, C.J., dissents with opinion.
ROBERTS and ERVIN, JJ., dissent and concur with THORNAL, C.J.
THORNAL, Chief Justice (dissenting).
I am deeply concerned that the Court has today drawn too tight a line around public financing for the accomplishment of legitimate public objectives. It is my view that the impact of the majority decision will have far-reaching adverse results upon Florida's admitted ambitions to develop its recreational facilities as essential aspects of our vital tourist industry.
Admittedly, the provision of extensive recreational facilities is a recognized public purpose in a state which has devoted a substantial segment of its economy to the attraction of visitors, thousands of whom ultimately become permanent residents. Given the public purpose, I can find no objection to a cooperative program in which a governmental agency and a private entity collaborate to accomplish the legitimate public objective. The Florida Development Commission tells us that there are presently 16 Major League baseball teams which train in our state in the spring of the year. There are 79 minor league teams which also train in Florida. The same source advises that baseball has become an estimated twenty-five million dollar a year business. Undoubtedly, many, if not all, of these baseball organizations lease and occupy publicly-owned facilities in substantially *13 the same fashion as Deerfield Beach proposes for the accommodation of the Pittsburg Pirates. It appears to me that the City here proposes to accomplish nothing more than we have repeatedly approved in similar financing plans over the years.
In State v. City of Miami, Fla., 41 So. 2d 545, we approved Miami's issuance of revenue certificates to finance additional seats for the Orange Bowl Stadium, which is now recognized as one of the major sports facilities of the country. In State v. Daytona Beach Racing and Recreational Facilities District, Fla., 89 So. 2d 34, we authorized a public district to issue securities to construct a speedway, which would be leased to a private enterprise for a period of months each year for 40 years. In Sunny Isles Fishing Pier v. Dade County, Fla., 79 So. 2d 667, we permitted the leasing of a publicly-owned fishing pier to a private enterprise for development by private capital. In related activities we have repeatedly recognized the issuance of public securities to construct publicly-owned facilities which were needed to accommodate private enterprises engaged in serving a public function. In Seaboard Airline R. Co. v. Peters, 43 So. 2d 448, this Court actually approved the issuance of so-called revenue certificates which pledged a 2 mill ad valorem tax to expand the Miami International Airport for the accommodation of privately-owned airlines. This was done without benefit of freeholder approval. Again in State v. Dade County, 62 So. 2d 404, the Court approved the issuance of public securities to construct a large warehouse and overhaul shop on public land for immediate rental to a privately-owned airline. These decisions are merely illustrative of many others which could be cited.
I simply feel that the cited decisions should be followed in this instance to enable the appellee City of Deerfield Beach to effectuate a program which its municipal officials have concluded would redound to the welfare of the community and its citizens. If they are no longer the law we ought to say so. I think they are sound and should control here.
Despite my profound respect for the views of my colleagues of the majority, I am compelled to dissent. I would affirm the decree of the trial judge and validate the proposed revenue certificates.
ROBERTS and ERVIN, JJ., concur.