Case Name: STATE of Missouri ex rel. William R. TAYLOR, Relator, v. LAND CLEARANCE FOR REDEVELOPMENT AUTHORITY OF KANSAS CITY, Missouri, a public corporation under the laws of Missouri, Respondent
Court: Supreme Court of Missouri
Jurisdiction: Missouri
Decision Date: 1979-09-11
Citations: 586 S.W.2d 331
Docket Number: No. 61220
Parties: STATE of Missouri ex rel. William R. TAYLOR, Relator, v. LAND CLEARANCE FOR REDEVELOPMENT AUTHORITY OF KANSAS CITY, Missouri, a public corporation under the laws of Missouri, Respondent.
Judges: DONNELLY, RENDLEN and MORGAN, JJ., and HENLEY, Senior Judge, concur.
Reporter: South Western Reporter Second Series
Volume: 586
Pages: 331–338

Head Matter:
STATE of Missouri ex rel. William R. TAYLOR, Relator, v. LAND CLEARANCE FOR REDEVELOPMENT AUTHORITY OF KANSAS CITY, Missouri, a public corporation under the laws of Missouri, Respondent.
No. 61220.
Supreme Court of Missouri, En Banc.
Sept. 11, 1979.
Rehearing Denied Oct. 10, 1979.
Wm. B. Morgan, Campbell, Gilmore, Erickson, Cottingham, Morgan & Gibson, Kansas City, for relator.
Lawrence M. Berkowitz, Judson L. Palmer, Jr., James S. Allen, Jr., Stinson, Mag & Fizzell, Thomas W. Tierney, Tierney, Pierce & Ernst, Kansas City, for respondent.
W. Scott Snyder, Columbia, Irvin Dagen, St. Louis, Howard C. Wright, Jr., Springfield, amicus curiae.

Opinion:
WELLIVER, Judge.
This is an original information in the nature of quo warranto. It is filed by relator William R. Taylor with the approval of the Attorney General to test the authority of respondent Land Clearance for Redevelopment Authority of Kansas City, hereinafter referred to as "LCRA", to issue Mortgage Revenue Bonds and Housing Revenue Bonds. The relator is an individual resident, registered voter and taxpayer residing at 9 West 125th Terrace in Kansas City, Missouri, and respondent LCRA is a public corporation organized and existing pursuant to the provisions of § 99.300 to 99.660, RSMo 1978.
The information filed by relator challenges the statutory authority for and the legality and constitutionality of respondent's actions taken in the process of attempting to issue fifteen million dollars of bonds. We find and hold that respondent has exceeded its statutory authority in attempting to issue these Mortgage and Housing Revenue Bonds.
The facts are stipulated or admitted in pleadings. Respondent LCRA of Kansas City, Missouri, has adopted resolutions and is taking actions to issue and sell its Mortgage Revenue Bonds and its Housing Revenue Bonds (collectively, the "Bonds"). The Bonds will not be payable from funds raised by taxation. It is intended that interest on the Bonds will be exempt from federal income taxation.
The proceeds of the sale of the Mortgage Revenue Bonds are intended to be used to make loans to individuals (the "Mortgagors") who will either be occupiers, developers, or landlord-owners of single-family or two-to-four-family residences in Kansas City, Missouri. Landlords need not reside in the mortgaged premises. Respondent intends to make some loans "involving mortgagors of moderate and high income levels." It intends "to finance some mortgages without limitation to the maximum amount of the loan or the maximum value of the property". Respondent intends to contract with other persons who will service some of the mortgage loans by collecting and appropriately applying monthly payments from the Mortgagors and enforcing the terms of the mortgage loans. The proceeds of the sale of the Housing Revenue Bonds would be used to make loans to private lenders (the "Lenders") who will make loans to Mortgagors.
It is intended that the tax-exempt interest on the bonds will permit respondent to make available loans to the Mortgagors and Lenders at lower rates of interest than conventional market rates, thereby reducing the principal and interest payments of the Mortgagors. The Mortgagors would be required to use the proceeds of the mortgage loans for the purchase, construction or rehabilitation of residential units. These residential units must be located on land necessary or incidental to the respondent's land clearance or urban renewal projects. Respondent intends to exercise its own discretion with respect-to whether a particular property is "incidental" to a land clearance or urban renewal project.
Respondent would pledge an appropriate portion of the collective monthly payments from the Mortgagors or the Lenders to pay principal and interest due on the Mortgage Revenue Bonds or the Housing Revenue Bonds, respectively. Each mortgage loan made from the proceeds of the Mortgage Revenue Bonds would be required to be insured or guaranteed and the proceeds of such insurance and guarantees along with reserves would also be pledged to the owners of the Mortgage Revenue Bonds. The Housing Revenue Bonds would be secured by securities guaranteed by the Government National Mortgage Association.
Respondent contends that statutory authorization for issuance of these Bonds can be inferred from any of the following statutory provisions.
(1) § 99.480.1 gives the Authority the power to issue bonds "for any of its corporate purposes."
(2) § 99.420.4 gives the Authority power "to prevent a recurrence of blighted or insanitary areas or to effectuate the purposes of this law" and the power to issue these Bonds can be inferred therefrom.
(3) § 99.420.14 grants the power "[t]o exercise all powers or parts or combinations of powers necessary, convenient or appropriate to undertake and carry out land clearance, redevelopment and urban renewal plans and projects and all the powers herein granted." \
(4) § 99.420.4 uses the word "develop".
(5) § 99.320.16 defines "real property" for the purposes of the act to include "liens by way of judgment, mortgage or otherwise and the indebtedness secured by such liens."
(6) § 99.650 provides that "[t]his law shall be construed liberally to effectuate the purposes hereof. Insofar as the provisions of this law are inconsistent with the provisions of any other law, the provisions of this law shall be controlling."
Respondent then alleges that there is a proper public purpose for its actions in issuing the Bonds, that the Bonds are constitutional under Article VI, Sections 23 and 25 of the Constitution, and that servicing of mortgage loans would not be an unlawful delegation of powers by the LCRA.
The Land Clearance for Redevelopment Authorities of Columbia, Springfield and St. Louis have filed briefs amici curiae in support of respondent's asserted authority to issue the Bonds.
Relator urges that the actions and intended actions of the respondent are not within its statutory grant of power. Relator quotes the following language from Taylor v. Dimmitt, 336 Mo. 330, 336, 78 S.W.2d 841, 843 (1934):
It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers, and no others: (1) Those granted in express words; (2) those necessarily or fairly implied in, or incident to, the powers expressly granted; (3) those essential to the declared objects and purposes of the corporation — not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied.
In State ex rel. Mitchell v. City of Sikeston, 555 S.W.2d 281, 288 (Mo. banc 1977), this court reaffirmed the principle that a municipal corporation has only the powers granted to it by the legislature.
To address the question of statutory construction presented, it is helpful to look at the historical development of housing legislation in this and other states. Respondent Authority was created by, and derives its powers from the Land Clearance for Redevelopment Authority Law, hereinafter referred to as the "LCRA Law", § 99.300 to 99.660, RSMo 1978, first enacted in 1951. The LCRA Law is typical of redevelopment authority statutes passed in many states, primarily in the decade following World War II. Such urban redevelopment authorities are commonly authorized to issue revenue bonds to finance projects involving the clearance and redevelopment of blighted and insanitary areas. These statutes commonly empower the redevelopment authorities to acquire property and to pay off liens and encumbrances existing on such property for that purpose. The introductory clause of § 99.420 expressly provides that the powers enumerated therein are those necessary or convenient to carry out the purposes of the LCRA Law, and respondent's powers must be construed in the light of those purposes. This court considered the purposes of the LCRA Law in State on Inf. of Dalton v. Land Clearance for Redevelopment Authority, 364 Mo. 974, 270 S.W.2d 44 (1954). In Dalton, relator challenged the validity of the LCRA Law on the ground that it violated Mo.Const. art. Ill, § 23, which provides that "[n]o bill shall contain more than one subject which shall be clearly expressed in its title." The court denied this contention, stating that "[t]he Law here in question deals with one general subject matter and has one purpose: the eradication and redevelopment of blighted and insanitary areas." Id. 270 S.W.2d at 54.
In the late 1960's a number of states began to enact legislation to slow the acceleration of urban deterioration caused by shortages in certain neighborhoods of mortgage capital. The legislatures focused attention on practices of private commercial lending institutions of "redlining," /. e., refusing to grant mortgages and home improvement loans in deteriorating urban neighborhoods. The diversion of investment capital from depositors in redlined neighborhoods to borrowers in other areas is known as disinvestment. The practice developed because such investments are less secure than loans for property elsewhere. The lack of incentive for absentee landlords and real estate speculators to invest funds to maintain buildings is seen as exacerbating the deterioration process. Hearings on S. 1281 before the Senate Committee on Banking, Housing and Urban Affairs, 94 Cong., 1st Sess., pt. 1 at 551-54 (1975) (report by Sternlieb, Burchell & Listokin). The common legislative response to the problem of housing shortages caused by a shortage of mortgage financing was to create a statewide housing finance authority. Most of the housing finance authority statutes concentrate the power to lend money to buyers of homes in a centralized finance agency. The lending power is circumscribed by numerous restrictions. Most such agencies are authorized to make loans only for residential housing and only to low to moderate income borrowers. Frequently such loans may be made only after an administrative determination that they are unavailable from private commercial lenders. Other limitations have been placed on the permissible amount of individual loans and on the aggregate indebtedness that the agency is permitted to incur.
Missouri's Housing Development Commission Act of 1969, § 215.010 to 215.250, RSMo 1978 represents our General Assembly's response to the general problems of financing of low cost housing and the related problems of disinvestment and redlining of neighborhoods by commercial mortgage lenders. It empowers the Housing Development Commission to issue revenue bonds to raise funds to "make, purchase or participate in the purchase of uninsured, partially insured or fully insured first mortgage loans . to finance the building or rehabilitation of residential housing" for low or moderate income persons. § 215.-030.1. Unlike the LCRA Law, the Housing Development Commission Act provides for the centralization of delegated powers in a single state agency. § 215.020. The Commission's power to purchase and insure first mortgage loans is limited to loans for residential housing, and only loans to low to moderate income borrowers are authorized. § 215.030.1 and .2. The power of the Commission to make construction loans is limited to federally insured loans to sponsors of residential housing for occupancy by persons and families of low to moderate income. § 215.030.3. Construction loans are further required to "be made only upon determination by the commission that construction loans are not otherwise available, wholly or in part, from lenders upon reason ably equivalent terms and conditions." Id. Originally, the Housing Development Commission was authorized to issue no more than $100 million in bonds, but this was raised in 1974 to $200 million of bonding authority. § 215.160, RSMo 1978; Laws of Mo.1969, p. 362; Laws of Mo.1974, pp. 826-27.
We are persuaded that the LCRA Law does not explicitly extend the power to the respondent to act as a mortgage lender, nor is such power fairly implied in or incident to powers expressly granted in the statute, nor is such power essential or indispensable to attaining the purposes expressed in the statute. No case has been cited to or found by this court in which this or any other state has construed the language of its LCRA Law to include the authority to issue revenue bonds to become a mortgage lender as respondent proposes to do. The provision in § 99.650 that the LCRA Law should be liberally construed to effectuate its purposes and the provision in § 99.420.14 granting all necessary and appropriate powers for attainment of the purposes of the law, place no obligation on this court to infer new and additional purposes over and beyond those purposes originally contemplated by the legislature. Respondent's argument that its authority to "develop" buildings in carrying out its statutory purpose "includes providing financing for the ultimate purchaser" severs the word from context and attributes to it a sense that is far removed from the meaning of the term in the series in which it appears. We find no merit in respondent's contention that the difference in wording between the grants of power in the LCRA Law and the grants of power in the Housing Development Commission Act represents only an evolution in the General Assembly's writing style over the eighteen years that elapsed between the passage of the two statutes.
Historically, housing finance laws have followed and supplemented the LCRA Laws of the various states.
We find no state which has by judicial interpretation read into its LCRA Law, the mortgage financing powers herein sought to be established by respondent. We find no special provisions distinguishing the Missouri LCRA Law in this respect and from which we can infer the alleged power to issue revenue bonds and engage in mortgage financing. For the reasons stated, we find and hold that respondent, LCRA of Kansas City, has exceeded its statutory authority in attempting to issue its Mortgage Revenue Bonds and Housing Revenue Bonds.
Having found the lack of statutory authority to act, we find it unnecessary to address the constitutional questions briefed by the parties. The requested ouster is granted and judgment is entered in favor of relator.
DONNELLY, RENDLEN and MORGAN, JJ., and HENLEY, Senior Judge, concur.
SEILER, J., dissents in separate dissenting opinion filed.
BARDGETT, C. J., dissents and concurs in separate dissenting opinion of SEILER, J.
HIGGINS, J., not participating because not a member of the court when cause was submitted.
. Among these are Alaska's City Housing Law of 1935, Alaska Stat. § 18.55.480 to 18.55.996 (1978); California's Limited Dividend Housing Corporations Law of 1951, Cal. Health and Safety Code § 34800 to 34948 (1973); Colorado City Housing Law of 1935, Colo.Rev.Stat. § 29-4-101 to 29-4-123 (1977); Georgia's Housing Authorities Law of 1937, Ga.Code Ann. § 99-1101 to 99-1170 (1976); Iowa's Urban Renewal Law of 1957, Iowa Code Ann. § 403.1 to 403.18 (West 1976); Maine Housing Authorities Act of 1954, Me.Rev.Stat. tit. 30, § 4551 to 4788 (1978); Michigan's municipal rehabilitation legislation of 1945, Mich.Stat. Ann. § 125.71 to 125.84 (1976); Minnesota's Municipal Housing and Redevelopment Act of 1947, Minn.Stat.Ann. § 462.411 et seq. (West 1962); Montana's Housing Authorities Law of 1935, Mont.Rev.Codes Ann. § 35-101 to 35-146 (1961); North Carolina's Urban Redevelopment Law of 1951, N.C.Gen.Stat. § 160A-500 to 160A-526 (1976); Oregon's Housing Authorities Law, Or.Rev.Stat. § 456.055 to 456.230 (1977); Pennsylvania's Urban Redevelopment Law of 1945, 35 Pa.Cons.Stat.Ann. § 1701 to 1747 (Purdon 1977); Rhode Island's Redevelopment Act of 1956, R.I.Gen. Laws § 45-31-1 to 45-33-17 (1971); Tennessee's Housing Authorities Law of 1935, Tenn.Code Ann. § 13-801 to 13-833 (1973); Utah's Community Development Law of 1965, Utah Code Ann. § 11-15-1 to 11-15-152 (1973); Vermont's Urban Renewal Act of 1957, Vt.Stat.Ann. tit. 24, § 3201 to 3221 (1975); West Virginia's Urban Renewal Authority Law of 1951, W.Va.Code § 16-18 — 1 to 16-18-29 (1972); and Wisconsin's Urban Redevelopment Law of 1943, Wis.Stat.Ann. § 66.405 to 66.425, 66.431 (1965).
. The way in which the unavailability of mortgage loans causes deterioration of a redlined neighborhood is outlined in Note, Attacking the Urban Redlining Problem, 56 Boston U.L.Rev. 989, 997 (1976):
Current homeowners, recognizing both the lower demand for housing in their neighborhood and its resultant effect on property values, realize that the sale of their homes will no longer yield a return equivalent to their investments. Owners of multi-family homes no longer feel capable of refinancing their properties in order to retrieve capital for further investment purposes. Thus, the homes in the area become nothing more than costly burdens to their owners. Any further expenditures seem both unwarranted and wasteful. As a result, homeowners keep maintenance and repair costs at a minimum, and the neighborhood deteriorates.
. Cal.Health and Safety Code § 37910 to 37964 (Supp.1979); Colo.Rev.Stat. § 29-4-701 to 29-4-732 (Supp.1978); Ga.Code Ann. § 99-3601 to 99-3612 (Supp.1978); Iowa Code Ann. § 220.1 to 220.36 (Supp.1979); 30 Me.Rev. Stat. § 4601A (1978); Mich.Stat.Ann. § 125.-1401 to 125.1496 (1976); Minn.Stat.Ann. § 462A.01 to 462A.24 (Supp.1979); Mont.Rev. Codes Ann. § 35-501 to 35-526 (Supp.1977); N.C.Gen.Stat. § 122A-1 to 122A-23 (Supp. 1977); Or.Rev.Stat. § 456.550 to 456.720 (1977); 35 Pa.Cons.Stat.Ann. § 1680.101 to 1680.603a (Purdon 1977); R.I.Gen.Laws § 42-55-1 to 42-55-27 (1977); Tenn.Code Ann. § 13-2201 to 13-2214 (Supp.1978); Utah Code Ann. § 63 — 44a-1 to 63-44a-20 (1978); Vt. Stat.Ann. tit. 10, § 381 to 398 (Supp.1978); W.Va.Code § 31-18-1 to 31-18-25 (1975); Wis.Stat.Ann. § 234.01 to 234.44 (Supp.1979).
It has been reported that thirty-nine states had enacted legislation creating state housing finance agencies by 1976. Note, State Housing Finance Agencies: The Iowa Blueprint, 62 Iowa L.Rev. 1524, 1524 n. 12 (1976-77).