Case Name: Ira Royal L. TRIBE et al., Plaintiffs and Appellants, v. SALT LAKE CITY CORPORATION and Redevelopment Agency of Salt Lake City et al., Defendants and Respondents
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1975-07-30
Citations: 540 P.2d 499
Docket Number: No. 13856
Parties: Ira Royal L. TRIBE et al., Plaintiffs and Appellants, v. SALT LAKE CITY CORPORATION and Redevelopment Agency of Salt Lake City et al., Defendants and Respondents.
Judges: TUCKETT, J., concurs.
Reporter: Pacific Reporter 2d
Volume: 540
Pages: 499–515

Head Matter:
Ira Royal L. TRIBE et al., Plaintiffs and Appellants, v. SALT LAKE CITY CORPORATION and Redevelopment Agency of Salt Lake City et al., Defendants and Respondents.
No. 13856.
Supreme Court of Utah.
July 30, 1975.
H. R. Waldo, Jr., Michael D. Hughes, W. Robert Wright, and Ronald Ockey of Jones, Waldo, Holbrook & McDonough, Salt Lake City, for plaintiffs-appellants.
Richard S. Fox and William D. Oswald of Strong, Poelman & Fox, Salt Lake City, for defendants-respondents.
Parley R. Baldwin, Ogden, for amicus curiae.

Opinion:
MAUGHAN, Justice:
Here on appeal is the decision of the district court declaring the Utah Neighborhood Development Act constitutional, and that actions taken and proposed to be taken pursuant to those statutory provisions are constitutionally permissible.
Plaintiffs commenced a declaratory judgment action in the court below with the alleged purpose of having the foregoing statutes and actions declared unconstitutional. On appeal plaintiffs raise seven points, any one of the first five of which, if valid, would be sufficient to reverse the action of the lower court, and defeat the proposed project. In summary, the points raised by plaintiffs are:
1. That the Redevelopment Agency proposed is in fact a special commission and contravenes the provisions of Article VI, Section 28, Utah Constitution.
2. The proposed Redevelopment Agency bonds constitute a debt of the City within the meaning of Article XIV, Sections 3 and 4, Utah Constitution, and thus would require approval of the electorate of the City — an action which will not be taken under the proposed plan.
3. The proposed plan contravenes the provisions of Article VI, Section 29, Utah Constitution, because the issuance of the proposed bonds would in fact be a lending of credit in violation of this constitutional provision.
4. The construction and operation of the proposed parking facility will result in the granting of private benefits, and thus contravene Article I, Sections 7, 22, 23 and 24, Utah Constitution, and the Fourteenth Amendment to the United States Constitution.
5. The proposed plan is in violation of Article XIII, Section 5, Utah Constitution, because the tax allocation provisions of the plan are a clear interference with the power of the City and County to collect taxes for all purposes.
6. That the Redevelopment Agency is subject to the budgetary laws applicable to cities.
7. That the proposed allocation of taxes using an assessed valuation base of 1970 constitutes a retroactive application of the enabling law, and thus violates proper principles of statutory construction.
In June of 1969, Salt Lake City Corporation created the Redevelopment Agency of Salt Lake City, (hereinafter referred to as the Agency) pursuant to the provisions of the Utah Neighborhood Development Act (hereinafter referred to as the Act). The Board of Commissioners of Salt Lake City Corporation was designated as the Redevelopment Agency of the City. In February of 1971, the City duly adopted an ordinance approving a redevelopment plan for the project area with which we are here concerned, viz., the blocks and streets adjacent thereto, of the two-block area bounded on the north by First South Street, on the east by Main Street, on the south by Third South Street, and on the west by West Temple Street.
The plan recognized that in this project area there were a number of substandard buildings and substandard land use; and that through rehabilitation, in some cases, or acquisition, clearance and rebuilding in other cases, the project area could be improved, with the result, among other things of strengthening the tax base and ameliorating the economic health of the entire community. Within this area the plan called for the construction and operation of a parking facility, to be financed by the issuance of $15,000,000 of tax allocation and parking revenue bonds. These bonds are to be retired by parking revenues and from an allocation of taxes, the formula for which is given in the Act. The allocation of taxes comes about in the following fashion: A base year is chosen (in this instance 1970) which year provided the last equalized assessment roll prior to February 11, 1971, the date of the adoption of the original redevelopment plan. On that date there was no possibility of providing for an allocation of taxes to the Agency, because it was not until April 4, 1974, that such a method of financing was provided by the legislature. Taxes assessed within the project area will continue to be paid to the various taxing agencies, through normal channels, based on the assessed valuation established by the assessment roll of 1970.
Any increase in valuation, above that established by the assessment roll of 1970, within the project area, will produce an increment in tax revenue. It is this increment which will be diverted directly to retire the Agency bonds. This tax allocation together with the anticipated revenues from the operation of the parking facility will constitute the sole revenues obligated to retire the bonds. The plan provides that this method continues until such time as the bonds are retired, after which the total taxes assessed will find their way, through normal channels, to the various taxing agencies, while the revenue arising from the operation of the parking facility becomes that of the Agency, for use in future redevelopment projects. It is this tax allocation feature which is central to the matters here for consideration.
Are the Agency, and its methods for implementing its objects constitutionally permissible? The answer to this question hinges on whether the objects and purposes of the Act are statewide or local; and whether the Agency, as structured by the Act, is such a one as can concurrently exist with municipal corporations and assessment units.
The concept of redevelopment was enacted by the state legislature, its area of operation is statewide, and deals with a statewide problem, viz., blight. To be sure, the present project area would appear to have only local operation, but it must be remembered that it is a local operation of an act of general statewide scope; and that its local operation hinges on a contingency — the decision of the legislative body of the Agency. A decision motivated by the existence of a condition of statewide concern.
It appears clear that the Agency here concerned is a quasi-municipal corporation, and not a special commission. A quasi-municipal corporation has been defined as a public agency created by the legislature to aid the state in some public work for the general welfare, other than to perform as another community government. A municipal corporation is a body politic and corporate, created to administer the internal concerns of the district embraced within its corporate limits; in matters peculiar to such place and not common to the state at large. A special commission is some body or group separate and distinct from municipal government. Such a commission is not offensive to the constitution by its creation, but only when such a commission is delegated powers which intrude into areas of purely municipal concern.
The success of plaintiff's challenges depends upon the character of the agency created by the legislature. If the legislative enactment authorizes the performance of activities, which qualify as a function appropriately performed by a state agency, the constitutional interdiction of Article VI, Section 28, is not applicable. This section applies only to municipal functions, the performance of which are constitutionally limited to the units of local government. The problem of "urban blight" we recognize as one of statewide concern, and not merely a local or municipal problem. The agency for that reason does not run counter to Article VI, Section 28. The agency is a quasi-municipal corporation, a public agency created for beneficial and necessary public purposes. It is not a true municipal corporation, having power of local government, but an agency of the state designed for state purposes. Since it is a quasi-municipal corporation, formed for public purposes, it is within the discretion of the legislature to grant it any powers, not expressly prohibited by the constitution, to further such purposes, including the power of taxation. The public purposes for which the agency is organized inures to the benefit of the public generally, therefore the public may be charged for such benefits through general taxation. The agency is separate and apart from the city government, and yet is administered by a legislature body responsible to the local electorate.
The Act specifically provides that the bonds and other obligations of the agency are not a debt or obligation of the community (which is defined in the Act as a city, county or combination of the two), the state, or any of its political subdivisions. In addition, the enabling statute, the proposed bond resolution, the proposed bond form, and the city ordinance of ratification all prohibit the use of credit of the city for the repayment of the bonded indebtedness. The bondholders can look only to revenues from the operation of the facility and the allocated taxes, for retirement of the bond obligation. Under the subject statute, providing for this arrangement, there can be no city debt created contrary to Article XIV, Sections 3 and 4; nor can there be a lending of the city's credit in contravention of Article VI, Section 29.
In Patterick v. Carbon Water Conservancy District this court stated that the constitutional inhibitions of Sections 3 and 4 of Article XIV apply only to cities, towns and villages and subdivisions thereof, and do not apply to quasi-municipal corporations, which are not municipalities within the contemplation of that term, as used in the constitution. A quasi-municipal corporation is an arm of the state government separate and distinct from any municipality, with powers and rules of its own, and the mere fact that its territorial boundaries may encompass or impinge upon the territorial boundaries of a municipality does not make it a part of the city, for its powers are distinct and separate.
With reference to appellant's claim that procedures under this Act, as proposed, will grant private benefits through the use of public money, we note that there may be some private benefits — it is hard to imagine how a facility such as the one proposed here could be constructed without conferring a benefit on some private individual or individuals — but any benefit which might inure to a private individual through the construction of the parking facility is strictly incidental to the public purpose of the agency in redeveloping the area to terminate urban blight. The funds are being used by a public body for a public purpose, i. e., to terminate urban blight; they are not being given or loaned to a private person, nor are they used primarily for private purposes. This particular question was dealt with in Redevelopment Agency of the City and County of San Francisco v. Hayes. The court there said that the fundamental test of the constitutionality of the statute requiring the use of public funds is whether the statute is designed to promote the public interest, as opposed to the furtherance of the advantage of individuals; and such a statute should not be declared unconstitutional because of the fact that, incidental to the main purpose, there results an advantage to individuals.
Directing our attention now to appellants' claim that the allocation of taxes violates Article XIII, Section 5, it needs only to be said that the law is well settled that in exercising the powers of the state the legislature may require the revenue of a municipality, raised by taxation, to be applied to uses other than that for which the taxes were levied. Its power is, of course, subject to constitutional limitations, but here we see no specific constitutional limitation which has been offended, or which expressly prohibits the powers conferred on the agency by the statutes in question, or to the actions taken by the agency pursuant thereto.
What has been heretofore said about the provisions of the Act, its objects and purposes; and the nature of the agency renders inapplicable the Uniform Municipal Fiscal Procedures Act. Thus, plaintiffs' sixth assignment of error is without merit.
It remains only to deal with appellants' point No. 7, where it is claimed that the retroactive application of the Enabling Act is in violation of proper principles of statutory construction.
Section 11-19-23 of that Act permits the amendment of an existing redevelopment plan, and such amendment does not create a new or separate redevelopment plan. In the matter at hand, the plan was amended to include the statutory allocation as a means of financing the project. Section 11-19-29, specifically provides that any redevelopment plan may contain a provision for tax allocation "after the effective date of the ordinance approving the development plan." The term "redevelopment plan" in 11-19-29(1) refers to the original redevelopment plan, and the effective date of the ordinance creating the plan establishes the base to which the allocation formula is applied.
For the foregoing reasons we sustain the decision of the trial court and hold that the Utah Neighborhood Development Act is a constitutional exercise of state power by the legislature, and that the proposed issue of parking revenue and tax allocation bonds are constitutionally permissible. No costs awarded.
TUCKETT, J., concurs.
ELLETT, J., concurs in the opinion and also concurs in the concurring opinion of CROCKETT, J.
. 11-19-1 et seq., U.C.A.1953; and Chapter IV, Laws of Utah 1974.
. Section 6, Chapter 4, Laws of Utah 1974.
. Id. Chapter 4, effective date April 4, 1974.
.1 McQuillin, Municipal Corporations, 3d Ed., Sec. 2.13, p. 467.
. Carter v. Beaver County Service Area No. One, 16 Utah 2d 280, 282, 399 P.2d 440 (1965).
. Patterick v. Carbon Water Conservancy Dist., 106 Utah 55, 71-72, 145 P.2d 503 (1944).
. 11-19-25, Laws of Utah 1974.
. Id. 11-19-23.3, 25-35.
. Footnote 6.
. Lehi City v. Meiling, 87 Utah 237, 256-257, 48 P.2d 530 (1935).
. 122 Cal.App.2d 777, 266 P.2d 105, 125 (1954).
. Salt Lake County v. Salt Lake City, 42 Utah 548, 134 P. 560 (1913); McQuillin, Municipal Corporations, Rev. Vol. 1966, Section 4.140.
. 10-10-23 et seq., U.C.A.1953, as amended.
. See Redevelopment Agency of City and County of San Francisco v. Cooper, 267 Cal.App.2d 70, 72 Cal.Rptr. 557 (1968), wherein a similar interpretation was based upon similar statutory provisions.