Title: Southeast Kan. Landowners Ass'n v. KAN. TURNPIKE AUTH.
Citation: 224 Kan. 357, 582 P.2d 1123
Docket Number: 48,726
State: Kansas
Issuer: Kansas Supreme Court
Date: July 15, 1978

224 Kan. 357 (1978)
582 P.2d 1123
THE SOUTHEAST KANSAS LANDOWNERS ASSOCIATION, et al., Appellants,
v.
THE KANSAS TURNPIKE AUTHORITY, Appellee.
No. 48,726

Supreme Court of Kansas.
Opinion filed July 15, 1978.
Robert J. O'Connor, of Hershberger, Patterson, Jones &amp; Roth, of Wichita, argued the cause and was on the brief for the appellants.
Richard R. Rock, of Rock, Smith &amp; Wright, of Arkansas City, argued the cause and was on the brief for the appellee.
The opinion of the court was delivered by
MILLER, J.:
This action was commenced by the plaintiffs, Southeast Kansas Landowners Association, an unincorporated association composed of more than 230 persons owning more than eighty per cent of the land over which proposed toll roads are to be routed, and Kent Radcliff, Phyllis Clayton, and Lynn Swearingen, individually and as representatives of a class of similarly situated persons, to permanently enjoin the defendant, The Kansas Turnpike Authority, from building, and from issuing bonds to fund, the proposed Southeast Kansas Turnpike, which will extend from Winfield, Kansas, to the Baxter Springs-Galena area in southeast Kansas, and the "connector," which would connect the proposed Southeast Kansas Turnpike and the present Kansas Turnpike, extending from Winfield, Kansas, to the area of Belle Plaine, just south of Wichita. The trial court found in favor of the Kansas Turnpike Authority on all issues; plaintiffs appeal.
There are a number of issues, which will be detailed later in this opinion. We turn first to the legislative history and background facts.
*358 LEGISLATIVE HISTORY
The original Kansas Turnpike statutes were enacted in 1953 (Laws 1953, Chap. 308). These now appear as K.S.A. 68-2001 to 2020, inclusive. Certain studies were statutorily mandated; these were required before the project could be undertaken. Section 2 of the original act, K.S.A. 68-2002, provides:
The issuance of Turnpike revenue bonds was authorized. These were made payable solely from revenues by section 8 of the 1953 act, now K.S.A. 68-2008, which provides:
The construction and funding of the 18th Street Expressway, connecting Kansas City, Kansas, and the original Kansas Turnpike, with the urban areas of northeast Johnson County, was authorized by Laws of Kansas, 1957, Chapter 368, since amended and now appearing as K.S.A. XX-XXXX-XXXX. The 1957 act required studies similar to those required in the original turnpike act, but additional funds were provided to pay the indebtedness in the event that revenues were not sufficient in any year. Sections 2, 4, and 7 of the 1957 act read in part as follows:
The 1967 legislature authorized some additional turnpike studies by Laws of Kansas, Chapter 356, now appearing as K.S.A. 68-2051 to 2069, inclusive. The provisions for a preliminary study, and for the issuance of revenue bonds payable solely from revenues of the project paralleled the requirements in the original turnpike act. This enactment authorized the feasibility study of a toll road from Kansas City to the southeast corner of the state; studies were made, but the project was not found to be feasible.
Laws of 1972, chapter 249, now K.S.A. 68-2070 to 2092, inclusive, authorized certain toll road projects, including one from Wichita to the vicinity of Strother Field, in Cowley County. The act provides:
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Laws of 1973, chapter 269, authorizes a toll road, commencing near the city of Winfield, at a point of intersection with the Wichita-Strother Field expressway, and continuing in an easterly direction to a point on the Kansas-Oklahoma border in the vicinity of the cities of Galena and Baxter Springs. The 1973 act contains provisions substantially identical with those quoted from the 1972 act.
Laws of 1974, chapter 276, amended the 1973 enactments to authorize the state highway commission to make payments to the *362 authority not only from the state highway fund, but also from the state freeway fund. The pertinent provisions of the 1974 amendments are as follows:
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The state freeway fund was created in the Laws of 1969, chapter 462, section 3, which now appears as K.S.A. 79-3425. By *364 section 18 of the 1969 act, the state highway commission was "authorized, empowered and directed to establish and construct a state system of modern express highways and freeways." The act was vetoed by then Governor Robert B. Docking, but the veto was overridden by a two-thirds majority of both houses of the legislature. Section 18, since amended, now appears as K.S.A. 68-2301.
The money allocated to the state freeway fund is derived from the tax on motor fuels imposed by article 34 of chapter 79 of the Kansas Statutes Annotated. See, K.S.A. 79-3425. The tax on motor fuels is imposed, as provided in K.S.A. 79-3402, "for the purpose of producing revenue to be used by the state of Kansas to defray in whole, or in part, the cost of constructing, widening, purchasing of right-of-way, reconstructing, maintaining, surfacing, resurfacing and repairing the public highways, including the payment of bonds heretofore issued for highways included in the state system of this state, and the cost and expenses of the director of this state and his or her agents and employees incurred in administration and enforcement of this act and for no other purpose whatever."
BACKGROUND FACTS
Following the enactment of the 1973 act, the Turnpike Authority took steps to make the prerequisite studies for the "connector" and the Southeast Kansas Turnpike. The Authority retained three firms, each of whom had been retained to assist in the making of the required preliminary studies for the original Kansas Turnpike.
The Authority engaged the engineering firm of Coverdale &amp; Colpitts, of New York City, to make an estimate of the potential traffic and the tolls and other revenues to be realized on each of the segments being considered, the proposed "connector" and the proposed Winfield to Galena turnpike.
Knoerle, Bender, Stone and Associates, Inc., a Chicago based civil engineering firm, was retained to do the needed engineering studies, and to estimate the cost of land acquisition, construction, operation, and maintenance of the proposed toll roads.
Finally, the brokerage house of E.F. Hutton &amp; Company, Inc., of Kansas City, Missouri, was retained as financial consultant, to advise the Authority as to the feasibility of issuing and funding the bonds authorized for construction.
Extensive studies were made by each of these consultants. *365 Their initial reports were not favorable. For example, Coverdale &amp; Colpitts reported in September, 1973, that the revenues then estimated "come nowhere near the revenues needed to pay [maintenance and operation] expenses and debt service for a bond issue and would require support from the State Highway Fund." (Emphasis supplied.) We should note, however, that this letter was premised upon the issuance of 20-year bonds, and the retirement of the bonds within that period.
In June, 1974, after the enactment of the amendments heretofore quoted, updated and final reports were made to the Authority by each of the consulting firms. Knoerle, Bender, Stone and Associates presented its final cost estimate; Coverdale &amp; Colpitts presented an updated estimate of revenues over a 46-year period (which was considerably more optimistic than its earlier forecasts); and E.F. Hutton &amp; Company, basing its opinion upon the final reports of Knoerle, Bender, Stone and Associates and Coverdale &amp; Colpitts, reported to the Authority that in its opinion the projects would be self-liquidating over the 40-year life of the bonds, and the project was thus feasible.
The Authority determined that public funds were not available to build free expressways over the proposed routes. In reliance upon the reports received from the Knoerle, Coverdale, and Hutton firms, the Authority adopted a resolution on June 27, 1974, in which it recited the receipt of the reports and the making of a thorough study by the Authority with respect to traffic, engineering, cost and financing, and that construction of the proposed toll roads "can be financed wholly through the investment of private funds in highway revenue bonds ...; that such highway revenue bonds ... will be entirely self-liquidating through tolls and other income from operation of such expressway, but not including any amounts to be paid to the Authority [from] the State Highway Fund [or] State Freeway Fund ... and ... that with respect to such express highway, the Authority has determined that its study shows that the provisions of Chapter 269 of the Laws of Kansas, 1973, as amended by Section 2 of Chapter 275 and Section 1 of Chapter 276 of the Laws of Kansas, 1974, are met."
The Authority submitted its final report to the State Highway Commission on July 30, 1974. On August 14, 1974, the Authority and the Commission entered into contracts covering both projects. *366 The Commission agreed to make payments to the Authority from the State Highway Fund, in connection with the "connector," and from the State Freeway Fund or the State Highway Fund, in connection with the Southeast Kansas Turnpike, as authorized by Laws of Kansas, 1972, Chapter 249, § 4 (now K.S.A. 1977 Supp. 68-2073) and Laws of Kansas, 1974, Chapter 276, § 3 (now K.S.A. 1977 Supp. 68-2096), respectively.
This injunction action was filed July 15, 1974. The matter was fully tried, briefed, and argued, and proposed findings of fact and conclusions of law were filed by counsel. On November 18, 1976, the trial court entered its order. It made lengthy and detailed findings of fact and conclusions of law. The conclusions of law are as follows:
The trial court then entered judgment for the defendant on all issues; this appeal followed. We should note that as of this date, bonds have not been issued by the Authority to fund either project.
RULES OF STATUTORY CONSTRUCTION
Before turning to the issues raised, we should review briefly the principal rules governing the judicial construction of acts of the legislature, and governing judicial review of the actions of administrative boards. The fundamental rule of statutory construction, to which all others are subordinate, is that the purpose and intent of the legislature governs when that intent can be ascertained from the statutes. Easom v. Farmers Insurance Co., 221 Kan. 415, Syl. 2, 560 P.2d 117 (1977); Thomas County Taxpayers Ass'n v. Finney, 223 Kan. 434, 573 P.2d 1073 (1978); Brinkmeyer v. City of Wichita, 223 Kan. 393, 573 P.2d 1044 (1978).
In determining legislative intent, courts are not limited to a mere consideration of the language employed, but may properly look to the historical background of the enactment, the circumstances attending its passage, the purposes to be accomplished, and the effect the statute may have under the various constructions suggested. State, ex rel., v. City of Overland Park, 215 Kan. 700, Syl. 10, 527 P.2d 1340 (1974); State v. Luginbill, 223 Kan. 15, 574 P.2d 140 (1977).
In construing a statute, the legislative intention is to be determined from a general consideration of the whole act. Effect must be given, if possible, to the entire statute and every part thereof. *368 To this end it is the duty of the court, so far as practicable, to reconcile the different provisions so as to make them consistent, harmonious and sensible. Harris v. Shanahan, 192 Kan. 629, 635, 390 P.2d 772 (1964); Rogers v. Shanahan, 221 Kan. 221, 228, 565 P.2d 1384 (1976).
The wisdom, justice, and expediency of legislation is not for judicial determination. State, ex rel., v. Kansas Turnpike Authority, 176 Kan. 683, 689, 273 P.2d 198 (1954).
The limitations on judicial review of the actions of administrative agencies, absent statutory guidance, were discussed in Warburton v. Warkentin, 185 Kan. 468, 345 P.2d 992 (1959), where at page 479, then Justice Schroeder said:
THE CONVENTIONAL REVENUE BOND ISSUE
The first and primary issue before us is whether the Authority, and the experts it retained, erred in failing to apply conventional revenue bond concepts. Plaintiffs contend that the enabling legislation for the southeast Kansas turnpike and the connector only authorized the issuance of conventional revenue bonds, or "conventional supported" revenue bonds. The defendant contends that the statutes authorized the issuance of "subsidized or guaranteed" revenue bonds.
The parties agree that there are three types of revenue bonds: *369 conventional or pure revenue bonds; "conventional supported" revenue bonds; and "subsidized or guaranteed" revenue bonds. Each requires a different type of study.
A conventional or pure revenue bond study, such as that conducted under the original Kansas Turnpike Act, is premised upon there being but a single source of funds: tolls and other revenues of the project, which must be adequate to pay all costs of maintenance and operation of the project, and all principal and interest payments on the bonds, for each year of the project, commencing with the first year. The amount of revenue projected for the project must be at least fifty per cent over the "break-even" point, in order to provide sufficient protection for investors.
A "conventional supported" revenue bond study is premised upon there being two sources of funds, tolls and other revenues from the project, and standby or supplementary funds. There must be sufficient anticipated revenues from the proposed project to pay all maintenance and operation cost plus principal and interest on the bonds, each year of the project, beginning with the first year; but, because an additional source of funds is provided, the amount of projected revenue need only equal the amount required to break even  an amount sufficient to pay the anticipated maintenance, operation, and bond expense. The supplementary source (in this case, the state freeway fund and the state highway fund) provides additional protection for the investors.
A "subsidized or guaranteed" revenue bond study is based upon the assumption that the revenues will not be sufficient to pay all expenses during the early years of the project. Such deficiency will be met by payments from a supplemental source. The study need only show that the project will be self-liquidating over the designated life of the bonds. The revenues need not be sufficient to pay all the costs for the first few years, as long as sufficient revenue is generated over the life of the project to pay all of the maintenance, operation, and bond expense, including repayment of advancements from the supplemental source made during the initial years.
All of the Kansas Turnpike statutes require that the project be self-liquidating; but in the acts now before us, the legislature has authorized additional and supplementary sources of funds for payment of the bonds and interest  payments from the State Highway Fund in the case of the connector, and from both the *370 State Freeway Fund and the State Highway Fund in the case of the Southeast Kansas Turnpike. If the legislature intended each project to pay its own way from the start, it could have said so, as it did in the 18th Street Expressway legislation. The legislature abandoned the pure or conventional bond revenue requirement of the original Turnpike act when it enacted the 1957, 1972, 1973, and 1974 acts.
When the 1974 amendments were before the Kansas legislature, Senator Bob Storey, who carried the amendments on the Senate floor, distributed to each senator a copy of a financial chart prepared by the controller of the State Highway Commission. This chart shows the amounts of money which the State Highway Commission estimated would be required to support the Southeast Kansas Turnpike during the initial years of its operation. The legislature was thus made aware that the projected tolls from the Southeast Kansas Turnpike would not be sufficient, in the initial years of its operation, to fund the project, and that supplemental funds from some other source or sources were necessary if the road were to be built. Such projections are not consistent with a plan for the issuance of either conventional revenue bonds or conventional supported revenue bonds. Both types require projections of revenue sufficient to meet all expenses, commencing with the first year of the project's operation. The projections before the Senate indicated clearly that the project would be unable to support itself during its early years. The repayment provisions contained in the acts indicate that the legislature intended the project to be self-liquidating, not at the start, but over the entire span.
Three separate, distinct, and independent findings are required by the enabling acts of 1972, 1973 and 1974. The Turnpike Authority must make each required finding before bonds can be issued and sold. The Authority has done so. The first finding is that adequate public funds are not available so that freeways can be built over the proposed routes. The Authority could and did make that determination without expert assistance.
The second is that the proposed construction can be financed  all construction costs can be paid  from the proceeds of the bonds. This the Authority determined from the construction cost estimates of Knoerle, Bender, and from the report of Hutton indicating that the necessary sums for construction could *371 be realized from the sale of the bonds. This finding is concerned with the initial financing of construction, not with revenues or operational costs thereafter, except insofar as those having a bearing upon the salability of the bonds.
The third required finding is that the project, including the indebtedness created by the issuance of bonds, will be entirely self-liquidating from tolls and other income from operation. Amounts advanced from the state freeway fund and the state highway fund must be repaid, and all operational, maintenance, bond and interest cost must be paid from the income generated by the project. The basis for this finding lies in the maintenance and operation cost estimates of Knoerle, Bender &amp; Stone; the revenue estimates of Coverdale &amp; Colpitts; and the amount of principal and interest of the proposed bond issue. Since the legislature knew that the project would not be self sufficient at the outset, the only rational construction of the legislative language is to hold that the legislature meant the project to be self-liquidating over the term of the bonds.
We hold that the 1972, 1973, and 1974 acts, each construed as a whole, authorize the issuance of "subsidized or guaranteed" revenue bonds, and that the Authority and the trial court did not err in so construing the acts.
THE GENERAL OBLIGATION BOND ISSUE
Are the highway revenue bonds authorized by the enabling legislation violative of Article 11, § 9 of the Kansas Constitution? We think not. That section provides in part that "The state ... may adopt, construct, reconstruct and maintain a state system of highways, but no general property tax shall ever be laid nor general obligation bonds issued by the state for such highways ..."
Though the enabling acts authorize payments from the state freeway fund and the state highway fund, those funds are not raised by general property taxes; instead, both arise from the levy of special taxes on motor fuels. See Article 11, § 10 of the Kansas Constitution, and K.S.A. 79-3401, et seq., as amended.
The bonds themselves, by the express terms of the statute, and by the express language required to be set forth on the face of the bonds, are not general obligation bonds. We conclude that the highway revenue bonds authorized by the 1972, 1973 and 1974 acts do not violate Article 11, § 9 of the Constitution.
*372 THE STUDIES
Plaintiffs contend that the studies made by Coverdale &amp; Colpitts, and the other firms retained by the Authority, were not supported by the evidence, and that the conclusions in the several reports made to the Authority in June, 1974, were thus erroneous. All of plaintiffs' objections to the reports and the conclusions were thoroughly litigated in the trial court. In some instances plaintiffs' experts disagreed with the conclusions of those engaged by the Authority. As to land values, for example, plaintiffs' expert estimated the acquisition cost to be several times the figure arrived at by Knoerle, Bender &amp; Stone. The trial court pointed out that the Knoerle, Bender &amp; Stone estimate was the result of a tract by tract analysis, involving on-site viewing and several months of office work; plaintiffs' expert, on the other hand, had spent six days total office time on the appraisal.
The early Coverdale &amp; Colpitts reports, as we have previously noted, were based upon a conventional bond approach; the later report was made by applying a subsidized or guaranteed bond approach to the data already on hand as a result of many months' work.
As is natural, appellants emphasize that evidence which would support conclusions favorable to appellants' position contrary to the conclusions reached by the consultant firms. It would extend this opinion unduly, and add nothing to this discussion, to include a detailed statement of the evidence disclosed in the voluminous record. We have carefully reviewed the evidence, however, and upon the whole of this record, we cannot say that the studies were insufficient or that the conclusions were not adequately supported and justified by the data at hand.
SCOPE OF REVIEW
As the trial court observed, a court cannot substitute its judgment for that of an administrative body, nor can a court overturn the decision of an administrative body unless the court is clearly satisfied from the evidence that the decision was unlawful. Other exceptions would be where the decision was fraudulent, corrupt, arbitrary, or capricious. Warburton v. Warkentin, supra; Brinson v. School District, 223 Kan. 465, 467, 576 P.2d 602 (1978).
The decision by the Authority to build the Southeast Kansas *373 Turnpike and the Connector was an administrative decision. There is no contention that the decision was fraudulent or corrupt, and there is no evidence that it was made in bad faith, or that it constituted arbitrary or capricious action.
While the bringing of an action for an injunction is a proper means to challenge administrative action in the absence of a means of appeal, Brinson v. School District, supra, the granting or denial of an injunction is in most instances a discretionary matter. Absent manifest abuse of that discretion, an appellate court will not interfere. South Shore Homes Ass'n v. Holland Holiday's, 219 Kan. 744, 751, 549 P.2d 1035 (1976). The court below did not abuse its discretion in denying injunctive relief.
Plaintiffs complain because the Authority did not make detailed findings of fact, stating each of the facts upon which it based its decision. No rule, regulation or statute requires it to make such findings. Decisions of the Kansas Turnpike Authority are not ordinarily the subject of judicial review as are the orders of some administrative agencies, such as the State Corporation Commission. See Kansas Public Service Co. v. State Corporation Commission, 199 Kan. 736, 433 P.2d 572 (1967), and Cities Service Gas Co. v. State Corporation Commission, 201 Kan. 223, 440 P.2d 660 (1968), where the rationale of the requirement that the State Corporation Commission make findings of fact is discussed. That rationale is inapplicable here. It is only when an administrative body is acting in a quasi-judicial capacity that findings of fact are necessary; here the Authority was acting administratively and not in any judicial or quasi-judicial capacity.
We have carefully examined each of the other points raised by the appellants, and we conclude that they are without merit.
We should add a caveat, however, that our affirmance of the judgment below in nowise clears the way for the immediate issuance of the contemplated highway revenue bonds. Construction costs, land values, operational costs, and the bond market have all changed measurably since the studies were conducted in 1973 and 1974. Updated information must be secured, studies must be reworked, analyses must now be made and decisions reached on the basis of current information. The predictions of growth and highway development in southeast Kansas, made over four years ago, may now be viewed in retrospect and compared *374 with actuality. Any future administrative decision to proceed must be made in conformity with the statutory guidelines as set forth in the enabling acts.
The judgment is affirmed.