Opinion ID: 2633497
Heading Depth: 3
Heading Rank: 1

Heading: Utah County and Provo City Were Authorized to Enter into the Agreement Pursuant to Their General Contracting Power

Text: ¶9 Spring Canyon argues that because Provo City lacks the power to condemn the subject property, both the Agreement and the exercise by Utah County of its eminent domain power pursuant to the Agreement were unlawful and invalid under the ICA. Spring Canyon's primary argument is that the ICA requires that all parties to an agreement have the power to do everything contemplated by the agreement. We conclude that local governments have authority to enter into agreements pursuant to their general contracting powers so long as each entity does not exceed its individual power, and, although the ICA provides for contracting only where all parties to an interlocal agreement have the power to do all acts under the agreement, the ICA does not abrogate local governments' general contracting power. ¶10 We first examine the limits of local governments' general contracting power. Before the Legislature passed the ICA in 1965, local governments had the power to contract with one another under general powers granted by the state constitution and various statutes. See Bair v. Layton City Corp., 307 P.2d 895, 902 & 902 n.8 (Utah 1957) (citing various constitutional and statutory provisions that conferred authority for Layton City to contract with North Davis County Sewer District); Utah Code Ann. § 10-1-202 (2003) (Municipalities may . . . enter into contracts. . . .); id. § 17-50-302(1)(b) (2005) (A county may . . . provide services, exercise powers, and perform functions that are reasonably related to the safety, health, morals, and welfare of their inhabitants, except as limited or prohibited by statute.). The limit on these general contracting powers was presumably that no governmental party to a contract could exceed its individual powers in fulfilling its obligation under the contract. Thus, two governmental entities of unequal power could contract in their areas of inequality so long as neither exceeded its own powers in performing the contract. ¶11 The Agreement in this case does not require any performance by either Utah County or Provo City that is beyond the individual authority of that entity. The terms of the Agreement material to this appeal require Utah County to condemn the property for the road and Provo City to pay the expenses of condemnation, installation, and maintenance of the road. Utah County has authority to condemn property under Utah Code section 17-50-302(2)(a)(ii). Provo City has authority to appropriate money for any purpose that, in the judgment of the municipal legislative body, provides for the safety, health, prosperity, moral well-being, peace, order, comfort, or convenience of the inhabitants of the municipality. Id. § 10-8-2(3) (Supp. 2005). Paying for the construction and for the maintenance of a public road certainly falls within Provo City's authority under this provision. Thus, absent the ICA, the Agreement is a valid exercise of both Utah County's and Provo City's general contracting powers. We are called upon to determine, however, whether the ICA operates to limit these general contracting powers. ¶12 Spring Canyon argues that because the ICA, specifically Utah Code section 11-13-212(1)(a), allows for interlocal. agreements only where each party has the power to do all acts contemplated in the agreement, it must also preclude all other agreements between local governmental entities. Utah County counters that Spring Canyon's proposed interpretation would lead to logically inconsistent results because a local government could condemn property for a street if a private party paid the expenses, see 7 Patrick J. Rohan & Melvin A. Reskin, Nichols on Eminent Domain, § 5.02[3] (3d ed. 2006), but could not do the same where another local government pays the expenses. We conclude that although the ICA does not provide a source of power for cooperative action between local governments of unequal power in their area of inequality, it also does not preclude local governments from contracting with each other in these areas under their general contracting power. ¶13 It is true that Utah Code section 11-13-212 only allows agencies to contract with one another to perform any service, activity, or undertaking which each public agency . . . is authorized by law to perform. Utah Code Ann. § 11-13-212(1)(a) (2003). We further stated in CP National Corp. v. Public Service Commission that the intent of the [ICA] appears to be to allow the municipalities collectively to exercise powers which they already possess individually. 638 P.2d 519, 521 (Utah 1981). But while these sources support Spring Canyon's argument that the ICA only authorizes contracting among local governments of equal power, they do not support the argument that the ICA precludes all other contracts between local governments. Spring Canyon offers no evidence that the Legislature intended the ICA to have that effect. ¶14 Indeed, the ICA's stated purpose is to permit local governmental units to make the most efficient use of their powers by enabling them to cooperate with other localities on a basis of mutual advantage and also to provide the benefit of economy of scale. Utah Code Ann. § 11-13-102 (2003). This purpose statement demonstrates that the Legislature intended the ICA to expand rather than limit local governments' ability to cooperate. Additionally, we can find no provision of the ICA that removes existing powers from local governments. Where the Legislature has not clearly limited the general contracting powers of local governments, we construe those powers broadly. State v. Hutchinson, 624 P.2d 1116, 1126-27 (Utah 1980). Thus, the ICA does not abrogate local governments' power to contract among themselves under their general contracting power. No. 20040846 6 ¶15 In sum, although the ICA did not empower Utah County and Provo City to enter into the Agreement, the Agreement is nevertheless valid under their general contracting powers. See Utah Code Ann. § 10-1-202; id. § 17-50-302(1)(b). Having determined that the ICA does not invalidate the Agreement, we now discuss whether the agreement evidences bad faith such that we must dismiss Utah County's condemnation action.