Opinion ID: 1124495
Heading Depth: 1
Heading Rank: 1

Heading: Public Purpose Requirement

Text: ¶ 11 Both sections 14 and 17 of article X of the Oklahoma Constitution embrace a public purpose requirement. Section 14 restricts the use of public funds to expenditures for a public purpose. [3] That provision's correlative limitation, section 17, [4] was adopted for the purpose of preventing the investment of public funds in private enterprises. Lawrence v. Schellstede, 348 P.2d 1078, 1082 (Okla.1960). ¶ 12 Economic development was recognized as a legitimate public purpose in Burkhardt v. City of Enid, 771 P.2d at 611. Proponents of the challenged expenditures argue that it is constitutionally permitted and compare it to the economic development plan approved in Burkhardt. ¶ 13 In Burkhardt, voters approved a plan by which a public trust provided economic development by purchasing a privately owned college campus and leasing it back to the former owners. Upholding the plan under sections 14 and 17 of article X, this Court held that [e]conomic development is a legitimate public purpose for which public funds may be expended. Id. Further, the plan did not lose its public purpose merely because it involve[d] a private actor. Id. ¶ 14 The plan in Burkhardt met the public purpose requirement. The city maintained control jointly with the university over operating capital and scholarship funds. The plan was not a gift or loan to a private enterprise because there was adequate consideration from the private actor in the form of direct economic benefits from the university's presence and the obligations it assumed under the plan. Id. ¶ 15 The economic development plan approved by the Warr Acres City Council was structured upon the legal guideposts set out in Burkhardt. The City received adequate consideration under the plan by which Warr Acre's best commercial tract was developed by the country's largest retailer. Sales tax collections from the store have greatly exceeded the projected $400,000.00 per year. Additional jobs were provided and the tax base for the public school system was greatly expanded. ¶ 16 The City also obtained accountability from Security Trust. In the event that Wal-Mart or a successor retail business does not exercise an option to lease the land beyond the primary term, all public money reverts to the City. In addition, Security Trust agreed that so long as this contract with the CITY is in full force and effect, that it will not take any action nor consent to any amendment to said Ground Lease Agreement that will in any manner materially impair or adversely affect the rights of the CITY. . . . Security Trust cannot increase the rent regardless of changing economic conditions or changes in the cost or value of money from 1992 through the year 2011. ¶ 17 The City Council is the legislative body of a city. As such, it is its function to determine what expenditures are designed to promote the public good and welfare of the city and its inhabitants. It has no limitations as to expenditures, save and except those which are expressly placed on its exercise by the Constitution of the State. Dixon v. Shaw, 122 Okla. 211, 253 P. 500, 501 (1927). ¶ 18 The term public purpose should not be construed in a narrow or restrictive sense. Burkhardt 771 P.2d at 610 (quoting Helm v. Childers, 181 Okla. 535, 75 P.2d 398, 399 (1938)). Courts are to give great deference to a legislative body's determination that a particular project will serve a public purpose. In reviewing that determination, courts cannot interfere to arrest legislative action where the line of distinction between that allowable and that which is not is faint and shadowy. Childers, 75 P.2d at 399. Such a determination should be reversed only upon a clear showing that it was manifestly arbitrary, capricious, or unreasonable. R.E. Short Co. v. City of Minneapolis, 269 N.W.2d 331, 337 (Minn.1978). ¶ 19 The structure of economic development arrangements must change and grow over time to reflect and respond to increased commercial competition and complexities. An economic development plan, in whatever form it takes, will be upheld so long as it serves a public purpose and otherwise meets constitutional requirements. ¶ 20 By passage of Resolution 214, the Warr Acres City Council determined that the proposed economic development plan would promote a legitimate public purpose by increasing sales tax revenues for the City of Warr Acres, adding new jobs, retaining existing jobs, and promoting collateral economic growth and development. The essential question presented to this Court, as well as to the trial court, is not whether the details of the plan match those in Burkhardt, but rather whether the plan served a legitimate public purpose. It is not for the courts to second guess the wisdom of the City Council in agreeing to the details of the plan. This Court need not agree that it was the best arrangement or even a good arrangement. If the economic development plan served a legitimate public purpose of promoting the general welfare, economic security, and prosperity of the City of Warr Acres and its citizens, then it withstands constitutional challenge. ¶ 21 The general welfare, economic stability, and prosperity of the City of Warr Acres and its citizens have been served and will continue to be served by the relocation of a large retail facility to within the corporate limits where it has generated approximately $650,000.00 annually in sales tax revenues. These revenues have allowed the City to expand the type and scope of services allowed to all citizens of the community, including enhanced public improvements, police protection recreational facilities and the like. The economic development plan does not violate section 14 or section 17 of article 10 of the Oklahoma Constitution.