Opinion ID: 1642699
Heading Depth: 2
Heading Rank: 3

Heading: The Series 2002 Warrants

Text: On or about March 14, 2002, the Conecuh County Public Building Authority (the Building Authority), a public corporation organized by the Conecuh County Commission, issued an official statement (essentially, a prospectus) in connection with a public offering of a series of revenue warrants in the amount of $8,960,000 (the Series 2002 Warrants), supported, in part, by a pledge of the proceeds from the court fee and the lodging tax. The warrants were issued not only to address the deteriorating county courthouse, but also to refund and retire revenue warrants previously issued to construct a new county jail as mandated by a federal court order (the Series 2000 Warrants). The first two paragraphs of the official statement summarized much of the transaction: This Official Statement is furnished by The Conecuh County Public Building Authority, a public corporation under the laws of the State of Alabama (the `Building Authority'), in order to provide information to prospective purchasers of its $8,960,000 in principal amount of Revenue Warrants (Conecuh County Jail & Courthouse Projects), Series 2002, dated March 1, 2002 (the `Series 2002 Warrants'). The Series 2002 Warrants will be issued under a First Supplemental Indenture dated as of March 1, 2002 (the `First Supplemental Indenture') which will amend and supplement that certain Mortgage and Trust Indenture dated as of May 1, 2000 (the `Original Indenture'), between the Building Authority and Regions Bank, Montgomery, Alabama (said bank, together with its successors in trust, being herein called the `Trustee'). The Building Authority has heretofore issued under the Original Indenture (the Original Indenture and the First Supplemental Indenture being herein together called the `Indenture') its Revenue Warrants (Conecuh County Jail Project) Series 2000, dated May 1, 2000 (the `Series 2000 Warrants'), originally issued in the aggregate principal amount of $3,395,000 and now outstanding in the aggregate principal amount of $3,335,000, in order to acquire, construct and equip a new county jail facility (the `New County Jail') in and for Conecuh County, Alabama (herein called the `County'). The Series 2002 Warrants will be issued in order (i) to finance the costs of renovating, repairing and improving the courthouse building in the County (the `County Courthouse') and (ii) to refund and retire the Series 2000 Warrants and thereby to restructure the funded indebtedness of the County.  Contemporaneously with and as a condition to the issuance of the Series 2002 Warrants, the Building Authority and the County will enter into a First Supplemental Lease Agreement dated as of March 1, 2002 (the `First Supplemental Lease'), which will amend and supplement that certain Lease Agreement dated as of May 1, 2000 (the `Original Lease') between the Building Authority and the County under which the Building Authority has leased the New County Jail to the County (the Original Lease and the First Supplemental Lease being herein together called the `Lease'). Under the First Supplemental Lease, the Building Authority will agree to acquire and also to renovate, repair and improve the County Courthouse and to lease it to the County for a term not longer than the current fiscal year of the County ending on September 30, 2002; provided, however, that the Lease shall contain a grant to the County of successive options to renew the term of the Lease annually until the Series 2002 Warrants are paid. See `Duration of Term' under `THE LEASE.' See also `SPECIAL COVENANTS OF THE COUNTY.' (Emphasis added.)
The Building Authority and Regions Bank entered into the first supplemental indenture, pursuant to which the Building Authority issued the Series 2002 Warrants as described above. The first supplemental indenture, in addition to refunding and retiring the Series 2000 Warrants, authorized the demolition of the existing Conecuh County courthouse and the construction of a new county courthouse on the site of the existing courthouse. The recitals in the first supplemental indenture state: The County has requested the [Building] Authority to acquire the existing county courthouse building (herein called the `Existing Courthouse Building') as well as the land (herein called the `Courthouse Site') upon which the Existing Courthouse Building is situated, to demolish the Existing Courthouse Building, to construct a new county courthouse building (herein called the `New Courthouse Building') on the Courthouse Site[,] to acquire and install various items of furniture, furnishings and equipment (herein called the `New Courthouse Equipment') for use in the New Courthouse Building (the Courthouse Site, the New Courthouse Building and the New Courthouse Equipment being herein together called the `New County Courthouse'). The County has also requested the [Building] Authority to refund and retire the Series 2000 Warrants to enable the County to realize a reduction in its annual payments under the Original Lease. The [Building] Authority has agreed to do so on behalf of the County. Section 3.1 of the first supplemental indenture reads as follows: Pursuant to the provisions of the Act and for the purposes of (a) providing for payment of the costs of demolishing the Existing Courthouse Building, of constructing the New Courthouse Building and acquiring and installing the New Courthouse Equipment for use in connection with the New County Courthouse, and (b) refunding the Series 2000 Warrants, there are hereby authorized to be issued under the Indenture an issue or series of Warrants designated Revenue Warrants (Conecuh County Jail & Courthouse Projects), Series 2002, limited in aggregate principal amount to $8,960,000. (Emphasis added.)
In conjunction with the issuance of the Series 2002 Warrants, the Building Authority also entered into a first supplemental lease agreement with Conecuh County; the first supplemental lease agreement amended the original lease agreement executed in conjunction with the issuance of the Series 2000 Warrants. Under the first supplemental lease agreement, Conecuh County agreed to convey the existing courthouse to the Building Authority. Section 4.1 of the first supplemental lease agreement specifically provided that the Building Authority and Conecuh County would undertake and complete, or will cause to be undertaken and completed[,] the demolition of the Existing Courthouse Building, the construction of the New Courthouse Building and the acquisition and installation, on or about the Courthouse Site or elsewhere in the County, of the New Courthouse Equipment, such demolition, construction, acquisition and installation to be made in accordance with written orders, and directions from the County. (Emphasis added.) Subsequent to the issuance of the Series 2002 Warrants, the Conecuh County Commission initiated plans for the demolition of the existing county courthouse and the construction of a new county courthouse on the site of the existing courthouse. In December 2002, the Conecuh County Commission solicited bids for the demolition of the existing courthouse and the construction of a new courthouse; those bids were to be submitted by January 9, 2003. The Conecuh County Commission postponed awarding a contract for the demolition and construction after this action was filed. The appellants filed this action seeking a declaratory ruling (1) that the proceeds from the court fee and the lodging tax were dedicated by law for use in renovating the existing county courthouse and the maintenance of the courthouse after it was renovated, and that those proceeds could not be used to demolish the existing county courthouse and construct a new courthouse on the same site, and (2) that the proceeds of the Series 2002 Warrants could not be used to demolish the existing courthouse and to construct a new courthouse. In addition, the appellants sought injunctive relief (1) prohibiting the Conecuh County Commission from using the proceeds from the court fee and the lodging tax for any purpose other than to finance the construction of the new jail and the renovation of the existing county courthouse; (2) forcing the County Commission to renovate the existing county courthouse, and (3) prohibiting the County Commission from using the proceeds from the sale of the Series 2002 Warrants for any purpose other than to finance the construction of the new jail and the renovation of the existing county courthouse. The trial court issued an order, on the joint stipulation of the parties, temporarily restraining the awarding of any contract for the demolition of the existing county courthouse that was to be funded by the court fee, the lodging tax, or the Series 2002 Warrants, and from spending any proceeds generated from those sources for such demolition. The trial court set a hearing on a preliminary injunction for January 14, 2003. This hearing, however, was restricted to the appellants' requests for injunctive relief. Following that hearing, the trial court entered an order granting some of the appellants' requests for injunctive relief and denying others. Specifically, the order enjoined the County Commission: 1. From using any public funds generated by the Amendment [Amendment No. 634] or the Act [Act No. 98-657] for any purpose other than to pay for the costs of constructing, equipping, financing, refinancing, and operation of the new Conecuh County Jail and to pay the costs of planning, designing, renovating, repairing, financing, rehabilitating, and operating the existing Conecuh County Courthouse. 2. From awarding any contract for the demolition of the existing Conecuh County Courthouse, the payment for which is, partially or totally, from funds generated by the Amendment or the Act; 3. From using any public funds generated by the Amendment or the Act for the purpose of paying, in whole or in part, for the demolition of the existing Conecuh County Courthouse; and, 4. From using any public funds generated by the Amendment or the Act for the purpose of constructing a new Conecuh County Courthouse. However, the trial court denied the appellants' other requests for injunctive relief. The trial court subsequently made this order final pursuant to Rule 54(b), Ala. R. Civ. P. The appellants appeal the trial court's denial of their request for injunctive relief prohibiting the County Commission from using the proceeds from the sale of the Series 2002 Warrants for any purpose other than to finance the construction of the new jail and the renovation of the existing county courthouse and forcing the County Commission to renovate the existing county courthouse; the County Commission cross-appeals, raising various issues discussed below. [4]