Opinion ID: 1778220
Heading Depth: 1
Heading Rank: 1

Heading: House Resolution Number 69.

Text: Whereas, there is now pending in the Legislature of Alabama House Bill No. 800 (copy of which is attached hereto), authorizing the formation of a public corporation for the purpose of completing the construction and equipment of the coliseum building located in the Alabama Agricultural Center, together with necessary related facilities, authorizing the State to convey to said corporation the said building and the land in the said Center, and authorizing said corporation to issue its bonds for the purpose of financing such construction and equipment and to lease the said building and related facilities to the Agricultural Center Board; and Whereas, there is also pending in said Legislature House Bill No. 801 (copy of which is attached hereto), authorizing the Agricultural Center Board to lease from said corporation the coliseum building and related facilities; and Whereas, important constitutional questions are presented by said House Bills; Now, therefore, be it resolved by the House of Representatives of Alabama that the Justices of the Supreme Court of Alabama are hereby respectfully requested to render their written opinion, as provided by Title 13, Section 34 of the Code of Alabama of 1940, on the following important constitutional questions; 1. Will bonds issued by the public corporation authorized to be created by House Bill No. 800 constitute debts of the State of Alabama within the meaning of Section 213 of the Alabama Constitution? 2. Will the conveyance by the State of Alabama of the uncompleted coliseum building, together with the lands in the Alabama Agricultural Center, to said public corporation, pursuant to the provisions of House Bill No. 800, violate Section 99 of the Alabama Constitution? 3. Will the agreement of lease provided for in the said two House Bills constitute a debt of the State of Alabama within the meaning of Section 213 of the Alabama Constitution? 4. Do the said two House Bills authorize the state to be engaged in works of internal improvement or to be interested in any private or corporate enterprise or to lend money or its credit in aid of any thereof within the meaning of Section 93 of the Alabama Constitution? House Bill No. 800 provides that the Governor, the Commissioner of Agriculture and Industries and the Director of Finance may become a corporation, the name of which shall be Alabama Agricultural Center Corporation, or other name if that be not available, and specifies how incorporation shall be effected. Pertinent sections of the Bill are as follows: Section 7. Powers of the Corporation. The corporation shall have the following powers, together with all powers incidental thereto or necessary to the discharge thereof in corporate form: to have succession by its corporate name until dissolved as hereinafter provided; to sue and be sued and to prosecute and defend suits in any court having jurisdiction of the subject matter and of the parties; to make use of a corporate seal and to alter the same at pleasure; to acquire from the state, and hold title to, the coliseum and the land in connection therewith in the City of Montgomery as hereinafter provided, together with all rights incidental to its estate in such property; to improve the land to acquired and to complete the construction of and equip the coliseum and make all contracts necessary to that end; to sell and issue and do all things incidental to the sale and issuance of its interest bearing revenue bonds to the extent and for the purpose hereinafter set out; and to secure such bonds by pledge of the rentals from the leasing of its properties and to execute any instrument or instruments which its board of directors may deem necessary or desirable in connection with such pledge; and to contract, lease and make lease agreements as hereinafter provided respecting its properties. Section 8. Conveyance to Corporation by State. The Governor is authorized and directed to execute and deliver, in the name of and in behalf of the state, immediately before or simultaneously with the delivery by the corporation of the first bonds of the corporation which are sold hereunder, an appropriate deed whereby there will be conveyed to the corporation the coliseum together with the lands in the Alabama Agricultural Center in the City of Montgomery. Upon delivery of such deed to the corporation it shall there upon be vested with all title and rights which the State of Alabama has in the property conveyed thereby, subject to the right of reverter to the state provided for in Section 20 hereof upon dissolution of the corporation. It is hereby recognized that if the conveyance herein provided for is not made, the coliseum will remain uncompleted, and it will be in the public interest for the said conveyance to be made so that the corporation may complete and equip the coliseum. Section 9. Lease of Properties of the Corporation. The corporation is authorized to enter into a lease agreement with the board whereunder all or any part of the properties of the corporation shall be leased to the board for a period not later than the last maturity of any bonds which may be issued by the corporation pursuant to the provisions hereof. The said lease agreement shall provide for the payment by the board, as rental for the said properties, of an amount sufficient to pay, as the same respectively mature, the principal of and interest on the bonds of the corporation and to create and maintain a reserve therefor, and shall require the board, as additional rental, to pay the premiums on all proper insurance covering the coliseum and all expenses necessary to keep the coliseum in good repair. The said lease agreement may contain such other provisions and agreements not inconsistent with the provisions of this act as the corporation and the board may agree. Section 10. Bonds of the Corporation. The corporation is authorized to issue its interest bearing revenue bonds, not exceeding $1,250,000 in aggregate principal amount, solely for the purpose of completing the construction and equipment of the coliseum. All bonds issued by the corporation shall be limited obligations of the corporation the principal of and interest on which shall be payable solely out of the rentals payable under said lease agreement. None of the bonds of the corporation shall ever constitute an indebtedness of the state or a charge against the credit of the state or its taxing powers. The bonds of the corporation may be authorized and issued at any time and from time to time, may be in such form and denominations, may be of such tenor, may be in registered or bearer form either as to principal or interest or both, may be payable in such installments and at such time or times not exceeding forty years from their date, may be payable at such place or places, may bear interest at such rate or rates payable and evidenced in such manner, all as shall not be inconsistent with the provisions of this act and as may be provided in the proceedings of the board of directors of the corporation whereunder said bonds shall be authorized to be issued. The corporation may retain an option or options to redeem all or any part of such bonds at such time or times, at such price or prices, after such notice or notices, and on such terms and conditions as may be provided in the resolution of the board of directors of the corporation wherein the bonds shall be authorized to be issued and as shall be briefly summarized in the face of such bonds. All such bonds may be sold at either public or private sale in such manner and from time to time as may be determined by the board of directors of the corporation to be most advantageous. The corporation may pay all expenses, premiums and commissions which its board of directors may deem necessary or advantageous in connection with the authorization, sale and issuance of its bonds. All bonds issued by the corporation and all interest coupons applicable thereto shall be construed to be negotiable instruments, despite the fact that they are payable solely from a specified source. All bonds issued by the corporation shall contain a recital that they are issued pursuant to the provisions of this act, which recital shall be conclusive evidence that the said bonds have been duly authorized pursuant to the provisions of this act. Section 12. Pledge for Bonds. In the proceedings authorizing the issuance of its bonds the corporation is hereby authorized and empowered to pledge the said lease agreement and the rentals required to be paid thereunder for payment of the principal of and interest on its bonds, and to agree to use solely for such purpose all rentals payable to the corporation from said lease agreement. Such pledge when made shall create a lien on all rentals required to be paid to the corporation under the provisions of the said lease agreement. The said rentals are hereby separated from the ownership of the properties of the corporation to such extent as may be necessary to preserve inviolate the priority and enforceability of the said pledge and lien. Upon the issuance of any bonds by the corporation it shall cause to be filed in the office of the Judge of Probate of Montgomery County, Alabama, an instrument reciting the issuance of the said bonds and the pledge of said rentals and the creation of the said lien as security for the bonds so issued, and the filing of such instrument shall constitute constructive notice of the pledge and lien referred to therein. Section 20. Dissolution of the Corporation. When all bonds issued by the corporation and all obligations incurred by it under the provisions of and within the limitations contained in this act shall have been fully paid, the then president of the corporation shall thereupon execute and deliver in the name of and in behalf of the corporation an appropriate deed, to which the seal of the corporation shall be affixed and attested by the secretary of the corporation, whereby there shall be conveyed to the State of Alabama all properties then owned by the corporation. The then members of the board of directors of the corporation shall at such time file with the Secretary of State a written statement, subscribed and sworn to by them, reciting payment in full of all bonds of the corporation and all obligations incurred by it under the provisions of this act and the execution and delivery of said deed to the state, which statement shall thereupon be recorded by the Secretary of State with the certificate of incorporation of the corporation, whereupon the corporation shall stand dissolved. House Bill No. 801 is in part as follows: Section 2. Authorization of Lease. The Agricultural Center Board is hereby authorized and empowered to enter into an agreement with the corporation under which agreement all or any part of the properties of the corporation shall be leased to the board. The lease agreement shall begin upon the completion of the construction and equipment of the coliseum and the necessary facilities in connection therewith and shall extend for such period of time as may be agreed upon by the board and the corporation; provided, that it shall not extend for any period later than the last maturity of any bonds which may be issued by the corporation. The lease agreement shall provide for the payment by the board, as rental for the properties covered thereby, of an amount sufficient to pay, as the same respectively mature, the principal of and interest on all bonds issued by the corporation and to create and maintain a reserve therefor, and shall require the board, as additional rental, to pay the premiums on all proper insurance covering the said properties and the equipment therein and all expenses necessary to keep the said properties in good repair, and may contain such other provisions and agreements not inconsistent with the provisions of this act and the laws of the state as the board and the public corporation may agree. Section 3. Operation of Properties Leased. Upon securing possession of the properties covered by the lease agreement, the board is authorized to and shall thereafter operate, manage and control the said properties for the purpose of conducting or permitting to be conducted thereat livestock shows, agricultural and industrial displays, markets, and other exhibits and events related thereto, and to make contracts with individuals, livestock associations, and other organizations for the conduct of such shows, displays, markets, exhibits and events related thereto. The board is authorized to make such charges for and in connection with any of said matters as will produce revenues sufficient to pay the rentals required to be paid by the board under the lease agreement and to pay the reasonable expenses of operating the said properties and the board's administrative expenses including salaries and per diem, all to the end that the said properties shall be self-supporting; provided, however, that such charges shall not be made with a view of producing any revenue or profit to the board or to the State of Alabama but shall be based exclusively upon the rentals required to be paid by the board under the lease agreement, the reasonable expenses of operating the properties covered thereby, and the board's administrative expenses. It is hereby declared that it is not intended that this act shall be interpreted as authorizing the board to engage in the business of selling or marketing livestock or products of any kind, or in what may be termed a brokerage business, or to compete with private enterprise. In the event the revenues derived during any fiscal year of the board from the operation of the properties covered by the lease agreement should be in excess of the said rentals and operation and administration expenses payable during the same fiscal year, then the said charges shall be adjusted for the ensuing fiscal year in such manner as to avoid as far as may be practicable the production of any excess over the amount necessary to pay the said rentals and operating and administrative expenses payable during such ensuing fiscal year. If during any fiscal year the said charges should produce any such excess, then such excess shall be used to make advance payments on the rentals payable under the lease agreement. Section 4. Appropriations for Rentals and Expenses. The collection of all such charges made by the board shall be deposited monthly in the State Treasury to the credit of a special fund therein designated the Agricultural Center Fund, and shall be used solely for the payment of the rentals payable under the lease agreement and the said operating and administrative expenses. So much of the moneys in the Agricultural Center Fund as may be necessary therefor are hereby appropriated for said purposes. In the event the revenues derived from the operation of the properties covered by the lease agreement should not be sufficient to pay, as the same respectively mature, the rentals required to be paid by the board under the provisions of the lease agreement and to pay the said operating and administrative expenses, there is hereby appropriated and ordered set aside in each fiscal year during the term of the lease agreement, solely out of moneys accruing to the Agricultural Fund under the provisions of Section 31 of Title 2 of the Code of 1940, such amount as, when added to the moneys in the Agricultural Center Fund derived during that fiscal year from the operation of the properties covered by the lease agreement, shall be sufficient to pay the said rentals and the said operating and administrative expenses payable during each such fiscal year. The board is hereby authorized to pledge in the lease agreement for payment of said rentals so much as may be necessary for such purpose of the moneys herein required to be paid into the Agricultural Center Fund. The moneys so appropriated for the payment of the said rentals shall be transferred by the State Treasurer to the credit of the corporation from time to time as may be necessary to pay said rentals. All other withdrawals from the Agricultural Center Fund shall be made upon requisition by the chairman of the board to the State Comptroller and upon warrant drawn by the State Comptroller upon the State Treasurer. Nothing herein contained shall be construed to estop or prevent the legislature at any time and from time to time in the future from altering the amounts and rates of the fees, licenses, fines, penalties and charges, the collections from which may now or hereafter be required by law to be paid into the Agricultural Fund, or from abolishing any thereof, or substituting others therefor, or adding others thereto, as the legislature in its discretion may from time to time deem advisable. Section 5. Lease Not to Constitute Debt of State. The lease agreement shall never in any event constitute or give rise to an indebtedness of the State of Alabama and no recourse shall ever be had against the general credit of the state or against its general funds for payment of said rentals. The rentals provided for in the lease agreement shall be payable solely out of the moneys in the Agricultural Center Fund derived from the operation of the properties covered by the lease agreement and, to the extent such moneys are not sufficient to pay said rentals and to pay the said operating and administrative expenses, out of the moneys in the agricultural fund herein appropriated for said purposes. No moneys at any time in the General Fund of the state shall ever be used for payment of said rentals. Wm. Alfred Rose and Ellene Winn, Birmingham (Alex S. Lacy and White, Bradley, Arant, All & Rose, all of Birmingham, of counsel), filed brief amici curiae. To the Members of the Alabama House of Representatives State Capitol Montgomery, Alabama Sirs: Re: House Resolution No. 69 proposing constitutional questions relative to pending House Bills numbered 800 and 801. In view of certain recent Opinions each question propounded in your inquiry is due a negative answer, although perhaps it can be said with justification that there has been some laxness of expression in these later opinions which may have trenched on earlier cases interpreting some of the considered constitutional provisions.