Opinion ID: 1374075
Heading Depth: 1
Heading Rank: 6

Heading: Authority of Commission to Issue Revenue Bonds or Certificates of Participation

Text: The Commission next contends that it has the authority to issue revenue bonds or certificates of participation in order to finance the contemplated Diamond building project. Moreover, the Commission maintains that the bond issuance does not violate West Virginia Constitution Article X, Section 8. Finally, the Commission claims that the anticipated rental payments to be paid by the State pursuant to the proposed lease-purchase agreement are constitutional in light of West Virginia Constitution Article X, Sections 4 and 6. 1. Authority of Commission to issue bonds to finance property acquisition and renovation. The Commission asserts that it may properly issue bonds or certificates of participation to finance its acquisition and renovation of a building that it intends to lease to the State. The West Virginia Legislature has provided municipal building commissions with broad statutory authority to issue bonds in order to raise revenue necessary to carry out their statutory powers. For example, W. Va.Code, 8-33-4(j) (1984), permits a municipal building commission to [r]aise funds by the issuance and sale of revenue bonds[.] In addition, W. Va.Code, 8-16-7(d) (1981), directs that a municipality may issue municipal revenue bonds necessary to pay the cost of the [municipal public] works[,] while W. Va.Code, 8-16-10 (1973), specifies which aspects of a public works project may be financed by bond revenue. Moreover, W. Va. Code, 8-16-11 (1969) provides: Nothing in this article contained shall be so construed as to authorize or permit any municipality or municipalities to make any contract or incur any obligation of any kind or nature, except such as shall be discharged or payable solely from the funds provided under the authority of this article. Funds for the payment of the entire cost of the works shall be provided by the issuance of revenue bonds of the municipality or municipalities, the principal and interest of which bonds shall be payable solely from the special fund for such payment herein provided for, and said bonds shall not in any respect be a corporate indebtedness of such municipality or municipalities. All such bonds and the interest thereon, and all properties and revenues and income derived from such municipal public works, shall be exempt from all taxation by this State, or any county, municipality, political subdivision or agency thereof. All of the details of such bonds and the issuance thereof shall be determined by ordinance of the governing body or bodies. See also W. Va.Code, 8-16-2 (1969) (providing that municipality shall not incur obligation when it issues revenue bonds to finance public works project); W. Va.Code, 8-16-4 (1969) (permitting governing body to lease municipal public works to lessee provided rental payments provide sinking fund for payment of bonds and interest thereon). Finally, W. Va.Code, 8-33-4(h) (1984), permits a municipal building commission to [s]ell, encumber or dispose of any property, real or personal. Likewise, the Commission states that it has the authority to finance the proposed project by issuing certificates of participation. In this scenario, the certificates would be issued through a trustee and would encumber the property to secure repayment of the certificate holders should the State terminate the lease or default in rental payments. Therefore, the Commission would have no liability under the certificates of participation because the encumbrance on the property would ensure repayment of the investors. Respondent Dial reiterates that the Commission's issuance of the proposed financial obligations necessary to finance its acquisition and renovation of the Diamond building is ultra vires in that the project will ultimately benefit the State of West Virginia rather than the City of Charleston. Citing W. Va. Code, 8-33-4(f). He further maintains that the Commission failed to authorize the proposed financing by ordinance. W. Va.Code, 8-16-11, requires the details of municipal bonds to be determined by ordinance. The ordinance process also requires a municipal corporation to read the proposed ordinance at at least two of its meetings. W. Va.Code, 8-11-4(a)(1) (1969). With regard to the proposed financing of the Diamond building project, the Commission has neither enacted any ordinance explaining the details of the bonds or certificates of participation nor read such an ordinance during two of its meetings. Rather, Dial asserts that the Commission merely resolved to accept the financial advisor services of Millennium, who would in turn develop the details of the proposed financing. [14] Amici Curiae acquiesce in respondent Dial's arguments and assert that the Commission's inability to issue bonds or certificates of participation is delineated by statute. Citing W. Va.Code, 8-16-1 (1981) (defining municipal public works). W. Va.Code, 8-33-4(h), (i), and (j), specifically permit a municipal building commission to issue secured bonds or to otherwise raise funds by issuing revenue bonds: Each commission shall have plenary power and authority to: