Opinion ID: 2209486
Heading Depth: 1
Heading Rank: 1

Heading: Question Number One

Text: On the merits, I answer question number one in the negative: the nonrecourse financing for the proposed consolidated rental-car facility is not, in my opinion, subject to the approval requirement of the Rhode Island Public Corporation Debt Management Act, G.L. 1956 chapter 18 of title 35 (the act). This proposed facility is not an essential public facilit[y] within the meaning of the act; rather, it is an exempt economic development project that will be financed by the Economic Development Corporation (EDC) through nonrecourse debt in an amount up to $120 million. Section 35-18-2(3)(4). The bonds in question will not be a general obligation of either the state, the EDC, or the Rhode Island Airport Corporation (RIAC); rather, they will be a special obligation of the EDC payable solely from revenues pledged to secure that debt, including a so-called customer-facility charge (CFC) that has been and will be paid by customers of the car-rental companies who will use the proposed facility in connection with their airport travel and with other related uses. The act prohibits public corporations from financing, in whole or part, the construction or improvement of any essential public facility without the prior approval of the General Assembly. The term essential public facilities is defined in the act to mean, in pertinent part, facilities used by any state agency, department, board, or commission, including the board of governors for higher education, to provide services to the public pursuant to the requirements of state or federal law, and all fixtures for any of those facilities. Section 35-18-2(4). (Emphasis added.) The proposed rental-car facility will primarily serve rental-car companies and their airport customers, as well as individuals who park in the garage that is proposed to be included within the facility. Because the nonrecourse financing for this proposed facility will be paid entirelyfrom nongovernmental sources  to wit: user fees charged to rental-car customers and not from the funds of any state agency  this facility is not an essential public facilit[y] as defined by the act. Moreover, any services to the public that are provided there will not be pursuant to the requirements of state or federal law. Section 35-18-2(4). (Emphasis added.) In my opinion, the act does not apply to financing for projects that a state agency or public corporation undertakes that are merely authorized  as opposed to required  by the pertinent enabling legislation. Thus, only when the facility is to be used to provide services to the public that are required to be provided by state and federal law would the proposed financing be subject to the act. But projects such as this one that are merely authorized but not required by law do not meet this definition and therefore are exempt. In my opinion, the facility also qualifies as an economic development project as defined in the act, § 35-18-2(3), and is therefore exempt from the need for the financing to obtain General Assembly approval. Because most of the facility will be used by car-rental companies for rental vehicles and for servicing their customers, it qualifies as a commercial venture within the act's definition of an economic development project (a project relat[ing] to financing the acquisition of any land and any building or other improvement which shall be suitable for manufacturing, warehousing, or other industrial or commercial purposes). The act also incorporates by reference the definition of project that is contained within the Rhode Island Industrial Facilities Corporation Act. See G.L.1956 § 45-37.1-3(5) (any building or other improvement    which are suitable for use for manufacturing, warehousing, or other industrial or commercial purposes). This definition must be liberally construed so as to effect its purpose. Section 45-37.1-18. In my opinion, by including economic-development projects that could be undertaken by the Rhode Island Industrial Facilities Corporation within the category ofprojects that are exempt from General Assembly approval, the Legislature intentionally exempted the proposed financing for this type of project from the act's approval requirements. In sum, because the proposed facility is not an essential public facilit[y] but, instead, qualifies as an exempt economic development project, General Assembly approval is not required under the act for the proposed financing to proceed.