Opinion ID: 2520349
Heading Depth: 1
Heading Rank: 2

Heading: Second Issue on Appeal

Text: ¶ 14 The second issue is whether the Hospital Authority is prohibited by 60 O.S.2001 § 178.4 from using its funds to participate in the development of retail outlets. The Hospital Authority is continuing to use its funds for the project. The Hospital Authority states that the issue is moot because the Authority is now using an urban development plan and that § 178.4 does not apply because of 60 O.S.2001 § 178.6. The trial court determined that § 178.4 did not bar the Hospital Authority's participation in the project, but the parties did not raise § 178.6 in the trial court ¶ 15 The parties disagree on an interpretation of 60 O.S.2001 § 178.4. That statute states: § 178.4. Trust purpose  Exceptions A. Trusts created under the provisions of Sections 176 through 180.55 of this title or any amendments or extensions thereof shall not include any trust purpose, function nor activity: in any wholesale outlet, unless said wholesale outlet is a direct part of the industry. Provided, however, that the distribution centers for intoxicating beverages and low-point beer as defined in Title 37 of the Oklahoma Statutes shall not qualify under the provisions of this title; nor shall it include a retail outlet unless said retail outlet is operated in conjunction with and on the same premises as the industrial, manufacturing, cultural, recreational, parking, transportation or airport facility or international trade processing center; nor shall it include a residential enterprise or function except as provided in Section 178.6 of this title. B. Nothing in this section shall preclude the financing, construction, ownership or leasing of a warehouse as a permissible trust purpose, function or activity, so long as such warehouse is not used directly or indirectly for housing, storage or distribution of intoxicating beverages or low-point beer. 60 O.S.Supp.2003 § 178.4 The parties do not dispute that the Hospital Authority is a trust created under the provisions of sections 176 through 180.55 of Title 60, commonly referred to as Oklahoma's public trust act. Morrison v. Ardmore Indus. Development Corp., 1968 OK 116, 444 P.2d 816, 819; Oklahoma Attorney General Opinion, 1985 OK AG 129, ¶ 1 (O.S.C.N.). ¶ 16 Landowners argue that the Hospital Authority's participation in the development project violates § 178.4 because the project includes retail outlets. The City and Authority agree that retail outlets will be included, and further state that virtually all redevelopments will necessarily include some form of retail outlet. The City and Authority maintain that § 178.4 is not violated. ¶ 17 The Hospital Authority provides funds to acquire the property in the project area. Landowners' property has been the object of two eminent domain proceedings by the City. According to the City, the Midwest City Urban Renewal Authority is now attempting to take the property by eminent domain. After the property is taken by eminent domain its title is to be transferred to the Hospital Authority. ¶ 18 The Hospital Authority states that it is merely `disposing of' property by a fifty (50) year lease and a thirty (30) year renewal option to a private redeveloper in an arm's length business transaction, and receiving a return for that disposition. The Hospital Authority argues that § 178.4 will not be violated unless the developer defaults on its obligations: The Authority acknowledges that if Sooner [the developer] should default on the lease and the retail improvements become the property of the Authority, the Authority would be under an obligation to promptly dispose of the property under Section 178.4. (Explanation added). The Hospital Authority argues that this unlikely contingency must not defeat the purpose of the Local Development Act. ¶ 19 This Court has adjudicated controversies involving public trusts, but has not had an occasion to examine § 178.4 in the context of a public trust financing a project for obtaining land to be used for retail facilities. The Attorney General of the State of Oklahoma has discussed § 178.4 at least five times. The three most recent warrant comment. [7] In 1982 the Attorney General issued an Opinion stating that a public trust could not finance the construction of a motel and restaurant unless they are operated on the same premises with and in conjunction with the industrial trust facility. 1982 OK AG 81 (14 Okl. Op. Atty. Gen. 189). He explained that § 178.4 is a plain prohibition to a public trust financing a retail outlet. 1982 OK AG 81 ¶ 2 (O.S.C.N.). He then explained the exception to the prohibition in § 178.4 where a public trust could finance certain types of retail activities: The obvious reason for the exception in § 178.4 to which your question alludes is not to foreclose industrial, manufacturing, cultural, recreational, parking, transportation or airport projects from trust financing merely because one or more retail outlets will be operated incidentally from the same premises, such as a gift shop at an airport. 1982 OK AG 81 ¶ 6 (O.S.C.N.). ¶ 20 In 1985 the Attorney General stated that a public trust could not use its funds to acquire, construct or equip a livestock auction market unless it was on the same premises with, and operated in conjunction with, an industrial, manufacturing, cultural, recreational, parking or transportation or airport facility. 1985 OK AG 129 (17 Okl. Op. Atty. Gen. 208). This Opinion is consistent with the 1982 Opinion. ¶ 21 In 1979 the Attorney General determined that a public trust, the Mid-America Industrial Park, could not construct and lease a warehouse to store goods used by retail business. 1979 OK AG 215, (11 Okl. Op. Atty. Gen. 342). In 1990 the Legislature amended § 178.4 to allow a public trust to finance, construct, own or lease a warehouse as a permissible public trust purpose. 1990 Okla.Sess.Laws, Ch. 72, § 1. In 1990 the Legislature did not alter § 178.4 with regard to the Attorney General's conclusions made in the 1982 and 1985 opinions. ¶ 22 We have said that an Opinion of the Attorney General construing a statute has persuasive authority and silence by the Legislature may be regarded as acquiescence or approval of that construction by the Attorney General. National Cowboy Hall of Fame and Western Heritage Center v. State ex rel. Oklahoma Human Rights Commission, 1978 OK 76, 579 P.2d 1276, 1279; Goble v. Mazie Dependent School Dist. D-32, 1971 OK 105, 488 P.2d 156, 157. We agree with the Attorney General that § 178.4 contains a broad prohibition on public trusts engaging in financing, constructing, and operating retail outlets. We also agree that § 178.4 has an exception and allows retail activities such as a gift store in an airport. ¶ 23 The City and Hospital Authority also apparently agree with the Attorney General since they state that if the developer fails to satisfy its obligations the Authority could be required to divest itself of the property because of § 178.4. However, they argue that the Authority is not in violation of § 178.4 if it transfers (leases) its property to the developer who in turn leases the property to retail outlets. This argument is not convincing. ¶ 24 The statute prohibits a trust engaging in an activity in a retail outlet. The Project Plan specifically includes plans for both specific anchor retail stores and unspecified retail stores. The Hospital Authority is investing in retail activities  it is buying land for the purpose of operating, albeit through a third individual, retail activities. One aspect of the Hospital Authority's investment in retail activities is shown by how the Hospital Authority will receive income from the retail project. Q. Okay. From whom is Sooner Town leasing the land? A. From the Midwest City Hospital Authority. Q. What in a general way are the payment obligations of the developer to the Authority? A. The payment obligations come in the form of three divided parts. The first part is what they call the guarantee rent, which is the pass-through rent of our two main anchors, Target and Lowe's. The second form of rent comes in what we call a preferred rent, which would be rent after expenses have been paid operating the property, and expenses of the debt that could be placed upon the development, but before the developer is to receive any money. And then the third form of rent comes in the form of participation rent, which is an equal amount that the developer receives from the project. Tr. at 57-58. We find unpersuasive the argument that while, in general, a public trust would not be permitted to buy land and rent it to Target and Lowe's, this Hospital Authority should be allowed to buy land and rent it to Target and Lowe's so long as it does so through a third party. The record clearly shows that the Hospital Authority is planning to purchase land for the purpose of providing the land for retail activities by others and be compensated from those retail activities. The Hospital Authority is prohibited by § 178.4 from buying land for this Project unless some other legal authority exempts it from the reach of § 178.4. ¶ 25 The Hospital Authority states in its post-appeal supplemental materials that such authority exists, 60 O.S.2001 § 178.6. That statute states: Public trusts  Exemption from provisions  Housing finance The provisions of Sections 652 and 653 of Title 62 of the Oklahoma Statutes and Sections 178.4 and 178.5 of this title shall not affect: public trusts operating facilities for the aged or disabled persons by nonprofit, religious or benevolent organizations; public trusts operating county, municipal or nonprofit hospitals; public trusts operating college or educational dormitories or student housing facilities; trusts formed for the purpose of constructing buildings for local units of the Department of Human Services under the provisions of Section 189a of Title 56 of the Oklahoma Statutes; public trusts carrying out redevelopment, rehabilitation and conservation activities in accordance with an approved urban renewal plan, provided property owned by said trust shall not be exempt from ad valorem taxation for a period exceeding five (5) years; trusts created under the provisions of Sections 15-141 through 15-147 of Title 2 of the Oklahoma Statutes or other trusts created for the same purpose. Section 176 et seq. of this title shall not prevent public trusts from administering a housing program pursuant to a contract with an agency of the United States Government or the State of Oklahoma, or prevent public trusts from financing housing programs, provided said programs involve only property that is subject to ad valorem taxation and located within the geographic boundaries of the beneficiary or beneficiaries of the public trust or meet the requirements of clauses (i), (ii), (iii), (iv) and (v) of subdivision b of division 2 of subparagraph a of paragraph 8 of Section 2887 of Title 68 of the Oklahoma Statutes. A public trust with a city or cities, a county or counties, or the state as the beneficiary or beneficiaries thereof may issue its evidences of indebtedness for the purpose of financing housing or housing programs within the geographic boundaries of its beneficiary or beneficiaries as same represent an authorized and proper public function for public trusts. 60 O.S.2001 § 178.6, (emphasis added). The City and Hospital Authority state that they are now proceeding with the redevelopment plan pursuant to the Urban Renewal Act, and that this fact places their conduct outside the scope of § 178.4. This argument presents several issues which must be left for the trial court on remand. ¶ 26 The argument made by the City and Hospital is based upon the existence of an urban renewal plan. The existence of this plan is raised for the first time in post-appeal supplemental filings. The post-appeal supplemental material filed by Landowners challenges the legality of the urban renewal plan as well as the authority of the Midwest City Urban Renewal Authority in the condemnation proceedings. Assuming, without deciding, that § 178.6 would be applicable to the Midwest City Hospital Authority, such application would be based, pursuant to the City's argument, on a legal urban renewal plan that is actually being properly implemented by the Authority. We decline the invitation by the City and Authority to make a first-instance adjudication on appeal deciding whether certain facts exist and the legality of an urban renewal plan so as to exempt the Hospital Authority from the reach of § 178.4. ¶ 27 On occasion we have remanded a proceeding to a trial court for it to make a first-instance adjudication of facts and law because of a post-appeal change in law due to an after-enacted statute. See, e.g., American Ins. Association v. State Indus. Commission, 1987 OK 107, 745 P.2d 737, 740-741 (trial tribunal's order was vacated and the cause remanded with directions to afford a party a full opportunity to argue based upon an after-enacted statute). The proper forum is the trial court for the arguments and development of a record relating to § 178.6. While we reverse the trial court on its legal conclusion that § 178.4 does not apply to the Midwest City Hospital Authority, the Authority and Landowners are left with a full opportunity to address the applicability of § 178.6 on remand. Further, in light of our holding on the third issue raised on appeal, additional litigation in the District Court on this second issue may not be required, a determination which should be adjudicated in the first instance in the trial court.