Court Opinion

ID: 9674866
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:36:41.10546+00
Date Added: 2024-06-11T18:16:29.974391
License: Public Domain

Steele Hays, Justice, dissenting. I wholly disagree that the caveat in Purvis 1 was meant to give the warning the majority opinion now says was intended. The court suggests that in Purvis I we expressed “serious doubts about bonds being issued without an election.” That is a broadening of what was intended by the Purvis caveat. It was not simply the lack of an election which prompted the warning in Purvis, it was the fact that bonds unapproved by an election were secured by revenues other than those generated by the convention center complex. No objection was implied in Purvis I to the long approved practice of municipalities issuing special obligation bonds without an election where the bonds were to be retired solely from revenues generated by the improvement. By this opinion the court has turned back the calendar by several decades, and skirted a good many cases, in its treatment of special obligation bonds. Regrettably, it tries to give credibility to that extraordinary move by relying on the Purvis caveat. In Purvis I, we noted that the bonds were to be repaid not simply from the revenues generated by the convention center complex, but from several sources beyond the complex, including state turnback revenues, income from adjacent parking facilities, revenues derived by the city from a tax on gross receipts from hotels, motels, and restaurants, and revenues received by the city from the existing and new convention centers. This multiple financing concept gave the appellant reasonable grounds to argue in Purvis I that voter approval of the bonds was required under Amendment 49. And although we rejected that argument in Purvis I, the court warned in the caveat that the issue of voter approval was subject to re-examination because of a gradual expansion of the concept of special revenue producing bonds in the fifty years since Snodgrass v. Pocahontas, 189 Ark. 819, 75 S.W.2d 223 (1934) was decided. In Snodgrass we upheld the issuance of revenue bonds by the City of Pocahontas without voter approval because the bonds were to be paid solely from revenues derived from the improvement. That is precisely the situation here. These bonds, like those in Snodgrass v. Pocahontas, are to be paid solely from the revenues produced by the facility. The “gradual expansion” referred to in the Purvis caveat was intended to bring into question such cases as Holmes v. Cheney, 234 Ark. 503, 352 S.W.2d 943 (1962); Mills v. Gordon, 234 Ark. 525, 353 S.W.2d 157 (1962), and McArthur v. Smallwood, 225 Ark. 328, 281 S.W.2d 428 (1955), where we had approved without an election, methods for the repayment of bonds from sources of revenue far more extensive than simply derived from the improvement itself. Presumably, that process of expansion reached its outer limit in Purvis and, hence, the caveat. Elsewhere in its opinion the court implies that the Purvis caveat is aimed at the public-purpose versus private-purpose issue. That, too, is wrong. The public-purpose issue was dealt with at length at the outset of the Purvis I opinion and the private-purpose argument was rejected without the slightest suggestion that we intended to later re-examine that issue. Nor do I agree that it is our place to conclude that no public purpose is served by this facility. By adopting Act 380 of 1971, the legislature empowered “any municipality or county” to undertake projects which might benefit tourism, a major economic resource to those areas having some appeal to tourists. The City of Little Rock acted pursuant to that legislation and it is not for us to second-guess that decision. We frequently say that whether projects sanctioned by other branches of government are wise and prudent is not ours to judge. Purvis v. Hubbell, supra and Miles v. Gordon, 234 Ark. 525, 353 S.W.2d 157 (1962). Nevertheless, the court has substituted its own judgment for that of the Little Rock Board of Directors in determining what benefits tourism and has effectively concluded that accommodations for food and lodging do not. Interestingly enough, this court once recognized the importance of accommodations to tourism in upholding the right of the City of Eureka Springs to tax hotels, motels, and restaurants for the benefit of tourism saying: It is common knowledge from time immemorial that the traveler or tourist must first have lodging and food in the area in which he sojourns. Dicks v. Naff, Mayor, 255 Ark. 357, 500 S.W.2d 350 (1973). In this case, title to the land and the entire improvement is vested in the City of Little Rock. The La Quinta Motel leases the improvements from the city and will pay to the City of Little Rock $900.00 a year to defray administrative costs and an amount determined by a formula intended to produce each year what La Quinta would pay in ad valorem and property taxes if it were the owner. Additionally, La Quinta will pay $12,626,000 under the lease to retire the bonds. We have approved bonds in similar projects where public facilities are leased to private operators. See Wayland v. Snapp, 232 Ark. 57, 334 S.W.2d 633 (1960); Lambert v. Wharf Improvement Dist. No. 1 of Helena, 174 Ark. 478, 295 S.W. 730 (1927), and in Purvis v. Hubbell, Mayor, 273 Ark. 330, 620 S.W.2d 282 (1981). Where in this record (other than by the proffer of excluded testimony) is there any proof to support the conclusion that no public purpose exists? That determination was made by the Little Rock Board of Directors and appellant does not attempt that argument except to submit that a “free-standing” motel does not come within Act 380, urging that it must be functionally a part of an overall tourism project. Yet the majority has overruled the Chancellor and brushed aside with a sentence substantial evidence presented to the trial court that the proposed project was thoroughly examined over an extended period of time by the Board of Directors, including holding public hearings — proof from which the Chancellor found the project promoted tourism. The majority has made no attempt to differentiate between the benefits of the project accruing to the public in contrast to private interests, it has simply concluded without discussion that any public interest is lacking. In so doing it has invaded the province of another branch of government and vetoed the acts of a municipal government wholly without evidence to justify such action. The fundamental issue of this appeal is not nearly as complicated as the majority opinion would have it seem. It is simply whether or not bonds of limited obligation may be issued without an approving election to construct an improvement which a municipality deems to be in the public interest in promoting tourism. Cases extending over half a century have said again and again that where the general revenues of a city are not pledged, no approving election is required. The bonds in this case can never constitute an indebtedness of the City of Little Rock nor become a liability of its residents. These bonds were issued on the express proviso that only the revenues generated by the development itself are pledged to secure the bonds. Why this court should suddenly see fit to invalidate that time tested method of financing is not apparent. delivered June 4, 1984 669 S.W.2d 900 The decree should be affirmed. Adkisson, C.J., and Hollingsworth, J., join in this opinion.