Court Opinion

ID: 9674865
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:36:41.101277+00
Date Added: 2024-06-11T18:16:29.972707
License: Public Domain

Robert H. Dudley, Justice, concurring. The various multipartite opinions in this case are evidence of our division over the numerous issues. The majority of the members do not agree with the reasoning expressed in much of the plurality opinion. This concurring opinion is written in order that those interested may determine where the maj ority lies on the various issues and to state the reasoning which I think is valid. The bonds issued for the La Quinta Motor Inn and the Kettle restaurant were not issued for a public purpose. “Public purpose” under Amendment 13 was limited to streets, parks, airfields, and similar improvements. It did not include erection of factory buildings for a private corporation. Williams v. Harris, Mayor, 215 Ark. 928, 224 S.W.2d 9 (1949). Amendment 49 broadened the Amendment 13 definition of “public purpose” by providing, in part: “Any city . . . may issue . . . bonds for the purpose of securing and developing industry.” Under this more recent definition we look at the entire undertaking, not just whether the purpose is to construct an improvement which benefits a private corporation, but whether the entire undertaking is to alleviate unemployment. Wayland v. Snapp, 232 Ark. 57, 334 S.W.2d 633 (1960); Myhand v. Erwin, 231 Ark. 444, 330 S.W.2d 68 (1959). The term “industry” is used in the context of its broader meaning of providing employment in cooperation with private enterprise. Hackler v. Baker, County Judge, 233 Ark. 690, 346 S.W.2d 677 (1961). Legislation may be enacted in implementation of a constitutional provision so long as such legislation is not inconsistent with or repugnant to the constitutional provision. Myhand v. Erwin, supra. Act 380 of 1971, as codified at Ark. Stat. Ann. § 13-1801 (Repl. 1979), expressly has been found to be a valid implementation of Amendment 49. Purvis v. Hubbell, Mayor, 273 Ark. 330, 620 S.W.2d 282 (1981). It provides, in part, that tourism is legislatively determined to be an industry. That determination has a rational basis and, as far as I can find, is questioned only by the plurality opinion and the other concurring opinion. Section 2 of the act, Ark. Stat. Ann. § 13-1802 (Repl. 1979), states in pertinent part: Tourism projects authorized and enumerated. — Any municipality ... is hereby authorized to own, acquire, construct, . . . sell, lease, contract concerning, or otherwise deal in or dispose of any lands, buildings,. . . or facilities of any and every nature whatever necessary or desirable for the securing and developing of recreation, relaxation, travel, entertainment, cultural development and other tourism activities of every nature . . . within or near the municipality . . . including, without limitation, hotels, motels, inns, lodges, folklore facilities, cultural development facilities, convention facilities, restaurants (in connection with other facilities for the securing and development of tourism), parks . . . parking facilities . . . recreation areas and other facilities of any nature whatever that can be used to secure and develop tourism and to thereby stimulate and enhance the economic growth and well-being of the municipality . . . and the people. Any such undertaking, or combination of such undertakings, will be herein sometimes referred to as a “tourism project.” Within the purview of this statute we approved the issuance of municipal revenue bonds for the construction of a hotel in connection with the development of a civic center. Purvis v. Hubbell, Mayor, supra. However, the statute does not, and cannot, make every commercial undertaking into an industrial undertaking to eliminate unemployment. In order to fulfill a public purpose, a commercial undertaking must bring about more than a remote or an indirect public benefit. Of course, the motel and restaurant will redound to the public benefit by slightly reducing unemployment, but this is true of any commercial operation. If a slight reduction of unemployment constitutes a public purpose then all commercial enterprises in the state are entitled to a similar bond issue. The determination of whether a municipal undertaking fulfills a public purpose initially is an executive decision to be made at a local level. A court is hesitant to disagree with that local decision. Accordingly, we will reverse that decision only if the local government acted arbitrarily, unreasonably, or capriciously. See Purvis v. Hubbell, Mayor, supra. In this case the Little Rock Board of Directors acted unreasonably. The motel and restaurant involved in this case are freestanding commercial structures. They do not constitute a functional part of a convention center, a public park, or a recreational center. The appellees point out that they have been constructed in an area where a city zoo, amusement park, tennis center, golf course, football stadium, baseball stadium, and health care facilities were already in existence. Reasonably close proximity to public institutions does not convert a private commercial enterprise into an undertaking which fulfills a public purpose. The close physical proximity of La Quinta and the Kettle to the public institutions is not of real significance and is not determinative. To illustrate, assume the record contained evidence that a motel and restaurant, named the Markham Inn and the Black Angus restaurant, were located even closer to the same public institutions than are La Quinta and the Kettle. Also, assume that the owners of those establishments wanted the same bond privileges that have been extended to La Quinta and the Kettle and that the city board again approved a bond issue. If these assumed facts were tested in a case, and the appellees’ rationale were followed, the bond issue again would be approved. Assume the record contained evidence that two nationally franchised fast food restaurants, such as McDonald’s and Wendy’s, were also located close by. Could either be distinguished from the Kettle or the Black Angus? Assume a mall, named University Mall, containing many enterprises, was located as close to some of the public facilities as La Quinta. Under appellees’ theory each enterprise would be entitled to a bond issue. The same would be true of any enterprise in the state which is located near a courthouse, a post office, a federal building, a park, a football field, or a school. To accept the rationale of the appellees, as the dissenting opinions do, is to accept an arbitrary and unreasonable local governmental decision and to abdicate the responsibility of judicial review. A majority of the members of this court agree that the bonds for the La Quinta Motor Inn and the Kettle restaurant were not issued for a public purpose. I concur in holding that these bonds are not valid within the purview of Act 380 of 1971. Unfortunately, the plurality opinion would go much farther and hold that Act 380 of 1971, Ark. Stat. Ann. § 13-1801, “is invalid when it purports to allow bonds to be issued without an election and for interest in excess of six per cent and the maturity dates beyond thirty years.” The plurality opinion would similarly limit bonds issued under Act 9 of 1960, Ark. Stat. Ann. § 13-1601 (Repl. 1979). A majority of the members of this court do not agree with the plurality opinion on this point. For fifty years this court has held that the Constitution of Arkansas authorizes cities to incur long term debt for the purpose of making authorized improvements for public purposes, without conducting an election, if the debt is to be repaid out of revenue generated by the improvements and the repayment does not place a burden on the taxpayer for which his property might be appropriated. Amendment 13 contains the following provision on elections, rates of interest and maturity dates on bonds: Provided that cities of the first and second class may issue by and with the consent of a majority of the qualified electors of said municipality voting on the question at an election held for the purpose, bonds in sums and for the purpose approved by such majority at such election . . . No bonds issued under the authority of this amendment shall bear a greater rate of interest than six per cent per annum . . . No bonds issued under the authority of this amendment shall be issued for a longer period than thirty-five years. In 1932, in the case of McCutchen v. Siloam Springs, 185 Ark. 846, 49 S.W.2d 1037, this court held that a city, without an election, under Amendment 13, could incur a debt in excess of its current revenues, payable over a five and one-half year period, to buy machinery for its electric plant, because money derived from the operation of the plant was not “funds belonging to the city” and could be pledged. By Act 131 of 1933 the General Assembly authorized municipal waterworks, without an election, to issue bonds to purchase, construct or improve the waterworks system. In Jernigan v. Harris, 187 Ark. 705, 62 S.W.2d 5 (1933), we upheld the statute and stated: “As to Amendment No. 13, it may be said that it has no application here, as there is no attempt to exercise any of the powers conferred by it.” In the 1934 landmark case of Snodgrass v. Pocahontas, 189 Ark. 819, 75 S.W.2d 223, the court held that under Amendment 13 elective approval was required if the bonded indebtedness for the municipal improvement would place a burden on the taxpayer, but Act 131 of 1933 provided an alternative method and, under it, an election is not required if the bonded indebtedness is to be repaid solely by revenues from the improvement. We have never deviated from that construction of Amendment 13. Hogue v. The Housing Authority of North Little Rock, 201 Ark. 263, 144 S.W.2d 49 (1940); and Boswell v. City of Russellville, 223 Ark. 284, 265 S.W.2d 533 (1954). The plurality opinion expressly reaffirms these cases. By 1958 this court had held, for over a quarter of a century, that an election is not necessary if the debt was to be repaid solely from revenues from the improvements. At that time it was felt that unemployment could be alleviated through industrial development but, in order to develop industry, it would be necessary to broaden the definition of public purpose contained in Amendment 13. The drafters of the proposed amendment, No. 49, obviously relied on our quarter century of precedent. The voters then approved the amendment. Amendment 49 contains the same three strictures on elections, interest and maturity as were contained in Amendment 13. Some of its language is identical: Any city of the first or second class, any incorporated town, and any county, may issue, by and with the consent of the majority of the qualified electors of said municipality or county voting on the question at an election held for the purpose, bonds in sums approved by such majority at such election. . . . Such bonds shall bear interest at a rate not to exceed six percentum per annum. . . . . . . No such bonds shall be issued for a period longer than thirty (30) years. The General Assembly, obviously relying on this court to treat implementing legislation of Amendment 49 just as we had treated Act 131ofl933 under Amendment 13, passed Act 9 of 1960, Ark. Stat. Ann. § 13-1601, the Industrial Development Revenue Bond Law, and Act 380 of 1971, Ark. Stat. Ann. § 13-1801, the Tourism Revenue Bond Act. In Purvis v. Hubbell, Mayor, supra, we reaffirmed our earlier cases and held the three strictures of Amendment 49, just like the three strictures of Amendment 13, were not applicable when the bonded indebtedness was to be repaid solely by the revenues from the improvement. The holding was in accord with the desire of the voters to broaden the scope of Amendment 13 by the adoptión of Amendment 49 and was in accord with the reliance placed on our earlier cases. The plurality opinion reaffirms all of the cases decided under Amendment 13, the old amendment, and then, without stating a reason, without discussing the similarities of the strictures contained in Amendments 13 and 49, and without giving effect to the broadened scope of Amendment 49, would make the three strictures applicable to Amendment 49 bond issues. Thus, the plurality would not require an election under the older and narrower amendment but would require an election under the newer and broader amendment. The plurality opinion would do this even though Amendment 49 constitutionally changes the definition of purely public purpose to more broadly include “securing and developing industry.” The plurality opinion is simply wrong on this point. Our cases constitute a well developed body of precedent, now stretching over half a century, by which this court has consistently interpreted the constitution to authorize governments to incur long term debt, without elective approval, in order to make authorized improvement for public purposes when the debt is to be paid out of revenues. The plurality opinion and the other concurring opinion, by applying the three strictures, would not only reverse our precedent but would prevent municipalities from issuing industrial bonds or tourism bonds for any of the above purposes until interest rates again fall to six per cent. Again, a majority of the members of this court do not agree with the plurality opinion. Lastly, a majority of the members of this court do not agree that the facts of this case bring it within the aegis of the caveat expressed in Purvis. A majority intend that warning to apply to the expanded concept of “payment solely from revenues” which has been used to retire a bonded indebtedness without elective approval. Richard B. Adkisson, Chief Justice, dissenting. The issuance of bonds under Amendment 49 contemplates that tax monies will be obligated to retire the indebtedness, and there must be voter approval before issuance. Such was the case in Purvis v. Hubbell, Mayor, 273 Ark. 330, 620 S.W.2d 282 (1981), but, here, no tax monies are involved. Therefore, voter approval is not necessary. These are strictly revenue bonds to be retired solely from monies generated from the La Quinta Motor Inn project. I would affirm.