Court Opinion

ID: 6826313
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:26:48.453347+00
Date Added: 2024-06-11T16:04:23.103800
License: Public Domain

JUSTICE LACY,
concurring.
This Court has come too far in its consideration of the constitutionality of financial obligations undertaken by state and local governments to declare today that an obligation is a debt for purposes of Article VII, § 10(b) of the Virginia Constitution when the obligation is only a conditional promise to pay, it is admitted by the parties to be only a moral obligation, and cannot be enforced through any legal process. This holding allows the “disastrous effect” of the failure to perform to create a legal obligation and directly contradicts the holdings and statements made by this Court in numerous prior cases, without any attempt to address, distinguish, or overrule them. E.g., Terry v. Mazur, 234 Va. 442, 451, 362 S.E.2d 904, 909 (1987); Baliles v. Mazur, 224 Va. 462, 469, 297 S.E.2d 695, 698-99 (1982); Harrison v. Day, 202 Va. 967, 975-77, 121 S.E.2d 615, 620-22 (1961); Almond v. Gilmer, 188 Va. 822, 840-41, 51 S.E.2d 272, 279 (1949). This is the first instance in which the repayment of bonds is totally dependent on a conditional promise of the governmental unit. Although the “practical effect of such a calamitous event” on the governmental unit should it choose not to keep its promise to appropriate funds was no less present in these prior cases, it did not transform a conditional appropriation into a debt under Article VII, § 10(b). Baliles v. Mazur, supra.
I agree with the majority’s analysis of the special fund doctrine as it applies to this case. I cannot accept the rationale by which the majority reverses the trial court’s judgment. The county’s promise to pay, which does not have to be kept, although the basis for the security underlying the bonds, nonetheless, does not legally obligate the county to appropriate sums for payment of a debt beyond one year and, therefore, does not run afoul of the constitu*369tional prohibition.* Nevertheless, I concur in the result the majority reaches because the contract between the county and the commission violates the Transportation District Act of 1964, Va. Code §§ 15.1-1342, et seq.
The Act was passed to allow the provision of transportation services and facilities on a regional basis. As reflected in the Act, effective planning and provision of a transportation infrastructure “cannot be achieved by the unilateral action of the counties.” Code § 15.1-1343. The Act is not structured simply to provide a county with a financing mechanism for its own facilities, facilities in which the district commission has no interest whatsoever. In this regard, the district commission is similar to the Ports Authority and Public Building Authority. These entities were created to undertake certain types of projects which would provide directly, or through sale or lease, certain services and facilities.
Consistent with this purpose § 15.1-1359 allows the county to enter into contracts with the commission “pursuant to which . . . [the commission] . . . undertakes to provide the transportation facilities specified in a duly adopted transportation plan, and/or to render transportation service.” Here, the commission is neither providing transportation facilities nor rendering transportation services to the county. It is only providing money to the county which in turn will construct the facilities, own them, and use them to provide transportation services. Code § 15.1-1359 does not authorize the county to enter into a contract with the commission where neither transportation service nor facilities are to be provided by the commission. Therefore, in my opinion, the contract at issue is invalid because it violates the Act.
I believe the contract also violates § 15.1-1364(b), which provides that the obligations and indebtedness of a commission “shall not create . . . any . . . obligation ... of any . . . county . . . either legal, moral or otherwise . . . .” The majority, the appellants, the Attorney General, and even the appellees acknowledge the the contract imposes some type of obligation on the county. In fact, the Attorney General and the appellees have labeled the obligation a “moral” one. Furthermore, the contract obligates the county to hold the commission harmless from any liability or ex*370pense “arising out of or in connection with this contract or the Bonds or the Trust Agreement.”
Section 15.1-1364 is not a mere repetition by the General Assembly assuring that a commission obligation would not be “deemed to be” or interpreted as the legal obligation of a county or city subject to the constitutional limitation. See, e.g., § 15.1-1358.2(a)(2). Rather, this section prohibits creating such an obligation in fact, precisely to preclude the type of circumvention of statutory and constitutional provisions attempted here. The obligation of the commission to repay the $330,000,000 bonded indebtedness as reflected in the bond, trust, and contract documents creates and obligation, “moral or otherwise,” on behalf of the county and, therefore, does not comply with the provisions of the Act.
Finally, the concluding proviso of § 15.1-1364(b) states that “nothing in this chapter . . . shall be construed to authorize a commission ... to incur any indebtedness on behalf of or . . . obligate the . . . county . . . .” Thus, the General Assembly has stressed again that the commission’s actions under the statute must comply with the law of the Commonwealth. The commission’s obligations as reflected in the contract do not comport with this statutory provision. Therefore, both the county and the commission are precluded from executing the instant contract under the terms of the Act.
If the trial court’s decree validating the bonds in issue is sustained, it is conclusive as to the validity of the “means provided for the payment of such bonds and the validity of all pledges of revenues and of all covenants . . . .” Code § 15.1-220. For the reasons set out above, I believe the contract offered as security for the bonds is invalid and, therefore, the judgment of the trial court must be reversed.
UPON REHEARING
Marcia P. Dykes
v.
Northern Virginia Transportation District Commission, et al.
Record No. 901033

 Apparently, financial analysts and bond counsel consider the detriments of non-performance by the county to be so great that this promise, although not legally binding, provides sufficient security to potential bondholders to endorse the sale and purchase of the bonds.