Court Opinion

ID: 9847925
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:10:01.845688+00
Date Added: 2024-06-11T09:17:46.598841
License: Public Domain

RABINO WITZ, Justice,
concurring.
I agree with the majority’s conclusion that the lease of the Dillingham cold storage facility was subject to the requirements of AS 29.48.260(c), including its competitive bidding requirement. However, I would reach that result by a statutory interpretation different from that employed by the majority.
AS 29.48.260(e) provides:
A municipality, in order to make sites available for beneficial new industries, may acquire and hold real property, either inside or outside the corporate limits, and may sell, lease or dispose of it to persons who agree to operate a beneficial new industry upon the terms and conditions the assembly or council considers advantageous to the municipality.
The majority opinion concludes that real property transactions made by a municipality “in order to make sites available for beneficial new industries” are subject to the procedural, competitive bidding, and voter ratification requirements of AS 28.48.260(c), because subsection (e) of AS 29.48.260, unlike subsections (b) and (d), does not include an express exemption from those requirements. However, I have concluded that the legislature did not intend such transactions to be subject to those requirements. This conclusion is based on general principles of statutory interpretation, a review of previous Alaska statutes authorizing municipalities to acquire real property and make it available to new industries, and the public policies underlying those earlier statutory provisions and the current provisions of AS 29.48.260(e).
First, I think the majority opinion’s interpretation of AS 29.48.260(e) is contrary to the fundamental rule of statutory construction which provides that “[a] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.”1 As the majority opinion says, under its interpretation the first clause of this statutory provision remains significant, as it authorizes a municipality to acquire real property for the specific purpose of making sites “available for beneficial new industries.”
However, the last clause of subsection (e) authorizes a municipality to “sell, lease, or dispose of [property acquired for this purpose] to persons who agree to operate a beneficial new industry upon the terms and conditions the [municipal] assembly or council considers advantageous to the municipality.” As the majority opinion says, under its interpretation this clause would mean only that the council’s terms and conditions would be set forth in the bid specifications. The majority’s interpretation thus renders this clause superfluous and insignificant, since the general procedural provisions of AS 29.48.260(c), which the majority holding applies to AS 29.48.260(e), also provide that the terms and conditions for competitive bidding are to be fixed by the assembly or council.2 If the last clause in AS 29.48.-260(e) is not to be redundant, it must be read as giving the assembly or council the authority to negotiate and approve a real property transaction with a beneficial new industry.
The earliest Alaska statute authorizing municipalities to engage in real property transactions with beneficial new industries provided that:
[T]he common council, in order to make available sites for the installation and operation thereon of new industries which will benefit the civic welfare of the municipality, may likewise acquire, own *44and hold such sites, including real property, either within or without the corporate limits and may sell, lease or dispose thereof upon such terms or conditions as may be deemed advantageous to the civic welfare of the municipality, to such persons, associations, co-partnerships or corporations as will agree to install, maintain and operate thereupon such new industry or industries, and such sites as well as any right, equity, claim or title now or hereafter acquired by the municipality in and to real property sold to it for delinquent taxes, shall not be deemed to be “property acquired, owned or held for any public use or devoted thereto" as used herein.3
The statutory scheme at that time had no competitive bidding requirements, but did require voter ratification of any “sale, lease, exchange or other disposition of any property acquired or held for any public use, or devoted thereto.”4 As the majority opinion recognizes, the disposition of new industry sites was thus explicitly exempted from those ratification requirements.5
Such transactions were instead to be made by the municipal council “upon such terms or conditions as may be deemed advantageous to the civic welfare of the municipality,” an expression of council authority virtually identical to that in AS 29.48.-260(e), the statutory provision involved in the present case. Indeed, the language of that early beneficial new industry provision was retained virtually intact in successive statutes, including the immediate predecessor to the present statute.6
As a general principle, “[t]he legal history of a statute, including prior statutes on the same subject, is an especially valuable guide for determining what object an act is supposed to achieve.”7 I think that there were definable public policy considerations which moved previous Alaskan legislatures to exempt from voter ratification requirements a municipal property transaction undertaken by a municipal assembly or council to establish a beneficial new industry in the community. The majority opinion fails to recognize those considerations in construing the present statute to impose not only voter ratification requirements, but also competitive bidding requirements, on such transactions.
Competitive bidding is widely required in municipal contracts for the positive purpose of “inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption.”8 However, as a general rule municipal corporation competitive bidding requirements are construed narrowly, since “[i]n the absence of some statutory provision, competitive bidding is not an essential prerequisite to the validity of contracts by and with public bodies.”9 *45The reason for this rule of narrow construction is pragmatic; there are contexts in which a requirement of competitive bidding impedes rather than enhances the efficiency of municipal government.
Therefore, even where there are statutory competitive bidding requirements generally applicable to municipal contracts, “[t]he manifest impracticality of demanding strict compliance with a statutory requirement of public bidding under certain circumstances has resulted in widespread recognition of three general exceptions.”
The first and most prevalent involves the emergency situation. Thus, the requirement of competitive bidding may be dispensed with where it is essential to the health, safety or welfare of the people that immediate action be taken. The almost infinite variety of factual contexts in which this problem has arisen, though, renders it infeasible to isolate the ‘emergencies.’ However, in order for the exception to be granted, it is necessary that an emergency ‘be present, immediate, and existing, and not a condition which may or may not arise in the future, or one that is . . . to be expected to arise.’
By the weight of authority, a second general exception applies to contracts for the purchase of public utilities. Several jurisdictions apparently still refuse to recognize this exemption. However, the majority have more realistically considered the monopolistic nature of the public utility companies, and the rate controls to which they are subjected, and have thus removed contracts for their services from the statutory requirement.
Third, contracts for the purchase or lease of real estate for municipal use are generally excluded from competitive bidding procedures. Insofar as the particular location is most frequently that which makes land desirable, little purpose could be served in imposing an otherwise applicable statutory requirement. These decisions, then, apparently reflect a continuation of the time-honored deference the courts have paid to the ‘uniqueness’ of land.10
Fact specific exceptions have also been recognized where the contract is for rendering specific professional or skilled services,11 or for a desired service, product, or process available from only one source,12 and where a transaction involving municipal real property rights was not amenable to competitive bidding.13
*46The “public purpose” in encouraging the development of beneficial new industries in Alaskan communities has been recognized by this court in the context of holding municipal industrial development bond schemes constitutionally permissible in Wright v. City of Palmer, 468 P.2d 326, 330-31 (Alaska 1970). Courts and legislatures have generally given broad latitude to municipalities to develop incentives to economic development through tax exemptions and municipal bond financing for new industry. Id.14
In most cases municipalities must negotiate agreements for establishing a new industry in a community on an individual basis with a prospective industry; it is simply unrealistic to require a municipality to issue a general invitation to bid as a means of attracting such potential industrial developers. For that reason, agreements between municipalities and industries for new development, which may include construction of plants financed by municipal bonds, property leasing or sale arrangements, and tax benefits tailored to the specific needs of the industrial developer, have been widely exempted from general competitive bidding requirements.15
I think a recognition of the pragmatic necessity of giving municipal governing *47bodies the power and flexibility to negotiate with potential industrial developers moved previous Alaska legislatures to exclude beneficial new industry transactions from the voter ratification requirements of the predecessor versions of the municipal property statutory provisions involved here. It would be inconsistent with this legislatively expressed public policy to interpret the current statutory provisions as imposing both voter ratification and competitive bidding requirements on such transactions. Therefore, I would conclude that the legislature did not intend to impose those requirements in this context, but intended to give municipal assemblies and councils the authority to “sell, lease or dispose [of real property acquired for this purpose] to persons who agree to operate a beneficial new industry upon the terms and conditions the assembly or council considers advantageous to the municipality.”
Despite the fact that I disagree with the majority opinion’s construction of the “beneficial new industry” provisions of AS 29.-48.260(e), I concur in its disposition of this case because, unlike the majority, I do not think the renewed operation of the Dilling-ham cold storage facility by Engstrom Brothers is a “beneficial new industry.” Given my view of the purpose of these “beneficial new industry” provisions, I think the tax exemption cases employed by the majority are particularly appropriate and can agree that “the term ‘beneficial new industry,’ as used in AS 29.48.260(e), refers to any newly organized business that is not a mere expansion or continuation of a business that has previously operated in the municipality.”
While perhaps there should be some deference to a community’s political discretion in determining “beneficial new industry” status,16 the negotiations here involved a lease of a pre-existing cold storage facility for a renewal of its prior use. The exemption from voter ratification and competitive bidding requirements provided under my view of AS 29.48.260(e) is addressed to a situation where a municipality is attempting to attract a truly new industry and must negotiate based on the specific needs of that potential industrial developer. In contrast, the facts in this case reveal a situation amenable to the bidding and ratification requirements of AS 29.48.260(c). There was at least one other concern willing to compete to lease and operate the cold storage facility, and three bid invitations were in fact issued by the City and apparently received no response only because the City’s terms were unduly restrictive.
There is certainly an economic benefit to the Dillingham community from the renewed operation of this facility. However, this would be true in the case of any “expansion or continuation of a business that has operated in the municipality.” Neither the fact that a different corporation is to operate the facility nor the fact that the facility had not been operated for one season prior to the beginning of lease negotiations alters my conclusion that the renewed operation of the facility was only a continuation or, at most, a slight expansion of the existing cold storage business and not a “beneficial new industry” in the terms of AS 29.48.260(e).17
*48For this reason, I concur with the majority opinion’s conclusion that the lease of this facility by the City of Dillingham was subject to the competitive bidding requirements of AS 29.48.260(c).

. 2A C. Sands, Sutherland Statutory Construction § 46.06, at 63 (4th ed. 1973). See, e. g., Isakson v. Rickey, 550 P.2d 359, 364 (Alaska 1976).

. For example, the assembly or council would set the terms and conditions of bid specifications for the disposition of “property no longer required for municipal purposes” under AS 29.-48.260(a), though that provision does not explicitly so state.

. This paragraph was enacted in ch. 27, § 1, SLA 1945 (emphasis added).

. Id.

. See Seltenreich v. Town of Fairbanks, 103 F.Supp. 319 (D.Alaska 1952), aff'd, 211 F.2d 83 (9th Cir.), cert. denied, 348 U.S. 887, 75 S.Ct. 206, 99 L.Ed. 697 (1954).

. The provisions succeeded by the present AS 29.48.260(e) were in former AS 29.10.132(e), which provided:
The council, in order to make sites available for new industries which will benefit the municipality, may likewise acquire, own and hold such sites, including real property, either inside or outside the corporate limits and may sell, lease or dispose of them upon the terms and conditions as it considers advantageous to the civic welfare of the city, to persons who will agree to install, maintain and operate a beneficial new industry. Sites acquired under this paragraph and any right, equity, claim or title acquired by the municipality to real property sold to it for delinquent taxes are not “properly acquired, owned or held for or devoted to a public use” as used herein.

. 2A C. Sands, Sutherland Statutory Construction § 48.03, at 191 (4th ed. 1973).

. 10 McQuillin, Municipal Corporations § 29.29, at 321 (3d ed. rev. 1966). See, e. g., Coller v. City of St. Paul, 223 Minn. 376, 26 N.W.2d 835, 841 (1947).

. People ex rel. Adamowski v. Daley, 22 Ill.App.2d 87, 159 N.E.2d 18, 20 (1959). See also Hertz Drive-Ur-Self System, Inc. v. Tucson Airport Auth., 81 Ariz. 80, 299 P.2d 1071 (1956); Riverside County v. Whitlock, 22 Cal.App.3d 863, 99 Cal.Rptr. 710 (1972); R. E. Short Co. v. City of Minneapolis, 269 N.W.2d 331 (Minn.1978); Thatcher Chem. Co. v. Salt Lake City Corp., 21 Utah 2d 355, 445 P.2d 769 (1968). *45See generally 10 McQuillin, Municipal Corporations § 29.31 (3d ed. rev. 1966).

. Note, The Necessity of Competitive Bidding in Municipal Contracts, 27 U.Pitt.L.Rev. 117, 120-21 (1965) (footnotes omitted).
The appellees have argued that if competitive bidding requirements do apply to the lease in this case, compliance was unnecessary because of the emergency exception. However, negotiations for the lease were conducted over the course of several years and three bid invitations were in fact issued by the city. See also 10 McQuillin, Municipal Corporations § 29.38, at 344 (3d ed. rev. 1966) (emergency exception doesn’t apply to “a condition . . . which reasonably may be seen in time to advertise for bids”). Still, I agree with the majority that this is a question which should be addressed by the superior court on remand.

. See Note, supra note 10, at 118; Annot., 15 A.L.R.3d 733 (1967). See, e. g., Parker v. Panama City, 151 So.2d 469 (Fla.App.1963) (tax expert); Lehigh Const. Co. v. Housing Auth. of City of Orange, 56 N.J. 447, 267 A.2d 41 (1970) (plans and developers for low-rent housing for elderly); Mongiovi v. Doerner, 24 Or.App. 639, 546 P.2d 1110 (1976) (architectural services); Commonwealth ex rel. Roberts v. Tice, 272 Pa. 447, 116 A. 316 (1922) (attorney); Modjeski & Masters v. Pack, 215 Tenn. 629, 388 S.W.2d 144 (1965) (consulting engineer).

. See, e. g., Hylton v. Mayor and City Council of Baltimore, 268 Md. 266, 300 A.2d 656 (1972) (only one possible source for desired type of waste treatment facility); Cosentino v. City of Omaha, 186 Neb. 407, 183 N.W.2d 475, 479 (1971). See also Note, supra note 10, at 123.

. See, e. g., Meakin v. Steveland, Inc., 68 Cal.App.3d 490, 137 Cal.Rptr. 359, 363 (1977) (sale of small plot of San Francisco to developer for construction of pedestrian plaza; full appraised value paid, only potential uséi and only potential purchaser; “where requests for competitive proposals would be futile, unavailing or would not produce an advantage, statutes requiring competitive bidding do not apply”); Whelan v. N. J. Power & Light Co., 45 N.J. 237, 212 A.2d 136 (1965) (contract between city and power company; city to acquire additional *46water supply, company to use reservoir to generate hydroelectric power as well as purchase five acres of municipal property for hydroelectric plant site; competitive bidding statute should not be read to “deny municipalities authority to deal with problems in a sensible, practical way”).

. See also Pinsky, State Constitutional Limitations on Public Industrial Financing: An Historical and Economic Approach, 111 U.Pa.L. Rev. 265 (1963); Note, Legal Limits to Public Inducement to Industrial Location, 59 Colum.L. Rev. 618 (1959); Note, Industrial Development Bonds: Judicial Construction vs. Plant Construction, 15 U.Fla.L.Rev. 262 (1962); Note, Incentives to Industrial Relocation: The Municipal Industrial Bond Plans, 66 Harv.L.Rev. 898 (1953); Comment, Financing Industrial Development with Municipal Revenue Bonds, 1967 U.Ill.L.F. 331 (1967); Note, The “Public Purpose” of Municipal Financing for Industrial Development, 70 Yale L.J. 789 (1961).

. Green v. City of Mt. Pleasant, 256 Iowa 1184, 131 N.W.2d 5, 24 (1964) (upholding validity of bond statute and city council’s proposal to issue bonds to finance construction of specially designed new factory building to be leased to industry without public bidding); Gregory v. City of Lewisport, 369 S.W.2d 133, 135 (Ky.App.1963) (competitive bidding not required for construction work on bond-funded aluminum plant); R. E. Short Co. v. City of Minneapolis, 269 N.W.2d 331, 342-13 (Minn.1978) (competitive bidding not required for parking garage contract executed in conjunction with hotel development); Wring v. City of Jefferson, 413 S.W.2d 292 (Mo.1967) (competitive bidding not required for bond-funded construction and lease to company); Whelan v. N. J. Power & Light Co., 45 N.J. 237, 212 A.2d 136 (1965) (see note 13 supra), Clem v. City of Yankton, 83 S.D. 386, 160 N.W.2d 125, 134 (1968) (competitive bidding not required for bond-funded construction, since it is acquired for private industry rather than public use); Uhls v. State, 429 P.2d 74 (Wyo.1967) (bond-funded $25,000,000 refinery leased without needing to meet competitive bidding requirements “in the sale of city property”). The rationale was expressed in Bennett v. City of Mayfield, 323 S.W.2d 573, 576 (Ky.App.1959) (bond-funded site acquisition and plant construction with lease to tire manufacturer):
There are many special transactions of such character as to make it impractical or unwise to apply the policy of competitive bidding . . The commitment of the [City] to sell and convey the property to the lessee according to the option is not an obligation to sell property in the ordinary and usual meaning or such a character of sale as generally requires competitive bids. This commitment is an integral and essential consideration of the whole contract [for the development of a new industry in the community] existing ab initio, and is not a contract arising subsequent to the lease .... We, therefore, hold this provision not to be such a contract of alienation or sale of property as requires advertisement and sale on competitive bids. It is also recognized that:
With respect to the power of a city to dispose of its property without advertising for bids, there is a clear distinction between disposing of property purchased and held for public use and the benefit of the citizens and disposing of property acquired and used for strictly corporate or proprietary purposes. As to the latter class of property, the power of a municipality to sell is unquestionable unless restrained by charter or statute. That is the law in general.
Bennett v. City of Mayfield, 323 S.W.2d 573, 576 (Ky.App.1959). See generally Annot., Power of Municipal Corporations to Lease or Sublet Property Owned or Leased by It, 47 A.L.R.3d 19, 63-67 (1973).

. See, e. g., Meador v. Mac-Smith Garment Co., 188 Miss. 98, 191 So. 129, 133 (1939) (recognizing discretion in board to determine “new industry” status). See also Uhls v. State, 429 P.2d 74 (Wyo.1967). In Uhls, the Wyoming Supreme Court, by a 3-2 decision, upheld a bond financing, construction and lease agreement between the City of Cheyenne and an oil company for a $25,000,000 new refinery. The dissenters argued that “no ‘new’ industry [was] being brought to Cheyenne” because the agreement was for building a new plant to replace 25-year-old facilities bordering on competitive obsolescence which would employ a maximum of 30 additional employees. Id. at 91. While the dissenters felt this was not a new or even expanded industry, and that there had therefore been no clear showing of public purpose, the majority was content to respect the community’s political decision as to the economic desirability of the project.

. Meador v. Mac-Smith Garment Co., 188 Miss. 98, 191 So. 129, 134 (1939), stated the following simple test, which is helpful in this case:
We think that the test is whether the factory now being operated by the present exemp-tionist is a new factory compared with that *48which was actually operated by the former owner .
That case upheld the grant of a “new industry” tax exemption to a new operator of a factory, where the factory had not been used for three years, much new machinery had been installed, and an entirely different product was to be produced.
Even though I have concluded that this case does not involve a new industry in this sense and that this lease was not authorized by AS 29.48.260(e), the City of Dillingham is, as the majority opinion notes, specifically authorized to “exercise the powers necessary to provide cold storage plants” by AS 29.48.-030(8).