Court Opinion

ID: 9855472
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:25:35.051023+00
Date Added: 2024-06-11T09:35:47.887982
License: Public Domain

POFF, J.,
dissenting.
I dissent. The majority tries but fails to distinguish Button v. Day, 208 Va. 494, 158 S.E.2d 735 (1968).
The City’s urban redevelopment project has a legitimate public purpose and, politically, the method of financing chosen by City Council may have been the most prudent option. But political *593judgments are not the province of this Court. Our sole function in this appeal is to determine whether the means chosen to achieve the end offend Article X, § 10 of the Virginia Constitution, which provides that “[n] either the credit of the Commonwealth nor of any . . . city . . . shall be directly or indirectly, under any device or pretense whatsoever, granted to or in aid of any person, association, or corporation. . . .” If so, we must say so, even if the statutes upon which the City relies seem to authorize the means employed here. “It cannot be gainsaid that stimulation of the development of industry is a public purpose .... It does not follow, however, that because the goal is meritorious, every method which might, in some way, aid its accomplishment is therefore constitutionally permissible. . . .” Button v. Day, 208 Va. at 503, 158 S.E.2d at 741.
On October 27, 1983, City Council adopted resolutions which (1) ratified the Cooperation Agreement, (2) authorized the issuance of $9.5 million in bonds backed by the faith and credit of the City, and (3) appropriated the bond proceeds to CRHA to be used as a loan to Charlottesville Properties. On the same day, the same members of City Council, acting in their capacity as officers of CRHA, adopted a resolution ratifying the Agreement and committing CRHA to lend the same money to Charlottesville Properties.
In short, City Council pledged the credit of the City to borrow money from the public to be advanced to CRHA for the exclusive purpose of making a loan at bargain rates to a private commercial concern. CRHA was nothing more or less than an artificial conduit through which the City channeled the proceeds from the sale of the bonds. The entire process, although artfully structured and skillfully designed, was a transparent “device or pretense” for the granting of credit, albeit “indirectly”, in aid of private persons. That is precisely what the Constitution expressly forbids.
Because the legislature cannot permit what the Constitution forbids, the statutes upon which the City relies, if construed to validate its evasion of the credit clause, would be unconstitutional as applied. The trial court’s ruling went no further; facial constitutionality was never under challenge.
Read together, the Virginia Housing Authorities Law, Code §§ 36-1 et seq., and the Virginia Housing Development Authority Act, Code §§ 36-55.24 et seq., afforded City Council an alternative method of financing the hotel-conference center complex *594which would have escaped the constraints of the credit clause. A city is authorized to create a housing authority, Code § 36-4, and a housing authority is authorized to issue and sell revenue bonds to raise money for urban redevelopment, Code § 36-29. This method of financing would have been constitutionally sufficient because Code § 36-29(b) provides that a city shall not be liable on bonds issued by a housing authority. Obviously, bonds are more marketable when backed by the faith and credit of a city, and that is why City Council chose to pledge the City’s credit in aid of this private project. The proceeds from the bonds, raised on the City’s credit and advanced to Charlottesville Properties, were the keystone of the financial arch. Yet, the majority concludes that the benefit conferred upon the private developer was “incidental”.
This Court should apply the principles underlying the constitutional analysis in Button v. Day, obey the explicit constitutional command, and affirm the judgment of the trial court.
COCHRAN and RUSSELL, JJ., join in dissent.