Court Opinion

ID: 9755765
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:49:45.821629+00
Date Added: 2024-06-11T07:28:10.968828
License: Public Domain

ANNABELLE CLINTON IMBER, Justice, concurring. I concur stice, different reasons than those expressed in the majority opinion. This court’s construction of Amendment 65 is of utmost importance because, as Section 4 of the Amendment states, “[t]his amendment shall be the sole authority required for the authorization, issuance, sale, execution and delivery of revenue bonds authorized hereby[.]” (Emphasis added.) The majority opinion interprets Amendment 65 to allow for the repayment of revenue bonds with rents, user fees, charges, or other revenues (other than tax revenues) derived from the operations of “any governmental unit,” including municipalities and their instrumentalities. The plain language of Amendment 65 lends itself to no other reading. Accordingly, I wholeheartedly agree with the majority’s conclusion in Part I of the opinion that “the ordinance is in compliance with Amendment 65.” However, I must disagree with Part II of the majority opinion which interprets Amendment 65 as prohibiting the use of general revenues to offset losses caused by pledging revenues from user fees to cover bond indebtedness: Because Amendment 65 forbids repaying revenue bonds with assessments from local improvements or taxes, it correspondingly forbids pledging tax revenues to fill the gaps left by using other sources of monies to repay the bonds. In short, using tax revenues to offset losses caused by pledging revenues from user fees to cover bond indebtedness is indirectly using tax revenues to secure repayment of bonds, which is prohibited conduct. (Emphasis added.) As the majority points out in Part I of the opinion, Amendment 65, by its broad and plain language, allows revenue bonds to be repaid with user fees or revenues derived from the operations of any instrumentality of the City. Nothing in the language of Amendment 65 limits the use of such revenues to (a) revenues that have never been produced before, or (b) revenues that exceed operating expenses. Indeed, the use of revenues derived from the operations of any governmental unit to repay revenue bonds will inevitably leave “gaps” in operating funds. The record in this case shows that in previous years, the City has subsidized the operations of its parks and recreational facilities with money from the City’s general fund because those facilities do not generate sufficient revenues to support themselves. Although the City’s authority to subsidize the operations of its parks and recreational facilities with general revenue funds is not questioned, the majority opinion would nonetheless require the City to refrain from increasing that subsidy by so much as one dime once the bonds are issued. These revenue bonds were issued in 1998. Thus, pursuant to the majority opinion, the City’s subsidy of its parks and recreational facilities can never exceed the amount of the 1997 subsidy; that is, the maximum amount of the subsidy from the general fund will be frozen in time. Such a result is absurd because future subsidy increases may be necessitated by outside economic forces over which the City has no control, such as an increase in the minimum wage. Under the majority’s reasoning, the City Board’s hands will be tied from making the financial decisions that it must make to account for such unforseen circumstances. Furthermore, such an interpretation of Amendment 65 creates a moving target, whereby the constitutionality of this bond issue will depend upon how much money the City Board appropriates each year from the general fund- to subsidize its parks and recreational facilities. The constitutionality may also depend upon the source of the revenue that the City Board appropriates each year.1 However, the City Board’s ability to increase the subsidy to its parks and recreational facilities by appropriating funds from sources other than tax revenues will also be limited by the majority’s interpretation of Amendment 65 because tax revenues can never be used to offset losses caused by such an appropriation. In effect, the majority has engrafted two words onto Amendment 65. Henceforth, the revenues that can be used to secure repayment of revenue bonds must be new revenues or net revenues. In the future, governmental units will rarely, if ever, be able to issue revenue bonds “for the purpose of financing all or a portion of the costs of capital improvements of a public nature ... and for such other public purposes as may be authorized by the General Assembly.” Ark. Const, amend. 65, § 1. I must also disagree with the majority’s conclusion that our decision in Rankin v. City of Fort Smith, 337 Ark. 599, 990 S.W.2d 535 (1999), is not determinative of the issue at hand. The bond financing arrangement presented in Rankin, which we upheld, is no different than the one now before this court. In Rankin, the city issued revenue bonds to fund the building of a parking garage. In order to repay those bonds, the city pledged the revenues collected from all parking facilities owned and operated by the city, including those unrelated to the parking garage. Id. Therefore, just as in this case, the city was taking revenue from existing instrumentalities of the city in order to repay bonds for a new project. In addition to the revenue collected from the parking facilities, the City of Fort Smith paid over $500,000 from its general fund to the parking facilities fund between 1992 and 1996. Id. These general fund monies were specifically appropriated for use in the maintenance and operation of the facilities. Id. Again, like this case, the bond financing arrangement approved in Rankin left “gaps” in operating funds for the city’s parking facilities. In upholding the appropriation of general funds in Rankin, we relied upon the undisputed proof that the parking facilities’ revenue exceeded the bond debt service obligation. Id. Likewise, the record in this case shows that the maximum payment required to meet principal and interest payments on these revenue bonds in any one year is $1,294,112.50 in the year 2002. The record also reveals that for the years 1988 through 1997, the last year for which there is a financial statement, the total annual revenue for the City’s parks and recreational facilities was never less than $1,485,186, in 1988. Since that time, revenue has increased every year, with the exception of one, and, for the year 1997, revenue collections totaled $3,273,919. Clearly, revenue collections for the City’s parks and recreational facilities have historically exceeded the debt service requirements on these revenue bonds, just as they did in Rankin. The burden of proof was on the appellant to show otherwise, which Ms. Harris failed to do. Rankin v. City of Fort Smith, supra. Finally, we upheld the bond financing arrangement in Rankin despite a clause in the city’s ordinance which stated: The City covenants and agrees that it will own, operate and maintain a sufficient amount of parking facilities and will fix and collect rates and charges for the use of all parking facilities ... including the increasing of the same from time to time ... which shall be sufficient, together with other available funds, to make the required deposits into the Bond Fund[.] Id., 337 Ark. at 601-02, 990 S.W.2d at 536 (emphasis added). That covenant is no different than the covenant at issue in this case in which the City agreed “to appropriate sufficient funds to insure the efficient operations and maintenance of the park and recreational activities of the City[.]” I fear that the majority’s construction of Amendment 65 in Part II of the opinion has entangled the political issues involved in this case with the legal issues presented to this court. It may be that the City Board made an unwise political decision in passing the ordinance in question, which divests the City’s parks and recreational facilities of their revenue in order to finance the acquisition of land for the Presidential Park and fund capital improvements to the City’s zoo and its three public golf courses. If the citizens of Little Rock disagree with that decision, political consequences will surely follow. However, that is not for us to decide. We must only determine whether Amendment 65, as the sole authority for the revenue bonds at issue, allows the City Board to do what it has done here. I conclude that it does.   The general fund includes revenue from a variety of sources, such as sales taxes, utility franchise fees, general property taxes, licenses and permits, and a large number of other miscellaneous sources.