Thomas R. Powell Bond Counsel for the City of Wichita 2000 Epic Center 301 North Main Street Wichita, Kansas 67202-4820
Dear Mr. Powell:
As bond counsel for the city of Wichita you seek our opinion concerning the proposed city of Wichita east bank hotel project ("project") and the financing of the project with city of Wichita ("city") general obligation bonds.
The city proposes to issue the bonds pursuant to a charter ordinance exempting the city from K.S.A.
As background information you note that the project will consist of a hotel which will cost approximately $31,000,000 and a conference center and a parking garage that will cost approximately $5,000,000 each. The plan calls for $9,300,000 of the cost of the hotel to be paid for from the city's general obligation bonds, and the conference center and garage to be paid for 100% by city general obligation bonds. The developer will provide an equity contribution of approximately $5,100,000 for the hotel and the remaining approximate $15,000,00 for the hotel will be provided by financial institutions through loans made to the developer.
The hotel improvements and underlying land will be owned by the city and will be leased to the developer for a period of 99 years. The hotel will be a Hyatt with a minimum of 300 rooms. The parking garage containing approximately 500 parking spaces will be owned by the city. Three hundred of the spaces will be reserved for use by the hotel, with the remaining 200 spaces available to the general public at all times. The development agreement between the city and the developer will provide that the parking garage at the option of the developer will be managed by the developer or the city. The conference center will be owned by the city and will be managed and operated by the developer under a 99 year management agreement. The conference center will consist of meeting rooms available for use by the hotel and will also be available for booking of events scheduled at Century II.
The issue presented for our determination is whether the city may properly use its constitutional legislative authority to charter out of K.S.A.
The issue raises two questions, requiring separate analysis. The first question involves whether the city may, through its powers of local legislation granted in article
Examining the first question, whether the city may properly charter out of K.S.A.
"Any city may by charter ordinance elect in the manner prescribed in this section that the whole or any part of any enactment of the legislature applying to such city, other then enactments of statewide concern applicable uniformly to all cities, other enactments applicable uniformly to all cities, and enactments prescribing limits of indebtedness, shall not apply to such city."
Applying this constitutional standard to K.S.A.
It is apparent upon reading this statute that while its provisions apply to the city of Wichita, it is not an enactment uniformly applicable to all cities, and thus is a nonuniform statute. [For further discussion on nonuniform statutes, see Blevins v. Hiebert,
It is worthwhile to note that an objection could be made to a city charter ordinance out of K.S.A.
The opinion concluded that K.S.A.
We now turn to the second question, whether a valid public purpose is served through the issuance of the city's general obligation bonds to help finance part of the costs of the hotel convention center. The spending authority of a city is always subject to the public purpose doctrine which permits public funds to be spent only for public purposes. Ullrich v. Board of Thomas CountyCommissioners,
Increasingly, courts are recognizing that economic development is a legitimate public purpose for which funds may be expended. There is a growing acknowledgment that local governments may properly promote private economic development in order to assist or revitalize the public economy. See Ullrich,
The Duckworth case is of special relevance to the issue we address in this opinion. The city contends that through issuance of its general obligation bonds to help finance the downtown hotel convention center project a valid public purpose is served. To illustrate their argument, the city points out that the site where the hotel is to be constructed is in an area of ongoing clearance of slum and blight by an urban renewal project first undertaken by the city more than 30 year ago. The Duckworth case states: "The need for redevelopment efforts in the central city area of major urban centers is an important public concern, the legitimacy of which cannot reasonably be questioned." Duckworth,
The downtown convention and hotel report prepared by the city department of finance establishes that the hotel project will serve a public purpose in terms of revitalizing the downtown economy finding that the project among other things will:
"1. Enhance the city standing in the national convention and meeting market.
"2. Bring large conventions and accompanying visitors to the city and Century II.
"3. Create jobs.
"4. Increase business for other hotels due to positive latent demand providing an increase in hotel visitor related sales.
"5. Generate significant dollars in revenue for Century II.
"6. Protect the city's other investments in downtown Wichita.
"7. Stimulate other east bank developments."
A History of and Justification for a Downtown Convention Hotel, Department of Finance, City of Wichita, pages 50, 51 (1995).
We are persuaded by the information presented in the report that the construction of a downtown hotel convention center in the city of Wichita would serve a valid public purpose. There are no state statutes that specifically authorize a municipality to issue its general obligation bonds to finance a hotel. The city may, therefore, use its constitutional home rule authority pursuant to article
Very truly yours,
CARLA J. STOVALL Attorney General of Kansas
Rebecca E. Floyd Assistant Attorney General
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