*1 Tatro, on behalf them William DIECK and James situated, similarly selves and all others Plaintiffs- Appellants-Petitioners,

v. ANTIGO, UNIFIED SCHOOL DISTRICT OF Lan Wisconsin, Counties, glade, Marathon and Shawano Szitta, Hunter, Jeffrey Wagner, Gary Michael Linda Hartman, Nancy Dr. Kieper, Igl, Thomas Robert Keener, Shirley Steven Nagel, Brettingen, Antigo Building Leasing Corporation School and First Wis Milwaukee, WI, Company, consin Trust Defendants- Respondents.

Supreme Court 4, Argument September No. 89-2356. Oral 1991. Decided December 1991.

(Also 613.) reported in 477 N.W.2d *4 plaintiffs-appellants-petitioners there was For the Kelley, by Weber, Pietz & J. Weber brief Richard and argument by Slater, S.C., J. Richard Wausau oral Weber. by defendants-respondents there a brief

For the was Westgate Terwilliger, Terwil- Thomas Cassandra B. Conway, argu- liger, Wakeen, Piehler & S.C. and oral by Westgate. ment Ms. Fahey, L.

Amicus brief was filed William Curiae Lathrop Clark, & for Wis- Jill Weber Dean and Madison Boards, Inc. consin Association of School ABRAHAMSON, J. This is SHIRLEY S. appeals, published of a of the court of review decision Antigo, v. School Wis. 2d Dieck District Unified (Ct. 1990), App. affirming a sum- 458 N.W.2d 565 County mary judgment Langlade Court, Circuit Gary Judge, Carlson, L. in favor the defend- Circuit Antigo, ants, School school board Unified District persons. members, and other *5 principal presented The issue the is whether Unified Antigo School of District incurred indebtedness viola- 3(2), of sec. tion art. of the Wisconsin Constitution chapter 1989-90, or 67 or Stats. when it executed a purchase agreement lease finance to the construction of high purchase agreement a new school. lease The nonappropriation option gives includes a that the Dis- right purchase agreement trict the to terminate the lease by electing appropriate payments. to not funds for rental purchase agreement provides Thus the lease that the legal obligation unpaid District has no rentals. appeals, We affirm the decision of the of court granting summary which affirmed the circuit court's judgment declaring of favor the defendants that the power purchase District had the into enter this lease transaction. circuit court held that the District did incur indebtedness when it the executed lease purchase agreement nonappropriation option with a did thus not violate the or constitution statutes. The authority circuit court also held that District the has the agreement Corporation Leasing to enter into an with a acquisition created to enable the District finance the of land and the construction of new school. The circuit may $500,000 court further held that use through operations pay- general raised taxation for as a purchase agreement. ment under the lease The court of appeals agreed with the circuit court on resolution these issues. appeals conclude,

We as court did the and the summary court, district that defendants' motion for granted.1 judgment be should Because the lease summary 1The judg and defendants moved for reviewing summary judgment, ment. In a motion for the review ing applies statutory applies court court standards that a trial 802.08(2), judgment set forth in as sec. Stats. 1989-90: "The option, lease nonappropriation includes agreement does not violate constitution authority has District statutes Wisconsin. *6 Leasing Corporation cre- agreement enter into an with a acquisition District the of ated to enable the to finance may The land and the construction of a school. District $500,000 fund general payment from its as a disburse we purchase Accordingly, the agreement. under lease appeals, the of the court of which affirm decision Dis- judgment granting affirmed the circuit court's summary judgment. trict's for motion

HH dispute. plaintiffs, The facts are The relevant taxpayers within the boundaries of the Unified residing action Antigo, seeking filed a class suit School District declaratory judgment injunctive against and relief and suit Antigo Unified School District others. This authority to enter a lease challenged the District's into 12,1989, June with the agreement, executed on Antigo Leasing Corporation, School Board to finance acquisition land new and the construction of a Leasing is high Corporation chapter school. The not-for-profit corporation.

According purchase agreement, to the lease (the site, lessor) Leasing Corporation acquire will prop- hold title building, construct the new and to the (the however, lessee), The erty. District will act as the Leasing Corporation's agent to select the site and over- sought genuine if. . . shall is no as to be rendered there issue party moving judgment fact . . . the material entitled to a general summary reviewing a matter rules for as of law." Boss, 338-39, Grams v. judgment are set forth 97 Wis. 2d 294 N.W.2d 473 design building.

see the and construction of the Under may the lease lease the building Leasing Corporation twenty years, from the paying annually appropriations. rent from annual purchase agreement incorporates

The lease approves Mortgage the terms of a and Indenture of Trust Leasing Corporation between the and the First Wiscon- (the trustee). Company sin Trust The District has no relationship Company. direct contractual with the Trust Leasing Corporation assigned rights has its Company. rental to the Trust Thus the Dis- payments directly Company, trict makes to the Trust which maintains all accounts created under the lease purchase agreement.

If the District rents the school for the duration of twenty-year period, option lease it has the *7 purchase property the for ten dollars. The Trust Com- pany Leasing Corpora- in holds escrow a deed from the tion to the District. explained previously,

As we the District has the right nonappropriation option under the to terminate purchase agreement by electing appro- the lease not to priate following year's payment. funds for the fiscal If nonappropriation option the District exercises this it obligated any payments will not be to make future under right the lease but forfeits its to building future use of the school and all the monies that appropriated. jeopard- it has No funds of the District are beyond year.2 ized the current fiscal provisions nonappropriation Several option. relate to the See, e.g., Section agreement, pro 8.1 of the lease which vides as follows: Payments Currently Budgeted Section 8.1. to Constitute

Expenditures the District. The District and the Lessor acknowl- of edge agree and that the Base Rentals and Additional Rentals hereun- $9,725,000 acquire Corporation will Leasing The from the school buy the site and construct necessary to These certificates participation. of the sale of certificates portion a to receive registered owners entitle from the District. Company receives the Trust rent relationship with no direct contractual District has owners right of certificate owners. certificate rental of the District's receive their share purchase agree- of the lease provisions subject to the option. nonappropriation ment, District's including the by a interests will be secured owners' The certificate any in funds held property in and interest mortgage by municipal Company's accounts and Trust payment is to insure the policy which bond insurance owners. No interest to the certificate principal and obtained policy had been municipal bond insurance expenditures currently budgeted of the District der shall constitute obligations general Lease District's under this fund. The from its right subject terminate this Lease the District's annual shall be hereof), 6.1,6.2,8.2 (as provided 8.6 and shall further Sections any ensuing mandatory charge requirement in or not constitute a beyond Fiscal Year. Since the District the then current Fiscal Year any payments obligation this Lease or the under has no to make general beyond appropriated from its fund for the those Certificates Year, requirements and Fiscal the referendum District's then current Statutes, Chapter as of the Wisconsin limitations of other provision amended, inapplicable of this Lease to this Lease. No are creating general obligation interpreted or as shall be construed or meaning consti- within the of the District other indebtedness statutory nor the limitation. Neither this Lease tutional or debt indirectly directly obligate the the Certificates shall issuance of appropri- any payments beyond budgeted those District to make *8 general then current Fiscal Year. fund for the District's ated from its obligation exercise its under no whatsoever to The District shall be Project. provision option purchase be of this Lease shall No any pledge create a lien on class or source construed to or to however, (provided, moneys of Section that the restrictions District apply the issuance of Additional 2.11 shall of the Indenture Certificates). plaintiffs when complaint filed the or at the time of oral argument this A sample court. municipal bond insur- policy part ance is of the record. According to the lease purchase agreement which has been executed and is in effect, the obligations District's bond insurer are expressly restricted to annually appropriated rents. assert purchase that agree- lease ment expressly designed to create indebtedness with- giving out the electors of the district an opportunity to vote. This lease agreement, according to the plaintiffs, chapters circumvents 67 and Stats. 1989-90, and contravenes the wishes of the electorate who, past years, over the have rejected eight referenda for the issuance of general obligation bonds to fund school construction. The last vote Septem- occurred on 13,1988, ber percent when over 53 opposed voters the issuance of bonds.

HHHH We first plaintiffs' address the claim that the lease XI, 3(2) (3), violates art. secs. and XI, the Wisconsin 3(2) Constitution. Article secs. (3), power limit of school districts to become XI, 3(2), indebted. Article sec. states: (2) town, county, city, village, No school dis- trict, sewerage district municipal corpora- or other may tion become indebted in an amount that exceeds percentage an allowable property of the taxable equalized located purposes pro- therein for state as legislature. vided In all cases the allowable percentage percent except specified shall be 5 as (a) pars, (b) . . .. 3(3) requires

Section a school district that incurs 3(2), indebtedness under art. sec. to collect a direct *9 pay as it interest on the debt the tax sufficient annual principal pay discharge the also to and falls due and years was time the debt from the debt within 20 3(3), XI, states: Article sec. contracted. town,

(3) county, city, village, school dis- Any corpora- trict, municipal other sewerage district or shall, (2) any under sub. incurring indebtedness tion so, doing provide for the or at the time of before pay the sufficient to of a direct annual tax collection due, pay falls and also to on such debt as it interest years principal discharge thereof within and (Emphasis contracting the same. the time of from added.) by whether, execution of its

At issue this case nonappropriation awith the lease option, indebted or incur will become XI, indebtedness, 3(2) in art. secs. words are used as those or incurs If District indebted and becomes 3(2) (3), by XI, execut- secs. and indebtedness under art. ing purchase agreement, XI, sec. it violates art. the lease 3(3), provide for a District has failed to because the pay on such the interest direct annual tax sufficient discharge principal pay within debt and to and years. or incur If District does not become indebted 3(2) (3), XI, execut- under art. secs. indebtedness purchase agreement, ing then the District need the lease levy provisions comply XI, sec. of art. with the tax 3(3), purchase agreement is constitutional. and the lease provi- history of the Wisconsin constitutional municipal concerning manifests both an debt sions willingness public to increase debt and a abhorrence of purposes.3 particularly limit, school the debt XI, include the basic sec. was amended 1874 to 3Art. original requirements section. The version of the current purpose 3(2) (3), prevent of art. secs. is to municipal consequent creation of excessive debt and the burdensome taxation. The constitutional restrictions *10 paying seek to assure that the burden of off the debt is imposed upon obligations. those who contracted the purpose court has said that "the of the constitutional provision was to limit the burden which those who con- obligations may place upon posterity." tract School Dis- Exchange trict No. 6 v. Marine Bank, National 9 Wis. (1960). 400, 407, 2d 101 N.W.2d 112 interpreted phrases The court has the "become "incurring any indebted" and XI, indebtedness" in art. 3(2) (3), according purposes underlying secs. and to the provisions. interpreted the constitutional The court has referring voluntary the word "indebtedness" as to a and undertaking pay absolute a sum certain. No indebted- municipal body may obliga- ness if exists avoid its adopted merely section in 1848 legislature directed the to restrict power municipal corporations money to borrow "so as to prevent XI, 3, abuses-." Article sec. Wis. Const. 1848. protect

The constitutional limitations on debt creditors from defaulting municipalities, an all too common occurrence before 1874, Kyes County, v. St. Croix 136, 142-43, 108 Wis. 83 N.W. (1900), protect society 637 general from the disorder that may accompany municipal bankruptcy, State ex rel. LaFollette v. Reuter, 384, 404, (1967). 33 Wis. 2d 147 N.W.2d 304 history

For discussions of the of debt limitations in Wiscon sin, generally Walsh, Constitutional Debt Limita Roger see E. Municipalities tions Survey, Wisconsin Marq. 45 L. Rev. —A 614, 614-16 (1962); Kiernan, Jr., Municipal Wisconsin William J. Indebtedness: Part I—The Power to Become Indebted and Its Limits, 173,185-95; L. 1964 Wis. Rev. Schilling, Paul R. Thomas Griggs Ebert, E. Municipal Wisconsin & Julianna Debt Finance: Eighties, An Outlook 539, Marq. 63 L. Rev. 548

469 precedent if tion or conditions exist.4 Indebtedness provision means, under this constitutional thus accord- municipal body ing cases, to our that the has assumed obligations." "legally State ex rel. LaFollette enforceable Reuter, 384, 398, 407, v. 2d 304 33 Wis. N.W.2d (1967); Giessel, 185, State ex rel. Thomson v. 265 Wis. (1953) (quoting State ex rel. Wis- 60 N.W.2d Dammann, 147, 197, Dev. Auth. v. consin 228 Wis. (1938)). undertaking N.W. 698 must be enforceable against municipal body the creditor or its assets. The test established our cases for indebtedness 3(2) (3), municipal art. secs. is not whether the body probably pay municipal unit will or whether the body pay.5 would be foolish not to The test is whether municipal body pay obligation is under an and the right payment against creditor has a to enforce *11 municipal body or its assets.6 No indebtedness is payments solely incurred "where are to be made at the government's option." Giessel, State ex rel. v. Thomson (1955). gov- 15, 40, 271 Wis. 72 N.W.2d 577 When binding obligation pay ernmental unit has no to rent for any lease, full term of the it has not incurred indebt- 3(2) (3). supra XI, Giessel, edness under art. secs. 271 Wis. at 37.7

4See, e.g., County Fund, Columbia v. Wisconsin Retirement 310, 328-31, (1962); State ex rel. 17 Wis. 2d 142 116 N.W.2d Giessel, 331, 345, Thomson v. (1954); 267 Wis. 65 N.W.2d 529 Ry. Light Milwaukee, City Milwaukee & Elec. Co. v. 173 Wis. 329, 343, (1921); Marshfield, Connor v. 181 N.W. 298 Wis. 128 280, 291-95, (1906). 107 N.W. 639 Milwaukee, City 5Burnham v. 128, 132, 98 Wis. 73 N.W.

6Connor, 292; Burnham, supra, supra 128 Wis. at 98 Wis. at 133. interpretation

7This court's of the words "debt" and "indebt- according municipal body cases, if Thus to our can acquire property incurring indebtedness, is, without that incurring legally obligations, without enforceable neither spirit nor the letter of the constitution has been kept purpose violated. "For it must be in mind that the prevent municipality of a debt limitation is not to acquiring buildings public place works, from but to may pledge limitation on the extent to which it its credit taxpayers." supra Giessel, and hence burden the (1931)). (quoting Wis. at 36 71 A.L.R. 1326 The court of appeals captured the theme of the cases when it stated 3(2) XI, that the constitutional restrictions art. secs. (3) "guard against indebtedness, and ing." not creative financ- supra Applying

Dieck, 157 Wis. at 2d 143. this longstanding interpretation 3(2) (3), XI, of art. secs. nonappropriation to the lease with a option in this case leads to one conclusion: The District any has not incurred 3(2). indebtedness under art. sec. purchase agree- The District can terminate the lease by refusing appropriate ment at time funds to payment. nonappropriation meet the annual rental option pay solely allows the District rent at its own option, though may leasing even envision building twenty years exercising and then its option purchase. Payments under lease agreement solely year budget are made from current expenditures. Future rental are conditioned on voting appropriations. the District's future Certificate *12 generally edness" the Wisconsin Constitution accords with accepted municipal definitions of indebtedness. See Reuven Mark Agreements: Bisk, Municipal State and A Reas- Lease-Purchase sessment, 521, (1984); Pol'y 7 Harv. J.L. & Pub. 543-44 15 McQuillan, Municipal Corporations 41.18, (3d secs. 41.19 ed. ed.). 1985 rev.

471 against for rental no recourse have holders supra years. Applying Giessel, 271 in future no "since there is 37, conclude that we must Wis. at pay obligation.. binding full terms of the rent for the .to debt is incurred...." leases, inconceivable that a it is purchase agreement that this lease conclusion Our option nonappropriation in- does not create with 3(2), effectuates art. sec. under debtedness integrity purpose of the constitutional and maintains option preserves nonappropriation A limitations. debt body responsibility legislative for each successive reviewing deciding and of of the lease the wisdom taxpayers from it and shields to continue whether generations burgeoning are not burdened debt. Future binding past on their decisions are decisions. While considering the constitution- us, other state courts most nonappropria- purchase agreements ality with of lease being upheld as not the transactions clauses have tion their constitutions.8 debt under 8See, e.g., Department Ecology Comm., v. State Finance 246, 1241, (1991); State ex rel. 116 Wash. 2d 804 P.2d 1244-47 Goldschmidt, 573, Kane v. 988, (1989); 308 Ore. 783 P.2d 991-96 Trust, Heights, Glennon Inc. v. Central Bank & 872, 658 P.2d (Colo. 1983); Edgerly Honeywell Inc., Sys., v. 878-79 Information State, 104, Ruge (Me. 1977); v. 391, 377 A.2d 108 201 Neb. Auth., 748, Jersey Bldg. (1978); Enourato v. New N.W.2d 750-52 58, aff'd, Super. 42, (1981), 396, 182 N.J. 440 A.2d 46-47 90 N.J. Lexington Cy. 449, (1982); Caddell v. Sch. Dist. 448 A.2d 455-56 1, 397, 598, (1988); McFarland v. 296 S.C. 373 S.E.2d 599-600 Barron, 639, 607, (1969); Texas Pub. 83 S.D. 164 N.W.2d 609-10 Mattox, Bldg. Auth. v. 924, (Tex. 1985); v. Baliles 686 S.W.2d Mazur, 462, 695, (1982); 224 Va. State ex rel. 297 S.E.2d 698-700 Virginia Recovery Disposal West Resource Waste Auth. v. —Solid Gill, see, e.g., 590, (W. 1984). But Montano 323 S.E.2d 594-95 Va. Gabaldon, v. 1328, (1989) (lease 108 N.M. 766 P.2d 1329-30 nonappropriation with clause creates moral *13 plaintiffs arguments

The advance to convince the prior court that this case differs from in cases which the court held the transactions constitutional. We are not persuaded by plaintiffs' arguments. plaintiffs argue purchase agreement subterfuge first that this lease is a designed by compliance the District to avoid with the plaintiffs Wisconsin Constitution. The contend that the disguised lease is a installment purchase plan with the construction costs amortized twenty-year period over the lease and thus creates 3(2) (3). indebtedness under art. secs.

The court has faced similar substance-over-form arguments previous response argu- in cases. In to these illegal ments the court has stated that it is not an eva- accomplish result, sion of the constitution "to a desired by legal way finding itself, Giessel, lawful to do it." (citation omitted).9 supra Leasing 271 Wis. at a new building objective desired, school lawful in this legal case. The issue is whether the District has found a equitable obligation payment to continue and therefore creates debt). declaring purchase agree- author

One concluded that a lease nonappropriation option ment with a constitutional was the "optimal approach legal that establishes both the correct rule and encourages Bisk, lease-purchasing." utilization Reuven Mark Municipal Agreements: State and Lease-Purchase A Reassess- ment, 521, (1984). Pol'y 7 Harv. J.L. & Pub.

9The has court also stated that "it should be remembered city . . . that could not it could do indirection what not do Wells, Earles v. directly." In 94 Wis. 68 N.W. 964 directly pay this case the District could not bind itself to make years. through ments future The District did not the lease option indirectly agreement nonappropriation with the years. bind itself to make in future way accomplish objective. this lawful We conclude it has. argument base their first that the *14 way legal century

District's is not on two late nineteenth plaintiffs compare cases. The this case v. to Earles (1896), Wells, 285, 94 Wis. in 68 N.W. 964 which this plan court invalidated a similar to the District's lease purchase agreement. city Earles, In of Kaukauna twenty years, would lease waterworks facilities for mak- ing payments reflecting capital operating lease costs. facility term, At the end of the lease title to the would automatically pass plaintiffs to Kaukauna. The contend option price that the nominal ten dollar in this case does distinguish plan city the District's from that of the following of Kaukauna and that Earles this lease purchase agreement must be held unconstitutional. City Berlin, The contrast Stedman v. (1897), upheld 505, Wis. 73 N.W. 57 in which the court city pay $4,500 of Berlin's contract to annual rental system option for the use of a waterworks with the to purchase system thirty years the entire at the end of According plaintiffs, $60,000. to the the distinction city between Earles and Stedman in is that Stedman pay system pos would rent for the use of the and then genuine option purchase, sess a to in while Earles the payments payments rental in were fact installment purchase facility. plaintiffs argue that the Dis plan is more like the trict's unconstitutional transaction in Earles than the constitutional transaction in Stedman. accepted plaintiffs' reading

The court has not period, the two A cases. third case decided in the same City Milwaukee, Burnham v. 98 Wis. 73 N.W. (1897), begins clarify the true nature of the dis- tinction between Earles and Stedman. In Burnham the city of Milwaukee entered into installment contracts to purchase public parks. city land for would automati cally gain paid the title to the land when it final install city, statutory power pay however, had ment. The not to and to cancel the contract. The court installment upheld constitutionality arrangement, relying in on the Stedman case because both cases all future municipal body. optional Burn were with the supra ham, 98 Wis. at 133.10 In Giessel the court made clear that the distinction passed between Earles and Stedman is not how title is binding government obligations but whether were cre- plan's Giessel neither the ated.11The court declared that plan resemblance to an installment nor the passed title in Earles was the manner which decisive determinative factor was that Earles the issue. The city binding obligation court concluded that the had a *15 every year thirty years. supra pay Giessel, for 271 rent 295). (citing Earles, Mil- at 94 Wis. at See also Wis. 38 Ry. Light Milwaukee, waukee Elec. & Co. v. 173 Wis. (1921). By 342-43, contrast, 329, in 181 N.W. 298 in Burnham is not holding 10The claim that special city that do applicable because the acted under statutes special apply Antigo statutes not to the School District. liability. city creating corporate was stated that statute; special Antigo the terms of the School District needs no agreement purchase itself state that the District does not lease any obligation payments. incur for future supra Kiernan, commentary these see note 3 at For on cases Walsh, supra 208-209, note 3 at 619-20. 11 in Giessel a series of transac The court decided whether VIII, 4, Wis. under art. sec. tions created state indebtedness indebtedness in that Wis. at 34. The definition of Const. 271 Reuter, supra XI, in 3. 33 Wis. 2d section is the same as art. sec. Giessel, 331, 352, 405; State ex rel. Thomson v. 267 Wis. at N.W.2d 529 pay-

Stedman the court concluded that the annual rental binding obligation not constitute a ments did on the governmental pay every year. Stedman, unit to rent Wis. at 511-12. prior saying

readWe these cases as that the method transferring of similarity title at the end of the transaction and the arrangement purchase

of the to an installment plan are not the determinative factors under the consti- tution. The essence of constitutional indebtedness is governmental obligation that the unit has an absolute to payments. make future option In this case the District has the stop payments, rental cancel lease agreement, acquire property. and not title to the Even though present the District's intention is to make all the payments, perhaps the District would be wise to do so, the lease will not result having any legally binding obligations. District's legal way We conclude that the District has found a accomplish objective. argument its lawful This plaintiffs fails. argument plaintiffs urge

The second is that the pledged namely, assets, District has its the balances of Company security controls, the accounts the Trust as the certificate owners and has thus incurred constitu- obligation An tional debt. is indebtedness under art. by any municipal body sec. if it is secured asset the prior incurring property owned the debt or on other purchased. mortgage addition to that ... "Where imposed property already by municipality, on owned *16 upon property purchased, or other in addition to that purchase price, secure the liability, there is an indebtedness or meaning within the of the debt limitation." Paper Company LaPlante, State ex rel. Hammermill v.

476 (1973) (citation 32, 65, 784 omit- Wis. 2d 205 N.W.2d 58 Milligan, v. Rogers also State ex rel. ted). 269 Wis. See City (1955); Burnham v. 565, 568, 69 N.W.2d of Kiernan, Milwaukee, supra 132-33; supra 98 Wis. at 210-11. note at do not constitute conclude that the accounts

We purchase prior owned to the lease assets the District property in to the real property or addition agreement purchase agreement. subject is the of the lease that rent- base rentals and additional pays The District year. Company The Trust appropriates which it each als pursu- it oversees payments into accounts directs these In of the transaction. case ant to the documents its default, exercising the District's which includes Company applies nonappropriation, the Trust option of outstanding in to the any funds those accounts excess At the termina- due the certificate owners. obligations in any remaining these accounts the lease funds tion of According District. to the docu- be returned to the would overpayment of ments, represent an the excess funds years inmay future rentals. Thus the District annual payments. its rental recover some of that the rental arguing effect are as the District's assets pledge payments constitute contingent interest the payments. The security for rental overpayments of rent as has these accounts District District's assets pledge not constitute does pay- future rental security payment for the additional 3(2) and of art. secs. meaning within the ments risk assets put at In no event does basis as rental appropriated on an annual specifically agreement. under the lease sample that argument third plaintiffs' produced by the policy, insurance municipal bond *17 pursuant discovery obliges motion, School District to a company any the District reimburse the insurance for company policy. funds the disburses under the The sam- ple policy oblige would the District to reimburse the company, example, insurance for funds the com- pany pays the in certificate owners the event that the nonappropriation option District exercises its plaintiffs persuasively argue defaults. The that the exe- policy by an cution of such insurance the School District in would result constitutional indebtedness because the policy obligate years in would future either pay to make future rental or to insurance company policy. under the municipal policy is, No however, bond insurance involved in case. this The District has in asserted each policy only sample court that the in the records is policy. clearly District The has stated it that does not adopt policy. court, intend to this The circuit the court appeals adoption and this court treat of this sam- ple policy contingent, "remote, aas and uncertain" event declaratory inap- judgment whose consideration for is propriate. Loy Bunderson, v. 400, 414, 107 Wis. 2d (1982) (citation omitted). N.W.2d 175 plaintiffs urge The the court to conclude that provision sample policy reimbursement impermissible creates

indebtedness. brief District's con- policy language obligating cedes that the it to reimburse company "would, fact, insurance create indebted- [and that] ness the District could not enter into such approval imposition contract without voter and the of a mandatory, redemption Respondent's irrevocable tax." agree Brief at 31. We with the and the District. policy, If the District executes a bond insurance the Dis- binding obligations trict must create future without applicable statutory complying constitutional and with provisions. sample policy plaintiffs argue if that bond *18 considered, then a vital instrument of the lease

purchase missing summary judgment agreement is and improper. appeals for the District is The court of in affirmed the circuit court's exercise of discretion determining that the issues raised about the lease purchase apart sample agreement, from the bond insur- policy participation, ance ficiently separate and the certificates of are suf- developed permit

and a declaration rights agreement of about the lease with the nonappropriation option. agree analysis. We with this Dieck, See 157 Wis. 2d at 138-40. forth, the

For the reasons set we conclude that when purchase agreement District entered into the lease with nonappropriation the clause it did not incur indebted- 3(2) (3). XI, secs. and ness under art.

H-( plaintiffs' contention that the We now address chapters purchase agreement lease contravenes District's operation 120, The and of 67 and Stats. establishment public governmental state, schools is a function portions power legislature delegated that and the has of Smith, school districts. Buse' v. 74 Wis. 2d to various 550, 563, 572, 141 A 247 N.W.2d school district express powers by ordinarily possesses granted statute powers implied powers necessary and expressly given to execute Milquet, v. it. State ex rel. Van Straten (1923); 109, 113, 192 Neis v. Board 180Wis. N.W. 392 314-15, Education, 614 Wis. 2d 381 N.W.2d 1985). (Ct. App. plaintiffs argue by entering

The that into the lease borrowing money is 67.03(1) complying statutory under sec. without with the requirements. 67.03(1)provides municipali- Section that may money municipal obligations ties borrow and issue only purposes procedures therefor12 specified chapter approval ordinarily 67. Voter one required 67.05(6a), procedures. Section Stats. 1989-90. parties interpreting no case law cite the word

"borrowing" persuaded, 67.03. sec. We are as were attorney general, chapter commentators that applies only municipal borrowing.13 ordinary meaning "borrowing" of the word solicit is to and receive property thing from another article of value promise repay with the intention and or return it or *19 equivalent. By executing purchase agree- its this lease engage "borrowing." ment the District not does in plaintiffs argue 120.44(2), The also that sec. Stats. requires 1989-90, the electors of the school district to approve purchase agreement. this lease Section 120.44(2)provides as follows: . . . The of a officers unifiedschool district havethe

powers of and duties the officers of a commonschool . . district .. The school . board shall not . . issue 67.01(6) municipal obligation 12Section broadly defines tó "every promise include engagement lawful in writing a municipality pay specified specified to aat future time a sum of money." Kiernan, supra, 248,

13See ("[T]he note 3 at n.444 . . title . 'and,' conjunction use of the functioning and the obvious chapter 67 all applies any rebut the notion that the restriction obligation] borrowing''); Schilling, other than Griggs & [credit Ebert, supra, (1980); (1974). note 3 at 544 n.18 63 O.A.G. indebtedness approval

bonds or incur other without the school district in instance of the electors of of a common district is where the school board school added). (emphasis not authorized to do so. parties authority interpreting cite no the word 120.44(2) Nothing

"indebtedness." sec. indicates that meaning of the "indebtedness" differs from its word 3(2) meaning art. secs. and As we have previously, explained the District has not incurred indebtedness. We therefore conclude that 120.44(2). approval need not seek voter under sec. repeal that the 1981 secs. argue also 120.10(18) 120.19, 1979-80,14 expressly and Stats. which purchase agreements authorized lease like the one at issue, power nullifies the District's to execute the lease purchase agreement. repeal of secs. Regardless 120.10(18) 120.19, presently expressly the statutes power provide school for the con- grant boards 120.10(5) pro- or lease Section buildings. struction "may sites for [designate vides that school board provide district for the erection of buildings school buildings buildings suitable or for the lease of suitable years fixed period exceeding with annual rentals by the lease."

A full extent may according school board act to the authority A exe- express powers. of its school board's corpora- leasing cute a lease with a any powers only by the granted tion does not rest on *20 repealed statutes. not plaintiffs argue next that the District does

possess statutory authority partic- to issue certificates of 20, 1348, 1350, 1981.

14Sections ch. Laws of ipation. participation The form of the certificate of is in final. An affidavit the record states that counsel proposed signatory has that the District not be a on the District's brief that the certificate. The indicates Dis- signatory trict will be removed as a presence and asserts that the signature of the District's on the certificate is not substantive to the transaction or to the issuance of Respondent's the certificates. Brief at 41-42. explained previously, As the circuit court exercised appropriately determining its discretion that apart raised, issues from the certificates and the bond sufficiently policy, separate developed insurance are permit rights a declaration of about the lease agreement nonappropriation option. with the The lease purchase agreement makes clear that the District has no relationship direct contractual with the certificate own- right ers and that the of certificate owners to receive subject their share of the District's rental is provisions purchase agreement, including of the lease nonappropriation option. the District's The issuance of directly indirectly obligate the certificates does not any payments beyond duly the District to make those appropriated budgeted general from District's year. fund for the then current As fiscal the transaction currently purchase agree- structured under the lease ment without finalization of the form of the certificate participation policy, and bond insurance engage does not incur indebtedness and does not municipal borrowing comply and thus does not have to statutory provisions upon with the and constitutional plaintiffs rely. which the

Finally, illegal contend that it was general $500,000 the District to disburse from the fund Company payment undertaking. to the Trust as a on this *21 may The claim that a district commit funds to purchasing leasing only the of a school site if the specifically purpose district votes a tax for that under 120.10(6), According plain- sec. Stats. 1989-90.15 to the by taking gen- tiffs, $500,000 the District erred from the specifically voting eral fund instead of a tax to lease a pursuant purchase agreement. site to the lease plaintiffs' argument of essence the is that because sec. 120.10(6), empowers levy 1989-90, Stats. of a tax to pay paid costs, rental such costs cannot be from funds authority. levied under other plaintiffs rely Riesen v. School on District No. 283, 290-91, 192 Wis. Riesen N.W. 783 inapposite. contemplated sepa- In Riesen the statute a rate fund for the In lease of a schoolhouse. contrast to 120.10(6) Riesen, the statute plate sec. does not contem- separate fund. 120.10(8)permits levy Furthermore sec. of taxes operation for necessarily of schools. Section 120.10 does not separately purposes

view the enumerated for levy mutually legislature taxes as If exclusive. separate leasing, intended a fund for it would have statutory language requiring segregated inserted clear 120.10(10m), has, instance, fund as it sec. Stats. build, rent, Vote a tax required district authorized lease. meeting including common or union 120.10 Powers (6) buildings. TAX FOR pay any obligations approved lease or purchase The tax high rental SITES, or lease suitable sites for school annual school district may BUILDINGS AND MAINTENANCE. be meeting. furnish, equip spread due in future may: or authorized at over as The annual and maintain school many years meeting buildings, years the annual under an as are of a 120.10(6) Nothing in 1989-90.16 sec. limits a district disbursing buildings from funds to lease when these levy operation funds were raised of taxes for *22 may We therefore conclude that the schools. District general payment $500,000 disburse out of the as fund a purchase agreement. under the lease above, For the reasons set forth we affirm the deci- appeals judgment sion of the court of and the of the circuit court.

By appeals the Court.—The decision of the court of is affirmed. (dissenting). CECI,

LOUIS J. I J. dissent because ripe the case is not for review. Without the final form of policy being review, the insurance purchase agreement available for the lease language

contains which troubles troubling language me. The is as follows: "The District hereby agrees that it will reimburse the Certificate any, paid by amounts, if Insurer for the the Certificate Municipal Policy." Insurer under the In Bond Insurance "Municipal Policy" addition, the Bond Insurance by agreement "insuring payment defined as of principal respect any and interest with to all or of the Certificates in accordance with the terms of Municipal Policy." Bond Insurance

through electors any money shall be to create a fund for the capital expenditures a common or union 120.10 other fund (10m) shall not be used for present deposited taxation or otherwise collected SCHOOL CAPITAL EXPANSION FUND. Vote a tax Powers of annual at a except by subsequent related to high the school district purpose school district authorization any buildings annual other meeting. financing purpose meeting pursuant and sites. All in may: by majority The annual segregated all current or be transferred to .... to this subsection money vote of the meeting fund. Such future raised of parts Agree-

The combination of these two of the ment, executed, which is final form and has been appears obligate pay somebody, Company it be whether the Trust or the Certificate purchase price Insurer, for the entire amount majority opinion ignores parts the school. The these agreement upon contradictory and instead focuses language agreement in the which states that "the Dis- obligations expressly trict's bond insurer are annually appropriated Majority op. restricted to rents." ignored troubling at 467. The District's brief also language quoted I effect of the which have above. ripe adjudication Controversies are when the "sufficiently developed facts are to avoid courts entan- gling disagreements themselves abstract .... While adjudicatory this does not mean that all facts must be prerequisite declaratory judgment, resolved as a to a " *23 contingent not facts must be 'so and uncertain.' Miller Case, 684, 694-95, Brands-Milwaukee v. 162Wis. 2d (1991) (citations omitted). Here, N.W.2d 290 the facts fully developed are but for the final forms of the insur- policy participation. ance and the certificates of How- policy ever, the insurance is crucial to the case as it could destroy legality the of the entire transaction. policy by could, terms,

The insurance its restrict the obligation something District's full less than the price policy amount the of the school. But without the being rely upon form, in final we are forced to assertions by attorneys the District's that the final form of the policy quotes majority create will not debt. The from the brief where the the lan- District's District concedes that guage sample policy, in the bond insurance which was part majority record, create debt. The would opinion by instructing concludes this section of the policy, issued, when not create District that "must Majority op. obligations binding 478. . . .." at future unripe render an otherwise does not Such an instruction dispute ripe for review. years, past 20

Furthermore, that for the it is obvious support has been unable to obtain school board expansive this the school district for electorate of expensive building project. This court should not innovative use of in the school board's become involved the will of the electorate and mirrors to thwart smoke advisory opinion. principally majority rendering See this majority op. "If 478-479, advises: at wherein the policy, the District bond insurance District executes a obligations binding future without must not create statutory complying applicable constitutional and with provisions." stated, I dissent.

For the reasons