*1 ROCK, M. v. CITY OF LITTLE B. PURVIS INC., INNS, ARKANSAS, QUINTA LA MOTOR COMPANY, N.A. BANK AND TRUST WORTHEN 83-184 of Arkansas
Supreme Court delivered March Opinion [Supplemental Opinion Rehearing on Denial of 1984.*] June Belew ir Walmsley, Blankenship, Harkey, appel- lant. Also, Hollingsworth, disqualification. J.,
*669 S.W.2d 900. Association, George Firm, by: A Law Rose Professional Proctor, B. Foster, Jr., Judy E. Vincent Campbell, *2 La Quinta. appellee,
Wright, Lindsey Jennings, appellee, Worthen &r Co., N.A. Trust Bank & Purtle, Chancery The Pulaski County I. Justice. John of Little Rock City properly declared
Court bonds” to $4,000,000 “tourism authorized the issuance of In Inn. Quinta of a La Motor be used to finance construction Act the trial court upheld decree 1971. it is appeal urged On that Act 380 of governed Amendment 49 to of the Constitution of Arkansas State and that it was error for the court not to require Act 380 to Also, so controlled. it is that Act Tourism argued Act, did not authorize the issuance of tax free revenue bonds to a private entity for of a construction free motel standing such as the La Inn. hold that Quinta We is controlled Therefore, Amendment 49. those provisions of the Act election, which authorize the issuance of bonds without an interest above 6% and beyond dates are maturity years invalid. in the tax bonds of Little issued exempt Rock City La $4,000,000 Quinta of a for use construction
amount of Park Boulevard intersection of Fair Inn at the Park from War Memorial across Freeway, Wilbur D. Mills Act 380 issued pursuant Zoo. The bonds were and the as bonds.” are known “tourism Assembly the General because name attached This “industry” Arkansas be an business in the tourist defined of the State Constitution of the pursuant of Arkansas. for construc- property actually purchased
The city La for a Quinta period motel and leased it to tion of the be due the property no taxes will Although years. in lieu make La would a payment Quinta
parties agreed obligation limited The bonds are described of taxes. a letter are backed They Rock. City of the Little Francisco. Bank of San from Crocker National credit The letter of Payment credit of the after 10 expires years. bonds and from revenues interest exclusively is to be made La generated by on the leased Quinta premises.
The same question Hubbell, was before us Purvis v. Mayor, 273 (1981) when we gave S.W.2d 282 notice of our intention to reconsider our stand on the issue “at the next after opportunity the present opinion becomes final.” We also stated: decisions,
After carefully our it considering previous there has been a appears gradual expansion bonds, of revenue concept no producing require popular approval, as was authorized for instance *3 (cite omitted).
The next opportunity has arrived. The Purvis I decision was 13, 1981, handed down on July denied on rehearing 21, September 1981. The bonds in the case are present dated 1,May It is 1982. obvious from the used language decision that we were trying give warning revenue bonds were probably used for being purposes other than the public purposes contemplated by Amendment 49 of 380 and that 1971 bonds were without being approved holding elections as required by the law and the Consti- tution.
The Arkansas General Assembly stated that Act 380 was
in implementation of Amendment 49 and was
for
necessary
the full accomplishment
of the public purposes contem-
plated
people
adopting
Amendment. The Act
legislatively determined that “tourism” was an industry
within the
of
meaning
Amendment 49. As stated by the
Amendment, bonds issued pursuant
thereto are “for the
of
securing
developing
within or
industry
near
the said municipality
hоlding the election .
.”.
has
legislature
the authority to implement a constitutional
amendment. Rockefeller,
1029,
Governor v. Hogue,
Ark.
The Arkansas Constitution provides: authorized pass shall be municipal corporation
No state; nor laws of to the contrary general law any to a greater property tax on real or any personal levy the dollar of the extent, mills on than five in one year, . . . same assessed value of the Amendment 10 was amended
Article Section general Arkansas people was approved court aby special supreme adopted and declared election This Hill, S.W. 865 Brickhouse 4 of Article to Section added three paragraphs Amendment fiscal limit was to thrust of Amendment 10 12. counties, The provision cities and towns. affairs of here states: 10 which we consider into contractor any . enter Nor shall council. . any city whatsoever any any purpose make allowance ... or other contract the issuance authorize the revenue in excess of evidence of indebtedness . fiscal . . year for the current or town *4 to the case is pertinent of the Constitution Article 16 in part: before us. It states or other town county, nor any city,
Neither the State State, for lend its credit in this shall ever municipality whatever; town county, city, nor shall any any purpose evi- interest-bearing ever issue municipality . indebtedness . . dences of was amended
Article Section Prior of Arkansas 1926. adopted by people amendment, first paragraph only Article 16contained Ann. (1947). Ark. Stat. volume the text which appears read: with we are concerned of the Amendment The portions Provided that cities of the first and second class may issue with the consent of a majority qualified electors of said on the municipality voting question at an election held bonds in purpose, sums and for the purposes approved by such majority at such election as . follows: . .
For the purchase of rights way construction of public streets ... for the . . . and purchase improve- ment of public . . . parks sewers and comfort stations . . . fire fighting . . . apparatus street . . . cleaning halls, equipment auditoriums, of city prisons, libraries, . hospitals . . garbage . disposal plants . . viaducts . . . . . . bridges for the purpose of pur- chasing, extending, improving, enlarging, building, or construction of water works or . light plants . . No bonds issued under authority this amend- ment shall bear a greater rate of interest than six per cent per annum . . . serial,
Said bonds shall be maturing annually after three years from date of issue. . .and no bonds. . .shall be issued . . . for a longer period than five thirty years. Amendment 49 was adopted by the people Arkansas in 1958. Section 1 of Amendment 49 states:
Any city class, of the first or second any incorporated town, and any issue, county, may by and with the consent of the the qualified . electors . . voting on the question at an election held for the purpose, bonds in sums approved by such majority. . . for the purpose of securing developing industry The Amendment contains other provisions limiting interest ratе to six percent (6%) per annum limiting to a period of no longer than thirty (30) years *5 maturity.
Act 9 of 1960 was enacted for the stated of purpose
107 and Act allows counties This Amendment 49. implementing election. without an industrial revenue bonds cities to issue of for the stated purpose was also enacted of 880 1971 of Act 380 The main thrust Amendment 49. implementing for the included tourism be was determine legislatively by intended industry securing developing Amendment 49. nor amendment any of the Constitution
No provision of bond issuance of any type expressly provides and Act 380 1971 an election. Both Act 9 1960 without simply This Amendment are based Amendment 49. upon kind without to be issued does not bonds of provide in an voting of a electors approval qualified election held for purpose. in the mentioned this court by
Revenue bonds were first 49 McCutchen Springs, case of Siloam S.W.2d
However, issued were the bonds the McCutchen case from had retired district and been by improvement an the suit the time by revenues the electric generated plant an electric had city operation was filed. The taken over owned the improvement which was generating plant for expansion The suit involved contract actually district. costs, were to be at which improvement plant. revenues to come from were period years, over a paid that payments plant. allegation generated years over violated a period in excess of the from revenues cities
prohibits obligating did not It that Amendment was held year. current incurred multi-year contract because prohibit no since funds were from revenue liability payable income from the There was no plant. electric generating election held on the contract. water authorized municipal of 1933
Acts 131 election. These revenue bonds without an works to issue Harris, Jernigan Acts tested the case of were certain of these Acts Although 5 (1933). parts unconstitutional, held other were sections were declared *6 be valid. The court revenue bonds in the clearly approved language follows:
A answer will of both The single dispose objections. such, municipality, does not incur any obligation issues, account of the bond nor does it assume any for their nor can responsibility payment, payment enforced out of taxes or other revenues. It is municipal provided each act that the bonds to be issued shall be from the payable solely revenues of the proposed waterworks, case, systems, the system, one the sewer other, not, in the and that such bonds shall any event, constitute an indebtedness of such municipality within the of the constitutional or meaning provisions limitations, and that it shall be stated on the plainly face of each bond that the same has been issued under provisions of the acts and do not consti- respective tute an indebtedness of such within municipality constitutional or statutory limitation.
The court held the specifically revenue bonds did not violate Amendment 10 and that Amendment had no application here.
Act 131
1933 was
in the case of
again upheld
Pocahontas,
Snodgrass v.
189 Ark.
This court has approved a line of cases back at going case of McCutchen Springs, Siloam least to the supra, which hold issue revenue municipalities may pure bonds for purely essential without public purposes holding an election. Such bonds are not prohibited by Consti- tution and were the General expressly provided We reaffirm these cases. Several cases have arisen Assembly. pursuant provisions Amendment 49 acts Erwin, The cases of legislature. Myhand supra, land v. relied Way Snapp, (1960), 334 S.W.2d bond an election upon by upheld issues for which *7 appellees, had been held. are not to the before They apposite question us. The bonds in the case were not present approved by In Purvis I we bonds electorate. considered so-called revenue 'which were to be retired from primarily revenues generated However, the hotel. other sources for retirement bond were in the case. In event we issued our caveat present any arewe now issued reconsidering the matter an election. without
We were wrong Purvis 1 where we approved issuance of revenue bonds to and Amend- pursuant Act 380 However, ment 49. we did notice that the matter would give be reconsidered at the first We opportunity. expressed serious doubt about bonds issued without an election. being We find no provision of Amendment allows bonds 49 which to be issued without an election. Neither is authorization or granted to issue bonds for a than 30 period longer years at an interest rate greater than 6%.
It was for the proper General Assembly legislatively determine tourism to be included as an as contem- industry determined, plated by 49. so it was not Having within the authority the General Assembly expand provisions of Amendment for the issuance provide revenue bonds without an election. The bonds were not issued for a purely public those purpose enumerated in Article after Amendment was and which approved, are set out above in this opinion. Neither were issued they to Acts pursuant 133 of 1933.
Neither Amendment nor any other constitutional provision permits the issuance of bonds by municipalities Therefore, without an election. is invalid when it to allow bonds purports to be issued without an election and for interest in excess of 6%and dates maturity beyond years. in Purvis I that we would reconsider our
We stated at the bonds issued municipalities on revenue position final The September next opportunity. is dated There May issue before us 1982. 1981. bond for our to have been considered. was time caveat enough property the title owner of the technically may of its but neither it nor where the motel located the La Inn. No operates Quinta agencies Amendment 13to such as those enumerated Article 16and No election being the Constitution of Arkansas is served. Therefore, was held. bonds are valid.
Reversed. Hickman, Dudley, J., concur. J. Hollingsworth, Adkisson, Hays, C.J.; J. J. dissent. *8 Hickman, (substituted Darrell Justice, concurring is I with the which to concurrence). agree majority opinion, hold, bonds other that so-called revenue among things, issued to Act and Act 9 unless pursuant illegal 380 are the voters. than go But I would further the approved by hold that name or majority any “revenue” bonds by indebtedness, Act or Act certificates of whether to 9 pursuant or other unless the provision, are unconstitutional voters, what bond issue is the that is the approved because requires. constitution
First, of Little Rock we should examine what City did this case. Little Rock land and issued bonds bought to finance motel was building totally of ~a which with as a con- any public enterprise unconnected it vention center or contend was park. Why? appellees tourism, done to aid can for to argument which we concede endeavor, a just industry be as has been found be a public so found legitimate purpose, because people to our they when Amendment 49 Constitution. adopted — is, do not this case are tax-free the holders have to on the earned. The state federal taxes interest pay motel; bonds will be retired from the rent when paid by done, La the land and Quinta may buy motel $100.00. expressed
We
concern with such schemes when
deep
we
Hubbell,
decided
Purvis
Ark.
In Purvis we issued this clear warning: decisions,
After carefully our considering previous it there appears has been a gradual expansion bonds, of revenue concept producing no require popular approval, was authorized for instance in Pocahontas, Snodgrass Ark. 75 S.W.2d However, (1934). should not be change made retroactively, after public agencies and investors have decisions; relied on our but in other instances we have given notice that an the Constitution interpretation of State, or will be may changed. Clubb v. Hare v. (1959);
326 S.W.2d
General Contract
Purchase Corp.,
tion is government indebtedness and the abuse wide-spread of government credit bonds. through We have this case a bond issue which merely uses the as a tool to obtain favorable for financing a purely private endeavor. How did we to this get point is Arkansas? The answer gradually.
The indebtedness of has been government always a sore debt because have they pay with subject taxpayers, — not those who govern, not those not the “government,” debt, endeavor, who incur
who not those conceive Bonded indirectly. it or directly benefit from nor those who indebtedness, indebtedness, is the as long-term well as provisions. and constitutional explicit of strict subject as the Revenue Stabilization These as well provisions, amended, officials pride matters state are state, the pride of this although as well as to people the Arkansas is Amendment false. Article and and local finance with state (1874) Constitution deal first of both states: taxation. The sentence town or nor any city, county, Neither the State State, its shall lend in this ever other municipality . . . for whatever. any credit that local Articlе contemplates governments Section 1 of indebtedness for capital improve- will to incur some have those the issuance bonds for ments and authorizes are for every public Those conceivable purposes purposes. streets, works, water electrical systems, work: sewer parks, libraries, stations, and a host of others. systems, fire airports, Amend- amended article 16 section was In ment or widening, straight- 13 to provide constructing, limits, flying within the ening corporate constructing streets fields, stations, comfort fire purchasing fighting fire street apparatus systems, cleaning apparatus, alarm abattoirs, disposals. and incinerators or garbage is controlled. The consti- indebtedness Ordinary explicitly tution reads: counties, incor-
The fiscal affairs of cities and towns on a sound financial porated shall conducted basis, and no court or board or county levying agent or or county shall make authorize contract any any make allowance for whatsoever any purpose fiscal year excess of the revenue from all sources in which said made. (Ark. contract allowance Art. as amended (1874) Const. 12 § 10.) *10 election. an requires bonds and state governs
Amendment 20 It says: evidence other or no bonds shall issue
The State
of
of the State
credit
faith and
the
pledging
indebtedness
whatsoever,
any
revenues
its
any
or
of
supplied.)
(Italics
the voters.
unless approved
state, counties and
the
that
direct
These provisions
means;
money
can borrow
they
their
must live within
cities
with one
purposes
for explicit
a bond issue
through
—
debt by
the
approve
must
the public
condition
important
roadblock
to be a
often proved
have
These provisions
vote.
salesmen,
builders,
lawyers,
bond
legislators,
to governors,
and approve
who conceive
and mayors
county judges,
the
obtaining
difficulty
have
but
projects
certain public
conditions imposed
terms and
voters. The
approval
So,
all
virtually
troublesome.
have also been
bond issues
local,
done through
are
state and
expenditures,
capital
approval.
voter
revenue bonds without
use of
of revenue
constitution
There is no mention
bonds,
those approved
for that matter except
first approved
revenue bonds
сoncept
voters.
of cases.
a series
McCutchen
depression
during
great
(1932);
Ark.
Regardless, precedent Snodgrass innumerable revenue bonds which did not have to be method, by a vote. That rather than approved issuing bonds, constitutional has become the norm for the obvious reason that voter is not The use of approval required. instances, revenue bonds was and is used for today, many sound and needed legitimate public involving purposes the public improvements. But revenue practice issuing bonds without a vote is serious in the fault government because there is no check those who have to process pay for the on whether the decision of those to improvement sound, issue the bonds is whether is needed and project whether, indeed, there is involved in the corruption process.
While
early history
the use of revenue bonds
held,
recently
and even
elections were
it has become obvious
current practice
is to avoid
to the
submitting
voters
whether the so-called
question
revenue bonds should
state,
issues,
in a series of
approved.
revenue bond
has
avoided the constitution
and issued bonds to build the
Building,
Revenue
and numerous
Building,
Justice
college
university
See McArthur v.
buildings.
Small
wood,
Ark.
(1955);
Holmes v.
The scheme for
the
a
building,
begun
part
grandiose
state office
plan,
was first
of a
seventy-two
exists,
which still
to issue
million dollars
complex
in bonds for construction of
immediately
office
an extensive
Building.
Capitol
west of the
This was done
through
agency
Authority
Building
an
called the Public
by
approval
created Act
of
voter
for
There was no
236 1973.
Authority
Building
these bonds. The
bonds
Public
were
declared unconstitutional in
the
was
lower court. While
case
being appealed,
power
Building Authority
the
of the Public
repealed,
to issue bonds was
the issue
and the court declared
Morgan Sparks Bryant,
moot. Act
of
&
270 1975.
258
very
273,
legislature,
At the
next session of the
legislature’s private bonding authority own to illegal appropriations pay bonds and certificates of indebtedness. say many outstanding
I cannot for certain how buildings, university buildings exist for other state property general. (See in of Act 469 Arkansas State Department Building Commission; of Health Act of Department Tourism; of Parks and Act Retardation.) expect Arkansas Board of Nor I Mental do government branches of state legislative executive bonds are many how publish just will collect Clinton, in the case of Wells Recently, outstanding. examined, part, we (1984), could of indebtedness of certificates question million debt the State dollar amount to a twenty-five from simply borrowing in this case is Arkansas. state itself, is that back. It pay significant revenues to it pledging constitutionality not reach the question we did it was not an unlawful did hold these certificates. We to be made for certain decisions authority delegation certificates, approve but we did not with those connection off used to the certificates рay The revenue certificates. revenues from part is from fees and part indebtedness I think the Arkansas of Correction. Department produced money deposit, interest state being paid by is from part and Act of 1965. is not of 1983 but that clear. See the state permits This scheme of hand sleight latest to be used from for one money to borrow collected It is itself an IOU. The state is simply issuing another. These are constitution. financing prohibited by deficit our debt in pay of revenues of the State of Arkansas to pledges *13 Constitution, to Arkansas of Amendment the violation 20 which reads: of Arkansas issue no or other State shall bonds
[T]he evidence of indebtedness the and credit faith pledging of the State or whatsoever, of its revenues for any purpose with the of except by and consent the the on qualified voting the electors of State the at a or at election question general special election for that called purpose.
Voters are not aware of these debt undoubtedly obligations. and certificates are for with funds that paid These bonds all in the treasury should be state’s for general appropriations. bonds, as those issued this case the just by State revenue Rock, they face City general of Little state their are not but “revenue to be the obligations, paid by bonds” reality, if the bonded indebtedness revenue But generated. — a encounters the it debt difficulty, legislature simply pays it it owes. denies See Act 1983. of public buildings have is a proliferation we
What being and are the of Arkansas belong which to State projects revenues general of Arkansas out the State paid to avoid designed out taxes or fees under schemes of special of Arkansas. Constitution bonds with local governments revenue problem The after deviation occurred turn. The main took a different to if was it evident that our state II when became World War readily The industry. had to people we attract progress which, constitution, for the Amendment to the approved to time, local allow state and governments first would was industry. to promote private issue bonds out all spelled amend Amendment 13 needed to could cities and counties works for which various 444, Erwin, Myhand issue bonds. met need which was unforeseen The amendment However, Amendment drafters 1874 Constitution. con- contained the same provision adopted The voters provisions. bonds other constitutional
cerning No sooner than the people had to bonds. approve after a “bonds” to finance industries authorized be issued to vote, in an Act 9 legislature of 1960 passed proper session. This act called such industrial extraordinary bonds, but an required. “revenue” election “implement supplement provisions Act 9 was the broadest carrying Amendment 49 to the end of out said pro- industrial possible development and most aggressive was to be that the act gram. legislature ...” directed In amended Act was liberally construed. issued bonds could be industrial “revenue” provide doubt, No was intended legislation without an election. to bonds pertaining provisions avoid constitutional and financing. *14 for
Amendment 49 did not need Act 9 implementation, Erwin, supra. Amendment v. Myhand but Act 9 needed 49. Wayland in v. essentially Snapp, 232 Act 9 was approved the court where (1960), 334 S.W.2d violated. way the other when constitution looked of all cannot be for a blanket approval But used Wayland bonds, a true Amendment 49 in just Myhand, because as issue, there was an voter overwhelming approval. bond is much like Act In Act 380 was Act 380 passed. amended, in that it allows bonds to be issued cities and vote, the word “industry” counties without a but expands “tourism,” a rather used in Amendment to include term. At the time that recites it is for nebulous same Act 380 49, it proceeds Amendment implementing vote, bonds are violate it. It for no states that the provides bonds,” in limitation thirty year “revenue increases the the interest limita- forty years, increases six away tions from annum to no limit and does percent per with the sale of the bonds after requirement public advertisement. Hubbell,
This us to the brings supra, case of Purvis review, and the current case. In we have is a what total of Article 16 and Amendments and We corruption 49. cannot and should not ignore problem any longer. Whatever sound reasons have existed for may approving “revenue bonds” either no exist or Snodgrass, longer should be abandoned if we are to the confidence of the keep and the financial of our taxpayers integrity government. It is in this strongly suggested that case pledge no tax or indebtedness of the are not even city, they bonds, and, therefore, revenue the bonds do not violate constitutional is if the provision. That true to a But degree. is not government involved in how can it issue any way, is, case; But bonds? it city bought land with revenue, or at least were is city city (that revenues pledged not lent its clear); credit to the bond issue violation Furthermore, of Article 16. is not limited to Amendment 49 Erwin, credit situations. lending Act 380 Myhand supra. can if it only legal is accordance with Amendment It 49. is the authority sole for its The bonds are not legal existence. if Act is not and it is legal, totally legal.
Actually, the reason for the bonds is more one of greed bonds, than welfare. These are tax free which are the federal approved by government, city merely and the being used as a tool to this favorable arrange financing *15 because profit motel owners The a private enterprise. purely arrangement; financial with a favorable a motel they get a and get sell bonds they get because bond salesmen profit, com- be a ordinarily purely оn what would commission income. situation; tax-free buyers get and mercial loan we care nothing. Should Probably does the city get? What is not liable? city face that the on their since the bonds state buy who would about bondholders we care Should government the federal because we care bonds? Should income? itself deprives about this creation brought funds has expended The two reasons. should care for We incurring land and by buying endeavor More important, the motel. to take over having liability provides which illegal. it is care because we should Amendment 49 violates voter approval, for bonds without stand, void. the bonds are it stand. If cannot and cannot or city, county, of any never approved The has the ones bonds. We were revenue issuing state government it now our duty this practice, that initially approved enforcing abuse by its further obligation prevent one. It will harm no will approval Voter constitution. The financial integrity. to our claimed restore us simply Hubbell, in Purvis only Not supra. was clear warning being purely this bond issue as we strike down should one, on all further a moratorium place we should private the constitution. revenue bonds enforce effect on the will have little no decision majority incurring state governments of local and practice general constitution, but it is a step of the debts avoidance direction. right Dudley, The various concurring. H. Robert Justice, our evidence case are in this opinions multipartite issues. numerous over the division in much expressed reasoning with the not agree
members do
is written
concurring
This
opinion.
of the plurality
where
determine
may
interested
those
in order
reasoning
state the
and to
issues
the various
lies on
ority
maj
is valid.
I think
*16
Inn and the
bonds issued for the La
Motor
Quinta
Kettle restaurant were not
issued for a public purpose.
“Public
under Amendment
was limited to
purpose”
13
streets,
airfields, and similar
It did not
parks,
improvements.
factory buildings
include
erection of
for a
cor
private
Harris,
928,
poration. Williams v.
Mayor, 215
Ark.
224
broadened the Amendment
(1949).
9
49
S.W.2d
13 definition
of “public purpose” by providing,
part:
. . .
issue . . . bonds for the
of
“Any city
may
purpose
and
this more
securing
developing industry.” Under
recent
definition we look at
the entire
not
undertaking,
just
whether
is to construct an
improvement
benefits a
but
private
whether
the entire
corporation,
is to alleviate
landWay
v.
undertaking
unemployment.
Erwin,
57,
Snapp,
handMy
Ark.
v.
(1960);
334
633
232
S.W.2d
Ark.
330
(1959).
The term
is
“industry”
S.W.2d
used in the context of its broader
of
meaning
providing
employment
with
cooperation
private
enterprise.
Baker,
Hackler v.
County Judge,
(1961).
Legislation may be enacted in
of
implementation
constitutional
provision
so
as such
is
long
legislation
inconsistent with or
to the constitutional
repugnant
Erwin,
Myhand
supra.
provision.
380 of
as
codified at Ark.
Ann.
Stat.
13-1801 (Repl. 1979), expressly
§
has been found to be valid implementation
of Amendment
Hubbell,
49. Purvis Mayor,
Tourism authorized projects own, hereby ... authorized municipality acquire, construct, sell, lease, . . . contract or concerning, lands, of . . any buildings,. otherwise deal or dispose necessary or and nature whatever any every facilities or desirable and securing developing recreation, entertainment, relaxation, travel, cultural of every other tourism activities and development . . . the municipality near . . . within nature motels, inns, hotels, limitation, without including, facilities, facili- development cultural folklore lodges, facilities, connection ties, (in restaurants convention development securing with other facilities for . recreation facilities . . . . . tourism), parks parking whatever facilities nature and other areas tourism develop secure and can be used to growth the economic and enhance thereby stimulate . and people. . . municipality well-being such under- or combination Any undertaking, *17 as a referred to sometimes will be herein takings, project.” “tourism the issuance this statute we approved purview
Within of a hotel construction revenue bonds for the municipal Purvis of a civic center. with the development in connection not, Hubbell, However, the statute does Mayor, supra. cannot, into an undertaking make commercial every and In to eliminate undertaking unemployment. industrial undertaking public order fulfill a а commercial purpose, to indirect public a remote or an must about more than bring course, to will redound the motel and restaurant benefit. Of but benefit by slightly reducing unemployment, the public a reduction commercial If operation. slight true all then a unemployment public constitutes to are entitled a similar the state enterprises commercial bond issue. under- a municipal of whether
The determination is an executive initially fulfills a taking public purpose A is hesitant to at a local level. court decision be made will we with that local decision. Accordingly, disagree acted if local only government reverse that decision Purvis See unreasonably, or arbitrarily, capriciously. Hubbell, Board of Mayor, supra. In this case the Little Rock unreasonably. Directors acted in this case are involved
The motel and restaurant do not constitute They structures. freestanding commercial center, a or a public park, of a convention a functional part appellees point they out have recreational center. The city zoo, a been сonstructed an area where amusement park, golf center, course, stadium, tennis baseball football already stadium, care and health facilities were existence. Reasonably proximity public close institutions does private undertaking enterprise convert a which fulfills imity commercial into an public purpose. physical prox- close public of La and the Kettle institutions Quinta significance is not To of real and is not determinative. illustrate, assume the record motel contained evidence that a restaurant, named Inn the Markham and the Black Angus restaurant, were located even closer to the same public Also, institutions than are La and the Kettle. Quinta assume that the owners of those establishments wanted privileges same bond and the Kettle that have been extended to La Quinta again approved board a bond case, issue. If appellees’ these assumed facts were tested again followed, rationale were the bond issue approved. would be Assume the record contained evidence nationally restaurants, that two franсhised fast food Wendy’s, by. McDonald’s and were located close also Could distinguished Angus? either be from the Kettle the Black many University containing mall, Mall, Assume a named enterprises, was located as close to some appellees’ theory Quinta. facilities as La Under each *18 enterprise be would entitled to bond issue. The a same any enterprise would be true of state the which is located post building, courthouse, park, office, near a football a a a federal accept field, or a school. To the rationale of the appellees, dissenting opinions accept do, as the an arbitrary governmental and unreasonable local decision and responsibility judicial to abdicate the review. majority agree A of the members of this court the bonds for the La Motor Inn the Quinta and Kettlerestaurant holding purpose. were not for a issued I concur in purview that these bonds are not valid within the of Act 380 of 1971.
Unfortunately, plurality opinion go would much farther and hold that Act 380 of 13- Stat. Ann. § purports “is invalid when it to allow bonds to be issued excess of six cent рer interest and for without an election years.” plurality beyond thirty dates maturity and the Act of issued under limit bonds similarly would opinion A majority 1979). Ann. (Repl. Ark. Stat. 13-1601 § the plurality do not with agree members of this court on this point. held that the Constitution court has fifty For this years debt for incur term long cities to of Arkansas authorizes for public authorized making improvements election, if the debt is to be an conducting without purposes, generated by improvements out of revenue repaid on the taxpayer a burden does repayment place might appropriated. his property on provision the following 13 contains elections, bonds: maturity rates of interest and dates class first second cities of the
Provided that of a majority with the consent issue may on the voting municipality electors of said qualified bonds in for the at an election held purpose, question at sums and for the purpose approved . such election . . amend- under authority
No bonds issued six per of interest than ment shall bear rate greater .. . per cent annum of this amend- authority
No bonds issued under thirty-five than longer period ment shall be issued for а years. *19 Siloam Springs, 1932, case of McCutchen
In 846, 1037, city, held that a Ark. 49 this court 185 S.W.2d 13, election, incur a could an under without revenues, over a five and payable in excess its current debt its electric machinery plant, buy one-half year period, 124
because derived from the money operation of the was plant not “funds to the and could be belonging city” pledged.
By Act 131 of the General Assembly 1933 authorized waterworks, election, municipal without an to issue bonds to purchase, construct or improve system. waterworks In Harris, 705, Jernigan v. Ark. 5 we (1933), 187 62 S.W.2d 13, upheld statute and stated: “As to it Amendment No. here, be said may that it has no as there is no application attempt exercise of the conferred any powers it.” Pocahontas, In the 1934 landmark case of Snodgrass 819, Ark. 189 S.W.2d the court held that under Amendment 13elective if the approval required bonded indebtedness for the municipal improvement would place burden on the taxpayer, but Act 131 of provided an and, it, alternative method under an election is not required if the bonded indebtedness is to be revenues repaid solely by from the improvement. We have never deviated from that construсtion of Amendment 13. v. The Hogue Housing Rock, North Little Authority S.W.2d Russellville, and Boswell v. (1940); City The plurality opinion expressly reaffirms these cases. held,
By 1958 this court had for over a of a quarter that an century, election is not if necessary the debt was to be repaid solely from revenues from the improvements. At that time it was felt that unemployment could be alleviated but, through industrial development order to develop it industry, would be to broaden necessary the definition of contained in Amendment 13.The drafters of amendment, the proposed No. relied on our obviously quarter century precedent. The voters then approved the amendment. Amendment 49 contains the same three elections, strictures on interest and maturity as were contained Amendment 13. Some its language identical: class,
Any city of the first or second incor- town, issue, porated any county, may and with the consent of the qualified electors of *20 at on the question county voting said municipality in sums the purpose, held for an election . election. . . such at approved at bear interest a rate bonds shall Such . . annum. . six percеntum per exceed for a period shall be issued . . . No such bonds (30) years. than thirty longer this court obviously relying
The Assembly, General just Amendment 49 to treat implementing legislation 13, passed Amendment had Act 131ofl933 under we treated 13-1601, Industrial Ann. the Act 9 of Stat. § Law, Revenue Bond and Development 13-1801, Act. Bond the Tourism Revenue Stat. Ann. § Hubbell, we our supra, In Purvis reaffirmed Mayor, three of Amendment earlier cases and held the strictures 13, were not of Amendment like the three strictures just be repaid the was to when bonded indebtedness applicable The holding improvement. the revenues solely from with desire of the voters to broaden accord of Amendment adoptión Amendment 13 scope earlier on our placed and was in accord with reliance cases. decided reaffirms all the cases opinion plurality then, amendment, 13, the old and
under Amendment reason, similarities discussing without stating without 49, and and of the strictures contained Amendments Amendment scope without effect to the broadened giving Amend- make the three strictures applicable would Thus, require would not ment 49 bond issues. the plurality but amendment an election under thе older narrower newer broader would an election under require do this even would plurality amendment. the defi- constitutionally changes though nition purely public purpose more broadly include “securing developing industry.” The plurality opinion is simply on this wrong point. Our cases constitute a well *21 developed body of now precedent, over half stretching a century, by which this court has consistently interpreted the constitution to authorize governments to incur term long debt, without elective in approval, order to make authorized improvement when public purposes the is to debt be paid out of revenues.
The plurality opinion and the other concurring opinion, by strictures, the applying three would not only our reverse precedent but would prevent municipalities from issuing industrial bonds or tourism bonds for of the above until purposes interest rates fall to six again per Again, cent. majority the members of this court do not with agree the plurality opinion.
Lastly, a the members of this court do not that the agree facts of this case it bring within the aegis the caveat expressed Purvis. A majority intend thаt warning to the apply expanded concept of “payment solely from revenues” which has been used to retire bonded indebtedness without elective approval. Adkisson,
Richard B. Justice, Chief dissenting. issuance bonds under Amendment contemplates indebtedness, tax monies will obligated to retire the there must be voter approval before issuance. Such was the Hubbell, in Purvis case Mayor, but, here, Therefore, no tax monies are (1981), involved. voter is not approval These are revenue necessary. strictly to be retired from monies from solely generated the La Motor Inn Quinta project.
I would affirm. Hays, I dissenting. disagree that Justice, wholly Steele 1 was give warning Purvis meant caveat suggests was intended. The court says now majority opinion about bonds in Purvis I we “serious doubts expressed broadening being is a issued without an election.” That simply by It was not what was intended the Purvis caveat. warning prompted the lack of an election unapproved election it was the fact that bonds an Purvis, generated by those were secured revenues other than objection implied complex. cоnvention center No municipalities long approved practice I Purvis issuing special obligation bonds without an election where generated the bonds were to be retired by from revenues solely By improvement. has turned the court good decades, the calendar several and skirted a back many special obligation cases, in bonds. its treatment of Regrettably, give credibility extraordinary it tries to to that by relying move on the Purvis caveat. *22 repaid I,
In Purvis we noted that the bonds were to be
simply
generated by
from the revenues
convention
the
complex,
beyond
center
but from several sources
the
complex, including
revenues,
state turnback
income from
adjacent parking
by
city
facilities, revenues derived
the
from
gross receipts
hotels, motels,
restaurants,
a tax on
from
existing
from
new
and revenues received
multiple financing concept gave
convention centers. This
appellant
grounds
argue
reasonable
to
in Purvis I that
approval
required
voter
of the bonds was
under Amendment
although
rejected
argument
I,
And
we
that
in Purvis
49.
court warned
approval
the caveat that the issue of voter
subject
gradual expan
was
to
of a
re-examination because
concept
special
producing
sion of the
revenue
bonds in
fifty years
819,
Pocahontas,
the
(1934) upheld was In Snodgrass decided. we City the issuance of revenue bonds of Pocahontas approval paid without voter because the were to be solely improvement. from revenues derived from the That is bonds, the situation here. These like those precisely paid v. Pocahontas, are to be from the Snodgrass solely produced by facility. “gradual expansion” revenues The bring referred to the Purvis caveat intended into to question such cases as Holmes v. Ark. 352 234 Cheney, (1962); 525, 353 Mills v. Ark. Gordon, S.W.2d (1962), and McArthur Smallwood, (1955), approved where an we had without S.W.2d 428 election, methods for the of bonds from sources repayment of revenue far more extensive than derived from the simply improvement itself. that Presumably, process expansion and, hence, reached its outer limit in Purvis the caveat. that implies the court opinion its Elsewhere private- versus is aimed at the public-purpose Purvis сaveat That, too, is wrong. public-purpose issue. I of the Purvis at the outset length dealt with at issue was was rejected argument and the private-purpose to later that we intended the slightest suggestion without that issue. re-examine
Nor do I that it is our to agree place conclude that no is served public purpose facility. By Act 380 adopting the legislature empowered “any municipality tourism, county” undertake projects might benefit economic resource to major those areas some having appeal City tourists. of Little Rock acted pursuant that legislation and it is not for us to second-guess decision. We frequently say whether sanctioned projects by other branches of government are wise and is not prudent Hubbell, Gordon, and Miles v. judge. supra ours to Purvis Nevertheless, the court S.W.2d 157 has substituted its own judgment for that of the Little Rock Board of Directors in what determining benefits tourism and has concluded effectively that accommodations for food and do not. lodging Interestingly this court once enough, *23 the of recognized importance accommodations to tourism in the of the of upholding right City Eureka to tax Springs hotels, motels, and restaurants for the benefit of tourism saying:
It is common from time knowledge immemorial that the traveler or tourist must first have and food lodging in the area which he sojourns. Dicks v. Naff, Mayor, 357, Ark. 500 350 (1973). 255 S.W.2d case, In this title to the land and the entire is improvement vested the of Little City Rock. The La Motel Quinta leases the improvements from the and will city to the of pay City Little Rock a to year defray administrative costs and $900.00 an amount determined aby formula intended to produce
129 pay year in ad valorem and each what La would Quinta Additionally, property La Quinta if were the taxes it owner. pay We $12,626,000 to retire the bonds. under the lease will public projects approved where similar have private operators. v. See are leased to landWay facilities (1960); Ark. 633 Lambert Snapp, Wharf Helena, S.W. No. Improvement Dist. (1927), Hubbell, and in Purvis Mayor, 620 S.W.2d proffer (other the in this record than
Where any proof support testimony) the is there excluded public purpose That exists? determina- that no conclusion Rock Board of Directors made the Little tion was except attempt argument appellant submit does not that “free-standing” within Act not a motel does come functionally part urging of an overall that it must be a majority project. has the Chan- Yet the overruled tourism with substantial evidence brushed aside a sentence cellor and proposed project presented to trial court that the period thoroughly time examined over an extended holding public including Directors, Board — proof hearings found from which the Chancellor promoted project attempt has no made tourism. project
to differentiate between benefits public private interests, accruing it has to the contrast any public simply discussion concluded without province lacking. doing so it has interest is In invaded government a vetoed the acts branch of another municipal government
wholly justify evidence to without such action. nearly appeal is as not
The fundamental issue of complicated majority opinion It have it seem. would may obligation simply is whether or bonds of limited approving to construct an election issued without an municipality improvement in the to be deems extending promoting over interest in tourism. Cases century again again that where have said half a approving pledged, no general are not revenues of required. never in this case can The bonds election *24 City nor Little Rock an indebtedness constitute liability issued bonds were residents. These of its a become 129-A the revenues express proviso only generated
on the the bonds. Why itself are secure development pledged fit to invalidate time suddenly this see court should is not financing apparent. tested method The decree should be affirmed.
Adkisson, Hollingsworth, C.J., and J., join opinion. Rehearing Denial of on Opinion
Supplemental 4, 1984 delivered June court, Curiam, Per members of rehearing. the difficulties experienced presented themselves having opinion no court decisions appellate single have expresses position by majority judges, taken it desirable to issue a supplemental thought each of which a majority few basic as to covering questions in broad a continued adherence despite are agreement, handed individual in the five еxpressed opinions views down on March 26.
129-B II, case, Purvis impair does not this in 1. The decision Pocahontas, 189 Ark. Snodgrass of typified by line cases or county when a holding (1934), 75S.W.2d223 a genuinely facility a revenue-producing owns waterworks, be nature, may bonds municipal such as a for the operation funds to obtain without an election issued being payable the bonds that public facility, expansion or George facility. derived from the from revenues only Justices Purtle, Smith, Hollingsworth and Hays, Dudley, Rose in this view. concur in tourists some may the attraction of Although
2. Amendment industry constitute an within situations as an is to define “tourism” unwilling attempt court II that a motel such Purvis industry, beyond holding tax-exempt Inn for a bond qualify the La does not Quinta as amended. under 49 and Act 380 issue Hickman, Purtle, Smith, and Dudley Rose George Justices concur in this view. inter- that the court’s rehearing on argument 3. I denies due Purvis process the caveat pretation because rejected, and its bondholders Quinta La in the La Quinta an express provision inclusion of if held be they are them callable at a making premium that the bonds be secured provision and also of taxable $4,565,625 by issuеd Crocker letter of credit a addition concerned in parties makes it obvious that all National Bank might bond realized that the bonds Quinta La issue Smith, Hickman, George tax Rose exempt. Justices Purtle, view. Dudley concur declines to issue an 4. The court unanimously to answer various advisory attempting case, to in this the issues beyond going questions, General’s amicus Attorney requested by are answers brief. curiae denied.
Rehearing Disqualification on Opinion Hollingsworth, P. A. has appellant Justice. conflict case is a in this that my participation asserted the Code from Canon 3 Canon citing interest curiam aby per this Court adopted Conduct Judicial canons reviewing carefully After November 1975. matter, of impropriety possibility I find no in this issues Neither by my participation. of impropriety the appearance *26 impartially duties my I cannot perform I find that do subject interest no or other I have financial diligently. located building My ownership in this case. matter has no connection District Improvement Metrocenter now before us. this case
Thomas A. DILDINE and Gerene
DILDINE
L.
CO.,
EQUIPMENT
CLARK
Foreign Corp.,
INTERNATIONAL,
TOWN AND COUNTRY
INC.