*1 Roger STEUP; A. American Federal Sav-
ings and Loan Association of Fort (Plaintiffs
Wayne, Appellants below),
INDIANA HOUSING FINANCE AU-
THORITY; Orr, Robert D. John C.
Hart, New, Faris, Jack James E. Carl
Raymond Carlson, Boink, Louis H. Flynn
Frank P. as members of the Indi- Authority;
ana Sendak, Attorney
Theodore L. Gener- Indiana, Appellees (Defendants
al of be-
low).
No. 1179S309.
Supreme Court of Indiana.
April
the Indiana General Assembly. This Court granted joint petition to transfer this pursuant cause from the Court of Appeals, 4(A)(10). Ind.R.App.P. Appellants’ challenge constitutional raises following issues for review: *3 (1) Whether the Act violates Ind.Const. by debt; Art. 10 creating a state § (2) (a) Whether the Act authorizes a pledge (b) of the state’s credit and makes state corporation a stockholder in a in 12; 11, violation of Ind.Const. Art. § (3) Whether the Act authorizes the Au- thority expend public private for funds public purpose benefit without a valid in violation of U.S.Const. amend. XIV and 1, 21; Ind.Const. Art. 1 and §§ (4) grants Whether the Act some citizens privileges granted similarly others situ- ated violation of U.S.Const. amend. XIV 1, 23; and Ind.Const. Art. § (5) Whether the Act arbitrary is and in equal protection guarantees, violation of U.S.Const. amend. XIV and Ind.Const. Art. Crook, Lewis by creating C. Bose and Kendall employment § C. Bose local and Evans, Indianapolis, appellants. contracting privileges; &
Phillip Blaich, (6) E. Gutman and H. Richard Whether Act tax exemp- creates Rothberg, Gallmeyer, contravening Fruechtenicht & Lo- tions U.S.Const. amend. XIV gan, Wayne, Harry 1, 1; Ft. T. 10, Ice and James A. and Ind.Const. Art. 23 and Art. § § Shanahan, Ice, Miller, Ryan, Donadio & In- (7) Act Whether the constitutes an im- dianapolis, Housing for Indiana et al. proper delegation legislative authority to Sendak, Gen., Atty. Theodore L. Jane M. state agency violation of U.S.Const. Gootee, Gen., Deputy Atty. Indianapolis, 4, amend. XIV Ind.Const. Art. and § 23; amicus curiae. Art. (8) process Whether Act due denies HUNTER, Justice. to certain Authority creditors in vio- Appellants Steup and the American Fed- lation of amend. XIV and Ind. U.S.Const. Savings eral Loan Association of Fort 21; Const. Art. 1 and §§
Wayne brought suit against the Indiana (9) Whether the trial court’s conclusions Housing (hereinafter Authority Finance re- contrary of law are to law in that are Authority”), ferred to as “the individual its supported by sufficient evidence and members Attorney and the General of Indi- contrary evidence. declaratory judgment injunc- ana for a holding tion A a presump unconstitutional Indiana statute clothed with Act, constitutionality. Every tion of doubt seq., (Burns Supp.1979), et raised must be resolved in favor of the § 5-20-1— (hereinafter Act”). Furthermore, validity. heavy referred as “the statute’s by Hancock Circuit Court held that the Act the challenger. burden borne Sidle v. Majors, (1976) was a valid and constitutional enactment of provided the extent resolution of I. authority authorizing the issuance claim that the stat Appellants first thereof; (3) any moneys which other it authorizes fail because ute should authority may be made available to the other debt for of state creation for the of such fund from 5 of the Art. permitted those than other source or sources.” is as which follows: Constitution Indiana any debt to be authorize law shall “No (Burns 5-20-l-16(b) Supp.1979) Ind.Code § State, except contracted, on behalf funds, usage limits the as follows: To meet casual following cases: in the moneys any capital held in reserve “All revenue; pay inter- deficits in the fund, except specifically pro- as otherwise Debt; invasion, repel on the State est vided, used, solely: required, shall be or, insurrection, if hostilities be suppress (1) payment principal for the threatened, de- provide for secured in whole bonds of fense.” fund; payment or in *4 in nature to the Authority is similar The sinking payments fund mentioned of the the construction of created for commissions bonds; respect in this section with to such Road, High v. Toll Ennis State the Indiana (3) redemption of purchase for the or 311, Commission, 108 (1952) 231 Ind. way bonds; (4) payment of such for the inter- 687; Bridge, Toll Indi the Indiana bonds; (5) payment or for the est on such Minor, v. Bridge Commission ana Toll State required to any redemption premium 445; 193, (1957) 139 N.E.2d 236 Ind. paid be when such bonds are redeemed Building, Book v. State Office Office State However, maturity. moneys if in prior to al., (1957) et Bldg. Commission are less than the any such fund at time 273; port, Orbi and an Indiana 149 N.E.2d requirement estab- capital reserve fund al., (1961) Welsh, et son v. Governor provided in this lished for such fund as Authority is N.E.2d 727. The Ind. section, shall not use such authority private corpo agency neither a state nor optional purchase op- or moneys ration. Any redemption tional of such bonds. separate corporate entity which is a “[I]t by, incre- income or interest earned or instrumentality agency is an to, due to any capital ment reserve fund in its although it is not the state state may the investment thereof be transfer- capacity.” Orbison sovereign corporate authority to other funds or by red Welsh, Governor, supra, 242 Ind. at v. authority to the extent accounts of the at 734. 179 N.E.2d such transfer does not reduce the amount 5-20-1-16(a) (Burns Supp. Ind.Code § capital fund of such reserve below may cre 1979)provides that requirement such capital reserve fund capital more re ate and establish one or fund.” re notes or bonds serve funds to secure argue appropriations that by Ind.Code 5-20- ferred to and defined into the legislature paid made 1-2(10) (Burns “obligations.” as Supp.1979) create a state capital reserve fund would 5-20-l-16(a) (Burns Supp.1979) Ind.Code § moneys those could be indebtedness because states: herein establish one authority referred [1] may to as or more [create] capital special created and reserve funds, They satisfaction of the applied directly and further argue that the result would be Authority’s unconditionally to the obligations. agreed directly to as- identical if the state funds, and bonds. to secure the notes obligations portion sume all or a of the authority pay into each such shall become under the bonds or notes (1) ap- capital any moneys reserve fund: due, of Art. which would be a violation by the propriated and made available fund; Although 5 of the Indiana Constitution. purposes for the of such state bonds, may the result be identical: any proceeds of sale of notes or illegal obligations authority. an evasion a consti obli- “It is never Each to ac provision prohibition shall gation chapter tutional issued under this result, lawful complish a desired which is the face contain on thereof a statement itself, by discovering following a to the effect legal to do it.” Book Office way v. State obligated pay the same nor al., Bldg. supra, Commission et interest reve- except thereon from the N.E.2d at pledged nues or assets therefor and faith tax- neither the and credit nor the previously appropria We held have ing power of the state of Indiana tions advanced commissions for pledged payment principal projects did not create an of or the interest on obligation.” such cases, prior indebtedness state. In bonds authorized to be issued statute above leaves no recourse were state not issued the name of the against general and the the state fund can- and, held, obligation. we were not its En pay not' be the Authority’s reached obli- Commission, Highway supra; nis v. State gations. Bridge Indiana Toll v. State Commission Furthermore, appro the legislature may Minor, Welsh, Governor, Orbison supra; v. priate capital fund. funds reserve v. supra; Bldg. State Office Commis Book However, funds can flow re no into the sion, supra. The Book Acts Ennis and serve fund unless and until there is an provided were specifically that the bonds appropriation by legislature. The Act payable solely from the revenues derived require allows appropria but does from the commissions. Both Acts contained tions. In Agency Utah *5 stating obligations a section that the of the Smart, Utah, 561 P.2d the were not the obligations commissions the of Supreme Court Utah stated: state. legislation requires appro- “If the future 5-20-l-8(a) (Burns Similarly, Ind.Code § priations defray obligations to the of the Supp.1979) states in relevant part: Agency lending be it would invalid as the authority hereby, is to authorized credit, where, here, state’s but it mere- notes, or issue bonds or a combination ly appropriations allows future without thereof, carry its out and effectuate such, it requiring binding creates no obli- of, powers. principal gation upon the state and does therefore on, and the interest such bonds or notes or the not result in a debt of the state payable solely shall funds be from the lending of the state’s credit.” provided payment chap- for such in this a We hold that the Act does not create ter.” and, therefore, not state does indebtedness 5-20-l-7(a) (Burns Supp.1979) Ind.Code § contravene Ind.Const. Art. 5.§ obliga- that expressly Authority’s states debt, liability tions constitute a or do not II. obligation of the state: provides in rele- Ind.Const. Art. 12§ “Obligations issued under the part: vant debt, chapter do a of this not constitute credit of the ever be “nor shall the State obligation of liability or of the state Indi- loaned, given, any person, in aid of pledge ana of of or a the faith and credit corporation; nor association shall Indiana, payable of state but shall be a in State hereafter become stockholder solely revenues or of the assets any corporation or association.” circumstances, authority. any Under general fund revenues of of the state (a) may all or pay Indiana used to obligations authority, claim that of the net effect part Act, is no and 23 obligation and there moral Ind.Code Sections (Burns 5-20-1-12, Supp.1979), 16 and 23 pay of Indiana all or state §§ franchises position property corpo the state to a credit of to loan the is authority mortgage provision long this so as the has held that We have ration. only pri applicable property; on the the Constitution public bodies. and not corporations vate “(3) have the that the shall Governor, Welsh, supra; Ennis Orbison of di- power appoint to the board Commission, supra. We Highway v. State entity a number of new rectors of the above have determined directors, shall be suffi- which number entity corporate “hybrid,” separate “a is a majority of the cient to constitute a agency of instrumentality or which is an board', a loan entity if the has received in its sover the state the state” but “not chapter and the advance under this Welsh, Orbison v. corporate capacity.” eign the loan or authority determines that 399, 179 Governor, 242 Ind. at supra, be- jeopardy of not advances [sic] private Authority is not 734. Since hous- or that the residential repaid, violation of the we find no corporation, advance was which the loan or ing for 11, 12 which Art. § of Ind.Const. being con- of not jeopardy made is in private loaning of credit prohibits the rehabilitated. structed or corporations. asso- “(b) incorporation, The articles of (b) ciation, governing other partnership or cor- any limited dividend documents of Act argue that the Appellants also entity any association or poration, corpora in a a stockholder makes state developer assisted sponsor, builder or by Art. prohibited which is tion provide, in ad- chapter this under Act Although appellants concede law, requirements to other dition Authority to own permit does member shall every stockholder or corporation, ar any assisted shares agreed to have that he shall be deemed authority that the citation to gue without corporation, from the asso- not receive exceed equal to or Authority’s powers are of his entity repayment ciation or shareholders. typical powers in excess of the investment sums (Burns Supp.1979) the investment attributa- face value of states: plus respective to his interest ble *6 associ- “(a) incorporation, of The articles surplus cash cumulative dividend or ation, governing doc- partnership or other authority payments at such rate as the or devel- any sponsor, builder uments of proper.” to be reasonable and deems chapter oper assisted under this [5-20-1- extensive, we but need powers These contain, in addition shall 5-20-1-26] 1— whether of Sec- not reach a determination law, requirements of statements: to other Authority a shareholder tion 6 makes the organized “(1) entity that the has been Act. The Consti- under the entities assisted provide housing facilities and such to becoming a the state from prohibits tution social, recreational, commercial and Again, the corporation. a stockholder in may as be inciden- community facilities sovereign the state in its Authority is not persons thereto for appurtenant tal or and, therefore, Authority’s re- the capacity moderate in- or families of low and do not lationships organizations with other come; 11, 12. contravene Ind.Const. Art. “(2) operations entity of the that the authority and may supervised by be the III. entity enter into such that the Act autho Appellants claim that the the agreements with the private funds for expenditures of state rizes requires, time time authority from to public purpose. benefit without a valid regulation by the authori- for providing express pur- created for the development and The Act was ty of the planning, housing for low suitable housing pose providing of management of residential income Indiana residents. and their and middle by entity undertaken dis- 1979) requires Supp. purely arbitrary, defines or that to (Burns be §Code promote done which does not tend public purpose as follows: health, comfort, morality, safety or wel- (1) that there hereby “It is declared: society, fare of it is an unauthorized exer- exists in Indiana a need for the state of power.” cise of sanitary housing safe and residential of low within the financial means and In Edwards Housing Authority City families, and persons moderate income Muncie, (1939) 330, 335-7, need which unmet is threat we stated: health, safety, and morals welfare of In- legislature power pro- “That the has require diana residents and which will an morals, public health, safety, tect and expenditure public excessive funds for welfare, and to and to authorize exercise (2) problems social created: thus that exercising power taxation private enterprise investment and will domain, and raising eminent and the and adequately produce more be able expenditure public for pur- funds such decent, needed safe construction of and poses, cannot . . . be doubted. sanitary housing prices residential facts legislature found and recited rentals persons which and families of low in the disputed, enactments are not afford, can income moderate denied, and, their existence since the con- achieve urgently needed rehabilita- ditions be described must assumed to ex- tion present welfare, of much of the low and ist mod- and to affect public it can erate that housing; impera- scarcely income it is be there a public doubted that justifies interest supply housing undertaking tive that the residential which projects authorized the enact- persons for of low and and families mod- ments. dwellings ... If such are a by public erate income displaced actions menace to public, replace- and their increased; or natural disaster be ment necessary protection for the private investment enterprise and be en- public, there is a sufficient basis for the couraged build sponsor, and rehabili- expenditure of public funds. tate for such residential amount, manner, and method of the families; (3) expenditure, be unless it shown to be decent, sanitary housing per- safe and unreasonable, entirely must be left to the sons low and and families of moderate legislative discretion. income be who would otherwise unable to obtain adequate housing at costs [*] [*] [*] [*] [*] [*] public could afford is a valid right to secure the benefits of public may spent; which money projects generally public for the cannot necessity in the inter- special be denied because bene- incidental est and welfare for the of this may fits accrue to some individuals.” chapter hereby [5-20-1-1 5-20-1-26] — Public legisla- are matters for legislative declared a matter determi- *7 tive determination. nation.” requires “It imagi- little evidence and less Although the Act the will' upon nation to realize the effect commu- individuals, private general its pur- benefit nities when generally and the state hous- public pose nature. inadequate substandard. The adequate housing many lack of standard of review to determine if underlies problems legislation police by a state. . is a valid exercise of suffered upon All citizens public are then called to bear powers purpose for a was set forth in the cost of Department the evils which are combating Institutions v. Financial Holt, 293, good, inevitable in 302, the absence ade- (1952) 231 108 clean, quate, financially possible 629, portion relevant to our con- housing. more of a Nothing could be reads: sideration public purpose. “If the law prohibits that which is harm- itself, less in or if it is unreasonable and
1222 is not the the Act housing prices funds are disbursed can afford sub-
“How the issue, rather whether the ob- critical but stantially average housing above the local ject public pur- is a for which it serves cost. Families with incomes in excess of result, pose. in the end not in The test is family 125% of the median income for a may the means. ... A law serve geographical provided area are not assist- although public interest it benefits that, ance under the Act. claim certain or classes more than individuals therefore, the Act violates U.S.Const. Douglas others.” ex State rel. v. Nebras- 1, XIV Art. 23 amend. and Ind.Const. Fund, Mortgage (1979) ka Finance to cer- granting privileges and immunities 445, 12, Neb. 283 N.W.2d 21-2 [citations denying tain Indiana citizens while omitted]. and immunities to other privileges same Supreme The Nebraska held a Court valid similarly citizens situated. statute similar to our Act under constitu- are drawn ac When classifications substantially tion identical to our own in fundamentally suspect clas cording some regard. this sification, race, the Fourteenth such as issue, addressing In a like the Utah Su- justi places heavy burden Amendment
preme stated: Court However, classifi upon the state. fication “Appellants assert that the Act is consti- according to income are not cations drawn tutionally operation offensive because its suspect. private will confer certain benefits. cases, involving . . distinc- “In private There is an obvious benefit to race, according to tions not drawn persons who are able to obtain Supreme] Court has mere- States
financing through Agency [United who would ly asked whether there is rational not have able to been obtain it elsewhere. discriminations, and foundation for the There is a less substantial benefit the wisdom of the state mortgage participate lenders who in the has deferred to Agency’s (1967) mortgage legislatures.” Loving Virginia, transactions. These v. benefits, however, 9, 1822, merely incidental U.S. S.Ct. purpose dominant of the Act to [emphasis L.Ed.2d added]. alleviate a serious statewide shortage of unnecessary say ‘equal “It is decent low and moderate income housing, protection required laws’ consequent with its ill effects. While it is prevent 14th Amendment does improper spend public pri- funds for resorting to classification for states purposes, private vate benefits inci- legislation. Numerous public purpose dental to a dominant do of this court estab- and familiar decisions constitutionality not detract from the range have a wide of dis- lish legislation.” Housing Utah Finance regard. But the classifica- cretion in that Smart, Agency supra, 561 P.2d at reasonable, arbitrary, tion must be 1054-55. ground of dif- upon and must rest some reasoning We believe the in Utah and substantial re- having ference a fair Agency to be sound and in harmo- object legislation, so lation to the ny with our standards. Therefore we hold similarly circumstanced that all of the Act to be Royster alike.” Guano be treated nature and to be a valid exercise of the Virginia, Co. v. 253 U.S. Furthermore, legislative police power. 560, 561-2, 64 L.Ed. 990-1. 40 S.Ct. by private benefits received individuals are 23 of the Indiana Under Article *8 legitimate incidental to the execution of the Constitution, public purpose. valid, classification, must be “a to be IV. distinctions which on substantial based from another make one class so different Appellants many assert that moderate in- eligible necessity for different persons suggest come for assistance under as to with thereto.” legislation respect Davis V. of Construction Co. v. Board Commission Appellants equal protection raise an ers, 150, 132 (1921) 192 Ind. N.E. challenge to Section of the Act. Ind.Code 631. (Burns Supp.1979) reads in rele In the effectively interest of most part: vant
accomplishing public legislation purpose, “(a) in the administration of pro- may necessarily confer benefits on some grams by or receiving authorized benefits persons which are not available to others. under section 4 chap- of this [5-20-1-4] equal protection But the clause of our Unit ter, the executive director the authori- prevented ed States Constitution never has ty require: shall Assembly Indiana indulg General “(1) that extent oppor- to the feasible ing in reasonable classifications. Indiana & training tunities for and employment Michigan City Anderson, Elec. Co. v. arising planning, in with the connection (1978) Ind.App., 376 114. construction, rehabilitation, opera- power legislature is not with- tion of housing pro- assisted under such but, necessarily, limitations pow- out this grams given shall be of low range er must have a wide of discretion. residing income in the area of such precise is no There rule reasonableness housing; and classification, equality and the rule of permits many practical inequalities. A “(2) that extent feasible con- having classification some reasonable ba- performed tracts for work pursu- merely is not to be sis condemned because ant to such programs be awarded it is not framed with such mathematical concerns, to business including but not nicety as to include all within the reason limited doing to individuals or firms to exclude classification and all business in design, the fields of archi- Exact others. exclusion inclusion is tecture, construction, building rehabili- impractical legislation. It is almost tation, repair, maintenance or located impossible provide every exception- for in, by per- owned substantial imaginary a legislature al and case and sons residing of low income in the area ought required not to be to do so at the of such housing.” having risk of legislation its declared legislature claim that has void, though appropriate proper even employment contracting pref- created applied general subject to the upon as erences which are classifications that can- the law operate.” which is intended to protection up equal not stand scrutiny. Cincinnati, Dayton Hamilton and R. Co. v. McCullom 109 We will apply here the same level of N.E. 208. scrutiny applied which we in Issue IV Again, suspect above. no classification is standards,
Applying these we find involved. Our statute does not establish that the 125% of median income demarca therefore, quotas is, wholly racial dis- arbitrary tion line is neither nor unreason similar to Capital the Local Public Works light able in of the Act. The Development grant and Investment Act of privileges Act does not and immuni certain amended by Employ- ties to citizens to exclusion the Public Works similarly currently others situated. ment Act of 19771 which troubles “Except nority Secretary enterprise’ extent de- business means a business at otherwise, grant per termines no shall be least 50 made centum of which is owned chapter minority or, group public- this local under works case members of a project applicant gives satisfactory ly business, per unless the owned least 51 at centum of Secretary per by minority group assurance to the least 10 stock of which is owned grant preceding purposes centum of the amount of each shall be members. For sentence, expended minority enterprises. minority group business members are citizens paragraph, Negroes, Spanish- For of this the term ‘mi- United who are States *9 1224 fact, statute, In
the federal courts.2
Section 5 of
the Ninth Circuit
Appeals
Court of
has held:
involve mandatory quota
our Act does not
strong language.
“This is
It
important
Act includes an
does not
at all. The
modi-
give
City
officials the ‘broad discre-
fying phrase, “to the extent feasible.” This
tion’ that
the trial court concluded
it
that
statutory language requires every positive
‘greatest
We
does.
think that
extent’
approach
properly
that
can
be taken to
maximum,
says,
what
it
means
and
local
employ
award contracts
firms and
that
defendants were
therefore
planning projects
low income individuals
obliged
every
to take
affirmative
action
construction,
in the
maintenance
and
and
properly
that
could
take to make the
renovations,
necessary,
housing
where
of
Ramirez,
Leal & Co.
award to Ramirez.”
The federal
statute3
units.
which
City
Agency,
v.
Demonstration
(9th
Cir.
requires employment
of low income
1976)
549 F.2d
greatest
“to the
and local business
extent
requirement
The
impracticable
is not
interpreted
feasible” has been
in this man-
overly
leg-
burdensome. We do not have a
Department
ner. 40 A.L.R.Fed. 842. The
history
regard
islative
5-
Ind.Code §
Housing
Development
and Urban
has
(Burns
However,
Supp.1979).
20-1-5
since
regulations
couched its
under 12 U.S.C.A.
our statute follows the federal statute vir-
(Supp.1980)
“good
1701u
in terms of
faith
verbatim,
tually
proper
we deem it
to look
effort.”
24 C.F.R.
135.55-.60. A discre-
§§
history
of the federal statute.
tionary good
requirement
certainly
faith
legislative history of the federal act reveals
public
within
purview
thought
given
was
practicality.
be served in our Act. The statute remains
Banking
and Currency Committee
directory. The Housing
felt
require
did not
ignore
and contractors
are not free to
that a
moving
neighbor-
contractor
into a
statute and their
discretion
limited
it.
already
hood with an
established coterie
In construing
language
of the federal
of foremen
key
workers disband his
Orientals, Indians, Eskimos,
speaking,
providing
assistance, including
direct financial
6705(f)(2) (Supp.1979).
community
Aleuts.” 42
development
grants
§
U.S.C.A.
block
under ti-
Housing
Community Develop-
1tle of the
6705(f)(2)
2. 42
U.S.C.A.
has been held uncon
housing,
ment Act of
in aid of
urban
stitutional in Montana Contractors' Association
planning, development, redevelopment, or re-
Commerce,
Secretary
(D.Mont.1978)
v.
460
newal,
facilities,
community
and new
1174;
F.Supp.
Associated General Contractors
community development,
Secretary
shall—
Commerce,
Secretary
(C.D.
of California v.
“(1) require, in consultation with the Secre-
766;
1978)
F.Supp.
Wright
459
Cal.
Farms Con
Labor,
tary
greatest
that to the
extent
struction,
Kreps,
(D.Vt.1977)
Inc. v.
444
opportunities
training
feasible
ployment arising
and em-
1023;
F.Supp.
Associated General Contractors
plan-
in connection with the
Secretary
Commerce, (C.D.
of California v.
ning
carrying
any project
out of
assisted
Cal.1977)
F.Supp.
955. The statute has
any
program given
under
such
to lower
equal protection challenges
survived
in other
persons residing
income
in the area of such
Kreps, (2d
1978)
courts. Fullilove v.
F.2d
nomic
Cir.
project;
600;
Ohio Contractors Association v. Eco
“(2) require,
Development Administration, (S.D.Ohio
in consultation with the
Admin-
1977)
1013;
F.Supp.
Chapter,
istrator of the Small
Business Administra-
Rhode Island
tion,
Kreps, (D.R.
greatest
Associated
that to
General Contractors v.
extent feasible con-
1.1978)
338;
F.Supp.
performed
Constructors Associa
tracts for work to be
in connec-
Pennsylvania
(W.D.
Kreps,
tion of Western
project
tion with
be awarded to
Pa.1977),
F.Supp.
concerns,
936. The United States
including
business
but not limited
Supreme
granted
Court has
certiorari
Fulli-
doing
to individuals or firms
business in the
Kreps, supra,
love v.
at 441 U.S.
99 S.Ct.
planning, consulting, design,
field of
ture,
architec-
2403,
1225
purpose
with
organization by replacing them
local
the Indiana State Hous-
However,
workers or local contractors.
ing Finance Authority
provide
Act is to
outside workers and
to the extent
housing
affordable
to low and moderate
needed, they should
subcontractors were
persons
income
and families.
Ind.Code
hired,
possible,
persons
or
if
all
(Burns Supp.1979). Appellants
5-20-1-1
in the area.
business establishments
Sen-
argue
provisions
Report (Banking
Currency
Com-
ate
(Burns Supp.1979),
5-20-1-5
which create
91-392,
5,
(91st
mittee)
Sept.
No.
employment
contracting preferences
in
Cong.
sess.)." 40 A.L.R.Fed. 842.
1st
favor of low income individuals and busi-
judicial
regard,
in
For a
concurrence
this
nesses owned
low income individuals lo-
Crouch, (M.D.Tenn.1971)
Drake v.
see
housing being
cated in the area of the
con-
F.Supp. 722. In that case three subcontrac-
Act,
structed or rehabilitated under the
are
only
tors were involved and between them
rationally
related to the
of the
one
was hired. But
additional individual
agree.
the court found:
Act. We do not
Housing Authority
“that
the Nashville
prices
Rentals and
which low and moder-
every
comply
has made
effort to
with the
persons
ate income
and families can afford
requirements
Department
of the
of Hous-
ways:
lowering
can be achieved in three
Development
spir-
and Urban
and the
income,
prices, supplementing
rents and
or
Congress
it of
in the enactment of its
doing both until
the desired medium is
legislation,
by providing
wellbeing
attempts
reached. This Act
alter-
third
F.Supp.
of its tenants.”
at 729.
respect
native with
to low income individu-
aside,
Quotas and racial classifications
we
by creating
employment
als
the above
must
equal protection analysis
now turn to
contracting preferences. Appellants argue
under the “fair and substantial relation”
improperly distinguishes
that Section 5
be-
test.
cite some Indiana cases in
persons
tween low income
and families and
pass
which statutes
this
did
constitu
scrutiny,
persons
moderate income
and families in
Compa
tional
Davis Construction
Commissioners,
ny
(war
supra,
v. Board of
light
statutory purpose
to aid both.
relieving highway
time statute
contractors
It stands to reason that moderate income
who contracted with boards of commission
being
come closer to
able to afford
families
desig
ers under certain
of one
housing than do those in the low
adequate
many
pro
nated statute out of
acts which
category.
income
To the extent
that this
highway
vide for
public
and other
construc
might
statute
aid low income
tion);
Paving Compa
Crawford v. Calumet
closer to the
in-
moving into or
moderate
ny, (1954) 233
N.E.2d 368
group
general
it is consistent with the
come
(statute granting immunity to contractors
by this act within our
purpose served
constructing highways under contract with
body politic.
highway
the state
commission to
exclu
repairing
resurfacing
sion of contractors
or
stability
It is self-evident that the
of low
highways
building
repairing bridges
or
or
and moderate income
is served
under contract with the commission
con
promotion
conditions in the
of economic
constructing
tractors
repairing
local neighborhood, particularly
employment
roads); and State ex rel. Miller v. Mc of residents and stimulation of local busi-
Donald, (1973)
vice. Greenfield, (1967) 248 Ind. racial, City Court stated: Supreme ences as 230 N.E.2d criterion “Rather, employment it is an the cause to further reasonably designed provisions of Ind.Code § *11 make and to self-government of Indian a fair and sub- (Burns Supp.1979) do bear more re- of Indian the Affairs] [Bureau 20, object the of Article stantial relation to constituent of its to the needs sponsive that 5 Chapter 1. claim Section by participation It is directed groups. goals of the the Act is not related to the governing agency.” the governed in the the ac- solely to Act which are “restricted 535, Mancari, (1974) 417 U.S. Morton v. housing.” production adequate celerated 290, 554, 41 L.Ed.2d 94 S.Ct. overly simplistic state- accepting this Even 302. legislation, we object the ment of should providing preferences that In position agree appellants’ with cannot and local of low income to individuals given purpose of which assumes that the Section of low by individuals operated businesses the United employment. See provide is to income, evidently considered legislature the construction of District Court’s States busi- persons and the interest of such that statute, (Supp. 1701u § federal U.S.C.A. locality own in their project nesses in a (S.D.N.Y. 1980), Romney, in Feliciano v. quality positively affect would 1973) F.Supp. 656. We have found with- Certainly those located development. statute, provid- general purpose Authority’s operation in the area of low housing for ing adequate, affordable with enhance- more concerned would be and fami- income individuals and moderate development to the value of the ment of the Therefore, lies, it is sim- is constitutional. outside the community than those located to strike a ply logical down Therefore, expressed preferences area. enhance the economic which is devised to they may work to reasonable in that are group the same of low income conditions of the assisted hous- quality maximize We hold that Ind.Code 5-20-1-5 persons. § preferences stated ing under this Act. The comports equal with the (Burns Supp.1979) deprive certain individuals operate do not amend. guarantees of U.S.Const. protection classifications within the and businesses 1, Art. 23. Ind.Const. § XIV and opportunity participate drawn of the Quite to the Authority’s programs. VI. contrary. Authority’s operations will be em- preferences these statewide and argue the Act Appellants also in which the ployed many in each of areas exemptions, in violation of provides for tax Thus, 5 of operate. will Section Art. amend. Ind.Const. U.S.Const. § partici- operates the Act to allow maximum Art. XIV and Ind.Const. § use of a few pation repeated rather than 10, 1 of the Indiana Constitution Article § There or businesses statewide. individuals part: reads unreasonable in the nothing arbitrary is or provide, “(a) Assembly The General shall per- for low income preferences indicated law, equal rate of for a uniform Objections to this sec- sons and businesses. and taxation property assessment with Act indicate dissatisfaction tion of the to secure prescribe regulations than its consti- policy of the Act rather proper- all just valuation for taxation of validity. tutional personal. The General ty, both real citizens are “The mere fact that all of our property Assembly may exempt reasons, unable, for various and diverse any of the fol- any property taxation indirectly, participate in directly or lowing classes: proposed of a negotiate for some municipal, “(1) Property being used enterprise, appears public development or scientific, education, religious or literary, seeking excuse for to be but a lame ” . . . proposal purposes; charitable declaratory judgment that (Burns Supp.1979) Highway Commission, supra. In Ennis we states: stated: required shall not be “Since we have found this not to be a any
pay private corporation, taxes and assessments to the this contention is state, any county, municipality or oth- without merit.” 231 Ind. at state, governmental er subdivision of the N.E.2d at 696.
upon any property upon of its its obli- Having determined that the Authority is gations or other evidences of indebted- private corporation, not a but a state instru- pursuant ness of this mentality operating legitimate for a chapter, funds, upon moneys, reve- purpose, we exemption hold that the tax nues or other income held or received not a violation of Art. 1 of the Indiana authority, and the notes and bonds of Constitution. *12 the authority and the income therefrom The appellants’ argument the Act shall at all exempt times be from taxa- privilege confers a of tax exemption to state, imposed by tion except for denying privilege bondholders while gift death and taxes and taxes on trans- holders of bonds by private for-profit issued property by fers. Real owned the author- or not-for-profit corporations is without ity exempt shall be from all property merit. The Act does not create a classifica- special taxation and assessments of the Any tion of bondholders. distinction lies in thereof, state political or subdivisions but the character of the bond itself. Given our the authority may ágree pay, in lieu of determination that by bonds issued the Au- taxes, such amounts as the authority thority in furtherance public purpose finds consistent with the cost to the state properly taxation, exempted from there political supplying subdivision of mu- 1, is no violation of Art. 23 of the Indiana § nicipal property services for such real and Constitution or the Fourteenth Amendment any housing development constructed to the United States Constitution. thereon, payments which such bodies are accept.” authorized to VII. appellants, citing City Chadwick v. of Appellants also claim that the Act Crawfordsville, (1940) 399, 216 Ind. 24 improper constitutes an delegation legis of 937, argue N.E.2d exemption power by lative Assembly General property used “municipal purposes” re- Authority in violation of Art. 1 of § solely lates purpose for which the the Indiana Constitution which states in
property used and that the
must
part:
“public.” However,
be
Welsh,
in Orbison v.
Legislative authority
of the State
Governor, supra, we stated:
shall be vested in a
Assembly,
General
“It
is unquestioned that
exception
which shall consist of a Senate and a
contained in the above
pro
constitutional
Representatives.”
House of
specifying
exemption
vision
an
from tax
This
has been construed to mean
ation
.
.
for municipal
although
legislature
dele-
cannot
purposes, may
specially exempted
law,
gate
power
to make a
it can make
by law’ has been construed to include
a law delegating power
agency
to an
“to
governmental purpose
as distin
determine the existence of some fact or
guished
private. City
of Louisville
upon
situation
which the law is intended to
(C.C.1935),
162, 166,
v. Babb
75 F.2d
cert.
operate.”
Housing Authority
Edwards v.
den. 295
U.S.
S.Ct.
79 L.Ed.
Muncie,
City
supra,
“[T]he
mining
persons
those
of low and moderate
guide
the administrative
standards
Furthermore,
income.
provision guides
agency may
very
be laid down in
broad
in the formation of the stan-
get
general
preci
terms. Such terms
dards and defines low and moderate income
knowledge
experience
sion from the
adequate
families with
specificity as the
duty it
[persons]
whose
administer
case
Highway
necessitates. Ennis v.
statutes,
State
and then such statutes be
Commission, supra.
5-20-1-
reasonably
guides
carry
come
certain
2(11) (Burns Supp.1979)provides:
Legisla
the will and intent of the
out
Corp.
“(11)
ture. Mutual Film
v. Ohio Indus’l
‘Persons and
families
low and
230, 245,
(1915),
Comm.
236 U.S.
35 S.Ct.
moderate
income’ means
560;
Am.Jur.,
59 L.Ed.
personal
families of insufficient
family
Law, 45, p.
Public Administrative
adequate
346.”
income to afford
as de-
termined
the standards
established
appellants argue
that the Act does
the authority, and in determining such
terms,
sufficiently
define certain
includ-
standards the
shall take into
families,”
ing “low and moderate income
following:
account the
income,”
“adjusted family
“geographical
“(i) the amount of total income of such
residence,”
area” and “area of
or outline
*13
persons and families available for hous-
standards to be used
in its
needs;
capacities.
appellant
various
The
relies on
“(ii) the
family;
size of the
Schakel
Review Board of Indiana Em-
“(iii) the
Div.,
cost and condition of
ployment Security
(1968)
Ind.App.
facilities
geo-
available in the different
Appellate
tion as to vest power only in them the agency tablished such federal facts, to find the but make the law govern; . . . .” applied which shall be to those facts. range of the Board’s discretion as to Other appellant terms about which the com- ‘good what might constitutes cause’ vary plains are broad general gain and and will from claim to claim day day, precision and from Authority. from the Matthews v. analysis State, and in the final depend largely, supra. They involve methods and if entirely, on the changing complex- placed details that are well in the Authori- itself, ion of the Board ‘good ty’s cause’ discretion.
might
thing
mean one
to one mind and
(Burns
Ind.Code
Supp.
5-20-1-9
§
something entirely different to another.”
1979) provides
Authority may
en
distinguishable
This case is
from
agreements
Schakel
ter into trust
with certain cor
v. Review
Employment
Board of Indiana
porate trustees. The Authority has discre-
provisions
“The challenged provision
tion to include certain
in the
is nothing
agreements
amplification
trust
resolutions. But these
more than an
of the Feder-
al and
provisions
protecting
prohibition
must be “for
and en-
State constitutional
against
impairment
forcing
rights
remedies of the hold-
of contracts.”
and
453 Pa. at
any [obligations
tion or proceeding by or on behalf of such
Appellants claim that
the Act de
holders
fully
discharged.
are
met and
process
nies due
of law to certain classes of
authority
is authorized to include this
Authority by
creditors and claimants of the
pledge
agreement
of the
any
state in
enabling
Authority
pledge any
of its
agreement with the holders of such notes
payment
princi
assets or revenues to the
or bonds.”
pal
premium,
any,
if
and interest on
Supreme
Pennsylvania up-
Court of
obligations
Authority.
power,
of the
This
it
statutory
held a similar
provision of the
claimed,
preference
will result in
of bond
Housing
Agency
Finance
Law in Johnson v. holders over all other creditors or claimants
Pa.
Agency,
Pa.
Authority
prior
of the
without
notice to
329,
lien
shall be valid and
binding
against
parties having
all
IX.
tort,
contract or
any
claims of
kind
against
authority, irrespec-
otherwise
Appellants also claim that
parties
tive of whether such
have notice
sup
trial court’s conclusions of law
thereof.”
ported by
are con
sufficient evidence and
pledge
will
the Act states that such
trary
Since
to uncontroverted evidence. We reit
the time when
binding
be “valid and
appellants
heavy
erate that the
have a
bur
pledge
is made” it is clear that
invalidating facts in a
den to establish
con
pledge only applies to future revenues or
law
stitutional attack on a statute. The
The statute
existing unpledged assets.
clear that:
Authority
give priori-
does not enable
presumptively
“a statute is
valid and will
ty
on assets which are
liens to bondholders
not be overthrown as unconstitutional if
liens,
already subject
judg-
to mechanics’
any
it can
sustained on
reasonable
be
type of
ment
other
secured
liens
basis.
.
.
Book v. State Office
creditors, who are on
Only general
claim.
al.,
Bldg.
supra,
et
238 Ind.
Commission
the Act authoriz-
notice of the
For the and that was involved or established judgment tion and the court error trial affirmed. act to the established application should be Court Circuit Hancock holding, In so facts was unconstitutional. affirmed. Judgment that there had been pointed the court out finding discrimination in legislative no JJ., PRENTICE, concur. DeBRULER industry in the the construction State in GIVAN, J., part, in dissents concurs C. reason the court had Vermont and for that PIVARNIK, J., in which opinion with part, imposition not the to determine whether or concurs. constitutional when quota of the racial was Justice, concurring in GIVAN, Chief circumstances of the cases. applied to the dissenting part. part; plaintiffs held that the The court therefore equal protection under were denied majority dissent respectfully I of the United States Fifth Amendment constitutionality of upholds opinion con- when were denied Constitution argues that appellant The 5-20-1-5. IC § corporation they were a class, tracts because i. e. preferential 5 creates section and thus by two Caucasians wholly owned and low in the area income businesses low minority as re- representative of a had no employed in might be persons who income Thus, even the statute. quired under in con- or maintenance construction either to address purport would though a statute status project. Financial with the nection problem, oper- itself to discrimination race, religious joined alienage has not open must be to all that statute ation of suspect classes in the ranks of persuasion showing of a situated in the absence equally Exam- scrutiny. a strict level requiring would therefore hold of discrimination. I lower level of scru- ining the statute with a 5-20-1-5, re- in IC relationship fail to see a rational tiny, I to certain preferential treatment quiring purpose and the the classification between businesses, unconstitu- individuals and of the statute. tional. is to of the statute express purpose The and moder- for low
provide suitable J., PIVARNIK, concurs. legislative- on the families based ate income housing. IC for such ly need determined needs so 5-20-1-1. op- employment are not to increase
stated status enhance the financial
portunities sup- provide nor income businesses
of low may be so who income to families
plemental E. ex rel. Paul of Indiana STATE employed. Relator, HODGES, Ver- District Court United States Const., Kreps, Inc. v. Wright Farms mont addressed itself F.Supp. COURT CIRCUIT KOSCIUSKO brought an plaintiff wherein a a situation Morton, Special Judge Douglas B. Secretary Com- action to restrain No. in Cause Circuit Court Kosciusko 6705(f)(2), enforcing 42 U.S.C. merce from C-79-420, Respondents. *16 Enterprise provision Business Minority No. 1279S346. Develop- Capital the Local Public Works of Indiana. Supreme Court Act of and Investment
ment Employment Works amended the Public 3, 1980. April question addressed Act of 1977. The act in for racial discrimina- potential itself letting contracts.
tion in the
However, discussing pertinent the acts