Tucson Community Development and Design Center, Inc. v. City of Tucson

Citation641 P.2d 1298,131 Ariz. 454
Decision Date28 December 1981
Docket NumberNo. 2,CA-CIV,2
PartiesTUCSON COMMUNITY DEVELOPMENT AND DESIGN CENTER, INC., an Arizona non-profit corporation, Plaintiff/Cross Appellant, and Charles W. White; Johnny W. Bowens; and David A. Yetman, Plaintiffs/Appellees, v. The CITY OF TUCSON, a municipal corporation, and its Mayor and Council, Defendants/Appellants/Cross Appellees. 4026.
CourtCourt of Appeals of Arizona
William J. Risner, Tucson, for plaintiffs/cross appellant/appellees
OPINION

BIRDSALL, Judge.

The appellees, Charles W. White, Johnny W. Bowens and David A. Yetman, and cross-appellant, Tucson Community Development and Design Center, Inc., an Arizona non-profit corporation, filed a petition for special action in superior court seeking a declaratory judgment and injunctive relief with respect to acts of the appellant City of Tucson and its mayor and council, which declared an area of the city blighted and established a redevelopment plan.

The trial court, sitting without a jury, on February 2, 1981, granted appellees the relief requested. It declared the ordinances adopted by the city to be illegal and void, and enjoined the appellant city from proceeding with the redevelopment plan. Findings of fact and conclusions of law were requested and made.

In this appeal the appellant reasserts the arguments it presented in the trial court:

1) The appellees had no standing to bring the action,

2) They were guilty of laches, and

3) The city's acts were not illegal.

In its cross-appeal the Design Center contends the trial court erred in dismissing it from the action on a finding that it had no standing.

Since we agree with the appellant that none of the trial court plaintiffs had standing to maintain the action and that the appellant did not act illegally, we consider only those issues and reverse.

The trial consumed several days and a myriad of exhibits were introduced. Even though we find the one issue of standing controlling, we believe it is necessary to review the facts in some detail. These facts are essentially those found by the trial court.

The La Entrada redevelopment project, which is the subject matter of this litigation, is in the downtown area of Tucson. The land involved is in the area once commonly known as "Snob Hollow." The concept of La Entrada was conceived sometime in 1976. It is one project, among others, undertaken by the city under Article 3 of Chapter 12 of Title 36, A.R.S. § 36-1471 et seq., entitled "Slum Clearance and Redevelopment." The city envisions the project as one which will encourage the revitalization of the downtown area by providing part of a significant residential component. The housing to be constructed would be high-density, designed for middle to upper income, young married couples and single persons. The appellees' objections arose as a result of this emphasis on housing for other than lower to moderate income families. We will return to this disagreement in our discussion of appellees' "standing."

Before the city can redevelop an area pursuant to A.R.S. § 36-1471 et seq., it must first adopt a resolution finding that the area is slum or blighted and redevelopment is necessary in the public interest. A.R.S. § 36-1473. On August 1, 1977, the city adopted such a resolution with reference to the area encompassed in the La Entrada project. Although the city had employed a planner to study the area and that planner had prepared the ordinance subsequently adopted by the city council, no evidence concerning the blighted condition of the area was formally presented to the mayor and council. This is the alleged illegality found by the trial court, i.e., that this ordinance was adopted without receiving any evidence of blight to support the resolution and that the appellant therefore acted arbitrarily and capriciously.

On October 23, 1978, the mayor and council approved and adopted, again by ordinance, the La Entrada Redevelopment Project. Prior to that date, the city purchased the first parcel of land for eventual use in La Entrada for approximately $700,000. After adoption of the plan, it acquired other lands for approximately $2,000,000. The city now owns this land. The city has not sustained any pecuniary loss as a result of any activities pertaining to the project.

All of the funds used to acquire these properties were provided by the federal community block grant program. This program was created by the Housing and Community Development Act of 1974, Public Law 93-383, 42 U.S.C.A. 5301 et seq., and is administered by the U.S. Department of Housing and Urban Development (HUD). In addition, planning expenses in the amount of $13,000 and administrative costs totaling almost $35,000 have been paid from the same federal source. No city tax revenues have been spent for the project, nor is there any evidence that any will be used in the future.

The appellees White and Yetman own real property within the city, live there and pay city property taxes. The appellee Bowens lives within the city but does not own real property there or pay city property taxes. Bowens claims to pay taxes indirectly through his rental payments, but we have been cited no authority that this qualifies him as a city taxpayer and we do not believe it does. The trial court found as a fact that he was a taxpayer. We find no evidence to support that finding.

The cross-appellant, Design Center, is a private, non-profit Arizona corporation. It owns property within the city, but there is no evidence showing that it has paid any taxes. Even though a non-profit corporation, it would be liable for taxes unless it or its use of its property came within an exception. A.R.S. § 42-271. See Tucson Junior League of Tucson v. Emerine, 122 Ariz. 324, 594 P.2d 1020 (App.1979). Since cross-appellant's claim to standing is for the most part based on being a taxpayer, it was required to show that it did pay or was liable to pay taxes. It failed to meet this burden. The trial court properly found that it had no standing. See Smith v. Graham County Community College District, 123 Ariz. 431, 600 P.2d 44 (App.1979). See also Morgan v. Board of Supervisors, 67 Ariz. 133, 192 P.2d 236 (1948) (defining "taxpayer").

We turn now to the other appellees' standing. The trial court found that appellees White and Yetman had standing because they were resident taxpayers. We disagree.

Since there has been no expenditure of funds raised by taxation and no pecuniary loss to the city, the mere status of resident taxpayer is insufficient to confer standing. Dail v. City of Phoenix, 128 Ariz. 199, 624 P.2d 877 (App.1980). The trial court apparently did not have the benefit of Dail since, although it was decided December 16, 1980, review by the supreme court was not denied until March 3, 1981.

The facts of the instant case place it squarely within the holding of Division One of this court in Dail. Dail involved an action by a taxpayer of the city of Phoenix for declaratory judgment and injunctive relief. The taxpayer claimed that the city had failed to observe several legal requirements when it purchased the Ahwatukee water system. No evidence showed any expenditure of city tax funds, and the system, which the city had operated for some time, was self-supporting. The court held that since there was no expenditure from funds raised by taxation and no pecuniary loss, the Phoenix taxpayer had no standing to maintain the action. See also Franks v. Welch, 389 S.W.2d 142 (Tex.Civ.App.1965); Gruber v. Lincoln Hospital District, 285 Or. 3, 588 P.2d 1281 (1979); Alexander v. City of Greenville, 585 S.W.2d 333 (Tex.Civ.App.1979). The court rejected the argument also made, at least inferentially, by appellees, that showing the illegality of a contract is enough to confer standing. It held that before the trial court can consider alleged illegality the taxpayer must "first show some interest beyond a general desire to enforce the law." 128 Ariz. at 202, 624 P.2d at 880.

The trial court relied upon three Arizona cases: Smith, supra; Armer v. Superior Court, 112 Ariz. 478, 543 P.2d 1107 (1975); and Folk v. City of Phoenix, 27 Ariz.App. 146, 551 P.2d 595 (1976). None of these decisions supports the conclusion that the appellees have standing, particularly in view of Dail.

Smith held that a taxpayer resident of the Graham County Community College District had standing to bring an action to enjoin an unlawful expenditure of funds by the district. The district had solicited bids for a major roof alteration on one of its buildings. The bids were so high that the district proposed to accomplish the alteration with its own employees. Since the cost of the work exceeded $5,000, A.R.S. § 34-201 required the bidding procedure. For the district to proceed without readvertising and subsequently letting the contract to the successful bidder would be unlawful. There was no question that an illegal expenditure of tax funds was involved. In Smith we relied upon the reasoning in Ethington v. Wright, 66 Ariz. 382, 189 P.2d 209 (1948) that:

"The right to maintain such suits is based upon the taxpayers' equitable ownership of such funds and their liability to replenish the public treasury for the deficiency which would be caused by the misappropriation." 66 Ariz. at 386, 189 P.2d at 212.

See also Secrist v. Diedrich, 6 Ariz.App. 102, 430 P.2d 448 (1967). Since the instant case does not involve either the expenditure or the proposed use of tax revenues, Smith is inapposite.

Armer was an action by residents of a county within a multi-county water conservation district, seeking compliance with financial disclosure requirements by directors of the district. It was a special action in the nature of mandamus. After recognizing that the trial...

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