City of Middletown v. Thomas E. Ferguson, 85-LW-2194
| Decision Date | 29 April 1985 |
| Docket Number | CA84-04-049,85-LW-2194 |
| Parties | CITY OF MIDDLETOWN, Plaintiff-Appellee v. THOMAS E. FERGUSON, et al., Defendants-Appellants CASE |
| Court | Ohio Court of Appeals |
Sheldon A. Strand, Director of Law, City of Middletown, One City Centre Plaza, Middletown, Ohio 45042, and John R. Gall Squire, Sanders & Dempsey, 155 East Broad Street, Columbus Ohio 43215, for Plaintiff-Appellee.
Carl Morgenstern and Roger Gates, Carl Morgenstern Co., L.P.A 604 First National Bank Building, Hamilton, Ohio 45011, forDefendants-Appellants.
On July 12, 1983, plaintiff-appellee, the city of Middletown, filed a complaint for the validation of securities pursuant to R.C. 133.71 et seq. in the Court of Common Pleas of Butler County. The complaint sought a validation of municipal bonds which the city intended to issue as payment for the city's financial obligation on a municipal development project which widened Manchester Road from a two-lane rural highway to a five-lane divided highway between Breiel Boulevard and the eastern boundary of the municipal corporation. The bonds issued by the city were then to be retired through special assessments levied against the owners of property bounding or abutting that portion of Manchester Road which had been developed.
A bench trial was held on August 16, 1983. Most of the evidence was submitted via a joint stipulation of facts and designation of exhibits. In addition, the trial court also heard testimony from Richard Goecke, the Director of Public Services for the city of Middletown, and defendant-appellant, James Deger, a Middletown resident who lived on Manchester Road and whose property abutted the portion of Manchester Road subject to the improvement.
The record indicates that the improvement of Manchester Road was a project suggested by the city's 1963 master development plan. In 1975, the Ohio-Kentucky-Indiana Regional Council of Governments("OKI"), an agency responsible for the distribution of federal highway funds, gave its approval to the allocation of money for the Manchester Road project. Thereafter, the city began preliminary work on the project involving the appraisal of property, negotiations, and acquisitions of necessary portions of Manchester Road. On May 10, 1977, the Middletown City Commission passed Resolution R77-19, which directed the city to begin the process leading to the improvement of Manchester Road. On May 2, 1978, the city commission adopted Ordinance 078-93, wherein the city was authorized to enter a contract with the Ohio Department of Transportation ("ODOT"). ODOT was to perform the actual construction work on the project. Included within the ordinance were provisions providing for the city to pay 100% of the cost of the project less any federal funds determine to be eligible and available for participation in the project. The city also agreed to assume responsibility for the maintenance and operation of the project upon its completion. The parties stipulated that in 1978 the estimated cost of the project was $1,185,000, of which 70% would be paid for by federal funds with the remaining 30% to be contributed by the city. It was further stipulated that from the inception of the project the city had always intended to fund its share of the cost by levying special assessments to the benefiting owners of the property bounding or abutting the portion of Manchester Road subject to the improvement.
In February 1979, the city commission adopted an ordinance authorizing the city to conduct public hearings on the project in cooperation with OKI. On April 16, 1979, the city sent written notice to the property owners on Manchester Road informing them that public meetings concerning the project would be held on May 8. It was stipulated that the individual property owners who are appellants in this case attended at least one of the public meetings on May 8 along with the owners or representatives of 23 of the other pieces of property that were affected by the project.®1¯ A summary report of the questions and concerns raised at the meeting was mailed to the Manchester Road property owners in October 1979.
Footnote 1 Only four owners of Manchester Road property affected by the widening project have appealed the judgment of the trial court: James Deger, Judy Sticklen, Mary Rice and Frederick Cranford. The stipulation of facts indicates that the assessments were levied against "fifty pieces of private property" on Manchester Road.
Middletown City Commission passed Resolution R81-3 on January 20, 1981. The resolution, inter alia, declared that it was necessary to go forward with the project on Manchester Road and that the improvement was conducive to the public health, convenience and welfare of the city and its inhabitants. The resolution also provided that the city's cost of the project would be met by assessments levied upon the property lots bordering Manchester Road within the boundaries of the improvement. The resolution also directed the director of public services to prepare estimated assessments to be filed with the clerk of the city commission and thereafter to serve the estimated assessments on the assessed property owners. It was stipulated by the parties that notice of these assessments were sent to the property owners pursuant to R.C. 727.13 and that five of the owners filed written objections to the assessments levied against their respective properties. An assessment equalization board was appointed by the city commission to hear all timely written objections to the estimated assessments. A report filed by the board and adopted by the commission found that the estimated assessments were equitably distributed among the assessed parcels.
On March 10, 1981, Ordinance O81-44 was adopted by the city commission declaring the city's decision to proceed with the improvement project and to pay the costs of the construction by the estimated assessments which had been theretofore prepared and approved by the assessment equalization board and adopted by the city commission. Approximately a month later, the city commission adopted Ordinance O81-49, which was essentially the same as the earlier Ordinance O78-93 with the exception of some cost saving measures, authorizing a contract between the city and ODOT for the construction of the improvement to Manchester Road.
Resolution R81-41, adopted on June 23, 1981, approved the final plans and arrangements for the project and also included the appropriation of $332,355 to be paid to ODOT which represented the city's share of the construction cost. On that same date, the actual contract for the improvement project was executed between the city and ODOT. On July 21, 1981, ODOT opened sealed construction bids which it had earlier let for the construction phase of the project and awarded a contract to SK Construction Company on July 27. Thereafter, the actual construction of the project commenced in due course.
Meanwhile, on June 9, 1981, a copy of a proposed initiative ordinance was filed with the clerk of the city commission. The full title and text of the proposed initiative ordinance read as follows:
On July 17, 1981, appellant Deger filed several initiative petitions with the city calling for a vote on the proposed initiative ordinance at the next regular election on November 3, 1981, to determine whether to enact the ordinance. The required number of signatures on the initiative petitions were validated by the board of elections on July 24, 1981, and the initiative ordinance was placed on the ballot for the November election. On November 3, 1981, the citizens of Middletown, by a tally of 5,230 to 3,406, voted to adopt the initiative ordinance. The initiative ordinance went into effect on November 10, 1981. The parties stipulated that the day before the initiative ordinance went into effect, 59.6% of the construction phase was completed. It was further stipulated that work continued on the project under the belief that the electorate could not vote to repeal those ordinances dealing with the project since such would be tantamount to an impairment of the city's contractual obligations. By July 1, 1982, the project was 100% completed.
On June 7, 1983, the city adopted ordinances authorizing the levying of the special assessments against the property owners to cover the city's portion of the construction cost and to issue bonds to pay the property owners' portion in anticipation of the collection of the special assessments. The adoption of these ordinances, in light of the initiative ordinance adopted by the voters of Middletown prompted the city's complaint seeking a determination of its authority to issue the...
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