City of West Palm Beach v. State

• Decision Date: 24 June 1959
• Citation: 113 So.2d 374
• Parties: CITY OF WEST PALM BEACH, Florida, Appellant, v. STATE of Florida, etc., et al., Appellees.
• Court: Florida Supreme Court

Page 374

113 So.2d 374

CITY OF WEST PALM BEACH, Florida, Appellant, v. STATE of Florida, etc., et al., Appellees.

Supreme Court of Florida.

June 24, 1959.

Egbert Beall and C. Robert Burns, West Palm Beach, for appellant.

Phil D. O'Connell and Paty, Downey & Daves, West Palm Beach, for appellees.

PER CURIAM.

This suit was instituted by petition of the City of West Palm Beach to validate an issue of special obligation bonds, the proceeds to be used for the construction of a civic center composed of (1) an auditorium with seating capacity of 3,000; (2) restaurant, (3) a marina with docks for private vessels, charter vessels and marine shops, (4) stores, (5) large swimming pool with separate wading and diving pool, (6) grandstand to accommodate 1,500 persons, (7) offstreet parking lot for 1,100 automobiles, (8) central recreation building, (9) artificial beaches, private dressing rooms, food service and related facilities and (10) a fuel station to cost $50,000. Along with these items were unpaid interest and principal on 1947 bonds, administrative costs, landscaping, engineering, incidentals and other contingencies amounting in all to approximately $7,500,000.

Certain taxpayers were permitted to intervene and answer the petition. The state attorney also filed an answer to the petition. Both answers resist validation of the special obligation bonds. On the issues so made, trial was had before the court who denied the prayer to validate. This appeal is by the City of West Palm Beach from the final decree refusing validation of the bonds.

As is often the case, the parties are not in agreement as to content of the questions presented. Appellant rests its contention on two points and states them as follows:

Point One. Where a total municipal civic center special obligation bond issue os $7,500,000 to erect on one site a combined recreation center, civic auditorium parking facility and marina, a portion of the issue is to be used to erect marine shops at the slipside of the marina at a cost of $468,000, and where it appears that there is competent testimony that such shops at such location are essential for the success of the main civic center undertaking, does the fact that such civic center site lies in the general neighborhood of the main business section of such city make the use of such bond funds for marina shop purposes an illegal expenditure of public funds, and cause the proposed bond issue and the proceedings in connection therewith to be void?

Point Two. Where in the circumstances stated in Point One, it also appears that the civic center is to be leased under statutory authority to a private corporation, does such lease amount to such an improper subsidy of private enterprise with public money as to make void the proposed bond issue, and the proceedings in connection therewith under Section 10, Article IX of the Florida Constitution [F.S.A.] or other pertinent legislation?

We treat points one and two together because they arise from the same factual complex, turn on the interpretation of the same statutory and constitutional provisions and the same cases are relied on by appellant to support its contentions. Casual reading of appellant's point one reveals a purpose to construct a civic center composed of the facilities recited in paragraph one of this opinion, total cost to be $7,500,000. Included in this and attached to the marina were marine shops to cost $468,000 essential to the success of the civic center. The contention of appellant is that since the marine shops are essential to the success of the civic center, the fact that they are near the business part of the City of West Palm Beach and are to be constructed with a portion of the proceeds of the bonds should not render the bond issue and all proceedings taken thereunder invalid.

By appellant's second point it contends that since it is authorized by statute to lease the civic center to a private corporation, the said lease cannot be said to be an improper subsidy of private enterprise with public money so as to void the proposed bond issue as being in contravention to Section 10, Article IX, Constitution of Florida. Appellant urges that its contentions as to points one and two require a negative answer and relies on Panama City v. State, Fla.1957, 93 So.2d 608; and State v. Daytona Beach, Fla.1956, 89 So.2d 34; Raney v. City of Lakeland, Fla.1956, 88 So.2d 148; State v. Inter-American Center Authority, Fla.1955, 84 So.2d 9; State v. City of Miami, Fla.1954, 72 So.2d 655, are also cited as secondary authority to support appellant's contention.

Appellant points out that § 3(45) of its charter, Chapter 24981, Laws of Florida, Acts of 1947, when read in conjunction with § 169.01, Florida Statutes, F.S.A., vests it with ample power to construct the civic center. An examination of these statutes certainly reveals authority for appellant to issue bonds and construct civic projects of different kinds, but in this case the primary resistance to validation of the bonds and construction of the civic center is grounded on the manner in which its construction lease and administration collides with other statutory and constitutional provisions.

Under the Project Agreement and Ordinance 644, the city, among other things, agreed with Flagler Marine Center Corporation to issue special obligation bonds of the city in the sum of $7,500,000 to pay expense of constructing the civic center. When constructed the city agreed to lease the civic center to Flagler Marine Center Corporation, and to pay principal and interest of said bonds, the city pledged the net revenues received from the operation of the civic center. In case the net revenues were insufficient to pay principal and interest on the bonds for each fiscal year, then all monies received, collected and derived from the utilities service tax in the next succeeding fiscal year would be deposited by this city with a trustee as an additional pledge for the payment of the principal and interest of said bonds.

Appellees first contend that the proposed bonds and contract between the city and Flagler Marine Center Corporation to lease and administer the civic center are in violation of Section 10, Article IX of the Constitution, in that they amount to an appropriation of the city's funds or a loan of its credit to private enterprise.

It is not possible to treat the questions raised without consideration of Ordinance 644 and the project agreement between the city and Flagler Marine Corporation referred to previously. The latter provides, among other things, that the corporation shall have the power to make all rules and regulations affecting the use of the civic center. By such an agreement the city surrenders control of the civic center to the corporation, allowing it to make such changes and impose such conditions on its use as it may deem fit and proper.

Section 10, Article IX of the Constitution, in part provides that '[t]he Legislature shall not authorize any county, city or borough, township or incorporated district to become a stock holder in any company, association or corporation, or to obtain or appropriate money for, or to loan its credit to, any corporation, association, institution or individual.' The charter of the City of West Palm Beach unquestionably authorizes it to construct municipal projects and issue bonds for their payment, but that power has limitations in the charter and the State Constitution which may not be transgressed.

The chancellor considered some of these limitations on the power of the city when he entered his final decree upon the pleadings, testimony and argument of counsel as follows:

'The procedure whereby public funds are used to aid or promote individuals or private corporations in private enterprise is a dangerous and undemocratic course, and may not be followed except where it is clear and unmistakable that such private enterprise is a necessary adjunct to some proper public function. In the case at bar, because of the close proximity of the marina project to the main business district of West Palm Beach, where numerous stores, hotels, restaurants and all sorts of shopping facilities are readily available, it is highly doubtful that similar facilities at the site of the marina are a necessary adjunct thereto.

'Under the circumstances in this case, the plan now in question is an improper subsidy of private enterprise with public money, and cannot be sanctioned.'

The basis of the chancellor's holding that 'the plan now in question is an improper subsidy of private enterprise with public money, and cannot be sustained,' was the factual finding in the final decree as tested by the inhibition in the Constitution. It also finds ample support in Section 10, Article IX of the Constitution. Section 5, Article IX of the Constitution is of like import since it contains an inhibition against the city imposing taxes for any other than 'municipal purposes.'

The fourth question offered by appellees to rebut the contention of appellant is predicated on § 14(15) of the city charter which provides:

'The city is forbidden to subscribe for stock in any railroad company or in any other corporation or to give or lend money, aid or credit, except in caring for the poor or distressed, to any person or corporation whatsoever, and it is...