Denial of Approval to Issue $30,000,000.00 of Single Family Housing Bonds and $30,000,000.00 of Multi-Family Housing Bonds for Persons of Moderate Income, In re, MULTI-FAMILY
| Docket Nº | No. 196PA82 |
| Citation | 296 S.E.2d 281, 307 N.C. 52 |
| Case Date | November 03, 1982 |
| Court | United States State Supreme Court of North Carolina |
Page 281
SINGLE FAMILY HOUSING BONDS AND $30,000,000.00 OF
MULTI-FAMILY HOUSING BONDS FOR PERSONS
OF MODERATE INCOME.
[307 N.C. 53] Powe, Porter & Alphin, P.A. by W. Travis Porter, James L. Stuart, and Eugene F. Dauchert, Jr., Durham, for plaintiff North Carolina Housing Finance Agency.
Rufus L. Edmisten, Atty. Gen. by Douglas A. Johnston, Asst. Atty. Gen., Raleigh, for defendant Local Government Commission.
CARLTON, Justice.
In 1969 the General Assembly enacted the North Carolina Housing Finance Agency Act, G.S. 122A-1 to 122A-23 (1981 & Cum.Supp.1981), declaring "that the purposes of [the Act] are to provide financing for residential housing construction, new or rehabilitated, for sale or rental to persons and families of lower income." G.S. 122A-2 (1981) (emphasis added). This Court, determining that it was enacted for a public purpose, upheld the Act's constitutionality. Martin v. North Carolina Hous. Corp., 277 N.C. 29, 175 S.E.2d 665 (1970). In 1979 the General Assembly added another provision to the Act in order to extend its reach to "persons and families of moderate income." G.S. 122A-5.4 (1981) (emphasis added). In this appeal, a sequel to Martin, we determine whether G.S. 122A-5.4, the 1979 amendment to the Act, serves a public purpose and is, therefore, an appropriate exercise of the taxation power under article V, section 2(1) of the North Carolina Constitution.
I.
Plaintiff, the North Carolina Housing Finance Agency, is a public agency and instrumentality of the State of North Carolina. G.S. 122A-4 (1981). It has the power, under the North Carolina Housing Finance Agency Act, to do the following: issue bonds and notes, the proceeds from which may be used to purchase or make mortgages for persons of lower and moderate income so they can buy residential housing; make or participate in the making of development loans to sponsors of housing projects who lease to persons of lower and moderate income. G.S. 122A-1 to 122A-23 (1981 & Cum.Supp.1981).
The Local Government Commission, defendant, is also an agency of the State. G.S. 159-3 (1976). It is authorized, under G.S. 122A-8 (Cum.Supp.1981), to determine the rate of interest, price [307 N.C. 54] and manner of sale of plaintiff's bonds with approval of the plaintiff.
The facts in this case are not disputed. Both parties stipulated to the following:
On 16 December 1981 plaintiff's board of directors adopted a resolution calling for the issuance of $30,000,000 worth of mortgage subsidy housing bonds. The proceeds from these bonds were to be used to purchase
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or make mortgages for persons of moderate income who wished to buy single-family residences. The board also adopted a resolution calling for the issuance of an additional $30,000,000 worth of housing bonds, the proceeds from which were to be used to provide project development loans to builders, sponsors and developers of multi-family residential housing units who would lease their units to persons of moderate income. Plaintiff's board also adopted temporary rules establishing moderate income limits: $23,000 for people living in rural areas and $27,000 for those living in urban areas. In adopting the temporary rules, the board considered: (a) the total income of such persons which would be available to meet their housing needs, (b) the size of the family, (c) the cost and condition of housing facilities available, and (d) the eligibility of such persons for federal housing assistance. G.S. 122A-5.4(c) (1981).On 14 December 1981, after plaintiff notified defendant that it intended to issue the moderate income housing bonds, defendant requested an opinion from its bond counsel concerning the constitutionality of G.S. 122A-5.4 since this would be the first bond issuance proposed under the new "moderate income" provision of the Act. When this Court earlier had declared the Act constitutional, we did so at a time when the Act authorized assistance to persons of lower income only. Martin v. North Carolina Hous. Corp., 277 N.C. 29, 175 S.E.2d 665 (1970).
On 15 December 1981 defendant's secretary received an answer from bond counsel containing reservations about the constitutional status of G.S. 122A-5.4; thus, bond counsel indicated it was unable to render an unqualified approving legal opinion with respect to any bond issue of the agency to finance either single family or multi-family housing for persons of moderate income.
On 18 December 1981, after considering the opinion of bond counsel, defendant determined that it could not carry out its [307 N.C. 55] duties in connection with the sale of these bonds under G.S. 122A-8 because the constitutionality of the bond issuance was in doubt. Hence, defendant passed a resolution declining to act on the moderate income housing bonds due to its inability to obtain a clear legal opinion as to the constitutionality of such an issuance, realizing that the State's credit reputation would be harmed if the bonds were to be invalidated after the issuance.
To get its bond issuance approved, plaintiff brought suit against defendant to resolve all doubts concerning the constitutionality of G.S. 122A-5.4, the statute which authorized plaintiff to assist persons of moderate income in acquiring adequate housing.
The matter was heard before Judge Bailey upon the parties' stipulation of facts as set out above. In his written findings of fact the judge stated that plaintiff had the authority to issue bonds, the proceeds from which were to be used to help people with moderate incomes secure adequate housing. However, he noted that under the Act plaintiff's authority "is specifically conditioned on the unavailability of mortgage loans for the same purposes from private lenders upon reasonably equivalent terms and conditions." G.S. 122A-5(2) and (3) (Cum.Supp.1981) (emphasis added).
By implication, Judge Bailey concluded that single family and multi-family housing mortgage loans were not otherwise available from private lenders "upon reasonably equivalent terms and conditions." He did so by expressly noting that as of 16 December 1981 the average mortgage rate for conventional home mortgages in the State of North Carolina was 17%. The mortgages financed under the single family, moderate income bonds would carry a much lower interest rate: about 15%. Similarly, as of 16 December 1981, the average interest rate was 19% for project development loans to builders, sponsors and developers of multi-family housing units in the State. The project development loans financed through the multi-family moderate income housing bonds would also carry a much lower interest
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rate: about 15 1/2%. 1 Mortgage loans from private lenders, thus, were not available on "reasonably equivalent terms and conditions."[307 N.C. 56] In addition, the judge found that a survey of lending institutions indicated that substantial demand existed throughout the State for bond proceeds which would be used to provide mortgages for housing for persons of moderate income; and that the proceeds from the bonds would have been fully utilized and exhausted by lenders in the State or by the agency itself if the issuance of plaintiff's bonds had been approved and marketed.
Based on the foregoing findings of fact, Judge Bailey concluded as a matter of law that the issuance and sale of the...
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...language speaks of the "power of taxation," the limitation has not been confined to government use of tax revenues. In re Housing Bonds, 307 N.C. 52, 296 S.E.2d 281 (1982) (revenue bonds to finance housing for persons of moderate income); Stanley, Edwards, Henderson v. Dept. Conservation & ......
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...what constitutes a public purpose rests with the legislature, and its determinations are entitled to great weight. In re Housing Bonds, 307 N.C. 52, 57, 296 S.E.2d 281, 285 The enactment of N.C.G.S. § 158-7.1 leaves no doubt that the General Assembly considers expenditures of public funds f......
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...If constitutional requirements are met, the wisdom of the legislation is a question for the General Assembly. E.g., In re Hous. Bonds, 307 N.C. 52, 57, 296 S.E.2d 281, 284 (1982). In performing our task, we begin with a presumption that the laws duly enacted by the General Assembly are vali......
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Madison Cablevision, Inc. v. City of Morganton, 624PA87
...language speaks of the "power of taxation," the limitation has not been confined to government use of tax revenues. In re Housing Bonds, 307 N.C. 52, 296 S.E.2d 281 (1982) (revenue bonds to finance housing for persons of moderate income); Stanley, Edwards, Henderson v. Dept. Conservation & ......
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Maready v. City of Winston-Salem, WINSTON-SALEM
...what constitutes a public purpose rests with the legislature, and its determinations are entitled to great weight. In re Housing Bonds, 307 N.C. 52, 57, 296 S.E.2d 281, 285 The enactment of N.C.G.S. § 158-7.1 leaves no doubt that the General Assembly considers expenditures of public funds f......
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Comm. to Elect Dan Forest v. Emps. Political Action Comm., COA17-569
...Disclosure Statute, but rather we are only concerned with whether the General Assembly had the "power" to enact the law. In re Denial , 307 N.C. 52, 57, 296 S.E.2d 281, 284 (1982). We conclude that the General Assembly acted within its authority in 1999 when it enacted the Disclosure Statut......
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Hart v. State, 372A14.
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