Dobbs v. SHELBY COUNTY ECON. & IND. DEV. AUTH.

• Decision Date: 05 November 1999
• Citation: 749 So.2d 425
• Parties: John DOBBS and Audrey Dobbs v. The SHELBY COUNTY ECONOMIC AND INDUSTRIAL DEVELOPMENT AUTHORITY et al. Dawn Marie Pate and Royce D. Williams v. The Industrial Development Board of the City of Trussville et al.
• Court: Alabama Supreme Court

749 So.2d 425

John DOBBS and Audrey Dobbs v. The SHELBY COUNTY ECONOMIC AND INDUSTRIAL DEVELOPMENT AUTHORITY et al.

Dawn Marie Pate and Royce D. Williams v. The Industrial Development Board of the City of Trussville et al.

1926.

Supreme Court of Alabama.

November 5, 1999.

Albert L. Jordan and Michael L. Jackson of Wallace, Jordan, Ratliff & Brandt, L.L.C., Birmingham; and Algert S. Agricola, Jr., of Wallace, Jordan, Ratliff & Brandt, L.L.C., Montgomery, for appellants John Dobbs and Audrey Dobbs.

J. Michael Rediker, Patricia Diak, and Michael C. Skotnicki of Ritchie & Rediker, L.L.C., Birmingham, for appellants Dawn Marie Pate and Royce D. Williams.

Frank C. Ellis, Jr., of Wallace, Ellis, Fowler & Head, Columbiana, for appellees Shelby County Economic and Industrial Development Authority and its individual directors, Hayden Montgomery, Julia Stewart, Frank Dorrance, Jr., William W. Cooper, Johnny L. Lowe, Stephen R. Chapman, Andrew D. Bussey, Robert A. Doyle, Eric Ellington, David Nolen, and Gail Owen; Shelby County; and the Shelby County Commission.

Martin G. Woosley of Martin, Drummond & Woosley, P.C., Birmingham, for appellee Industrial Development Board of the City of Trussville.

Hugh R. Evans III, Montgomery, for appellees Alabama Ethics Commission and its individual members, Lewis G. Odom, Jr., John H. Watson, Henry B. Gray III, Camille S. Butrus, and Helen Shores Lee. Bill Pryor, atty. gen.; Ron Bowden, chief counsel, Department of Revenue, and asst. atty. gen.; and David E. Avery III, asst. counsel, Department of Revenue, and asst. atty. gen., for appellee H.E. "Gene" Monroe, Commissioner, Department of Revenue.

Alex B. Leath III of Balch & Bingham, L.L.P., Birmingham, for amicus curiae Economic Development Association of Alabama, Inc., in support of the appellees.

Corrie P. Haanschoten, general counsel, for amicus curiae Alabama Education Association.

JOHNSTONE, Justice.

In the Shelby County Circuit Court, John Dobbs and Audrey Dobbs filed a complaint for a declaratory judgment. They named as defendants the Commissioner of the Department of Revenue, Shelby County, the Shelby County Commission, the Shelby County Economic and Industrial Development Authority (SCEDA), the directors of SCEIDA, the Alabama Ethics Commission, and the members of the Ethics Commission.¹ The Dobbses sought a declaration that the Tax Incentive Reform Act of 1992 (TIRA), codified at §§ 40-9B-1 through -8, Ala.Code 1975, improperly delegates to SCEIDA the authority to grant tax abatements and thereby violates Art. I, § 23; Art. IV, §§ 93, 104, and 108; and Art. XI, § 212, Alabama Constitution of 1901. They also sought a declaration that the SCEIDA directors are public officials required by the 1995 Ethics Act, § 36-25-1 et seq., Ala. Code 1975, to file statements of economic interests pursuant to § 36-25-14.

All parties moved for a summary judgment. After a hearing, the trial court held that TIRA is constitutional and that the SCEIDA directors are not required to file statements of economic interests. The trial court denied the plaintiffs Dobbses' summary judgment motion but granted the summary judgment motions of the defendants the Revenue Commissioner, Shelby County, the Shelby County Commission, SCEIDA, the SCEIDA directors, the Alabama Ethics Commission, and the members of the Ethics Commission. The Dobbses appeal.

Similarly, in the Jefferson County Circuit Court, Dawn Marie Pate and Royce D. Williams, as individuals and on behalf of the taxpayers of Alabama, filed a complaint for a declaratory judgment and named as defendants the Commissioner of the Department of Revenue, the Industrial Development Board of the City of Bessemer (IDBB), and the Industrial Development Board of the City of Trussville (IDBT). Pate and Williams sought a declaration that those portions of TIRA that delegate to public industrial authorities (PIAs) the power to abate specified city, county, and state taxes are unconstitutional under the same sections invoked by the Dobbses — §§ 23, 93, 104, 108, and 212. All parties moved for summary judgment. After a hearing, the trial court held that TIRA does not violate any of these sections of the Alabama Constitution of 1901. The trial court denied the plaintiffs Pate and Williams's summary judgment motion but granted the summary judgment motions of the defendants the Revenue Commissioner, IDBB, and IDBT. Pate and Williams appeal.

Upon motions of the parties, this Court consolidated the appeal of the Dobbses with the appeal of Pate and Williams. On appeal, the Dobbses and Pate and Williams all contend that the legislative grant, through TIRA to PIAs, of the power to abate certain taxes violates Art. I, § 23; Art. IV, §§ 93, 104, and 108; and Art. XI, § 212, Alabama Constitution of 1901. The Dobbses also insist on their contention that the directors of PIAs are public officials who are required to file statements of economic interests. Rule 56, Ala. R. Civ. P., establishes a two-tiered standard for the entry of a summary judgment. To grant summary judgment, the trial court must ascertain that (1) there is no genuine issue of material fact and (2) the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3); Ex parte Brislin, 719 So.2d 185 (Ala.1998). In reviewing a summary judgment, an appellate court, de novo, applies the same standard as the trial court. Id.

We will address first the constitutionality of the delegation by TIRA of tax-abatement powers to PIAs. In reviewing the constitutionality of a legislative act, this Court will sustain the act "`unless it is clear beyond reasonable doubt that it is violative of the fundamental law.'" White v. Reynolds Metals Co., 558 So.2d 373, 383 (Ala.1989) (quoting Alabama State Fed'n of Labor v. McAdory, 246 Ala. 1, 9, 18 So.2d 810, 815 (1944)). All presumptions are indulged in favor of the validity of the act. House v. Cullman County, 593 So.2d 69 (Ala.1992).

TIRA is intended to promote industrial growth in Alabama by permitting municipalities, counties, and PIAs to abate municipal, county, and state noneducational ad valorem taxes, construction-related "transaction" taxes, mortgage taxes, and recording taxes for a "maximum exemption period" of 10 years when such taxes would otherwise be levied or collected "with respect to private use industrial property." §§ 40-9B-4 and -5, Ala.Code 1975. TIRA requires the abatements to "be embodied in an agreement" which must set forth the estimated amount of the abatement, "the maximum exemption period," and the "[g]ood-faith projections by the private user of: the amount to be invested[,] the number of individuals to be employed, initially and in the succeeding three years[,] and the payroll." § 40-96(b)(1) and (2).

TIRA requires that a PIA be a "public authority" authorized to issue tax-exempt industrial development bonds. TIRA thereby incorporates Chapter 92A of Title 11 (§§ 11-92A-1 through -22), Ala.Code 1975, which provides for those entities, called "industrial development authorities" (IDAs). Pre-existing industrial development boards (IDBs) incorporated under § 11-20-1 et seq. and § 11-54-1 et seq., Ala.Code 1975, may be reincorporated under this Chapter. §§ 11-92A-6 and -7. Thus a PIA is an IDA (or an IDB) which seeks to exercise tax-abatement powers under TIRA.

As the foregoing description reveals, TIRA depends and impinges on earlier industrial development statutes. A brief history of this legislation discloses the ramifications of the constitutional issues before us.

In 1949, the Alabama Legislature adopted the Cater Act, § 11-54-80 et seq., Ala.Code 1975, to promote and to develop industry in Alabama. The Cater Act authorizes municipalities to incorporate industrial development boards (IDBs). §§ 11-54-81 through -85, Ala.Code 1975. The Act authorizes IDBs to acquire projects composed of real and personal property and to lease, to sell, to exchange, to donate, or to convey its projects or properties. §§ 11-54-87(a)(4), (a)(5), and (a)(6). The Cater Act authorizes IDBs to issue bonds for the purpose of carrying out any of their powers, § 11-54-87(a)(7), and to mortgage any or all of their property as security for the payment of the principal of and interest on any bonds issued to purchase or to improve the property, § 11-54-87(a)(8). An IDB must amortize all bonds from the revenues and proceeds derived from the lease or sale of the property, and must redeem the bonds within 40 years of their execution and delivery. The Cater Act exempts all property owned by IDBs, income from the property, and all bonds issued by IDBs from "all taxation in the State of Alabama." § 11-54-96.

In 1951, the legislature passed the Wallace Act, § 11-54-20 et seq., Ala.Code 1975. The Wallace Act authorizes the municipalities themselves to perform the same acts and services as the IDBs. Mc-Donald's Corp. v. DeVenney, 415 So.2d 1075 (Ala.1982). However, the Wallace Act requires that the principal of and interest on bonds issued by a municipality must be paid from the revenues derived from leasing the property. § 11-54-24. The issuing municipality must redeem the bonds within 30 years of their execution and delivery. § 11-54-24. Such bonds, the income therefrom, all mortgages executed as security for the bonds, all leases of projects financed by the bonds, the revenues from the leases, and the projects themselves are exempt from "all taxation in the State of Alabama." § 11-54-31.

In order to give counties the same economic opportunities as municipalities, the legislature adopted the 1961 County Board Act, §§ 11-20-1 through -13, Ala.Code 1975. The 1961 County Board Act authorizes counties to acquire and to improve land (projects), to lease the projects, and to issue "revenue bonds" to defray the costs of acquiring and constructing the projects. § 11-20-3. However, before a county may issue any bonds, the county must lease the property. The lease agreement must require sufficient lease payments to...