In re Oklahoma Capitol Imp. Authority

Citation80 P.3d 109,2003 OK 59
Decision Date03 June 2003
Docket NumberNo. 97,936.,97,936.
PartiesIn the Matter of the Application of the OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY for Approval of $155 Million Oklahoma Capitol Improvement Authority State Facilities Revenue Bonds, Series 2002C and $20 Million, Series 2002D(Taxable).
CourtOklahoma Supreme Court

W.A. Drew Edmondson, Attorney General for the State of Oklahoma, Lynn C. Rogers, Assistant Attorney General, Gary M. Bush, Oklahoma City, OK, and Douglas F. Price, Stillwater, OK, for applicant.

Richard James, Stroud, OK, for protestant John Cassidy, Jr.

Protestant Jerry R. Fent, pro se, Oklahoma City, OK.

Protestant Edwin Kessler, pro se, Norman, OK.

BOUDREAU, Justice.

¶ 1 By amendment to 73 O.S.Supp.1999, § 301,1 the second regular session of the 47th Oklahoma Legislature in 2000 authorized the Oklahoma Capitol Improvement Authority (OCIA) to issue the proposed State Facilities Revenue Bonds, Series 2002C, in an amount not to exceed $155 million, and Series 2002D (Taxable), in an amount not to exceed $20 million. The proposed $175 million bonds constitute the second half of the $325 million bonds authorized in § 301(C) for the purpose of "providing funding for the projects authorized in subsection A". The proceeds from the proposed $175 million bonds are allocated to twenty-seven state agencies by § 301(A)(16). The OCIA initiated this original proceeding seeking approval of the proposed bonds.2

¶ 2 Three individuals, protestants John Cassidy, Jr. (Cassidy), Jerry R. Fent (Fent), and Edwin Kessler (Kessler), objected to the bond proposal. Protestants challenged both the authorizing statute, § 301, and the bond-approval process on several state constitutional grounds.

¶ 3 Upon considering the briefs and other filings by the parties and hearing oral argument en banc, we conclude that the deciding issue in this controversy is whether the authorizing statute satisfies the purpose-of-borrowing requirement in Okla. Const., art. 10, § 16.3 We find that § 301 as amended in 2000 does not specify the purposes for which the twenty-seven state agencies may use the bond proceeds. We determine that § 301 fails to satisfy the purpose-of-borrowing requirement in Okla. Const., art. 10, § 16. We hold that the proposed bonds are not properly authorized in 73 O.S.2001, § 301.

I. OCIA's Application for Approval of the Proposed Bonds

¶ 4 In its application for approval of the proposed bonds, OCIA asserted there is no valid distinction between this bond proposal and the bond proposal previously approved by this Court in Fent v. Oklahoma Capitol Improvement Authority, 1999 OK 64, 984 P.2d 200. In Fent, we approved the first half of the bonds authorized in 73 O.S.Supp.1998, § 301, a $162,700,000 bond proposal, against an attack that the bonds would create a debt requiring voter approval pursuant to Okla. Const., art. 10, § 25.4

¶ 5 Anticipating protests to its application, OCIA argued that the proposed bonds do not violate either the separation of powers requirement in Okla. Const., art. 4, § 1, the appropriation requirements in art. 5, § 55, nor the purpose of borrowing requirement in art. 10, § 16. OCIA contended that by designating twenty-seven state agencies to participate in the bond program and the dollar amount for each agency "for the purpose of `capital projects which are important to the furtherance of state functions'" the statute passes constitutional muster for a self-liquidating revenue bond authorization statute.

II. The Protests to the Proposed Bonds

¶ 6 Cassidy challenged the constitutionality of the 2000 amendments to § 301. He contended that the statutory provisions, allocating the borrowed funds to various state agencies, including $51 million to the Department of Central Services to be expended as directed by the Governor, without specifying the purpose, result in a delegation of legislative power which offends the state constitutional separation of powers doctrine and also violates the appropriations and borrowing provisions in Okla. Const., art. 4, § 1, art. 5, § 55, and art. 10, § 16.

¶ 7 In response to Cassidy, OCIA contended that the authorizing statute requires that the bond proceeds be used for capital projects of the specified agencies and confers discretion on the various agencies in choosing the capital projects. OCIA argued that the Legislature sufficiently set out general standards and policies for the use of the bond proceeds to guide the state agencies in carrying out the delegated power, citing Okla. Const., art. 4, § 1 and Bailey v. State Board of Public Affairs, 1944 OK 301, 194 Okla. 495, 153 P.2d 235.

¶ 8 Cassidy and Fent filed documents showing that Governor Keating and members of the Legislature agreed that the bond proceeds will be allocated as follows: House members will decide how to spend $55 million of the bond proceeds, Senate members will decide how to spend $55 million of the bond proceeds, and the Governor will decide how to spend $51 million of the bond proceeds. The documents listed some 520 possible projects for the bond proceeds. Cassidy asserted that this agreement is not an official legislative act and does not satisfy the purpose-of-borrowing requirement of Okla. Const., art. 10, § 16 nor the separation of powers doctrine of nondelegation.5

¶ 9 OCIA also acknowledged the existence of one or more lists prepared by individual legislative members directing a range of uses of the bond proceeds by various state agencies from purchasing equipment for rural firefighters to completing the Capitol dome. OCIA took the position that these "wish lists" are not a result of any official action of the Legislature and are not binding on the state agencies. OCIA explained that it will, with the assistance of the Office of the Attorney General, ultimately oversee the expenditure of the bond proceeds to assure that each project fulfills a lawful public purpose and does not involve the unconstitutional or unlawful gift or loan of proceeds to any local or private entity.

III. The State Attorney General's Position

¶ 10 The OCIA, a state entity,6 is represented in this proceeding by the Attorney General of the State of Oklahoma. Additionally, the Attorney General is ex officio Bond Commissioner of the State of Oklahoma, Okla. Const., art. 10, § 29, and tentatively approved the proposed bonds. However, because the protestants attack the constitutional validity of the statute authorizing issuance of the proposed bonds, this Court directed the Attorney General as Chief Law Enforcer to indicate whether his legal position with respect to the constitutional issues is reflected in the briefs filed by the Assistant Attorney General as attorney of record for the OCIA.7

¶ 11 The Attorney General took the position that the authorizing statute is not only presumed constitutional but is constitutional under this Court's pronouncement in Fent v. Oklahoma Capitol Improvement Authority, 1999 OK 64, 984 P.2d 200, "which approved bonds issued under Section 301 of Title 73, which in part provided funding for unspecified projects in designating $45,000,000 for `Capitol projects at institutions of higher education which are part of the Oklahoma State System of Higher Education.'"

¶ 12 Cassidy replied to the Attorney General's position contending that a lump sum allocation of borrowed money to the Oklahoma State Regents for Higher Education for capital improvements sufficiently specifies the purpose for the borrowing. He referred to Okla. Const., art. 13-A, § 3, which requires the Legislature to appropriate funds to the Board of Regents in consolidated form without reference to a particular institution and requires the Board of Regents to allocate the appropriated funds to each institution.

IV. The Purpose-of-Borrowing Requirement in Okla. Const., art. 10, § 16

¶ 13 The Oklahoma Constitution, art. 10, § 16 requires the Legislature to specify the purpose for which borrowed money is to be used in a statute authorizing the State to borrow money. It also prohibits the use of the money so borrowed for any other purpose.

¶ 14 This constitutional purpose-of-borrowing requirement is a limitation on the Legislature. Protest of Reid, 1932 OK 711, ¶ 7, 160 Okla. 3, 15 P.2d 995, 997-98. Its objective is to require legislative bodies to reveal the true purpose for which the borrowed money is to be used. Borin v. City of Erick, 1942 OK 144, ¶ 13, 190 Okla. 519, 125 P.2d 768, 770.

¶ 15 Application of the constitutional purpose-of-borrowing requirement to a state statute is a matter of first impression. However, this Court has considered the application of art. 10, § 16 to proposed municipal bonds and uses of municipal bond proceeds. Our decisions have, for the most part, strictly applied the constitutional purpose-of-borrowing requirement to limit the use of the proceeds.

¶ 16 In Protest of Reid, supra., we concluded that the purpose-of-borrowing requirement limits not only the immediate use of money borrowed, but also limits any subsequent use of the proceeds from the sale of property purchased with money borrowed by a municipality. Similarly, in Borin v. City of Erick, supra., we invalidated proposed municipal bonds, finding that the ordinance did not specify the real purpose for borrowing money in that it failed to reveal the power plant would be constructed partially with federal grant money.8 More recently, Quinn v. City of Tulsa, 1989 OK 112, ¶ 20, 777 P.2d 1331, 1336, reiterated the Borin rule that art. 10, § 16 prevents a municipality from using bond proceeds for a project that is substantially different from the planned project.

¶ 17 Protest of Reid and Borin v. City of Erick utilized the word "purpose" in its ordinary meaning as "the thing to be accomplished." See also, Barnes v. Barnes, 1955 OK 34, ¶ 5, 280 P.2d 996, 998

(defining "purpose" as "the thing to be accomplished"). This interpretation of "purpose" as used in art. 10, § 16 is consistent with the firmly established...

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