Interrogatories by Colorado State Senate (Senate Resolution No. 13) Concerning House Bill No. 1247 Fifty-First General Assembly, In re

• Decision Date: 13 June 1977
• Docket Number: No. 27682,FIFTY-FIRST,27682
• Citation: 193 Colo. 298,566 P.2d 350
• Parties: In re INTERROGATORIES BY the COLORADO STATE SENATE (SENATE RESOLUTION NO. 13) CONCERNING HOUSE BILL NO. 1247GENERAL ASSEMBLY.
• Court: Colorado Supreme Court

Page 350

566 P.2d 350

193 Colo. 298

In re INTERROGATORIES BY the COLORADO STATE SENATE (SENATE RESOLUTION NO. 13) CONCERNING HOUSE BILL NO. 1247 FIFTY-FIRST GENERAL ASSEMBLY.

No. 27682.

Supreme Court of Colorado, En Banc.

June 13, 1977.

James A. Roberts, Director of Legal Operations, Colorado Housing Finance Authority, Denver, Wilkie, Farr & Gallagher, New York City, of counsel.

KELLEY, Justice.

This is an original proceeding in which the Senate of the Fifty-First General Assembly (1977) by Senate Resolution No. 13 seeks our opinion upon interrogatories submitted to us under article VI, section 3, of the Constitution of Colorado. The interrogatories question the constitutionality of House Bill No. 1247 entitled "A Bill for an Act Making an Appropriation to the Colorado Housing Finance Authority." The bill has passed the House of Representatives and is pending in the Senate following passage on second reading. The Senate found that "the question of the constitutionality of . . . (the Bill) is a matter of extreme importance and public interest; that an emergency exists and it is essential that immediate judicial determination be secured; and that a solemn occasion within the meaning and intention of section 3 of article VI of the state constitution has arisen. . . ."

We have agreed to answer the interrogatories. We answer each interrogatory in the negative, finding no constitutional imperfections in House Bill 1247. We will consider the factual background and then answer the interrogatories.

On May 25, 1977, we issued an order granting to "any person who wishes or has a position in the matter (to) file their statement of position and any briefs by 5 o'clock on Tuesday, May 31, 1977, in the office of the Clerk of the Supreme Court." In response, the Colorado Housing Finance Authority filed a statement of position contending that each of the four interrogatories be answered in the negative, supporting its position by a well documented brief. No other appearances were made.

In 1973 the Colorado Housing Finance Authority Act (the "Act") was enacted, section 29-4-701, et seq., C.R.S.1973, and was amended in 1975 and further amended in 1976. Section 29-4-700.1, C.R.S.1973 (1976 Supp.).

In the Act the legislature specifically found and declared that:

"(1) . . . there is a shortage in Colorado of decent, safe, and sanitary housing which is within the financial capabilities of low- and moderate-income families. In order to alleviate the high cost of construction loans and home mortgage interest costs for such families, the general assembly believes that it is essential that additional public moneys be made available, through the issuance of revenue bonds, to assist both private enterprise and governmental entities in meeting critical housing needs. The general assembly also finds and declares that the compelling need within the state for such assistance can best be met by the establishment of a quasi-governmental and corporate entity vested with the powers and duties specified in this part 7.

"(2) . . . many housing facilities occupied by low- and moderate-income families use excessive and unnecessary amounts of energy for heating and other home uses due to inadequate insulation or to the absence of other design features or materials which reduce total home energy requirements; that many such facilities cannot be repaired or improved within the financial capabilities of the low- or moderate-income owners or occupants; and that existing private and public means of enterprise and investment cannot provide financing or assistance on terms and conditions within the means of many such low- or moderate-income families. These conditions are adverse to the safety, health, and welfare of the citizens of this state and are contrary to the public policies of promoting the conservation of scarce energy resources. The general assembly therefore further finds and declares that it is a valid public purpose to preserve and promote the safety, health, and welfare of the citizens of this state by the exercise of the powers specified in this part 7."

section 29-4-701, C.R.S.1973 (1976 Supp.).

In order to meet the public purposes set forth in the Act, the Colorado Housing Finance Authority (the "Authority") was established. Section 29-4-703(1), C.R.S.1973 (1976 Supp.). It is provided that the Authority shall be a "body corporate and a political subdivision of the state", but it is specifically declared "not to be an agency of state". Section 29-4-703(1), C.R.S.1973 (1976 Supp.). The Authority is to have all of the "duties, privileges, immunities, rights, liabilities, and disabilities of a body corporate and political subdivision of the state". Section 29-4-707(1)(a), C.R.S.1973. Among the powers specifically granted to the Authority are the powers to sue and be sued, to make and execute contracts, to purchase, lease, trade, exchange, or otherwise acquire, maintain and depose of real and personal property, and to borrow money and issue its negotiable bonds. Section 29-4-707(1), C.R.S.1973.

The Authority is authorized to issue its revenue bonds and notes to provide funds for achieving its purposes. Section 29-4-714(1)(a)-(d), C.R.S.1973 (1976 Supp.). In order to further secure its bonds, the Authority may establish "capital reserve funds" into which are deposited: "(a) Any moneys appropriated and made available by the state for purposes of such capital reserve funds;" Section 29-4-714.2(1)(a), C.R.S.1973 (1976 Supp.). The moneys in the capital reserve fund may be used solely for the payment of principal and interest, sinking fund payments, the purchase or redemption of the bonds, or the payment of any redemption premium required to be paid in the event the bonds are redeemed prior to maturity. Section 29-4-714.2(2). However, no withdrawals from a capital reserve fund may be made which would reduce the capital reserve fund below the capital reserve requirement, as defined in section 29-4-714.2(4), unless other moneys of the Authority are not available to make the required payments. Section 29-4-714.2(2).

As to the contributions of the state to the capital reserve fund, the Act specifically provides that such contributions are discretionary. The Act compels the Authority to inform the governor yearly of the sum, if any, required to restore the capital reserve fund to the capital reserve requirement. The Act then provides that:

"The governor may transmit to the general assembly a request for the amount, if any, required to restore each capital reserve fund to the capital reserve fund requirement. The general assembly may but shall not be required to make any such appropriations so requested." (Emphasis added.)

Section 29-4-714.2(7). Further, the Act specifically states that "(n)othing provided in this section shall create or constitute a debt or liability of the state." Section 29-4-714.2(7). Finally the Act includes the following provision:

"The state of Colorado shall not be liable for bonds of the authority, and such bonds shall not constitute a debt of the state. The bonds shall contain on the face thereof a statement to such effect."

Section 29-4-720, C.R.S.1973.

In order to achieve its authorized purpose of increasing the supply of decent, safe and sanitary housing for low- and moderate-income families, the Authority may:

(a) make direct loans to sponsors of housing facilities for occupancy by low- and middle-income families, Section 29-4-710(1)(a)(I), C.R.S.1973 (1976 Supp.); and

(b) purchase mortgages from lending institutions and make loans to lenders on condition that such lending institutions and lenders make new mortgage loans to low- and moderate-income families, in an amount at least equal to the amount purchased or loaned by the Authority. Section 29-4-710.5(1)(a) and (3), C.R.S.1973 (1976 Supp.).

The Authority, in its brief, advises that since its establishment in 1973 the Authority has implemented a number of programs and issued bonds to finance those programs. With respect to the loans to lenders program, the Authority currently has outstanding $49,120,000 in its Loans to Lenders Home Loan Bonds and Loans to Lenders Home Loan Refunding Bonds. In addition, $28,825,000 in loans to lenders bonds have been sold and are scheduled for delivery on June 15, 1977. With respect to the Direct Loan program, the Authority currently has outstanding $24,050,000 in its Multi-Family Housing Insured Mortgage Revenue Bonds.

No capital reserve fund has been established with respect to any of these bonds. The loans to lenders bonds previously issued are secured by a pledge of notes from each lending institution receiving a loan. Each note constitutes a general obligation of the lending institution and is fully collateralized. Similarly, the direct loan bonds are secured by a pledge of mortgages which are fully insured by the United States of America.

It further appears that the Authority is empowered to issue bonds to finance programs which do not have the security of the credit of a lending institution or the United States of America. Among such programs would be direct loans to sponsors which loans are not insured by the federal government and the purchase of mortgages not insured by the federal government. In order to make the bonds of the Authority to be issued to finance such projects saleable in the national bond market, the additional security of a reserve fund is needed. House Bill No. 1247 funds such a reserve fund.

The preamble to Senate Resolution 13 states that,

"WHEREAS, The authority has been advised by its bond counsel that it will be unable to issue bonds secured by a capital reserve fund established pursuant to section 29-4-714.2(1), Colorado Revised Statutes 1973, and funded by the appropriation provided for by House Bill No. 1247 until and unless certain questions as to the constitutionality of said appropriation are resolved by a decision of the Supreme Court of the State of Colorado; and

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