Kerr v. East Central Arkansas Regional Housing Authority

• Decision Date: 30 April 1945
• Docket Number: 4-7686
• Citation: 187 S.W.2d 189,208 Ark. 625
• Parties: Kerr v. East Central Arkansas Regional Housing Authority
• Court: Arkansas Supreme Court

187 S.W.2d 189

208 Ark. 625

Kerr v. East Central Arkansas Regional Housing Authority

No. 4-7686

Supreme Court of Arkansas

April 30, 1945

Appeal from Prairie Chancery Court, Southern District; Frank H Dodge, Chancellor.

Affirmed.

Harry Neely, for appellant.

John D. Thweatt, for appellee.

Griffin Smith, Chief Justice. Mr. Justice Frank G. Smith dissents.

OPINION

Griffin Smith, Chief Justice.

Act 298, approved March 23, 1937, authorizes creation of Housing Authorities in Cities of the First Class and in Counties. Its constitutionality was questioned in Hogue v. The Housing Authority of North Little Rock, 201 Ark. 263, 144 S.W.2d 49. Every objection urged against its validity was denied. In 1941, (Act 352 approved March 26th) §§ 10 and 22 of Act 298 were amended. Result is that the two Acts constitute a comprehensive and harmonious measure whereby, as it is said, relief from dangers to public health in cities and rural areas may be procured through elimination of "slums" and their incidents.

The legislation of 1937 authorizes creation of a public body corporate and politic when a City or County shall take appropriate action, to be expressed in the form of a resolution of intent and a declaration of necessity, together with certain other formalities. See § 4, Act 298. Five commissioners are appointed -- by the mayor, if a city; by the court, if a County. The Authority so established is given broad powers. It may sue and be sued, and it may perform such duties as are necessary to administration of the purposes expressed in the statute, or that may be appropriately implied.

Act 352 of 1941 broadens activities of Housing Authorities by providing that two or more contiguous Counties may create a Regional Authority; and pursuant to this grant of power fourteen Counties formed the East Central Arkansas Regional Housing Authority. ^[1] The governing body of the Regional Authority is composed of a Commissioner from each County. The suit from which this appeal comes was instituted by E. C. Kerr, a citizen and taxpayer of Prairie County, who alleged that a Housing Authority had been created in each of the Counties and that these separate organizations were functioning October 28, 1941. Certain sums had been borrowed under a plan whereby United States Housing Authority made loans equal to ninety percent of the construction cost of homes for farmers having low incomes. The right to issue bonds is given by § 14 of Act 298. The United States Authority also agreed that for a period not to exceed sixty years it would contribute to the County Authority with which it had contracted three and a quarter percent of construction or development costs of the houses. The ten percent (difference between what the United States Authority would lend and the one hundred percent construction cost) was supplied from proceeds of the County Authority's bonds sold to the public.

Appellant Kerr, suing for himself and all other taxpayers within the area similarly situated, charged that Lonoke County Authority had borrowed $ 164,200, and that its bonds for this sum were outstanding.

April 25, 1942, East Central Arkansas Regional Housing Authority (hereafter referred to as Regional Authority) contracted with Federal Public Housing Authority, (successor to United States Housing Authority) the latter agreeing to advance $ 675,000 as a loan for use in erecting "approximately" 313 rural dwellings, total cost to be $ 825,000. The contract further provided that the Regional Authority might, in addition, sell $ 82,500 of its three percent bonds at not less than par, such bonds to be secured by annual contribution made by the Federal Authority and by a pledge of income. Rentals on each house were estimated to be $ 75 a year. The Federal Authority, furthermore, agreed to make annual contribution for sixty years in a sum equal to three and a half percent of total development cost. ^[2]

The housing plan provides for purchase from a farm or plantation owner of a small parcel of land -- ordinarily an acre -- upon which the house is built. When the owner accepts the Authority's offer to buy, he retains an option to repurchase at any time. Such grantor, his tenant, sharecropper, or wage hand, is given priority of occupancy, and as long as the house is available to such preferred person the farm or plantation out of which the tract is carved cannot, under the contract, be used for any purpose other than farming; and it must be cultivated by the landowner, his tenant, sharecropper, or wage hand unless the Authority agrees otherwise. An additional covenant is that the landowner who thus conveys shall demolish or "eliminate from use" at least one substandard dwelling found to be unsafe or insanitary.

The Act of 1941 broadening scope of operations and enlarging the basic plan permits Regional Authorities to assume obligations of a County Authority, by agreement, in those instances where the County organization merges with or becomes a part of the Regional unit. In the appeal before us it is agreed that the statute has been followed.

Section 25 of Act 298 confers upon Cities and Counties the right to donate money for use in defraying "administrative expenses and overhead of such Housing Authority during the first year" . . . of its corporate existence. The section also undertakes to allow Cities and Counties ". . . to lend or donate money to the Authority, or agree to take such action."

The complaint alleged (1) that the purpose of the proposed project was private, hence the statutory attempt to exempt the Authority from taxation is unconstitutional; (2) Counties cannot lawfully appropriate for "donations" to cover administrative expenses; (3) the so-called purpose to eliminate insanitary rural...