Mayor and Members of City Council of City of Lexington v. Industrial Development Authority of Rockbridge County
| Decision Date | 06 March 1981 |
| Docket Number | No. 800457,800457 |
| Citation | 221 Va. 865,275 S.E.2d 888 |
| Parties | MAYOR AND MEMBERS OF the CITY COUNCIL OF the CITY OF LEXINGTON v. INDUSTRIAL DEVELOPMENT AUTHORITY OF ROCKBRIDGE COUNTY. Record |
| Court | Virginia Supreme Court |
William O. Roberts, Jr., Lexington, for appellant.
Alfred L. Shilling, Richmond (Bernard J. Natkin, Patrick K. Arey, Bonnie M. France Ganas & Natkin, Lexington, McGuire, Woods & Battle, Richmond, on brief), for appellee.
Before HARRISON, COCHRAN, POFF, COMPTON and THOMPSON, JJ. *
The threshold question here is whether under Virginia's Industrial Development and Revenue Bond Act (Act), Code §§ 15.1-1373 to -91, the Industrial Development Authority of Rockbridge County (Authority) may issue bonds to finance the construction and equipping of a retail sales facility. We must also determine whether the Authority may bring this proceeding to validate such bonds under Virginia's Public Finance Act, Code §§ 15.1-170 to -227.
The Authority was created in 1967 by the Board of Supervisors of Rockbridge County pursuant to the provisions of the Act and has operated continuously since that time. On December 5, 1979, the Authority adopted a resolution for the issuance of industrial development revenue bonds to pay the costs incident to acquiring, constructing, and equipping a retail sales facility in Rockbridge County to be operated under the name of "K Mart". This facility was to be leased or sold to Joseph J. Harding, III, or Joseph J. Harding, Inc. Thereafter the Authority filed a motion for judgment in this validation proceeding pursuant to Code § 15.1-214. The court below, by decree entered March 12, 1980, determined that all proceedings taken by the Authority were legal and valid and that the project constituted an "authority facility" as defined in the Act. The decree authorized the issuance of the bonds and declared that the bonds would be valid, legal, and binding limited obligations of the Authority. This is an appeal from that decree.
In Chesapeake Devel. Authority v. Suthers, 208 Va. 51, 155 S.E.2d 326 (1967), we determined that the Act was constitutional and that the Authority is a separate and distinct legal entity established to perform the public purposes designated by the legislature. In Development Authority v. Coyner, 207 Va. 351, 358, 150 S.E.2d 87, 94 (1966), we held that the Act is designed to induce new industries to locate in the Commonwealth and thereby "serves primarily a public purpose and thus constitutes a proper function of government." In I.D.A. v. LaFrance Cleaners, 216 Va. 277, 281, 217 S.E.2d 879, 883 (1975), we noted that an Authority created pursuant to the provisions of the Act is a political subdivision, stating that the Authority is
The intent of the General Assembly and its purpose in creating the Act in 1966 are clearly set forth in Code § 15.1-1375 which, in pertinent part, provides:
It is the intent of the legislature by the passage of this chapter to authorize the creation of industrial development authorities by the several municipalities in this Commonwealth so that such authorities may acquire, own, lease, and dispose of properties to the end that such authorities may be able to promote industry and development trade by inducing manufacturing, industrial, governmental and commercial enterprises and institutions of higher education to locate in or remain in this Commonwealth and further the use of its agricultural products and natural resources, and to vest such authorities with all powers that may be necessary to enable them to accomplish such purposes, which powers shall be exercised for the benefit of the inhabitants of the Commonwealth, either through the increase of their commerce, or through the promotion of their safety, health, welfare, convenience or prosperity....
In LaFrance Cleaners, supra, we held that Code § 15.1-1375 declares that "the powers conferred may be exercised only if a public purpose is promoted" and that "(e)ach of the several 'elements' recited ... is an indicium of a public purpose." 216 Va. at 280, 217 S.E.2d at 882. We said that in order to effectuate the obvious intention of the legislature, the conjunctive words of the statute may be construed as disjunctive.
The first issue here is whether a retail facility is a "commercial enterprise" within the purview of Code § 15.1-1375. In Code § 15.1-1374(j) "enterprise" is defined to mean "any industry for the manufacturing, processing, assembling, storing, warehousing, distributing, or selling any products of agriculture, mining, or industry ... or for such other businesses as will be in the furtherance of the public purposes of this chapter...."
To determine the "public purpose" of the Act we refer again to Code § 15.1-1375. There, the General Assembly stated that its intent in creating authorities was to promote industry and to develop trade by inducing commercial enterprises to locate and remain in Virginia and to further the use of the state's agricultural products and natural resources. The legislature vested the Authority with all powers necessary to accomplish this purpose with the admonition that the powers are to be exercised for the benefit of the inhabitants of the state through increase of the state's commerce or through the promotion of safety, health, welfare, convenience, and prosperity. Significantly, it further directed that the Act should be liberally construed to promote these expressed intentions.
We must give the Act a rational construction consistent with its purposes and not one which will substantially defeat its objectives. Norfolk So. Ry. Co. v. Lassiter, 193 Va. 360, 68 S.E.2d 641 (1952). The Act was designed to stimulate the economy of Virginia, thereby providing jobs, increasing business activity, and broadening the state's tax base. Appellant argues that the financing of private projects with industrial development authority revenue bonds often gives a competitive advantage to the developer involved. It further argues that such bonds unfairly compete in the market place with true municipal bonds issued to finance legitimate public improvements. While these arguments may have merit, they would more properly be addressed to the legislative body. The General Assembly has rejected these arguments and determined that this type authority is necessary to promote the...
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