McKinney v. City of Owensboro
| Decision Date | 20 June 1947 |
| Citation | 305 Ky. 254,203 S.W.2d 24 |
| Parties | McKINNEY v. CITY OF OWENSBORO et al. |
| Court | Kentucky Court of Appeals |
Appeal from Circuit Court, Daviess County; Sidney B. Neal, Judge.
Action by James H. McKinney, individually and as representing all citizens, residents, and taxpayers of the City of Owensboro against the City of Owensboro and others, etc., for a declaratory judgment to determine constitutionality of an act of the 1946 General Assembly, KRS 58.010 et seq., and validity of $550,000 revenue bonds proposed to be issued by the city on a public project consisting of a municipal auditorium, field house, and swimming pool. From a judgment declaring the act to be constitutional and the bonds to be valid revenue bonds but not an indebtedness of the city and dismissing the petition, the plaintiff appeals.
Affirmed.
Franklin P. Hays, Joseph R. Rubin, and Skaggs, Hays & Fahey, all of Louisville, for appellant.
Ridley M. Sandidge and Earl S. Winter, both of Owensboro, for appellee.
Appellant James H. McKinney, individually and as a citizen, property owner and taxpayer of the second-class City of Owensboro (hereinafter referred to as the City), representing himself and all other citizens similarly situated, brought this declaratory judgment action against the City wherein he attacked the constitutionality of an Act of the 1946 General Assembly Chapter 126, p. 331, and carried into the 1946 Statutes as KRS Chapter 58, and the validity of $550,000 revenue bonds proposed to be issued by the City on a public project consisting of a municipal auditorium, field house and swimming pool. The chancellor upheld the Act and declared the bonds to be valid revenue bonds which are not an indebtedness of the City.
The Act authorizes the acquisition, construction, maintenance extension and improvement of property for public projects and the renting and leasing thereof by governmental units and agencies, and the issuance of tax free revenue bonds payable solely from the revenue received from the project any any funds or tax revenues available for general purposes of the agency and not required by law to be devoted to some other purpose. KRS 58.020, 58.040 and 58.130. It is provided in KRS 58.070 that at or before the issuance of the bonds the governmental agency shall by order, resolution or ordinance set aside and pledge the income and revenue of the public project into a separate and special fund to be used in the payment of the cost, operation and depreciation thereof; and shall determine the amount of revenue necessary to be set apart and applied to the payment of principal and interest of the bonds, and the remaining proportion of the balance of the income shall be set aside to maintain the project. This section states the rents, royalties, fees, rates and charges for the use of the project shall be fixed and revised from time to time so as to be sufficient to provide for the payment of interest upon all bonds and to create a sinking fund to pay the principal thereof at maturity, and to provide for the operation and maintenance of the project and an adequate depreciation account.
The yield of the bonds is limited to 6% and they shall not constitute an indebtedness of the county, city or political subdivision issuing them, which shall be plainly stated on the face of each bond, and the bonds shall not run longer than 25 years. KRS 58.040 and 58.030. The order, resolution or ordinance must recite that the public project is being undertaken under the provisions of this Act, KRS 58.020. Provision is made in KRS 58.060 that in case of default in the payment of interest or principal on the bonds that a receiver may be appointed by a court of competent jurisdiction with power to operate the project and to fix fees and collect rates sufficient to maintain same and to pay the indebtedness.
On April 22, 1947, the Board of Commissioners of the City duly passed an elaborate ordinance which fully met and complied with the provisions of the Act and authorized the issuance of municipal auditorium, swimming pool and field house revenue bonds in the sum of $550,000, bearing a maximum interest rate of 2.70% per annum, the last of which mature in 1971. Filed with the petition in this action is a copy of this ordinance and incorporated in the ordinance is a form of bond to be issued. The bond recites that the principal and interest...
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