Rich v. State

• Decision Date: 09 July 1976
• Docket Number: No. 31187,31187
• Citation: 227 S.E.2d 761,237 Ga. 291
• Parties: Lacy B. RICH, Jr. v. STATE of Georgia et al.
• Court: Georgia Supreme Court

Page 761

227 S.E.2d 761

237 Ga. 291

Lacy B. RICH, Jr. v. STATE of Georgia et al.

No. 31187.

Supreme Court of Georgia.

July 9, 1976.

Rehearing Denied July 20, 1976.

Bryan, Ramos & Arnold, Gary P. Arnold, Merle A. Ramos, Atlanta, for appellant.

Lewis R. Slaton, Dist. Atty., Lauren O. Buckland, Asst. Atty. Gen., Arthur K. Bolton, Atty. Gen., Troutman, Sanders, Lockerman & Ashmore, Mark S. Kaufman, Atlanta, for appellees.

UNDERCOFLER, Presiding Justice.

The Georgia Residential Finance Authority, Ga.L.1974, p. 975, as amended Ga.L.1975, p. 1651; Code Ann. Ch. 99-36, was established by the General Assembly in order to encourage private investment in the building and rehabilitation of low income housing by providing mortgage loans at low interest rates to eligible low and moderate income borrowers. Code Ann. § 99-3602. Pursuant to its mandate, the Authority sought to issue revenue bonds, and the District Attorney of Fulton County brought this bond validation proceeding. Code Ann. § 99-3609(o). The trial court sustained the Act's validity, and this appeal is being prosecuted by intervenor, Lacy B. Rich, Jr., who raises numerous constitutional challenges to the Act. We affirm in part and reverse in part.

A. The Valid Portions of the Act.

1. In enumeration of error five, intervenor claims the Act is invalid because it does not serve a legitimate public purpose. It is clear, however, that the promotion of safe, sanitary housing is a purpose cognizable by the state under the police power. See Williamson v. Housing Authority of Augusta, 186 Ga. 673, 199 S.E. 43 (1938); see e.g.; West v. Tennessee Housing Development Agency, 512 S.W.2d 275 (Tenn. 1974); Minnesota Housing Finance Agency v. Hatfield, 297 Minn. 155, 210 N.W.2d 298 (1973); Maine State Housing Authority v. Depositors' Trust Co., 278 A.2d 699 (Me. 1971); Martin v. North Carolina Housing Corp., 277 N.C. 29, 175 S.E.2d 665 (1970).

Further, the Act specifically provides that 'the development and stimulation of trade and commerce in the housing industry of this State is vital to the public welfare, creates employment opportunities, and lessens unemployment and under-employment both in the home construction and real estate industry, and that an adequate supply of money with which to finance safe and sanitary dwelling accommodations for the people of Georgia is necessary to the health of the people of the State.' Code Ann. § 99-3602(b). That this purpose is legitimate is bolstered by the Georgia Constitution itself: 'The development of trade, commerce, industry and employment opportunities is hereby declared to be a public purpose vital to the welfare of the people of this State. The General Assembly may create development Authorities to promote and further such purposes . . .' Const., Art. VII, Sec. VII, Par. V-(A); Code Ann. § 2-6005.1. Thus, we find that the Act is a valid exercise of the police power by the General Assembly pursuant to a legitimate public purpose.

Intervenor interposes, however, that since the state may not constitutionally make loans, it can not set up an authority to do what it can not do. In so arguing, intervenor cites Mulkey v. Quillian, 213 Ga. 507, 100 S.E.2d 268 (1957) in which we held that the State Highway Board could not constitutionally lend money to municipalities or authorities to remove and relocate utilities located in the rights-of-way of state highways. That case, however, is distinguishable because the loan to local authorities there was to be a loan by the state of public money. Here, the funds used to carry out the purposes of the authority are derived from the sale of the authority's revenue bonds, and is thus private, not public, money. Code Ann. § 99-3609(a).

Similarly, there is no merit to intervenor's claim that Tippins v. Cobb County Parking Authority, 213 Ga. 685, 100 S.E.2d 893 (1951) and Beazley v. DeKalb County, 210 Ga. 41, 77 S.E.2d 740 (1953), ¹ necessarily limit the types of ventures in which a state may participate. These cases involve the establishment of authorities by a political subdivision of the state (Beazley v. DeKalb County, supra), or by the state for a political subdivision (Tippins v. Cobb County Parking Authority, supra), which are limited in their undertakings under the constitution to certain enumerated purposes. Constitution, Art. VII, Sec. VII, Par. V; Code Ann. § 2-6005. See Daughtrey v. State, 226 Ga. 758, 177 S.E.2d 670 (1970). The same limitation does not apply to the State itself. This section and these cases are thus inapposite.

In enumeration seven, intervenor contends that the authority Act violates the provisions of the Constitution, which limit the purposes for which the State may incur debt, Const., Art. VII, Sec. III, Par. I; Code Ann. § 2-5601, and for which the State may pledge its credit, Const., Art. VII, Sec. III, Par. II; Code Ann. § 2-5602. It has long been clear, however, that an authority, being an agent of the state but not the state itself, is not restricted by the state's debt limitation in the Constitution. McLucas v. State Bridge Bldg. Authority, 210 Ga. 1, 77 S.E.2d 531 (1953). Nor does the debt of an authority or agency obligate the state or pledge the credit of the State as is required to be made explicit by the authority on the face of the bonds it issues. Code Ann. § 99-3610. State v. Regents of University System of Georgia, 179 Ga. 210, 175 S.E. 567 (1934). This enumeration thus has no merit.

Additionally, intervenor claims in enumeration fifteen that since, in 1970, the voters refused to ratify a proposed constitutional amendment to set up an authority for a similar purpose, the General Assembly, as the representative of the people, can not now contravene that expression of the public and designate the promotion of housing a public purpose. This argument ignores the fact that the constitution and the electoral process are the only checks on the power of the General Assembly. Since we find no constitutional limitations on the power of the legislature to promote housing for low income families under its police power, we must again leave the people to express their will through their right to vote.

Having carefully considered all of intervenor's enumerations relating to the power of the General Assembly to enact such legislation, we hold that the promotion of housing for low and moderate income families and the stimulation of the housing market to be a valid public purpose.

2. Intervenor's first enumeration of error is a contention that the Revenue Bond Law, Code Ann. § 87-8, does not authorize the validation of the bonds the authority wishes to issue, because the authority's purpose is not an allowable 'undertaking' for which bonds may be validated under the Revenue Bond Law. Code Ann. § 87-802. The Authority Act provides that '(a)ll revenue bonds issued by the authority under this Chapter shall be executed, confirmed, and validated under, and in accordance with, the Revenue Bond Law, . . . except as otherwise provided in this Chapter.' Code Ann. § 99-3609(l). (Emphasis supplied.) The manifest intent of the legislature was to adopt only the procedures set out in the Revenue Bond Law, Code Ann. §§ 87-814 to 87-823. In fact, that law itself makes clear that 'the limitations imposed by this Chapter shall not affect the powers conferred by any other general, special, or local law.' Code Ann. § 87-825. We therefore conclude that the Georgia Residential Finance Authority Act does not violate the provisions of the Revenue Bond Law in not presenting an allowable undertaking under that law.

Intervenor, in his second enumeration of error, presents the question whether the validation petition adequately complies with the provisions of the Revenue Bond Law, requiring that the petition set forth the amount of annual interest and when the bonds are to be paid in full. Code Ann. § 87-816. We have reviewed the petition and exhibits and find this enumeration to be without merit.

There was ample evidence in favor of the economic feasibility and soundness of the bonds presented to the trial court. Since the burden is on the intervenor to come forward with evidence to support any affirmative defenses interposed by him against the petition by the state setting forth the validity of the bond issue, ² Harrell v. Town of Whigham, 141 Ga. 322, 80 S.E. 1010 (1913), and the intervenor produced none, the trial court did not err in finding the program 'sound, reasonable, feasible and practical.' See, Mays v. State, 110 Ga.App. 881, 140 S.E.2d 223 (1965). Furthermore, this is a legislative matter subject to the most limited review by the courts. See, Holcombe v. Georgia Milk Producers Confederation, 188 Ga. 358, 3 S.E.2d 705 (1939). We thus reject intervenor's enumeration four.

The third enumeration of error proposes that since the Act provides that the bonds issued 'shall be general obligations of the Authority,' Code Ann. § 99-3603(b) (emphasis supplied), the series A revenue bonds are not an authorized type of bond which the authority may issue. It is clear from the Act, however, that the authority is authorized to issue revenue bonds. Code Ann. § 99-3609. We do not find that these two sections conflict.

3. Enumerations of error eight, nine, ten and eleven challenge the composition of the membership of the authority, and, thus, the validity of any action already taken by them on behalf of the authority. The Act provides for six members: the Governor or in his stead the Director of the Office of Panning and Budget, the State Auditor, the Director of the Financing and Investment Division, the Commissioner of Community Development, and two public members to be appointed by the Governor with the Senate's confirmation. Code Ann. § 99-3605(a).

Enumeration of error eight raises a separation of powers question. Intervenor contends that since the state auditor is elected and paid by the legislative arm of government, the separation of powers ³ required in the...