State ex rel. County Com'n of Boone County v. Cooke
| Citation | 197 W.Va. 391,475 S.E.2d 483 |
| Decision Date | 17 July 1996 |
| Docket Number | No. 23375,23375 |
| Court | Supreme Court of West Virginia |
| Parties | STATE of West Virginia ex rel. the COUNTY COMMISSION OF BOONE COUNTY, a Public Body Corporate of the State of West Virginia, Petitioner, v. Ed COOKE, Clerk of the County Commission of Boone County, Respondent. |
Syllabus by the Court
1. When tax increment obligations are issued pursuant to W. Va.Code, 7-11B-1, et seq. [1995], The Tax Increment Financing Act, to finance a county development project authorized therein, a debt is created within the meaning of article X, § 8 of the Constitution of West Virginia and such tax increment obligations may only be issued in accordance with article X, § 8.
2. The issuance of tax increment obligations pursuant to W. Va.Code, 7-11B-1, et seq. [1995], The Tax Increment Financing Act, is not in accordance with W. Va. Const. art. X, § 8 because W. Va.Code, 7-11B-1, et seq. [1995] does not provide "for the collection of a direct annual tax on all taxable property therein, in the ratio, as between the several classes or types of such taxable property, specified in section one of this article [W. Va. Const. art. X, § 1], separate and apart from and in addition to all other taxes for all other purposes" in order to pay the principal of and interest on such tax increment obligations and is, therefore, unconstitutional.
3. "A writ of mandamus will not issue unless three elements coexist--(1) a clear legal right in the petitioner to the relief sought; (2) a legal duty on the part of respondent to do the thing which the petitioner seeks to compel; and (3) the absence of another adequate remedy." Syl. pt. 2, State ex rel. Kucera v. City of Wheeling, 153 W.Va. 538, 170 S.E.2d 367 (1969).
James K. Brown, Lee O. Hill, Lee van Egmond, Jackson & Kelly, Charleston, for Petitioner.
L. Lee Javins, II, Shaffer & Shaffer, Madison, for Respondent.
Joseph W. Powell, President, West Virginia AFL-CIO, Charleston, Amicus Curiae.
Michael L. Clowser, Executive Director, Contractors Association of West Virginia, Charleston, Amicus Curiae.
The petitioner, the County Commission of Boone County (hereinafter the "County Commission"), seeks a writ of mandamus to compel the respondent, Ed Cooke, the Clerk of the County Commission of Boone County (hereinafter the "Clerk"), to publish notice of a public hearing, pursuant to The Tax Increment Financing Act found in W. Va.Code, 7-11B-1, et seq. [1995], regarding the issuance of tax increment bonds for the purpose of financing a county water project which will be referred to as the Boone County Development Project. The Clerk refused to publish the notice of the hearing because he asserts that the Tax Increment Financing Act is unconstitutional on many grounds. For reasons explained below, we decline to issue a writ of mandamus.
In order to facilitate an understanding of this case, it is necessary to initially analyze the Tax Increment Financing Act. That analysis will be applied to the Boone County Development Project.
The Tax Increment Financing Act allows a private project developer and a county commission to jointly make capital improvements or build facilities which result "in the increase in the value of property located in the area or encourage increased employment within the area[.]" W. Va.Code, 7-11B-2 [1995]. More specifically, the act authorizes a county commission to issue tax increment obligations 1 in order to finance "development projects to foster economic development, including infrastructure and other public improvements prerequisite to private improvements[.]" W. Va.Code, 7-11B-4(c) [1995].
The objective of the Tax Increment Financing Act is to use the increased ad valorem tax revenue which is generated as a result of the development project to pay the principal of and interest on the tax increment obligations. The underlying premise of the tax increment financing scheme is the assumption that the assessed property value of the private project will increase as a result of the development project thereby increasing the amount of ad valorem taxes collected. Thus, in order to measure the increased assessed property value, the act initially requires a base assessed value to be established on the private project property. W. Va.Code, 7-11B-4(a) [1995]. The base assessed value is the taxable assessed value of the private project property in the year preceding the county's adoption of a tax increment financing plan. W. Va.Code, 7-11B-3(b) [1995]. 2 After the tax increment financing plan is adopted by the county commission "the amount of tax attributable to the amount by which the current assessed value of a private project in a development project area exceeds the base assessed value, if any, of such private project, less the portion of tax allocated to the state[,]" is called the "tax increment." W. Va.Code, 7-11B-3(i) [1995]. The tax increment is paid to the tax increment financing fund which, in turn, is used to pay the principal of and interest on tax increment obligations. W. Va.Code, 7-11B-4(a)(3) [1995]. Thus, the tax increment is the amount of additional ad valorem taxes collected as a result of the increase in the value of the private project property.
The process by which a county commission finances a project using tax increment financing begins when an agency or project developer requests the county commission to adopt a tax increment financing plan 3 "with respect to a development project to be developed [by the county] in conjunction with a private project of a project developer." W. Va.Code, 7-11B-4(a) [1995]. Before the county commission may enter an order approving a tax increment financing plan, the county commission must hold a public hearing regarding the proposed plan. W. Va.Code, 7-11B-4(b) [1995]. The county commission must also submit the tax increment financing plan to the voters and receive an approving vote of three-fifths of the participating voters. W. Va.Code, 7-11B-6(b) [1995].
Once approved by the voters, the county commission is authorized to issue the tax increment obligations. W. Va.Code, 7-11B-6(a) [1995]. The county commission is also authorized to dedicate the tax increment, if any, to the tax increment financing fund. W. Va.Code, 7-11B-4(a)(3) [1995]. The moneys in the tax increment financing fund are then "used to pay the principal of and interest on tax increment obligations issued to finance the costs of such development project." Id. The Tax Increment Financing Act does not change the rate of taxation; however, when a tax increment financing plan is adopted the allocation of a portion of the ad valorem tax assessed on the private project property is changed. The increase in assessed property value of the private project property does not directly inure to the benefit of other levying bodies such as the board of education.
The county's development project is to "be sold, leased with an option by the lessee to purchase, leased or otherwise disposed of to a project developer." W. Va.Code, 7-11B-6(a) [1995]. In the event the moneys collected from the tax increment are insufficient to pay the principal of and interest on the tax increment obligations
then such bonds or notes shall be payable out of the revenues derived from the lease, lease with an option by the lessee to purchase, sale or other disposition in connection with the development project for which the bonds or notes are issued, or any other revenue derived from such project.
W. Va.Code, 7-11B-6(a) [1995]. The legislature has by reference to W. Va.Code, 13-2C-7 [1975] in the Tax Increment Financing Act stated that the bonds do not constitute an indebtedness of the county issuing them within the meaning of the Constitution of West Virginia. W. Va.Code, 7-11B-6(a) [1995]. 4 Additionally, the Tax Increment Financing Act makes clear "that the portion of property taxes allocable to the state shall be paid over to the state in accordance with law." 5 W. Va.Code, 7-11B-4(a)(3) [1995].
When the tax increment obligations are retired, the tax increment financing fund is to be dissolved and the tax increment is to be "paid into the general fund of the taxing units in proportion to their respective contributions to the fund." W. Va.Code, 7-11B-7(a) [1995]. The act further states that upon the dissolution of the tax increment financing fund the "real and tangible personal property shall be assessed and taxes collected and allocated in the same manner as applicable in the year preceding the adoption of the tax increment financing order." W. Va.Code, 7-11B-7(b) [1995].
Sometime in 1995 the West Virginia-American Water Company (hereinafter the "Water Company") requested the County Commission to adopt a tax increment financing plan pursuant to the Tax Increment Financing Act in order to improve water service in Boone County. The plan would require the County Commission to work in conjunction with the Water Company in order to implement the improvements in water service. More specifically, the Water Company would agree to undertake certain company projects such as constructing water mains, and the County Commission likewise would agree to undertake a county project of constructing other water mains. The estimated cost to the Water Company for the company project is $9,430,000.00. The estimated cost to the County Commission for the county project is $5,396,000.00.
The Water Company informed the County Commission that the project by the county was not likely to occur without tax increment financing. See W. Va.Code, 7-11B-4(c) [1995]. Therefore, the Water Company requested the County Commission to approve a tax increment financing plan in order to finance the county project through the issuance of tax increment obligations (bonds). The principal amount of the tax increment obligations (bonds) was not to...
To continue reading
Request your trial
-
URBAN RENEWAL AUTH. v. MEDICAL TECHNOLOGY AND RESEARCH AUTH.
...in conjunction with tax increment financing are "debts" within constitutional confines.43 In State ex rel. County Comm'n of Boone County v. Cooke, 197 W.Va. 391, 475 S.E.2d 483, 491 (1996), the West Virginia Court relied upon Muskogee in holding that its state's tax increment financing act ......
-
The use of pilot financing to develop Manhattan's Far West Side.
...Tech. & Research Auth. of Okla., 4 P.3d 677, 684 (Okla. 2000); Meierhenry, 354 N.W.2d at 179; County Comm'n of Boone County v. Cooke, 475 S.E.2d 483, 493 (W. Va. 1996); City of Hartford v. Kirley, 493 N.W.2d 45, 55 (Wis. (53.) Johnson & Kriz, supra note 21, at 45-47. South Dakota's ......
-
Blighting the way: urban renewal, economic development, and the elusive definition of blight.
...laws. Johnson & Kriz, supra note 74, at 31. And state courts held West Virginia's 1995 law unconstitutional. Boone County v. Cooke, 475 S.E.2d 483, 494 (W. Va. (80.) E.g., CAL. HEALTH & SAFETY CODE [section] 33031 (1993); Mo. ANN. STAT, [section] 99.805 (West 1982) (amended 1986 and......