State ex rel. Ohio County Commission v. Samol

• Decision Date: 05 June 1980
• Docket Number: No. 14865,14865
• Citation: 275 S.E.2d 2,165 W.Va. 714
• Parties: STATE ex rel. the OHIO COUNTY COMMISSION v. Thomas C. SAMOL, As Administrator, etc.
• Court: West Virginia Supreme Court

Page 2

275 S.E.2d 2

165 W.Va. 714

STATE ex rel. the OHIO COUNTY COMMISSION v. Thomas C. SAMOL, As Administrator, etc.

No. 14865.

Supreme Court of Appeals of West Virginia.

Decided June 5, 1980.

Opinion Filed July 15, 1980.

Concurring Opinion Oct. 7, 1980.

Syllabus by the Court

1. "Chapter 78, Acts of the Legislature, Regular Session, 1963, the 'Industrial Development Bond Act', is not in contravention of Sections 1, 6 and 8 of Article X or Sections 9 and 10 of Article III of the Constitution of this State or of the Fourteenth Amendment to the Constitution of the United States." Syllabus, State ex rel. County Court v. Demus, 148 W.Va. 398, 135 S.E.2d 352 (1964).

2. Absent a claim that legislative findings are irrational or have no bearing on a legitimate State purpose, they are not subject to judicial investigation.

Phillips, Gardill, Hazlett & Kaiser and Paul T. Boos, Wheeling, for relator.

Jackson, Kelly, Holt & O'Farrell, James K. Brown, Lee O. Hill and Taunja Willis Miller, Charleston, for intervenor, City of Huntington.

Goodwin & Goodwin, Richard E. Rowe and Joseph R. Goodwin, Charleston, for amicus curiae, Jay Goldman, etal.

Hamb, Poffenbarger & Williams and John Poffenbarger, Charleston, McKittrick & Vaughan and Dennis R. Vaughan, Jr., St. Albans, Lynch, Lynch, Carr & Kabala, Ralph Lynch, Jr. and Mary Conturo, Pittsburgh, Pa., for Butcher & Singer Inc., et al.

Hutchinson & James and Paul R. Hutchinson, Jr., Beckley, for National Association of Industrial and Office Parks.

Landers P. Bonenberger, Asst. Pros. Atty., Wheeling, for respondent.

MILLER, Justice:

In this original mandamus, we are asked to determine the constitutionality of W.Va.Code, 13-2C-1 et seq., which authorizes counties and municipalities to issue revenue bonds for commercial projects. By an order entered on June 5, 1980, we declared the provision to be constitutional for the reasons to be stated in this opinion.

The relator, The Ohio County Commission, sought mandamus to compel its administrator, Thomas C. Samol, to affix his signature to $1.575 million of revenue bonds which were to be used to finance the acquisition, expansion and improvement of the Warwood Shopping Plaza located in the City of Wheeling.

Prior to the final hearing before this Court, the City of Huntington was granted leave to intervene in order to support the relator's position, since the City of Huntington was involved with a $46 million revenue bond issue to be used for financing residential real property for family units. ¹

All parties to this action recognize that in State ex rel. County Court v. Demus, 148 W.Va. 398, 135 S.E.2d 352 (1964), and State ex rel. County Court v. Bane, 148 W.Va. 392, 135 S.E.2d 349 (1964), we upheld the Industrial Development Bond Act provisions of W.Va.Code, 13-2C-1 [165 W.Va. 716] et seq., as against a variety of constitutional attacks, stating in the single syllabus of Demus :

"Chapter 78, Acts of the Legislature, Regular Session, 1963, the 'Industrial Development Bond Act', is not in contravention of Sections 1, 6 and 8 of Article X or Sections 9 and 10 of Article III of the Constitution of this State or of the Fourteenth Amendment to the Constitution of the United States."

Article X, Section 1 of the West Virginia Constitution relates to the exemption of public property from taxation. Article X, Section 6 prohibits the granting of State credit to counties and municipalities. Article X, Section 8 sets a limit on bonded indebtedness for counties and municipalities. Demus clearly established that Sections 6 and 8 were not applicable to revenue bonds authorized under W.Va.Code, 13-2C-1 et seq., since revenue bonds are not a charge or indebtedness of the issuing body in the sense that the bonds can be liquidated out of its tax revenues or other public funds. Demus also recognized that Section 1 of Article X permits an exemption of public property from taxation and, to the extent that the property involved in a revenue bond financing project is conveyed to the public body issuing the bond, the property may be exempt from taxation. ² The argument based on Article III, Sections 9 and 10 relating to due process and equal protection was also rejected in Demus, since there was no taking of property without compensation nor any discriminatory feature in the bond mechanism.

The statutory provisions relating to the issuance of commercial revenue bonds are identical to those relating to industrial revenue bonds ³ and, therefore, Demus' constitutional reasoning is applicable. The chief argument in the present case is that commercial bonds do not serve a valid public purpose, but much the same argument was advanced in our industrial revenue bond cases and was rejected by this Court.

Demus involved $1.75 million of industrial revenue bonds to be issued by the county court for the acquisition and construction of an industrial plant in Marion County. Bane involved $500,000 in revenue bonds to finance the construction of a warehouse adjacent to an existing manufacturing facility, which we found to be a proper public purpose under the terms of the Industrial Development Bond Act.

In the area of industrial development bonds, this Court has consistently sustained the issuance of such bonds, recognizing the salutary public purpose of the Act authorizing the bonds. In State ex rel. County Court v. Kemp, 151 W.Va. 349, 151 S.E.2d 680 (1966), we approved the use of industrial revenue bonds to finance the acquisition of a plant which had been built by the owner on an agreement from the county commission that it would provide revenue bond financing. The factual record was clear that the owner had constructed the facility based on that agreement and that the facility did provide additional employment in the county.

In Kemp, we answered the public purpose question by placing considerable emphasis on the legislative findings contained in W.Va.Code, 13-2C-2, which stresses the underlying public needs that give rise to the creation of this type of revenue bond:

"Section 2 thereof declares as a matter of legislative finding that the lack of employment and business opportunities in many areas of this state has created a critically adverse condition; that the development of new commercial, industrial and manufacturing plants is essential to relieve such condition; that the health, happiness, safety, right of gainful employment and general welfare will be promoted by the establishment of industrial plants; 'and that the means and measures herein authorized for the promotion of industrial plants are as a matter of public policy, for the public purpose of the several counties, municipalities and the state of West Virginia.' " (151 W.Va. at 353-54, 151 S.E.2d at 683).

Absent a claim that legislative findings are irrational or have no bearing on a legitimate State purpose, they are not subject to judicial investigation. State ex rel. West Virginia Housing Development Fund v. Waterhouse, W.Va., 212 S.E.2d 724 (1974); State ex rel. West Virginia Housing Development Fund v. Copenhaver, 153 W.Va. 636, 171 S.E.2d 545 (1969); State ex rel. Appalachian Power Company v. Gainer, 149 W.Va. 740, 143 S.E.2d 351 (1965). It does not require any lengthy discussion to realize that the renovation, expansion or creation of existing or new commercial projects gives much the same economic benefit to a community as would comparable activities in the industrial area. Each serves to create or maintain employment and enhance tax revenues, and thereby operates to benefit the community and public in general. ⁴ Many states have some revenue bond financing mechanism whereby the bonds can be issued for funding a variety of projects designed to benefit the public, reduce unemployment and increase tax revenues. Such bonds do not impose an obligation on the issuing authority to redeem the bonds from tax revenues, but provide that the bond is to be liquidated from the proceeds of the particular venture. An overwhelming majority of courts have approved this type of revenue bond financing. Wayland v. Snapp, 232 Ark. 57, 334 S.W.2d 633 (1960); State v. County of Dade, 250 So.2d 875 (Fla.1971); Green v. City of Mt. Pleasant, 256 Iowa 1184, 131 N.W.2d 5 (1964); Faulconer v. City of Danville, 313 Ky. 468, 232 S.W.2d 80 (1950); LeBlanc v. Police Jury, 188 So.2d 131 (La.App.1966); City of Gaylord v. Beckett, 378 Mich. 273, 144 N.W.2d 460 (1966); State ex rel. Brennan v. Bowman, 89 Nev. 330, 512 P.2d 1321 (1973); Smiley v. Lininger, 36 Pa.Cmwlth. 169, 387 A.2d 1318 (1978); Elliott v. McNair, 250 S.C. 75, 156 S.E.2d 421 (1967); Darnell v. County of Montgomery, 202 Tenn. 560, 308 S.W.2d 373 (1957); Fairfax County Industrial Development Authority v. Coyner, 207 Va. 351, 150 S.E.2d 87 (1966).

As Kemp also indicates, further inquiry is appropriate to determine if the local project for which the revenue bonds are authorized falls within the industrial or commercial statutory classification and meets the general public purpose criteria contained in the legislative findings. In this connection, we look to the findings of the local government board issuing the bonds to determine the public relevancy of the project. As we stated in Kemp :

"The County Court of Brooke County, the petitioner herein, has made a finding that the acquisition of the spiral culvert plant, in the circumstances detailed above, would create additional employment and would, therefore, inure to the benefit of the public. This finding is clearly within the expressed legislative intent and, in the absence of fraud, collusion or bad faith, the wisdom of such finding can not be questioned. See State ex rel. County Court of Marion County v. Demus, 148 W.Va. 398, 135 S.E.2d 352; LaFollette v. City of Fairmont, 138 W.Va. 517, 76 S.E.2d 572; Brouzas v. City of Morgantown, 144 W.Va. 1, 106 S.E.2d 244." (151 W.Va. at 354, 151 S.E.2d at 683).

In the present case, the record discloses that at a hearing before the Ohio County...