State v. City of Riviera Beach, 59348

• Decision Date: 16 April 1981
• Docket Number: No. 59348,59348
• Citation: 397 So.2d 685
• Parties: STATE of Florida et al., Appellant, v. CITY OF RIVIERA BEACH, a municipal corporation of the State of Florida, Appellee.
• Court: Florida Supreme Court

Page 685

397 So.2d 685

STATE of Florida et al., Appellant, v. CITY OF RIVIERA BEACH, a municipal corporation of the State of Florida, Appellee.

No. 59348.

Supreme Court of Florida.

April 16, 1981.

David H. Bludworth, State Atty., and Oliver H. Harris, Asst. State Atty., West Palm Beach, for appellant.

Allan V. Everard, City Atty., Riviera Beach, and Henry E. Williams, Jr. of Brown, Wood, Ivey, Mitchell & Petty, Tampa, for appellee.

ADKINS, Justice.

This is an appeal from a judgment of the circuit court, Palm Beach County, entered in proceedings for the validation of bonds. We have jurisdiction. Art. V, § 3(b)(2), Fla.Const. (1980), and § 75.08, Fla.Stat. (1979).

The city of Riviera Beach brought an action to validate three million dollars in revenue bonds designated "industrial development revenue bonds (Standex International Corporation project) series 1980." The state attorney for the Fifteenth Judicial Circuit on behalf of the state of Florida filed an answer and objected to the issue of the bonds on grounds, inter alia, that the city had no authority under chapter 159, Florida Statutes, to sponsor a revenue bond project outside the municipal boundaries and further, that the city had no authority to sponsor an industrial project in an adjoining unincorporated area of the county without findings by, or the consent of, Palm Beach County. The bond issue was approved by final judgment of the circuit court and the state entered this appeal.

From the record it appears that the city, in connection with its industrial development program, was approached by representatives of Standex International Corporation, a Delaware corporation authorized to do business in Florida with principal offices in Salem, New Hampshire. Standex was considering the location of a plant in the industrial area or park in the city. After discussions and negotiations the city and Standex entered into a memorandum agreement covering the proposed issuance of the bonds and related matters.

The bonds are to be issued for financing part of the cost of a capital project, a manufacturing plant, to be sold to Standex pursuant to an installment purchase contract. The project consists of a 3.6 acre site located approximately a quarter of a mile or less from the current boundaries of the city in Palm Beach County, an industrial building of approximately 30,000 square feet, and machinery and equipment. The plant will manufacture electronic parts and components for automotive cruise control systems, for heart pacemakers, for guidance control systems used in remote control unit relay stations, and for U.S. radar components, and radar satellites for the military.

The company will employ 150 employees in the first year and, depending upon production of another line of components, 300 employees within two years, working on a shift or shift-and-a-half basis. The bulk of these employees will be drawn from the city of Riviera Beach and Palm Beach County and surrounding areas.

The area on which the site is to be located was de-annexed from the city, but the city and the company desire that the project site be reannexed to the city. The first issue is whether the bonds could be validated for an industrial revenue project on property that is outside the city limits.

Article VII, section 10, Florida Constitution, provides that neither the state nor any other governmental unit shall "give, lend, or use its taxing power or credit to aid any corporation, association, partnership, or person." It further provides that this restriction shall not prohibit laws authorizing the "issuance and sale by any county, municipality, special district or other local governmental body of ... revenue bonds to finance or refinance the cost of capital projects for industrial or manufacturing plants...." This constitutional provision authorizing the municipality to issue revenue bonds to finance the cost of a capital project for a manufacturing plant contains no geographic or territorial limitations.

Article VIII, section 2(c), Florida Constitution, provides that the municipal exercise "of extra-territorial powers by municipalities shall be as provided by general or special law."

These constitutional provisions do not prohibit the legislature from enacting a law authorizing any municipality to issue revenue bonds to finance a manufacturing plant located within or without the municipal limits or without regard to municipal boundaries.

The legislature implemented article VII, section 10(c), Florida Constitution, by the enactment of the Florida Industrial Development Financing Act, as amended, being sections 159.25-159.43, part II, chapter 159, Florida Statutes (1979). These are referred to as "the Act." Section 159.26 of the Act reads, in part, as follows:

The Legislature finds and declares that, in order to improve the prosperity and welfare of the state and its inhabitants, to improve living conditions, ... the economic development of the state, and to increase purchasing power and opportunities for gainful employment, it is necessary and in the public interest to facilitate the financing of capital projects for industrial or manufacturing plants, ... within the state; to facilitate and encourage the planning and development of these capital projects without regard to the boundaries between counties, municipalities, special districts, and other local governmental bodies or agencies in order to more effectively and efficiently serve the interests of the greatest number of people in the widest area practicable; ...

(emphasis added).

The legislature, in other words, has found that the undertaking of industrial development projects by local government is a matter of state interest and that the issuance of bonds in support of these projects by local governments without regard to the boundaries between them better serves the state interest or purpose by more effectively and efficiently serving the interest of the greatest number of people in the widest area practicable. The Act, construed as a whole, clearly provides for the undertaking by a municipality of an industrial development project located outside of its boundaries.

The undertaking by a municipality of an industrial development project is the exercise of a proprietary power rather than a sovereign power. We clearly defined a proprietary function or power in Daly v. Stokell, 63 So.2d 644, 645 (Fla.1953), when we said:

We understand the test of a proprietory power to be determined by whether or not the agents of the city act and contract for the benefit and welfare of its people; any contract, in other words, that redounds to the public or individual advantage and welfare of the city or its people is proprietory, while a governmental function, as the term implies, has to do with the administration of some phase of government, that is to say, dispensing or exercising some element of sovereignty.

This Court has repeatedly upheld the exercise of extraterritorial powers, particularly with respect to proprietary projects, by the municipalities where such powers are supported by or derived from legislative grant. Town of Riviera Beach v. State, 53 So.2d 828 (Fla.1951), reversing the lower court and validating revenue bonds of the town, now the city of Riviera Beach, for the purchase of a water system located in another municipality; State v. City of Pensacola, 143 Fla. 823, 197 So. 520 (1940), validating revenue bonds to extend city's water system into unincorporated areas adjacent to the city; State v. City of Tampa, 137 Fla. 29, ...