State v. Jacksonville Port Authority

• Decision Date: 19 July 1967
• Docket Number: No. 36379,36379
• Citation: 204 So.2d 881
• Parties: The STATE of Florida, Appellant, v. The JACKSONVILLE PORT AUTHORITY, Appellee.
• Court: Florida Supreme Court

Page 881

204 So.2d 881

The STATE of Florida, Appellant, v. The JACKSONVILLE PORT AUTHORITY, Appellee.

No. 36379.

Supreme Court of Florida.

July 19, 1967.

Opinion Revised and Rehearing Denied Oct. 4, 1967.

William A. Hallowes, 3rd, Jacksonville, and Frank M. Scruby, Orange Park, for appellant.

F. Bradley Kennelly, Francis P. Conroy and Chester Bedell, Jacksonville, for appellee.

DREW, Justice.

This is an appeal of the State from a decree of the Circuit Court of Duval County, Florida, validating $111,000,000.00 Special Purpose Bonds proposed to be issued by the Jacksonville Port Authority, a public agency, for the construction and acquisition of Special Purpose Facilities to be located on Blount Island, Duval County, which island is now owned by the Authority. Such facilities are to consist of shipyard and repair facilities, including buildings, improvements, fixtures, docks, dry docks, wharfs, bulkheads, machinery and equipment.

The Authority has entered a lease and a 'Supplemental Agreement' with Lockheed Aircraft Corporation, a private corporate tenant covering 500 acres of land on Blount Island, and the Special Purpose Facilities to be placed thereon. The first term of the lease extends 25 years with option in Lockheed to renew the lease for ten consecutive additional terms of five years each. Rentals to be paid thereunder are estimated to be sufficient to pay the principal and interest of said bonds and all sinking fund or other payments required thereunder. Such rentals are the only funds pledged to retire the bonds. The ad valorem tax power of the County is expressly precluded in the bond resolution from ever being resorted to in servicing the bonds.

Lockheed agrees to use the leased premises and the facilities to be placed thereon

'* * * for the operation of a shipyard and ship repair facility * * * (and to) provide repair, overhaul, modification and services to the general public when consistent with its commitments to the United States Government.'

These commitments to the Government refer to contracts Lockheed expects to enter with the Navy for the construction of Fast Deployment Logistic Cargo Ships.

In validating the bonds the Chancellor found, inter alia,

'FOURTH: That said Special Purpose Facilities so leased will be used by Tenant to offer ship construction, repair and maintenance services to the general public and the various agencies of the State and Federal Government, including the United States Navy under a program known as the Fast Deployment Logistics Ship Project; that the Jacksonville area has for years been the site of many activities of the United States Navy and has contributed thereto and benefited therefrom, and the construction and acquisition of the said Special Purpose Facilities and the lease of such facilities by the Authority to Tenant will directly contribute to the development of the public port and shipping facilities of the Authority and will generally benefit the Jacksonville area and the State of Florida and will contribute directly to the national defense.'

Objecting to the decree of validation, the State contends solely that the proposed Authority bonds considered in relation to the terms of the Lockheed lease would be violative of Section 10, Article IX of the State Constitution, F.S.A., because the bonds would be issued to obtain money to construct and acquire said facilities primarily for Lockheed's benefit on the credit of the Authority.

And so it is that once again we are confronted with the above identified section of the Florida Constitution which provides, 'The credit of the State shall not be pledged or loaned to any individual, company, corporation or association * * * The Legislature shall not authorize any county, city, borough, township or incorporated district to become a stockholder in any company, association or corporation or to obtain or appropriate money for, or to loan its credit to, any corporation, association, institution or individual.' This section was first adopted in 1875 as an amendment to the Constitution of 1868. Its purpose was to stop the practice of public bodies becoming stockholders or bond holders and in other ways loaning their credit to and becoming interest in the organization and operations of railroads, banks and other commercial institutions. Many of these enterprises were poorly managed and failed, resulting in such governmental entities as were interested therein in becoming responsible for their debts and other obligations, which obligations fell ultimately on taxpayers. ¹ This section has come down to us in substantially the form in which it first existed in 1875.

The question of whether the public welfare will be promoted by the issuance of public securities to finance or aid in the financing or the construction and operation of private enterprise as is presently being done in some states under specific constitutional or statutory provisions is not for this Court to decide. Perhaps the modern trend of government encroachment on the free enterprise system is the wise road to follow. So long, however, as the Constitution reads as it does now, it seems clear that we have no choice in the matter. The most recent decision of this Court in this area is State v. Manatee County Port Authority decided in January of this year. ² There is no difference whatever in the principle involved in the Manatee case and in this case. If anything, the record here establishes a far more direct extension of public credit and facilities to this private corporation than was proposed in the Manatee County case.

In the past fifteen years a majority of this Court has consistently adhered to the mandates of this section of the Constitution when confronted by proposals to issue public securities in which the private interests to be served by the overall project was more than incidental. ³ The cases are legion in which this Court has flatly refused to approve the issuance of public securities for the purpose of assisting in the establishment of industrial developments, housing projects, building apartment houses, baseball stadiums and projects of such nature, no matter how worthy the objectives might have been in such cases where the benefit to the public was shown to be only incidental. The dissenting opinions which have been filed in many of these cases are the best evidence of the fact that this Court has limited the issuance of such public securities to those instances where the private purpose served (if any) was purely incidental such as that which existed in the Gate City case in Jacksonville, ⁴ the Panama City case ⁵ and many others.

It is said in some of the dissenting opinions that this Court has not been consistent in its views upon the subject. The basic principle involved has been consistently adhered to. The factual issue, however, of whether the public purpose was the overriding and paramount purpose has evoked dissension in the Court from time to time. The cleavage, if any, lies in this area.

What, now, are the facts in this case? The Authority claims power to issue these bonds under Chapter 63--1447, Laws of Florida, Acts of 1963, which confers upon it the 'power to construct, acquire and operate shipping facilities of all kinds, to lease the same on such terms, conditions and period of time as the Authority may determine' and 'to solicit shipping and other business and do all things necessary or advisable to promote commerce and increase tonnage through the Port of Jacksonville.' To accomplish these purposes, the Authority is authorized 'to issue revenue bonds, to pay all or part of the costs of acquisition or construction * * * of any project and to pledge the revenues to secure the payment of bonds.' This language does not authorize the project being undertaken. The language clearly indicates the conferring of authority to carry on the public purpose of operating a port for the promotion of commerce. In connection therewith, of course, there exists the necessity of the construction of buildings, wharves, docks and other things to attain that purpose. Admittedly such is a public purpose the same as building sewers, highways, operating police departments, fire departments and performing any other essential public function. Shipping and commerce and transportation are essential public services. But that is not what is contemplated here.

In numerous decisions of this Court beginning with Gate City Garage v. Jacksonville, ⁶ this Court laid down the principle that if the paramount purpose is a public purpose, such project may as an incident thereto lawfully benefit private corporations or individuals. In each of the cases where this was discussed, notably in Panama City v. State, ⁷ this Court went at length into the question of the percentage of the project which was devoted to necessary public purposes. In the Panama City case we said that rentals from concession buildings amount to slightly less than 20% Of the total anticipated revenue from the overall project and that such concession buildings would occupy 1.22% Of the total area involved. We held that such were 'mere incidents to the main or primary purpose and for the convenience of those who used the buildings and facilities for a public purpose.'

In this case it is said that up to this time approximately $35,000,000 has been expended in the total harbor development of the Port of Jacksonville by both the federal and local authorities. At the present time the Authority has outstanding something less than $5,000,000 in improvement bonds. It has been authorized by popular freeholder election to issue an additional $25,000,000 of bonds which, according to the record here, were voted for the purpose of improving Blount Island, which is the principal territory involved in this case. Not all of these bonds, according to this record, have been sold. The proposed issue of bonds of $111,000,000, is many times the total of the Authority's current obligations. Every...