State v. Putnam County Development Authority, 40788
| Decision Date | 27 May 1971 |
| Docket Number | No. 40788,40788 |
| Citation | 249 So.2d 6 |
| Parties | , 1 Envtl. L. Rep. 20,339 The STATE of Florida, Appellant, v. PUTNAM COUNTY DEVELOPMENT AUTHORITY, Appellee. |
| Court | Florida Supreme Court |
Stephen L. Boyles, Palatka, for appellant.
E. L. Eastmoore, Palatka, for appellee.
This is a direct appeal from a final decree of the Circuit Court of the Seventh Judicial Circuit of Florida, in and for Putnam County, validating and confirming the issuance of.$4.5 million Industrial Development Revenue Bonds, Series 1971, of the Putnam County Development Authority, to be issued for the purpose of financing the acquisition and construction of a water treatment facility. We have jurisdiction by direct appeal pursuant to Fla.Const. Art. V, § 4(2), F.S.A. as a bond validation proceeding.
Under the Florida Air and Water Pollution Control Act, Fla.Stat. § 403, 261 et seq., F.S.A., Ch. 67-436, Laws of Florida, General Laws of 1967, industrial effluent discharged by industrial or manufacturing facilities must meet statutory standards of purity and must comply with the rules and regulations regarding such effluent and its discharge, which rules and regulations have been promulgated by the Florida Air and Water Pollution Control Commission. The Control Commission is statutorily empowered to issue cease and desist orders and to levy fines against industrial and manufacturing facilities which discharge industrial effluent in violation of the aforementioned statutory and administrative standards.
Hudson Pulp and Paper Corp., a corporation organized under the laws of the State of Maine, owns and operates a pulp and paper mill in Putnam County and employs, in connection therewith, an annual average of 2,500 people. By letter dated November 27, 1967, the Control Commission notified Hudson that it was discharging improperly treated industrial waste water from its Palatka mill in violation of law and ordered Hudson to furnish, within 90 days, evidence of corrective procedure. Hudson complied with the order and has agreed with the Control Commission to provide the water treatment facility in issue. The plans for said water treatment facility have been approved by the Control Commission, which has given Hudson until January 31, 1973, to comply.
Failure by Hudson to provide the facility within the time allotted will subject it to the imposition of fines not exceeding $5,000 per day. If such fines are levied, Hudson would be forced to curtail or terminate its operations at the Palatka mill. Such curtailment or termination would cause Hudson to discharge a significant number, if not all, of its employees at the Palatka mill.
Appellee, Putnam County Development Authority, was created and exists as a public body corporate and politic under Ch. 61-2727, Laws of Florida, Special Acts of 1961 as amended. The Development Authority has agreed to finance the acquisition and construction of a water treatment facility necessary to assure the continued operation of the Palatka mill and the employment attendant thereto. Said water treatment facility will consist of approximately 1,300 acres of aeration ponds together with the necessary pumps and piping. When completed, the project will be operated by Hudson.
The Florida Industrial Development Financing Act, Fla.Stat. §§ 159.25-159.43 F.S.A., Ch. 69-104, Laws of Florida, General Laws of 1969, authorizes any county, municipality, state, special district or other local governmental body to acquire and construct a project for the purpose of promoting the industrial economy of the state, to increase opportunity for gainful employment and purchasing power, to improve living conditions and otherwise contribute to the prosperity and welfare of the state and its inhabitants and to finance the acquisition and construction of such projects by the issuance of revenue bonds. The Development Authority, by resolution adopted November 17, 1970, as amended on January 21, 1971, has authorized the issuance of.$4.5 million industrial development revenue bonds to be dated as of April 1, 1971, the proceeds of which are to be used to acquire and construct the project. Hudson Pulp and Paper Corp. would be the vendee of said revenue bonds.
The resolution also provides for the execution and delivery of a contract of sale to be dated as of April 1, 1970, between the Development Authority and Hudson. The contract of sale provides that the Authority will acquire the necessary 1,300 acres and construct thereon the water treatment facility and sell the project to Hudson, pursuant to the terms of said contract of sale.
The resolution further provides for the execution and delivery of a mortgage and indenture of trust to be dated as of April 1, 1971, in order further to secure the payment of the bonds. The resolution and the indenture provide that, subject to the terms and provisions of contract of sale and indenture, the Development Authority will collect the purchase price installments and other payments from Hudson for the purchase of the project; that the purchase price installments and other payments so collected by the Development Authority will at all times be sufficient to provide funds for the payment of the principal and redemption premium on the bonds, if any, and of the interest on all bonds issued under the terms of the indenture as the same shall become due and payable. It is further provided that such collections will be sufficient to make all other payments required by the indenture; that such revenue shall be deposited in the manner and held for the purposes specified in the indenture; and that the contract of sale will be pledged under the indenture.
The resolution and indenture provide that the Development Authority is not obligated to pay said bonds or the interest thereon except from the contract payments paid to the Development Authority pursuant to the contract of sale and pledged therefor and the property mortgaged and pledged under the indenture. Neither the faith and credit nor the taxing power of the State of Florida or any political subdivision thereof, including the Development Authority and the County of Putnam, is pledged to the payment of the principle and interest in premium, if any, on said bonds. No holder of said bonds shall ever have the right to compel any exercise of the taxing power on the part of the State of Florida or of any political subdivision thereof possessing the taxing power to pay said bonds or the interest thereon, nor to enforce payment therefor against the property of the State of Florida or of any political subdivision thereof, except as permitted in the industrial act and as provided for in the indenture.
The indenture further provides, in the event of default by Hudson, for the reentering of the project by a Trustee for and on behalf of and in the name of the Development Authority, in the manner described in the contract of sale and indenture, for the purpose of protecting the rights of the Development Authority and the bond holders.
The installment purchase price payments, to be derived from the contract of sale relating to the project, are not pledged or encumbered in any manner, except as provided in the resolution and indenture.
The State of Florida, in answering the appellee's complaint for validation, admitted that under the Constitution and Laws of the State of Florida, local agencies have lawful authority to issue industrial development revenue bonds to finance the acquisition and construction of projects defined in the industrial act. The answer alleged, however, that (1) the water treatment facility did not constitute a 'project' as defined in the industrial act, (2) neither the Florida Constitution nor the industrial act permit the Development Authority to mortgage the project as security for the payment of the bonds, (3) the industrial act does not authorize the entering into of the contract of sale between the Development Authority and Hudson and the pledging of the payments to be made pursuant to the contract of sale under the indenture. The Circuit Court denied all of the objections contained in the answer and validated the bonds. This appeal followed.
Appellant argues that the industrial act does not authorize the Development Authority to finance the acquisition and construction of the paper mill treatment facility at the Palatka mill. The industrial act, it is argued, requires that a project have a Positive effect on the area economy; and that since the only effect of this project is to maintain the Status quo, it fails to meet the requirements of the Act. We do not agree.
The economic contribution of the project is amply demonstrated in the trial judge's final judgment. He found that Hudson is one of the major industries located in Putnam County and provides employment opportunities to a large number of Putnam County inhabitants. The curtailment or termination...
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