Utah Power & Light Co. v. Campbell

• Decision Date: 16 July 1985
• Docket Number: No. 15944,15944
• Citation: 108 Idaho 950,703 P.2d 714
• Parties: UTAH POWER & LIGHT COMPANY, a Utah corporation, Petitioner, v. Thomas V. CAMPBELL, in his official capacity as Mayor of the City of Idaho Falls, Idaho, Respondent.
• Court: Idaho Supreme Court

Page 714

703 P.2d 714

108 Idaho 950

UTAH POWER & LIGHT COMPANY, a Utah corporation, Petitioner, v. Thomas V. CAMPBELL, in his official capacity as Mayor of the City of Idaho Falls, Idaho, Respondent.

No. 15944.

Supreme Court of Idaho.

July 16, 1985.

W.F. Merrill, Pocatello, and Jody Williams, Salt Lake City, for petitioner.

Dale Storer, Idaho Falls, for respondent.

ON GRANTING OF WRIT OF MANDATE

HUNTLEY, Justice.

On May 2, 1985, Utah Power & Light Company ("UP & L") filed a Petition for Writ of Mandate, requesting this Court command that Thomas V. Campbell, Mayor of the City of Idaho Falls, act in accordance with a February 7, 1985 resolution of the Idaho Falls City Council and execute a ground lease and power sales contract with UP & L. The ground lease and power sales contract both relate to a low-head hydroelectric project on the Snake River known as the Gem State Project ("the Project").

The agreed facts are as follows. On April 7, 1982, UP & L and the City of Idaho Falls entered into a letter of intent wherein the City agreed to construct the hydroelectric project, and to sell a portion of the energy from the Project not required by the City to UP & L. UP & L agreed by that same letter to lease to the City land along the Snake River needed for the Project.

Pursuant to the letter of intent, the City and UP & L negotiated a ground lease and a power sales contract. According to the ground lease, UP & L will lease to Idaho Falls the property needed for the Project through the term of the Federal Energy Regulatory Commission (FERC) license issued to the City for the construction and operation of the Project, and through the term of any renewal or extension of the license. The initial term of the FERC license issued December 12, 1983, is fifty years. In consideration for the use by Idaho Falls of UP & L's land, the City agreed through the power sales contract to sell the company thirty-nine percent (39%) of the electric energy produced annually by the Project, a percentage which the City may reduce at its option if and when it determines that it is in the City's interest to retain a greater portion of the Project's output. In any case not less than twenty-five percent (25%) of the Project's annual output will be sold to UP & L for the term of the power sales contract, which expires thirty-five years from the date commercial operation of the Project begins.

For the energy it receives, UP & L is bound by the power sales agreement to pay an amount equal to the percentage of the output it takes times the sum of the capital (fixed) costs, the variable costs, and 5% of the sum of the capital and variable costs.

On July 19, 1984 the Idaho Falls City Council adopted ordinance No. 1763, in which it found that it was necessary, desirable and essential to the well-being of the City's inhabitants to undertake acquisition and construction of the Project. The ordinance further recites that because the City did not have sufficient funds to pay the cost of acquisition and construction of the Project, the Project would be financed through the issuance of general obligation bonds pursuant to Chapter 10 of Title 50 of the Idaho Code. The ordinance further provides the City, pursuant to I.C. § 50-1026A, would pledge as an additional source of payment of the bonds, all or any part of the revenues derived or to be derived from rates, fees, tolls or charges imposed for the services, facilities or commodities furnished by the City's power system which was to be improved and extended by the Project.

On September 11, 1984 the City conducted a special bond election for the purpose of submitting the proposition set forth by the ordinance to the electors of the City, which bond issue carried by a majority of the more than two-thirds of those voting in the election.

In November 1984, CH2M Hill, an engineering consulting firm, submitted a study to the city council. The study concluded that the Project was economically feasible for both the City and the region; that the cost of electrical energy to be produced by the Project would be less than the cost of comparable quality electrical energy from other sources likely to be available to the City in the foreseeable future; that the portion of electrical energy proposed to be sold to UP & L would not be required by the City for distribution in its system before the year 2024; and that the long term value to the City of the Project would be greater than that of any other potential electrical energy resource. On that basis, the study concluded, it was desirable and in the public interest for the City to proceed with the acquisition and construction of the Project and to enter into the ground lease and power sales contract with UP & L.

The city council on February 7, 1985, adopted a resolution which authorized and directed the mayor of Idaho Falls, Thomas V. Campbell, to enter into and execute the ground lease and power sales contract. On February 11, 1985, Mayor Campbell wrote a letter to UP & L in which he declined to execute either the ground lease or the power sales contract. He stated that given the proposed issuance of general obligation bonds by the City to pay the cost of acquisition and construction of the Project, the agreements providing for sale of electrical energy to UP & L for a period in excess of the proposed term of the bonds under the conditions contained in the ground lease and power sales contract may constitute an unlawful lending of credit of the City in violation of Art. VIII, Sec. 4 and Art. XII, Sec. 4 of the Idaho State Constitution. Specifically, Mayor Campbell was concerned with the language in Idaho Falls Consolidated Hospitals v. Bingham County Board of Commissioners, 102 Idaho 838, 839, 642 P.2d 553, 554 (1982), in which this Court stated, "Art. VIII, Sec. 4 specifically forbids counties [and also cities] from loaning or giving credit 'for any purpose whatever.' Therefore, the fact that the [Medical Indigency] Act in this case serves a public purpose is not enough in itself to uphold its constitutionality." Despite the City Council's finding that the Project would serve a public purpose, Mayor Campbell believed that the ground lease and power sales contract providing for sale of energy to UP & L for a period in excess of the proposed term of the bonds under conditions contained in the ground lease and power sales contract might represent an extension of credit by Idaho Falls in aid of a private corporation in violation of the Idaho Constitution.

UP & L thereupon filed a petition for writ of mandate, requesting this Court to compel Mayor Campbell to execute the ground lease and power sales contract in conformance with the February 7, 1985 resolution by the City Council. The Court entered an alternative writ of mandate commanding Mayor Campbell to either execute the power sales contract and ground lease with UP & L or show cause by answering the petition why he should not be permanently commanded to comply with the proposed writ. The Mayor filed an answer and both parties requested that the hearing on the writ of mandate be expedited because the City's FERC license requires that construction of the Project commence prior to November 30th, 1985.

Mandamus will lie if the officer against whom the writ is brought has a "clear legal duty" to perform the desired act, and if the act sought to be compelled is ministerial or executive in nature. Fitzpatrick v. Welch, 96 Idaho 280, 527 P.2d 313 (1974); Allen v. Smylie, 42 Idaho 846, 452 P.2d 343 (1969); I.C. § 7-302. Under I.C. § 50-607, a mayor of a city "shall sign all contracts and conveyances in the name of and on behalf of the City." The mayor of the City of Idaho Falls therefore has a "clear legal duty" to perform the ministerial function of signing all contracts on behalf of the city. Only illegality of the proposed contract would justify his refusal to execute the ground lease and the power sales agreement after authorization and direction by the City Council to execute them.

In Idaho Falls Consolidated Hospitals, Inc., supra, we restated a long-standing construction of the provisions of Art. VIII, Sec. 4 of the Idaho Constitution: namely, that this section imposes an absolute prohibition on any donation or loan of credit by a municipality to a private enterprise. ¹

This Court has commented:

The proceedings and debates of the Idaho Constitutional Convention indicate a consistent theme running through the consideration of the constitutional sections in question. It was feared that private interests would gain advantages at the expense of the taxpayers. This fear appeared to relate particularly to railroads and a few other large businesses who had succeeded in gaining the ability to impose taxes, at least indirectly, upon municipal residents in western states at the time of the drafting of our constitution.

Boise Redevelopment Agency v. Yick Kong Corp., 94 Idaho 876, 883-84, 499 P.2d 575, 583 (1972).

In Consolidated Hospitals, supra, we stated, "[I]t is apparent that the framers of the Idaho Constitution were primarily concerned about private interests gaining advantage at the expense of the taxpayer." 102 Idaho at 841, 642 P.2d at 556.

The primary concern of the delegates to the Idaho Constitutional Convention of 1889 in enacting Art. VIII, Sec. 4 and Art XII, Sec. 4 was with loans or donations of public credit. One delegate to the convention contrasted two potential arrangements:

It is supposed that we may desire in our town to have water works--in fact, it is a necessity, and let us suppose it will cost $50,000. If a capitalist comes in and says 'I will put $25,000 into the enterprise' and the people of our town will put $25,000 into the enterprise, it seems to me practicable and desirable that the people should be permitted to make the investment of $25,000 in that enterprise. On the other hand we do want to prohibit authority to vote $25,000 to this capitalist and absolutely giving him...