Later courts went against this
Declined to follow by City of Hot Springs v. Creviston, 288 Ark. 286 (1986)
We reject at once the bank’s argument that the case should be governed by Purvis I, Purvis v. Hubbell, 273 Ark. 330, 620 S.W.2d 282 (1981).
The opinion
Darrell Hickman, Justice, dissenting. The majority’s decision is a bad precedent for two reasons. First, the bonds in this case are not pure revenue bonds. The money that will be used by the city to pay off the bonds will not consist wholly of revenue produced by the project, but will also consist of money taken from the regular income of the City of Little Rock. Little Rock receives turnback money from the State of Arkansas which is the city’s portion of the state income and sales tax. An unknown amount of that money will be used annually hereafter to pay these bonds. Act 763 of 1977 is the vehicle being used to circumvent the constitutional prohibition against bonds issued without a vote by the people. Ark. Const, art. 16, amend. XIII. If Act 763 is allowed to stand then any part of the general income of a city, county, or state can be used to pay bonds not approved by the public. That is a dangerous as well as illegal practice. The pretext used in this case is tourism. Exactly what tourism is and exactly how much money will be set aside from the turnback funds to pay the bonds is unknown and really any such designation has to be arbitrary and speculative.
The second reason the decision is a bad precedent is that it violates Article 16, Section 1 of the Arkansas Constitution, as amended by Amendment 13. Amendment 13 reads:
. No municipality shall ever grant financial aid toward the construction of railroads or other private enterprises operated by any person, firm or corporation, and no money raised under the provisions of this amendment by taxation or by sale of bonds for a specific purpose shall ever be used for any other or different purpose. . . . [Emphasis added.]
The majority holds that no aid has been granted to a private developer in this case because the city owns the property. The title to the complex is vested in the City of Little Rock with the developer granted a 103 year lease. The fact that the city holds bare legal title is used as an excuse for finding that the project is city owned and, therefore, the constitution is not violated. The city in this case will pay up to $400,000 to the private developer for his services. The contractor will be paid a fee of nearly $600,000. The developer will receive a lease for 103 years, which no doubt exceeds the useful life of this project. The substance of this deal between the city and the developer is that the city will finance the project and the developer will operate it for its useful life. If this is not a case of a city granting financial aid to a private enterprise then none can ever exist.
Arkansas’s constitution is drafted so that the state, cities, and counties will remain solvent. The people of this state decided that the future income of this state would not be pledged without the voter’s consent at the polls. Numerous efforts to avoid these constituitonal provisions have been made and many of them have been successful. For example, the building in which this court is housed is financed by so-called revenue bonds that are really state bonds. To be specific, the money that is used to pay the bonds on the Justice Building comes in part from appropriations made to state agencies as rent. One of those appropriations was for the Public Service Commission. When the Public Service Commission moved from this building, the Court of Appeals was allowed money, called rent, which is paid to the bondholders. In other words, the General Assembly is appropriating money every two years to pay these bonds off. In McArthur v. Smallwood, 225 Ark. 328 , 281 S.W. 2d 428 (1955), a special court approved the bond issue for the Justice Building and closed its eyes to the realities of the situation. That has been the pattern generally followed by this court regarding attempts to evade the constitution.
Even so, the case before us presents a far more dangerous precedent that those set in the past. Now a part of the general revenue of the cities, counties, or state can be directly set aside to pay bonds which have not been approved by the voters. There will be no pretext of “rent.” Now city governments can openly, blatantly, and baldly enter into an agreement with a private developer in contravention of the Arkansas Constitution.
The fact that the complex contemplated in this case would be good for the City of Little Rock or even the State of Arkansas is wholly irrelevant. So is the fact its construction has begun. Any legal question should have been resolved long before now. That was a responsibility of the city officials and private interests.
The people trust this court to enforce the constitution. Our record in regard to the enforcement of Amendment 13 is poor.