Isaacs v. Oklahoma City

LAVENDER, Justice

(dissenting in part).

The plaintiff in error, Roy Isaacs, herein.after called the plaintiff, for himself and ■others similarly situated, commenced an action in the District Court of Oklahoma County against the City of Oklahoma City, ■a municipal corporation, that city’s Urban Renewal Authority, and the members of the Board of Commissioners of such Urban Renewal Authority, and its Executive Director, as defendants, praying for a declaratory judgment that the Urban Redevelopment Law that applies to cities having a population in excess of 100,000 (11 O.S.1961 Secs. 1601 through 1620) is unconstitutional upon various grounds, and for an injunction to restrain the defendants from proceeding further under said act pending final determination of such action.

After motions directed to the plaintiff’s petition had been sustained in part and the plaintiff had amended his petition to conform to the order of the court, the trial •court sustained the defendants’ joint demurrer to such amended petition, held the act constitutional and dismissed the plaintiff’s action. After his motion for a new trial had been overruled, plaintiff appealed to this court-by petition in error and case-made filed herein five days prior to the expiration of the time within which he might do so. When that time had- expired, the defendant city moved to dismiss the appeal upon the ground that the city was an indispensable party to such appeal, and the plaintiff did not serve the case-made on the city nor serve the city with any notice of the time and place for settling and signing the case-made, and the city did not waive such service or notice.

Section 9 of the act (11 O.S.1961, Sec. 1609) provides, among other things, that an Urban Renewal Authority provided for in the act “may sue or be sued.” Clearly, this is intended to apply to, but only to, suits involving the existence and/or powers and authority of such an Urban Renewal Authority, and to' contemplate that with respect to those questions the Urban Renewal Authority is the only necessary party plaintiff or defendant, as the case may be, so that in a suit against such an Urban Renewal Authority service upon the Authority is all that is required with respect to any questions which affect, either directly or indirectly, the existence or the powers and authority of the Urban Renewal Authority.

However, such an Urban Renewal Authority has no interest in questions involving the powers and authority of a city under the act which do not affect, either directly or indirectly, the existence or the powers and authority of such Authority. Therefore, because of the lack of service of the case-made and. of notice of settling and signing the case-made upon. the, City of Oklahoma City in this appeal, this court is without jurisdiction to review. any such questions and, with respect to all such questions, the appeal should be dismissed.

Consideration of all of the provisions of the áct in question discloses that the urban renewal contemplated and'authorized by. the act — the elimination, correction-and prevention of conditions ‘which .make an area with? in the corporate limits of a city to which the act is applicable a “blighted area,” as defined in the act — is, by the act, made a public purpose or function of the particular city in which such conditions exist; that the elimination, correction and prevention of such conditions by requiring the owners of ¡ *238 property to modify their property, or by acr quirin'g property, by eminent domain if necessary, so' that it can be modified or buildings or improvements thereon can be demolished or removed in order to eliminate, correct or prevent conditions which make an area in a city a “blighted area,” as an Urban Renewal Authority may be authorized under the act to do, constitutes an exercise of the police power; that although the act provides in sub-section (a) of Section 9 (§ 1609) that “there is hereby created,” in each incorporated city to which the act is applicable, a public body corporate to be known as the Urban Renewal Authority, does not exist in or for any such city unless and until such city- brings it into -existence and after being brought into existence by the city may not exercise the urban renewal project powers and authority provided in the act to be exercised by such an Urban Renewal Authority unless and until vested therewith by such city; that although such Urban Renewal Authority and such city are separate entities, in the sense that each is a public body corporate' with its own governing body,, such an Urban Renewal Authority in exercising urban renewal project powers and authority só vested in it by such city, acts purely as an administrative agency or agent of the city in the city’s performance of an authorized public purpose or function of such city; and that each Commissioner (member of the Board of Commissioners) of such an Urban Renewal Authority, appointed by the mayor of the city and approved'by the governing body of the city as provided in, the act, is an officer of such city; In short, when an Urban Renewal Authority provided for in the act exercises any of the urban renewal project powers and authority vested in it under the act, it is the city which brought the Urban Renewal Authority into existence and vested it with such powers and authority that is acting.

.Therefore, the portions of the act which provide powers and authority which may be exercised by an Urban. Renewal Authority authorize the city involved, acting by and through its Urban Renewal Authority, to exercise such powers and authority, and those portions of the act which authorize án Urban Renewal Authority to incur indebtedness and to issue bonds actually authorize the city involved, acting by arid through its Urban Renewal Authority, to incur indebtedness and to issue bonds.

Section 26 of Article 10 of the Constitution of the State of Oklahoma, as amended April. S, 1955, provides in pertinent part that:

“Except as herein otherwise provided, no county, city, town, township, school district, or other political corporation, or subdivision of. the State, shall be allowed to become indebted, in any manner, or for any purpose, to an amount exceeding, in any year, the income and revenue provided fo.r such year, without the assent of three-fifths of the voters thereof, voting at an election, to be held for that purpose, ' nor in cases requiring such assent, shall any indebtedness be allowed to be incurred to an amount, including existing indebtedness, in the aggregate exceeding five per centum (5%) of the valuation of the taxable property therein, to be ascertained from the last assessment for State and county "purposes previous to the incurring of such indebtedness: * * * Provided, further, that any county, city, town, school district, or other political corporation, or subdivision of the State, incurring any in- " debtedness requiring the assent of the voters as aforesaid, shall, before or at the time of doing so, provide for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof within twenty-five (25) years from the time of contracting the same, * * (Emphasis supplied.).

Section 27 of the same article of the Constitution authorizes any incorporated city or town, with the assent of a majority of the qualified property-tax paying voters of such city or town, voting at an election to be held for that purpose, to become indebted, in a larger amount than that specified in Section 26,, above, for the purpose of purchasing or constructing “public utilities,” or for repair *239 ing the same, to be owned exclusively by such city or town. This section also contains a proviso similar to the one in Section 26, quoted above, requiring the city or town, before or at the time of incurring any such indebtedness, to provide for the levying of an annual tax for the payment of the principal of and interest on such indebtedness.

In Burch v. City of Pauls Valley et al., 201 Okl. 78 , 201 P.2d 247 , this court in holding unconstitutional an act which authorized incorporated cities and towns, without any vote of the people of the city or town, to incur indebtedness which could be in excess of the debt limit specified in Section 26 of Article 10 of the Constitution for the construction, etc., of water and/or sewer facilities to be secured only by a pledge of revenue from such system or systems quoted from the syllabus to Zachery v. City of Wagoner, 146 Okl. 268 , 292 P. 345, 346 , as follows:

“The provisions of sections 26 and 27, article 10, of the Constitution apply without regard to the source from which the funds pledged to the payment of the indebtedness incurred are to be obtained.

“The fact that an indebtedness incurred by a municipality is to be paid only from some source other than ad valorem taxation does not render inoperative the limitation contained in section 26, article 10, of the Constitution, or extend the grant of authority contained in section 27, article 10, of the Constitution.”

And the court expressly refused to apply the “special fund” doctrine under which this court had, and has, many times held that the provisions of our Constitution relating to State indebtedness do not prevent the legislature from authorizing the State, or an agency of the State, to incur indebtedness in excess of appropriations to be secured only hy a pledge of revenue from a revenue-producing proj ect authorized by the legislature.

Later, in denying approval of natural gas system revenue bonds being issued by the City of Tahlequah under an act quite similar to the one involved in Burch v. City of Pauls Valley, supra, except that it required approval of the proceedings and bonds by this court instead of by the Attorney General as the State Bond Commissioner, and, like Sec. 27 of Article 10 of the Constitution, required approval of the proposition by a majority of the qualified property-tax paying voters of the municipality voting at an election held for that purpose, this court in Application of the City Council of the City of Tahlequah, Oklahoma, Okl., 285 P.2d 418 , referred to the Burch case and Zachery v. City of Wagoner, supra, and based upon Town of Walters v. Orth, 59 Okl. 99 , 158 P. 352 , held in the second paragraph of its syllabus:

“Under article 10, section 27, of the Constitution of this state, any contract of any city incurring. an indebtedness for any purpose named therein which required the assent of the voters therefor is void, unless such city; before or at the time of incurring such indebtedness, shall provide for the collection of an annual tax in addition to the other taxes provided for by the Constitution sufficient to pay the interest on such contracted indebtedness as. it falls due and to constitute a sinking fund for the payment of the principal thereof within 25 years from the • time of contracting the same.” ■

The act authorizes an Urban ‘Renewal Authority to incur indebtedness and to issue notes and bonds, at its discretion, to finance any urban renewal project under the act, which notes and bonds shall be authorized by resolution of the.Urban Renewal Authority and shall be payable “solely” from income, revenue, proceeds and funds’of the Authority derived from or.held in connection with its carrying out of urban renewal projects under the act, but payment of such notes or bonds may be further secured (a) by a pledge of any loan, grant or contribution from any source, in aid of any urban renewal projects of the Authority under the act, and (b) by a mortgage of any such urban renewal projects, or any part thereof, title to which is in the Urban Renewal Authority (see Secs. 1610 and 1616). The act places no limitation whatsoever upon the amount of indebtedness that may so be incurred or upon the amount of bonds that may so be issued, and it is quite clear that no vote of the people of the city and no pro *240 vision for an annual tax levy for retirement of any such indebtedness is required or even contemplated by the act. Thus, the act authorizes a city to which the act is applicable, acting by and' through its Urban Renewal Authority as its agent for the administration and carrying out of the city’s official urban renewal projects, to incur indebtedness in violation of the debt-limitation provisions of Section 26 of Article 10 of the Oklahoma Constitution and without compliance with the vote and tax levy requirements of that section or, where the indebtedness is to be incurred for the purchase, construction or repair of “public utilities,” without compliance- with the vote and tax ■levy, requirements of Section 27 of Article 10 of the Oklahoma Constitution.

The plaintiff’s sixth and eleventh grounds of attack must be sustained with respect to those portions of the act which authorize an Urban Renewal Authority in any fiscal year to incur indebtedness which, when combined with all other indebtedness of the city involved, would exceed the “income and revenue” provided for such city for that fiscal year) within the meaning of the term “income and revenue” as used in Section 26 of Article- 10’ of the Oklahoma Constitution.

Incidentally, the agent-for-the-city theory is the only, theory upon which that portion pf .the act which exempts from taxation property acquired by an Urban Renewal Authority while held by such Authority can be upheld as constitutional (see Section 50 of Article 5, and Section 6 of Article 10, of the Oklahoma Constitution); and it is only upon that theory that there would be no doubt as to the validity of those portions of the act under which an Urban Renewal Authority may exercise police power.

It is intended that this dissent shall, be applicable to both No. 41,527, S. M. Roof et al. v. Tulsa Urban Renewal Authority et al., and No. 41,276, Roy Isaacs v. The City of Oklahoma City et al., which cases have been consolidated by order of this court.

I respectfully dissent from the opinion of the majority only however insofar as it upholds the constitutionality and validity of those portions of the act in question which authorize an Urban Renewal Authority during a fiscal year to incur indebtedness (whether evidenced by bonds or not so evidenced) in an amount which, when combined with all other indebtedness of the city involved, would exceed the “income and revenue provided for such year” for such city, within the meaning of that term as used in Section 26 of Article 10 of the Constitution of the State of Oklahoma, and' also insofar as such opinion passes upon the constitutionality or validity of any portions of the act in question which provide powers and' authority to be exercised by a city, as a city, which do not affect, either directly or indirectly, the bringing into existence, or the existence, or- the powers and authority, of an Urban Renewal Authority under the act.