Petition for Writ of Certiorari — Warwick Mall Trust v. Rhode Island
Supreme Court brief1997
Ask Donna
What actually matters in this document.
Text
FLL EBD 0)
961100 JAN 9 1997
@FEIE OF THE CLERK
NO.
IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1996
WARWICK MALL TRUST, BLISS PROPERTIES, INC.,
AND IRVING SCHWARTZ,
PETITIONERS,
Vv.
THE STATE OF RHODE ISLAND, ET AL.,
RESPONDENTS.
On Petition for Writ of Certiorari to the
Supreme Court of the State of Rhode Island
PETITION FOR WRIT OF CERTIORARI
J. WILLIAM W. HARSCH
170 Westminster Street
Suite 800
Providence, Rhode Island 02903
(401) 454-4466
Counsel for Petitioners
QUESTION PRESENTED FOR REVIEW
Whether a party challenging the constitutionality of
an act of the General Assembly of Rhode Island may,
consistent with the constitutional protections afforded
litigants, be required to prove its claim "beyond a
reasonable doubt" upon a pretrial motion to dismiss the
complaint for failure to state a claim.
LIST OF PARTIES TO PROCEEDINGS BELOW
Pursuant to Sup. Ct. R. 14(b), the Petitioners submit
the following list of parties to the proceedings before the
Supreme Court of Rhode Island.
The Petitioners, who were Plaintiffs-Appellants
below, are:
Warwick Mall Trust;
Bliss Properties, Inc.;
Irving Schwartz.
There are no parent companies or nonwholly owned
subsidiaries of Bliss Properties, Inc.
The Respondents, who were Defendants-Appellees
below, are:
The State of Rhode Island;
The Honorable Lincoln S. Almond, in his
capacities as Governor of the State of Rhode
Island and Chairman of the Rhode Island
Economic Devele>ment Corporation;
Providence Place Group.
There are no parent companies or nonwholly owned
subsidiaries of the Rhode Island Economic Development
Corporation.
TABLE OF CONTENTS
Page
QUESTION PPESENTED FOR REVIEW .......... i
LIST OF PARTIES TO PROCEEDINGS
UM ee Sea de ka wen e's Dein eur buss ii
TABLE OF CITED AUTHORITIES ............. Vv
ENE eins even Vabebesivetstenees l
STATEMENT OF JURISDICTION .............. l
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED ......0.--0002: 2
SIA TRIMENS OF THE CASE 2.2 cc cc ccc ccc cees +
TABLE OF CONTENTS (CONT'D)
Page
ARGUMENT
THE RHODE ISLAND SUPREME
COURT'S IMPOSITION, AT THE
PLEADING STAGE, OF A "BEYOND A
REASONABLE DOUBT" STANDARD
UPON THOSE RAISING
CONSTITUTIONAL CLAIMS HAS
CREATED A NEARLY IRREBUTTABLE
PRESUMPTION OF
CONSTITUTIONALITY IN FAVOR OF-
ENACTMENTS OF THE RHODE
ISLAND GENERAL ASSEMBLY,
WHICH VIOLATES FEDERAL DUE
PROCESS RIGHTS OF PETITIONERS
AND OTHER LITIGANTS TO ACCESS
TO THE COURTS OF THE STATE OF
REGAR IS CEMRETES one ov cnc awh oud cee Venes 12
CRAPO Sodas Chek dees ee rees chess sce 23
APPENDIX
iv
iia i
_
TABLE OF CITED AUTHORITIES
Cases Page
Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S.
FRU RSPRAE CN OCR UREA Ea eee ts ee. 16
Boddie v. Connecticut, 401 U.S. 371 (1971) ....... 16
Bounds v. Smith, 430 U.S. 817 (1977) ...........- 16
Bowen v. Michigan Academy of Family Physicians,
TO Via WO? CAOOO) iis 604s Oe Chee ek 22
Brinkerhoff-Faris Trust & Savings Co. v. Hill, 281
Sed TP CEOS) ov coh oa be bs oT 14
California Motor Transport Co. v. Trucking Unlimited,
Wt RAs OU CUP TED bd xe ko ocv ees cuce, 16
Chartier Real Estate Co. v. Chafee, 101 R.1.
214, 225 A.20 166 (1967) 2. es ces ‘1 Sz, 3
Conley v. Gibson, 355 U.S. 41 (1957) ......... 13, 22
Ellis v. Rhode Island Public Transit Authority, 586
PL POOR AOR oo oe ok 8 ET ie 13
Heiner v. Donnan, 285 U.S. 312 (1932) .......... 20
:
Richards v. Jefferson County, Alabama, 116 S. Ct.
Bn | re Sg ee 14, 16, 18, 19
Vlandis v. Kline, 412 U.S. 441 (1973) ............ 20
TABLE OF CITED AUTHORITIES (CONT'D)
oe
Cases Page
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449
La hoe GROEN 65's p95 4 USS ERS Ske 22
Wolff v. McDonnell, 418 U.S. 539 (1974) ...... 16, 18
Statutes
Os Waites 6 ABST is do oe i eek ado eee l
Rds COU. OR. Wes BAO iat os hehe ou 2, 4, 9, 10 paadion
Ri, (opm. ont. BE Be ick eek eae 3, 4, 8, 10
ok. CUE, ONG. Bs ed 4 oh neo 0bee aca ees 4,10
R.I. Gen. Laws § 42-64-20 (1992) ..............6. 6
R.I. Gen. Laws § 42-64-23 (1992) ............... 10
RS. FUG Bs SOE nes: ns wien RES 4, 5, 6, 7 passim
Rul. KR. CAV. F, TRE vcd cen'ncsekeaeenaneee 4,8,9
SUD. GR, ER, ORG seb de ivnsbaeecekt Gheeeaniee li
Le. CE, SEE 8 actenaawedeens 2, 16, 17, 22
U.S. Const. amend. XIV, § 1 ........... 2, 14, 17, 22
vi
OPINIONS BELOW
The opinion of the Rhode Island Superior Court for
Providence and Bristol Counties granting the Respondents’
motion to dismiss the Petitioners’ complaint was given
orally from the bench, the relevant portions of which are
set forth in the Appendix beginning at A-25. The order of
the Superior Court is set forth in the Appendix at A-23 to
A-24.
The July 19, 1996 order of the Supreme Court of
the State of Rhode Island affirming the judgment of the
Superior Court is unreported, and is set forth in the
Appendix at A-1. The Supreme Court of the State of
Rhode Island thereafter issued an opinion on October 11,
1996, which opinion is reported at 684 A.2d 252 (R.I.
1996) and is set forth in the Appendix beginning at A-4.
STATEMENT OF JURISDICTION
The order of the Supreme Court of Rhode Island
sought to be reviewed here was entered on July 19, 1996.
The Supreme Court of Rhode Island's opinion setting forth
the reasons for the order was entered on October | 1, 1996.
This Court has jurisdiction to review that order under 28
U.S.C. § 1257.
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
U.S. Const. amend. I provides as follows:
Congress shall make no law respecting an
establishment of religion, or prohibiting the
free exercise thereof; or abridging the
freedom of speech, or of the press; or the
right of the people peaceably to assemble,
and to petition the Government for a redress
of grievances.
U.S. Const. amend. XIV, § 1 provides as follows:
All persons born or naturalized in thé
United States, and subject to the jurisdiction
thereof, are citizens of the United States and
of the State wherein they reside. No State
shall make or enforce any law which shall
abridge the privileges or immunities of
citizens of the United States; nor shall any
State deprive any person of life, liberty, or
property, without due process of law; nor
deny to any person within its jurisdiction the
equal protection of the laws.
R.I. Const. art. VI, § 16 provides as follows:
Borrowing power of general assembly.—
The general assembly shall have no powers,
without the express consent of the people, to
incur state debts to an amount exceeding
fifty thousand dollars, except in time of war,
or in case of insurrection or invasion; nor
shall it in any case, without such consent,
pledge the faith of the state for the payment
of the obligations of others. This section
shall not be construed to refer to any money
that may be deposited with the state by the
government of the United States.
R.I. Const. art. XIII, § 4 provides as follows:
Powers of general assembly over cities and
towns.—The general assembly shall have
the power to act in relation to the property,
affairs and government of any city or town
by general laws which shall apply alike to
all cities and towns, but which shall not
affect the form of government of any city or
town. The general assembly shall also have
the power to act in relation to the property,
affairs and government of a particular city
or town provided that such legislative action
shall become effective only upon approval
by a majority of the qualified electors of the
said city or town voting at a general or
special election, except that in the case of
acts involving the imposition of a tax or the
expenditure of money by a town the same
shall provide for the submission thereof to
those electors in said town qualified to vote
upon a proposition to impose a tax or for the
expenditure or money.
R.I. Const. art. XII, § 5 provides as follows:
Nothing contained in [article XIII] shall be
deemed to grant to any city or town the
power to levy, assess and collect taxes or to
borrow money, except as authorized by the
general assembly.
The pertinent provisions of R.I. Pub. L. 95-400 are
set forth in the Appendix beginning at A-49.
STATEMENT OF THE CASE
The Petitioners filed their complaint in the Superior
Court of Rhode Island for Providence and Bristol Counties
on December 29, 1995, alleging, inter alia, that R.I. Pub.
L. 95-400 was invalid because it was not approved by the
voters of the City of Providence as required by R.I. Const.
art. XIII, § 4 (Complaint ¥ 13), because it operates as a
pledge of the credit of the State of Rhode Island and
lacked the approval of the voters of the State as required
by R.I. Const. art. VI, § 16 (Complaint § 15), and because
it delegates legislative power in a manner which violates
the Rhode Island and United States constitutional
guarantees to due process. (Complaint § 23.) The
complaint sought a declaration that R.I. Pub. L. 95-400
was invalid and sought a preliminary injunction restraining
the Respondents from taking any action pursuant to R_I.
Pub. L. 95-400. The Respondents thereafter filed a motion
to dismiss the complaint pursuant to RI. R. Civ. P.
12(b)(6).
The Superior Court heard argument on this motion
on February 28 and 29, 1996, and from the bench issued
rulings dismissing each claim set forth in the complaint.
The Superior Court thereafter entered an order dismissing
the complaint. (A-23 to A-24.)
The Petitioners timely appealed the judgment
entered in the Superior Court to the Supreme Court of
Rhode Island. After briefs were filed and arguments
heard, the Supreme Court of Rhode Island issued an order
without opinion affirming the judgment of the Superior
Court. (A-1 to A-2.) The Supreme Court of Rhode Island
issued an opinion supporting its order on October 11,
1996. (A-3.)
The Petitioners filed the instant action in response
to the Rhode Island General Assembly's passage of R.I.
Pub. L. 95-400. RI. Pub. L. 95-400 is legislation
providing for public assistance for the development of the
Providence Place Mall by private developers. The
legislation granted the mall's private developers financial
assistance, tax breaks, and other incentives for
development of the mall. Such development was to occur
within the City of Providence, Rhode Island, which is a
Home Rule municipality under the Rhode Island
Constitution and governed by a charter adopted in 1980.
Petitioners Warwick Mall Trust and Bliss Properties, Inc.,
are the owner and operator, respectively, of a shopping
mall located in Warwick, Rhode Island, and Petitioner
Schwartz is a resident qualified voter of the City of
Providence.
One provision of R.I. Pub. L. 95-400 authorizes the
Rhode Island Economic Development Corporation
("EDC") and the City of Providence to enter into and
5
execute a tax treaty agreement with the private developer
of the mall. Under the legislation, the tax treaty thereby
authorized "shall provide" that the term of the treaty was
to be for thirty years and that the developer was to make
specified payments "in lieu of tax" for each of those thirty
years. (A-49 to A-50.) As characterized by the Supreme
Court of Rhode Island, the tax treaty contemplated by R.I.
Pub. L. 95-400 "would effectively exempt the Project's
real and personal property from municipal taxation for
over thirty years. It would do so by earmarking what
would otherwise constitute payments in lieu of taxes for
debt-service payments to the Project's lenders." (A-9.)
Another provision of the legislation concerned the
EDC's ability to bestow exemptions from state and local
real and personal property taxes upon private parties.
Rhode Island law had previously provided that EDC
property and projects were exempt from all taxes levied by
any municipality or political subdivision of the State. RI.
Gen. Laws § 42-64-20(a) (1993). RI. Pub. L. 95-400
includes a provision allowing the EDC to allow this
exemption to apply even if the EDC itself does not hold
legal title to any real or personal property used in the
development of a project. Such legal title may be held in
the name of a lessee from the EDC, which lessee
shall be exempt from taxation to the same
extent as if legal title of such property were
in the name of the [EDC], provided that the
board of directors of the corporation adopts
a resolution confirming use of such tax
exemption for such project by such lessee.
Such resolution shall include findings that
(1) the project is a project of the corporation
under R.I. Gen. Laws 42-64-3(p) and (2) it
6
is in the interest of the corporation and of
the project that legal title be held by the
lessee from the corporation. In adopting
any such resolution, the board of directors
may consider any factors it deems relevant
to the interests of the corporation or the
project including, for example, but without
limitation, reduction in potential liability or
cost to the [EDC] or designation of the
- project as a "Project of Critical Economic
Concern" pursuant to Chapter 117 of Title
42 of the General Laws.
(A-55 (emphasis deleted).)
R.I. Pub. L. 95-400 also established a mechanism
under which the State will give a percentage of annual
sales tax revenues received from the sales at the mall to
the mall's private developers over a twenty-year period.
The sales tax revenues will be escrowed according to a
formula and was to be evidenced by a twenty-year note of
the EDC. (A-51.) R.I. Pub. L. 95-400 also provided that
"[s]ubject to -annual appropriation by the General
Assembly, the State shall pay to the EDC an amount equal
to the annual payment which the EDC is required to make
to the developer[.]" (A-53.)
The Petitioners filed their complaint and sought a
declaration that the provisions of R.I. Pub. L. 95-400
which allowed the City of Providence to enter into a thirty-
year tax treaty with the mall developer, which allowed the
EDC to grant tax exemption to private entities, such as the
mall developers, violated both the United States and
Rhode Island Constitutions. Additionally, the Petitioners
sought a declaration that the provisions for payments to
7
the developers out of the sales tax revenues generated at
the mall violated the provision of the Rhode ‘sland
Constitution barring the General Assembly from pledging
the credit of the State without the express consent of the
people.
On the Respondents' motion to dismiss under R.I.
R. Civ. P. 12(b)(6), the Superior Court ruled that the tax
treaty provision of R.I. Pub. L. 95-400 did not violate the
provisions of R.I. Const. art. XIII, § 4, which provide that
the General Assembly has the power to act in relation to
the property, affairs, or government of any city "by general
laws which shall apply alike to all cities and towns," and
the power to act as to the property, affairs, or government
of a particular city or town, "provided that such legislative
action shall become effective only upon approval by a
majority of the qualified electors of said city or town
voting at a general or special election." The Superior
Court ruled that in order to state a claim for violation of
this state constitutional provision, the legislation must not
be one of statewide concern; because the General
Assembly made findings that the mall development would
have statewide impact, the tax treaty provision was not
required to be submitted to the voters of the City of
Providence under R.I. Const. art. XIII, § 4. (A-45 to A-
48.)
As to the Petitioners' argument that R.I. Pub. L. 95-
400 unconstitutionally delegated power to the EDC to
confer tax exemptions, the Superior Court held that the
standards accompanying the delegation of authority were
sufficiently specific to comply with constitutional
requirements. The court stated that the EDC's discretion
was adequately constrained by the requirement that the
project involved be one of the EDC and that it be in "the
8
interest of the [EDC]" to have title to property held by a
lessee. (A-42 to A-43.)
The Superior Court also dismissed the Petitioners’
claim that R.I. Pub. L. 95-400 effected an unconstitutional
pledge of the credit of the State in violation of R.I. Const.
art. VI, § 16. It stated that the bill's language itself
provided that obligations issued thereunder "shall not
constitute a debt, liability or obligation of the state . . . or
a pledge of the faith and credit of the state," and noted that
obligations incurred by the EDC are not considered
obligations of the State. (A-39 to A-40.)
At the outset of issuing its oral rulings, the Superior
Court also indicated that it was applying a standard to the
Respondents’ motion to dismiss for failure to state a claim
which placed the burden of proof upon the Petitioners.
Although the Superior Court recognized that a Rule
12(b)(6) motion generally should not be granted unless it
is clear beyond doubt that, based upon the allegations of
the complaint, the plaintiff can prove no set of facts in
support of its claim, because legislation is generally
presumed to be constitutional, the motion to dismiss before
it would be treated differently. (A-26 to A-27.) It then
stated that the claims challenging the constitutionality of
R.I. Pub. L. 95-400 would be dismissed unless the
Petitioners could demonstrate beyond a reasonable doubt
that the challenged provisions were unconstitutional. (A-
29.)
The Superior Court's order dismissing the
complaint was appealed to the Supreme Court of Rhode
Island by the Petitioners. Addressing the claim that the tax
treaty provision was unconstitutional because the citizens
of the City of Providence were not given the opportunity
9
to vote on whether the city should be authorized to enter
into the contemplated treaty, the Supreme Court held that
the power to authorize the City of Providence to enter into
a thirty-year treaty was reserved to the General Assembly
by R.I. Const. art. XIII, § 5, which generally provides that
nothing in Article XIII should be deemed to grant to cities
the power to levy, assess, or collect taxes or borrow
money. The Supreme Court held that, despite the
reservation to cities and their electors of the right to vote
on legislation specifically affecting that city contained in
R.I. Const. art. XIII, § 4, the provisions of Article XIII, §
5 authorized the tax treaty provision of R.I. Pub. L. 95-
400. (A-9 to A-10.)
The Supreme Court went on to hold that Ri. Pub.
L. 95-400 did not authorize the EDC to pledge the credit
of the State in violation of R.I. Const. art. VI, § 16. Citing
R.I. Gen. Laws § 42-64-23, the court held that this kind of
obligation does not constitute a debt of the State or a
pledge of the faith and credit of the State under the court's
precedent. (A-14.) The court recognized, as argued by the
Petitioners, that the State's credit rating may well be
affected by the level of debt incurred by the EDC, thereby
compelling the General Assembly to appropriate the funds
necessary to pay the EDC note and making the EDC debt
the functional equivalent of a pledge of the State's credit.
But it held that because the General Assembly had the
discretion whether to appropriate moneys for the fund or
not, there was no pledge of the State's credit. (A-15 to A-
16.)
The Supreme Court also affirmed with respect to
the claims that R.I. Pub. L. 95-400 unconstitutionally
delegated legislative power to the EDC. It found the
standards accompanying the delegation of power clear, in
10
that the project involved must be one of the EDC and that
it must be in the interest of the EDC that legal title be held
by the lessee. (A-19 to A-20.)
The Supreme Court also upheld the Superior
Court's decision to apply a "beyond a reasonable doubt"
standard of proof against the Petitioners on the motion to
dismiss. On appeal, the Petitioners alleged that use of this
standard constituted error because the Superior Court
essentially resolved any and all factual disputes against the
Petitioners. The Petitioners argued that application of the
beyond a reasonable doubt standard against a plaintiff on
a motion to dismiss for failure to state a claim erected a
barrier that few if any complaints challenging legislative
enactments could surmount. The Supreme Court, citing
Chartier Real Estate Co. v. Chafee, 101 R.I. 5 14, 565, 225
A.2d 766, 777-78 (1967), stated that "it was proper for the
Superior Court to apply a ‘beyond a reasonable doubt’
standard in deciding whether the plaintiffs’ challenge to
the constitutionality of the Enabling Act should be upheld
or rejected." (A-21 to A-22.)
11
ARGUMENT
THE RHODE ISLAND SUPREME
COURT'S IMPOSITION, AT THE
PLEADING STAGE, OF A "BEYOND A
REASONABLE DOUBT" STANDARD
UPON THOSE RAISING
CONSTITUTIONAL CLAIMS HAS
CREATED A NEARLY
IRREBUTTABLE PRESUMPTION OF
CONSTITUTIONALITY IN FAVOR OF
ENACTMENTS OF THE RHODE
ISLAND GENERAL ASSEMBLY,
WHICH VIOLATES FEDERAL DUE
PROCESS RIGHTS OF PETITIONERS’
AND OTHER LITIGANTS TO ACCESS
TO THE COURTS OF THE STATE OF
RHODE ISLAND.
In deciding to dismiss the Petitioners’ claims that
R.I. Pub. L. 95-400 was unconstitutional at the pleading
stage and before any opportunity was given to present
facts in support of the claims, the Superior Court relied
upon the decision in Chartier Real Estate Co. v. Chafee,
101 RI. 514, 565, 225 A.2d 766, 777-78 (1967), in which
the Rhode Island Supreme Court stated that a party
challenging the constitutionality of an act of the Rhode
Island General Assembly has the burden of proving
unconstitutionality "beyond a reasonable doubt." The
Superior Court did so despite its recognition of the
universally accepted rule that, in determining whether a
complaint is sufficient to resist a motion to dismiss for
failure to state a claim, all of the allegations of the
complaint must be accepted as true, and the trial court
12
must find beyond any doubt that the plaintiff is not entitled
to the relief sought. See Ellis v. Rhode Island Public
Transit Authority, 586 A.2d 1055, 1057 (R.I. 1991) (ona
motion to dismiss, a court should assume that allegations
of the complaint are true, view them in a light most
favorable to the plaintiff, and grant the motion only when
it is clear beyond a reasonable doubt that the plaintiff
would not be entitled to relief). In affirming the Superior
Court, the Supreme Court, also citing Chartier,
specifically endorsed requiring a plaintiff in an action
challenging the constitutionality of an act to prove his
claim beyond a reasonable doubt at the pleading stage.
The drastic effect of the decision of the courts
below to impose a beyond a reasonable doubt standard of
proof upon the Petitioners specifically and Rhode Island
litigants generally cannot be understated. Under the
Rhode Island decision in this case, Rhode Island litigants
attempting to enforce the most basic and fundamental of
rights, i.e., those embodied in the state and federal
Constitutions, are required to satisfy the most exacting
standard of proof recognized in this nation's jurisprudence.
While imposing this burden of proof as an ultimate matter
upon a party seeking to overturn a statute as
unconstitutional is not so extraordinary, this is not the
effect of the decisions below. The Rhode Island Supreme
Court instead imposed this beyond a reasonable doubt
standard upon the Petitioners and ultimately upon all
Rhode Island litigants who challenge the constitutionality
of statutes at the pleading stage upon a motion to dismiss
for failure to state a claim. The decision below not only
embodies a sharp reversal of the normal rule that it must
appear beyond a reasonable doubt that no claim exists
before a motion to dismiss will be granted, Conley v.
Gibson, 355 U.S. 41, 45-46 (1957); Ellis v. Rhode Island
13
Public Transit Authority, 586 A.2d at 1057, but also
imposes the beyond a reasonable doubt standard upon a
litigant challenging the validity of a statute before there is
an opportunity to submit evidence and factual materials in
support of the claim.
Although states and state courts have the power to
establish rules of procedure for the consideration of claims
brought in those courts, this Court has recognized that
such rules must be consistent with the guarantees of the
Due Process Clause of the Fourteenth Amendment and the
other guarantees of the federal Constitution enforceable
against the states through that amendment. This Court
recently reiterated this requirement in Richards yv.
Jefferson County, Alabama, 116 S. Ct. 1761, 1765 €1996),
holding that a state court's application of rules of res
judicata must be consistent with fundamental federal
rights. This Court recognized there that "the guarantee of
due process is not a mere form," id. at 1765, and that there
are cases in which a state may not deprive individual
litigants of their own day in court. Indeed, the Richards
decision held that such cases include those challenging the
constitutionality of a tax statute and noted that "we have
previously struck down as a violation of due process a
state court's decision denying an individual taxpayer any
practicable opportunity to contest a tax on federal
constitutional grounds.” /d. at 1768.
In support of this point, this Court cited
Brinkerhoff-Faris Trust & Savings Co. v. Hill, 281 US.
673 (1930), which declared unconstitutional a state court's
decision overruling established state precedent that a
litigant challenging the constitutionality of a statute must
first seek an administrative remedy for its claim. The
Court first held that denying the litigant the opportunity to
14
a
———
obtain relief constituted a violation of due process, and
that there was no less a violation simply because the result
was accomplished by the judiciary as opposed to the
legislature. Id. at 679-80. While conceding the authority
of state instrumentalities to declare the laws of the state,
the decision went on to state as follows:
Our present concern is solely with the
question whether the plaintiff has been
accorded due process in the primary
sense—whether it has had an opportunity to
present its case and be heard in its support.
. . . [While it is for the state courts to
determine the adjective as well as the
substantive law of the state, they must, in so
doing, accord the parties due process of law.
Whether acting through its judiciary or
through its Legislature, a state may not
deprive a person of all existing remedies for
the enforcement of a right, which the state
has no power to destroy, unless there is, OF
was, afforded to him some real opportunity
* to protect it.
Id. at 681-82. Therefore, even though the Rhode Island
courts in this case may have been applying a state rule in
requiring that the Petitioners prove their constitutional
claims "beyond a reasonable doubt" at the pleading stage,
it still must appear that imposing such a standard is
consistent with federal constitutional guarantees.
The imposition of the beyond a reasonable doubt
standard at the pleading stage upon Rhode Island litigants
seeking to vindicate and enforce constitutional rights is
inconsistent with, and a violation of, the right of access to
15
courts embodied in the federal Constitution. As
emphasized in Brinkerhoff-Faris, due process includes the
guarantee of the opportunity to present a case in state court
and be heard in support. Jd. at 681. Richards v. Jefferson
County, Alabama, 116 S. Ct. at 1768, similarly recognized
that a "State may not deprive individual litigants of their
own day in court." "The right of access to the courts .. .
is founded in the Due Process Clause and assures that no
person will be denied the opportunity to present to the
judiciary allegations concerning violations of fundamental
constitutional rights." Wolff v. McDennell, 418 U.S. 539,
579 (1974).
The constitutional right of access to courts also
derives from the right to petition the government for
redress of grievances embodied in the First Amendment.
Bill Johnson’‘s Restaurants, Inc. v. NLRB, 461 U.S. 731,
741 (1983). "Certainly the right to petition extends to all
departments of the Government," and the right of access to
courts is but one aspect of the right of petition. California
Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508,
510 (1972).
The right of access to courts does nct consist
simply of the pro forma right to file complaints in the
courts; a state has an affirmative obligation to afford
litigants "meaningful access” to the courts and allow them
to present their case. Bounds v. Smith, 430 U.S. 817, 824
(1977). In Boddie v. Connecticut, 401 U.S. 371 (1971),
this Court held unconstitutional a state rule requiring the
payment of court fees and costs by indigents seeking to
file divorce actions as a denial of the right of access to the
courts, and in the course of so holding stated as follows:
16
Prior cases establish, first, that due
process requires, at a minimum, that absent
a countervailing state interest of overriding
significance, persons forced to settle their
claims of right and duty through the judicial
process must be given a meaningful
opportunity to be heard. .. .
Due process does not, of course,
require that the defendant in every civil case
actually have a hearing on the merits. A
State, can, for example, enter a default
judgment against a defendant who, after
adequate notice, fails to make a timely
appearance, . . . or who, without justifiable
excuse, violates a procedural rule requiring
the production of evidence necessary for
orderly adjudication... . What the
Constitution does require is "an opportunity
* * * oranted at a meaningful time and in a
meaningful manner," Armstrong v. Manzo,
380 U.S. 545, 552, 85 S. Ct. 1187, 1191, 14
L.Ed.2d 62 (1965) (emphasis added), "for
(a] hearing appropriate to the nature of the
case," Mullane v. Central Hanover Bank &
Trust Co., [339 U.S. 306, 313, 70 S.Ct. 652,
657, 94 L.Ed. 865 (1950)].
Id. at 377-78 (some citations omitted).
The Rhode Island courts’ imposition of a "beyond
a reasonable doubt" standard of proof upon litigants in its
courts presenting constitutional clairns violates the
assurances of the First and Fourteenth Amendments that
citizens will have a meaningful opportunity to present their
17
claims for judicial determination. This is starkly apparent
in the instant case, especially with respect to the
Petitioners’ claim that R.I. Pub. L. 95-400 pledged the
credit of the State of Rhode Island in violation of R.I.
Const. art. VI, § 16, which precludes the pledge of faith or
credit of the State for the payment of the obligations of
others without the approval of the people of the State. The
Petitioners alleged that, despite the disclaimer in the
legislation, the provisions of R.I. Pub. L. 95-400 in which
the General Assembly obligated itself to appropriate sales
tax revenues toward the funding of the Providence Place
Mall constituted a pledge of the State's credit. This was
so, the Petitioners alleged, because in reality a future
General Assembly could conceivably refuse to appropriate
the sales tax funds toward funding the mall, but only at the
cost of the complete destruction of the State's credit rating,
and this circumstance would preclude the State from not
appropriating the funds. Thus, whether there was an
unconstitutional pledge of the State's credit arising from
R.I. Pub. L. 95-400 could only be determined by an
examination of the circumstances surrounding the
legislation. |
But the courts below pretermitted any examination
of this issue and denied the Petitioners the opportunity to
establish this and their other constitutional claims by
requiring that the complaint itself demonstrate the claims
beyond a reasonable doubt. To subject litigants raising
constitutional claims to such a burden at the pleading stage
certainly cannot be considered to afford "meaningful
access" to the courts as required by the federai
Constitution. A litigant must be afforded a "practicable
opportunity" or "real opportunity" to contest the
constitutionality of state legislation. Richards v. Jefferson
County, Alabama, 116 S. Ct. at 1768-69; Wolff v.
18
McDonnell, 418 U.S. at 579. Under the beyond a
reasonable doubt standard applied in this case, a Rhode
Island litigant raising a constitutional challenge to
legislation would be able to survive past the pleading stage
only in those highly exceptional cases where the
legislation is patently invalid. This state of affairs imposes
a barrier that cannot be reconciled with the requirement of
the federal Constitution that there be meaningful access to
State courts.
The instant case is not unlike the extreme
application of state res judicata principles found to be
unconstitutional in Richards v. Jefferson County,
Alabama. There the state court held that the petitioners'
constitutional challenge to a state taxing statute was barred
by res judicata because the statute's constitutionality had
been upheld in a prior case brought by different parties.
This Court reversed, holding that due process prohibited
the state court from enforcing res judicata principles
against persons who were neither parties to the prior action
nor represented by the parties to the prior action. 116 S.
Ct. at 1767-68. The Richards decision stressed that due
process requires an individual to have a fracticable
opportunity to contest a statute on constitutional grounds,
and held that to apply the prior decision upholding the
statute to bar the petitioners’ challenge "would thus be to
deprive petitioners of their ‘chose in action,’ which we
have held to be a protected property interest in its own
right." Jd. at 1769.
It was equally unconstitutional for the Rhode Island
courts to require the Petitioners to prove, solely on the
basis of their pleadings, their constitutional claims beyond
a reasonable doubt. The Rhode Island courts did, in
essence, the same thing done by the Alabama courts in
19
Richards; the courts below applied precedent in an
extreme way so as to deprive the Petitioners of a
meaningful opportunity to prove their claims. Application
of the beyond a reasonable doubt standard against them on
a motion to dismiss for failure to state a claim was the
means by which the Petitioners were effectively denied
access to the courts. Requiring the Petitioners’ pieading
alone to distinguish precedent and to demonstrate the
unconstitutionality of R.I. Pub. L. 95-400 simply did not
afford them a meaningful opportunity to contest that law's
validity.
The conclusion that the decisions below deprived
the Petitioners of their constitutional right of access to the
courts cannot be avoided on the basis of the claim that
there were no factual questions raised by their pleadings.
The effect of the lower courts’ decision is, in essence, the
creation of an irrebuttable presumption that no facts exist
that would support a claim seeking to enforce
constitutional rights. This Court has often held such
irrebuttable presumptions to be constitutionally disfavored.
Vlandis v. Kline, 412 U.S. 441, 446 (1973). In Heiner v.
Donnan, 285 U.S. 312, 329 (1932), the Court stated that
it "had held more than once that a statute creating a
presumption which operates to deny a fair opportunity to
rebut it violates the due process clause of the Fourteenth
Amendment." Denial of a fair opportunity to rebut the
presumption of constitutionality is precisely the effect of
the holding, that the Petitioners were required to prove
beyond a reasonable doubt their constitutional claims at
the pleading stage. The Rhode Island courts have declared
that, whatever the facts of the particular case are or
whatever facts may be developed by a claimant attempting
to assert a constitutional right, the facts make no difference
20
unless the pleading itself demonstrates the validity of the
claim beyond a reasonable doubt.
Indeed, the Rhode Island courts have essentially
vested Rhode Island's General Assembly with the sole
power to determine whether rights guaranteed to the state's
citizens by its constitution can be exercised. In rejecting
the Petitioners’ argument that P.L. 95-400 constituted a
pledge of the state's credit without voter approval in
violation of R.I. Const. art. VI, § 16, the Rhode Island
Supreme Court relied upon the recitation in P.L. 95-400
that the promise to the developers that they would be given
future sales tax revenues was not a debt, liability, or
obligation of the state. Under this ruling, the Rhode Island
General Assembly has been granted the power completely
to avoid the constitutional restrictions on pledging the
state's credit simply by including boilerplate language
disavowing the creation of any debt or pledge of credit,
without regard to facts which show that a debt or pledge of
credit is in fact created by the legislation. The General
Assembly is allowed to create an irrebuttable presumption
against a constitutional right because the Rhode Island
courts will not inquire into the facts supporting the
constitutional claim. The Rhode Island courts have
abdicated their role as the ultimate defenders of
constitutional principles, and litigants, instead of receiving
the reasonable opportunity to vindicate constitutional
guarantees they believe they will receive, will get only lip
service from the Rhode Island courts. The court decisions
below cede to the General Assembly the power to
determine whether constitutional rights can be enforced in
Rhode Island.
This situation surely violates the right of litigants to
a reasonable opportunity to prove their claims, which right
21
is protected by the federal Constitution's guarentee of
access to the courts. No branch of a state government
may, by ipse dixit, determine whether a constitutional right
can be enforced. Cf Webb's Fabulous Pharmacies, Inc. v.
Beckwith, 449 U.S. 155, 164 (1980). The suggestion in
the Rhode Island Supreme Court's decision that no facts
existed which would make any difference to the
Petitioners’ constitutional claim ignores the fact that this
conclusion results from the decision to impose a "beyond
a reasonable doubt" standard of proof at the pleading
stage, and it creates an irrebuttable presumption of
constitutionality. By preempting any factual development
of the constitutional claims, the lower courts deprived the
Petitioners of any real opportunity to assert rights granites
by the Rhode Island Constitution.
As such, the Petitioners were deprived of their right
of access to the state courts as guaranteed by the First and
Fourteenth Amendments to the United States Constitution.
Indeed, the decisions below, if allowed to stand, create a
nearly insuperable obstacle for litigants seeking to enforce
the provisions of the state Constitution. Application of the
beyond a reasonable doubt standard in considering
constitutional claims effectively deprives litigants of a
judicial forum for those claims, a situation which this
Court has noted raises a "serious constitutional question."
Bowen v. Michigan Academy of Family Physicians, 476
U.S. 667, 681 n.12 (1986). The Rhode Island courts’
decisions in this case are contrary to universally applied
notions of Anglo-American law, which allows claims to be
dismissed solely upon the pleadings only where it appears
beyond doubt that the plaintiff can prove no facts entitling
him or her to relief, Conley v. Gibson, 355 U.S. at 45-46,
and cannot be reconciled with the fundamental
constitutional guarantee of access to courts.
22
CONCLUSION
For the reasons set forth above, the Petitioners
respectfully request that this Court grant the Petition for
Writ of Certiorari to the Rhode Island Supreme Court.
R supmitted,
ag ‘ Pa
J. William W. Harsch :
170 Westminster Street
Suite 800
Providence, RI 02903
(401) 454-4466
Counsel for Petitioners
23
ee ee eee eee” a ass re
NO.
IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1996
WARWICK MALL TRUST, BLISS PROPERTIES, INC.,
AND IRVING SCHWARTZ,
PETITIONERS,
Vv.
THE STATE OF RHODE ISLAND, ET AL.,
RESPONDENTS.
On Petition for Writ of Certiorari to the
Supreme Court of the State of Rhode Island
APPENDIX
J. WILLIAM W. HARSCH
170 Westminster Street
Suite 800
Providence, Rhode Island 02903
(401) 454-4466
Counsel for Petitioners
TABLE OF CONTENTS
Rhode Island Supreme Court Order dated
July 19, 1996, affirming the judgment
Or Unk Deere Cott. sii ein ce,
Rhode Island Supreme Court's Opinion
Gateg Uctober £1, 1996 6 ois eeececcs
Rhode Island Superior Court for Providence
and Bristol Counties Order granting
Defendants’ Motion to Dismiss ..........
Excerpts from transcript of hearing held
February 28 and 29, 1996 in the Rhode
Island Superior Court for Providence
OS TIE COMI nos koa eit s ee
W0146 Supreme Court
No. 96-162-Appeal
(PC 95-6940)
Warwick Mall Trust, Bliss Properties, Inc. and
Irving Schwartz
V.
The State of Rhode Island, the Honorable
Lincoln C. Almond, in his capacities as
Governor of the State of Rhode Island and
Chairman of the Rhode Island Economic
Development Corporation, and Providence
Place Group
ORDER
After examining the briefs submitted by the parties
and hearing oral argument by counsel on July 19, 1996,
the court enters the following order.
The judgment of the Superior Court dismissing the
plaintiffs' complaint pursuant to Rule 12(b)(6) of the Rules
of Civil Procedure of the Superior Court is hereby
affirmed. An opinion setting forth the reasons for this
order will follow.
Entered as an Order of this Court this 19th day of
July, 1996.
By Order
/s/
Clerk
A-2
October 11, 1996
Supreme Court
No. 96-162-Appeal
(PC 95-6940)
Warwick Mall Trust.et al.
Vv.
The State of Rhode Island et al.
This opinion is subject to
formal revision before publication in the
Rhode Island Reporter. Readers are
requested to notify the Technical Secretary,
Supreme Court of Rhode Island, 250
Benefit Street, Providence, Rhode Island
02903, at Tel. 277-6588 of any
typographical or other formal errors in order
that corrections may be made before the
opinion is published.
October 11, 1996
Supreme Court
No. 96-162-Appeal
(PC 95-6940)
Warwick Mall Trust et al.
Vv.
The State of Rhode Island et al.
Present: Weisberger, C.J., Murray, Lederberg,
Bourcier, and Flanders, JJ. :
OPINION
Flanders, Justice. This appeal has challenged the
constitutionality of legislation enacted by the Rhode Island
General Assembly in 1995' authorizing the Rhode Island
Economic Development Corporation (the EDC) and the
city of Providence to enter into a long-term tax-exemption
agreement with the developer of the proposed Providence
Place Project (the Project), a large retail-shopping mall
and parking garage to be located in Providence.
'Public Laws 1995, ch. 400 (the Enabling Act).
This legislation passed with the assent of over two-thirds
of the members elected to each house of the General
Assembly. Journal of the House of Representatives, Vol.
122, No. 76 at H.J.-19 (67 yeas and 33 nays); Journal of
the Senate, Vol. 122, No. 77 at S.J.-24 (36 yeas and 13
nays).
A-4
The plaintiffs, Warwick Mall Trust and Bliss
Properties, Inc., are the owner and the operator,
respectively, of a shopping mall located in Warwick,
Rhode Island. The plaintiff Irving Schwartz is a city of
Providence voter and taxpayer. The defendants are the
State of Rhode Island; Lincoln C. Almond, in his capacity
as Rhode Island's Governor and as the chairman of the
EDC; and the Providence Place Group Limited
Partnership, a New York limited partnership that is the
Project's developer.
The Superior Court entered a judgment dismissing
plaintiffs' complaint for failing to state a claim upon which
relief could be granted. Super. R. Civ. P. 12(b)(6). The
plaintiffs then appealed from that adverse judgment,
asserting the Enabling Act's unconstitutionality on the
grounds that it violates the municipal voter-approval
requirements of the home rule article,? constitutes an
2Article XIII, section 4, of the Rhode Island
Constitution declares:
"The general assembly shall have the power
to act in relation to the property, affairs and
government of any city or town by general
laws which shall apply alike to all cities and
towns, but which shall not affect the form of
government of any city or town. The
general assembly shall also have the power
to act in relation to the property, affairs and
government of a particular city or town
provided that such legislative action shall
become effective only upon approval by a
majority of the qualified electors of the said
A-5
illegal pledge of the state's credit by the EDC,’ and
improperly delegates tax-exempting legislative authority
to the EDC.‘
city or town voting at a general or special
election, except that in the case of acts
involving the imposition of a tax or the
expenditure of money by a town the same
shall provide for the submission thereof to
those electors in said town qualified to vote
upon a proposition to impose a tax or for the
expenditure of money.”
Article VI, section 16, of our constitution States:
"The general assembly shall have no
powers, without the express consent of the
people, to incur state debts to an amount
exceeding fifty thousand dollars, except in
# time of war, or in case of insurrection or
invasion; nor shall it in any case, without
such consent, pledge the faith of the state
for the payment of the obligations of others.
This section shall not be construed to refer
to any money that may be deposited with
the state by the government of the United
States."
~
*Article VI, section 1, provides that "[t]his
Constitution shall be the supreme law of the state, and any
law inconsistent therewith shall be void. The general
assembly shall pass all laws necessary to carry this
Constitution into effect." Section 2 adds that "(t]he
legislative power, under this Constitution, shall be vested
A-6
On July 19, 1996, after reviewing the parties’ legal
briefs, hearing their oral arguments, and considering thcir
respective legal positions, we issued a brief order
affirming the Superior Court's judgment dismissing
plaintiffs’ complaint.’ We now set forth the reasons for
our decision.
i
Because the General Assembly Retains Its Exclusive
Power to Authorize Municipal Taxation and
Borrowing, the Home Rule Article Does Not Require
Local Voter Approval of the Enabling Act.
Despite the addition of the home rule article to
Rhode Island's Constitution in 1951, cities and towns
remain powerless "to levy, assess and collect taxes or to
borrow money, except as authorized by the general
assembly." R.I. Const., art. XIII, sec. 5.° The Enabling
Act authorizes the city of Providence to enter into a long-
term tax-treaty agreement with the developer of the
in two houses, the one to be called the senate, the other,
the house of representatives* * *."
*We assumed without deciding that plaintiffs had
standing to mount this constitutional attack on the
Enabling Act.
Article XIII, section 5, states that "[n]othing
contained in [article XIII] shall be deemed to grant to any
city or town the power to levy, assess and collect taxes or
to borrow money, except as authorized by the general
assembly.”
A-7
Project. Pursuant to the proposed tax treaty, the
developer's payments in lieu of taxes are earmarked for the
Project's debt service and are amortized over a thirty-year
period. A municipality's power to negotiate for payments
of this kind from property owners located within its
jurisdiction and its power to abate such payments, to
allocate them for certain purposes, or to exempt certain
property in whole or in part from municipal taxation are all
actions derivative of and subsumed by its basic authority
vel non to levy, to assess, and to collect taxes. See, e.g.,
Crafts v. Ray, 22 R.I. 179, 183, 46 A. 1043, 1043 (1900)
(noting that the "power to tax necessarily implies a power
to exempt"). Ifa city or a town cannot levy, assess, and
collect taxes without General Assembly authorization,
then it certainly cannot abate, exempt, or allocate
payments it would otherwise be entitled to receive as taxes
(or to negotiate for their receipt as payments in lieu of
taxes) without such authorization.’
™We note, for example, that G.L. 1956 § 44-3-9
provides in part:
"(a)(1) Except as hereinafter provided, the
electors of any town qualified to vote on a
proposition to appropriate money or impose
a tax when legally assembled, may vote to
authorize the town council of the town, for
a period not exceeding ten (10) years, and
subject to the conditions as hereinafter
provided, to exempt from payment, in whole
or in part, real and personal property used
for manufacturing, or commercial purposes,
or to determine a stabilized amount of taxes
to be paid on account of the property,
A-8
a eee
If consummated, the proposed tax treaty
contemplated by the Enabling Act would effectively
exempt the Project's real and personal property from
municipal taxation for over thirty years. It would do so by
earmarking what would otherwise constitute payments in
lieu of taxes for debt-service payments to the Project's
lenders. In any event the city's ability "to levy, assess and
collect taxes or to borrow money" with respect to the
Project will be affected by this legislation for the
foreseeable future. Accordingly we deem the Enabling
Act to fall within the General Assembly's exclusive
reserved power to authorize local taxation pursuant to
article XIII, section 5, of the Rhode Island Constitution.
Despite the tax-enabling features of this legislation,
plaintiffs still argued that because the Enabling Act
remained an act "in relation to the property, affairs and
government" of a particular home-rule city or town
(namely, the city of Providence), it could “become
effective only upon approval by a majority of the qualified
electors of the said city or town voting at a general or
special election * * *." R.I. Const., art. XIII, sec. 4.
notwithstanding the valuation of the
property or the rate of tax; * * *
Wk *
"(b) Cities shall have the same
authority as is granted to towns except that
authority granted to the qualified electors of
a town and to town councils shall be
exercised in the case of a city by the city
council.”
A-9
Although this appears at first blush to be a plausible
reading of sec. 4 of the home rule article, that section
cannot be read in isolation from sec. 5 of this same article.
In construing sec. 5, this court has already opined that,
notwithstanding a municipality's adoption of a home rule
charter, the General Assembly still retains "its exclusive
power to legislate by general or special acts in granting to
a city or town authority ‘to levy, assess and collect taxes or
to borrow money * * *.’ this power is expressly reserved
to the General Assembly under section 5 of said article
[presently section 5 of article XIII]." (Emphasis added.)
Opinion to the House of Representatives, 79 R.I. 277, 280,
87 A.2d 693, 696 (1952).
If, as plaintiffs have contended, local voters in a
home-rule city or town like Providence still have the right
to approve any specific tax-enabling legislation enacted by
the General Assembly pertaining to their municipality,
then the Legislature would be powerless to pass such laws
without first obtaining local voter approval. However, this
result would be inconsistent with the conclusion we
reached in Opinion to the House of Representatives that
the General Assembly retains the exclusive power to
authorize local taxation by general or special acts. Id.
Instead of the General Assembly's retaining an exclusive
power to authorize municipal taxation in any particular
city or town as provided for in sec. 5, its sec. 5-enabling
power would be a shared, conditional, and nonexclusive
one. Just as a municipality could pass no local tax
legislation without General Assembly authorization, the
General Assembly could pass no local tax-enabling laws
without local voter approval. Such a prescription for local
tax gridlock would be at odds with article XIII, section 5's
refusal to grant cities and towns any power with respect to
A-10
local taxation except as authorized by the General
Assembly.
Moreover, if plaintiffs' constitutional interpretation
were correct, then municipal voters in home-rule cities
would be empowered to veto any local tax-enabling laws
enacted by the General Assembly. Far from being
powerless and dependent on General Assembly
authorization to act on local tax issues, each city or town,
through its municipal voters, could stymie the General
Assembly's exercise of its exclusive power to pass "special
acts in granting to a city or town authority 'to levy, assess
and collect taxes or to borrow money * * *."" Opinion to
t
i
the House of Representatives, 79 R.I. at 280, 87 A.2d a
696.
Mindful that "to tax and to please, no more than to
love and be wise, is not given to men,® we have declined
to adopt this interpretation. To do so would conflict with
our constitution's exclusive allocation to the General
Assembly of the legislative power to authorize any city or
town to levy, to assess, and to collect local taxes and with
the rationale of our earlier decision in Opinion to the
ou Representatives, which we hereby affirm as it
bears on the issues raised by this appeal.
In the famous case of McCulloch v. Maryland, 17
U.S. (4 Wheat.) 316, 4 L. Ed. 579 (1819), Chief Justice
John Marshall spoke to this very point in fixing the
distribution of the taxation power between a general and
"Edmund Burke, Speech on American Taxation
(Apr. 19, 1774), in 2 The Writings & Speeches of Edmund
Burke 67 (1901).
A-11
a local governmental authority. In rejecting the State of
Maryland's attempt to tax a national bank, Chief Justice
Marshall uttered these memorable words:
"That the power to tax involves the
power to destroy; that the power to destroy
may defeat and render useless the power to
create; that there is a plain repugnance, in
conferring on one government a power to
control the constitutional measures of
another, which other, with respect to those
very measures, is declared to be supreme
over that which exerts the control, are
propositions not to be denied.” Id. at 431, 4
L. Ed. at 607.
In matters pertaining to the authorization of
municipal taxation and borrowing, our constitution
declares the General Assembly to be supreme over any
municipality's attempts to go it alone or to exert control
over state legislative initiatives through home-rule
measures such as local voter approval. R.I. Const. art.
XIII, sec. 5. Thus, pursuant to our advice in Opinion to
the House of Representatives (a decision rendered just one
year after Rhode Island adopted the home rule article), we
reaffirm that under the Rhode Island Constitution, the
General Assembly retains its plenary power to enact
special tax-enabling laws in relation to a particular city or
town, notwithstanding that municipality's adoption of a
home rule charter. And it can do so without having first to
obtain the voters' approval in that home-rule municipality
because local tax-enabling acts, like the one at issue here,
that affect a city's power to levy, to assess, and to collect
property taxes or to borrow money are not subject to
A-12
article XIII, section 4's requirement of local voter
approval.’
Given our holding that the Enabling Act is not
subject to the local voter-approval provisions of the home
tule article because of its status as municipal tax-enabling
legislation, there is no need for us to reach any of the other
arguments advanced by the parties in regard to the
question of whether the legislation is subject to any of
these provisions.
*Section 4 of the home rule article does provide that
"in the case of acts involving the imposition of a tax or the
expenditure of money by a town the same shall provide for
the submission thereof to those electors in said town
qualified to vote upon a proposition to impose a tax or for
the expenditure of money." However, because the
Enabling Act merely "authorize[s]" the EDC and the City
of Providence to enter into a tax treaty on terms that "both
the EDC and the City * * * deem advisable," P.L. 1995,
ch. 400, § 1 (enacting § 42-63.5-3), it does not involve
"the imposition of a tax or the expenditure of money by a
town, as distinguished from a city * * *." Opinion to the
House of Representatives, 79 R.I. 277, 280, 87 A.2d 693,
696 (1952). Thus it does not come within the tax-
imposition or money-expenditure-by-a-town provision of
article XIII, section 4, but instead falls within the General
Assembly's reserved section 5-power to authorize
particular municipalities to act on local tax matters.
A-13
II
The Challenged Legislation
Does Not Authorize the EDC to Pledge
the Credit of the State.
We also hold that the Enabling Act does not
authorize the EDC to pledge the credit of the state in
violation of the Rhode Island constitutional provisions set
forth in article VI, section 16 (requiring a majority of the
qualified electors of the state to approve state debts over
$50,000), nor is there anything in this law that pledges the
faith and credit of the state for the payment of the
obligation of others.
By law, this type of obligation issued by the EDC
under its enabling statute "shall not constitute a debt,
liability or obligation of the state or of any political
subdivision thereof other than the [EDC] or a pledge of the
faith and credit of the state or any political subdivision
other than the [EDC]." General Laws 1956 § 42-64-23.
We have repeatedly opined that when this or similar
disclaimer language is used, debt obligations issued by
public corporations like the EDC do not pledge the faith
and credit of the state or create a debt enforceable against
the state and that, therefore, these public entities are not
constitutionally barred from entering into such obligations.
See In re Advisory Opinion to the Governor (DEPCO),
593 A.2d 943, 950-51 (RI. 1991) (Rhode Island
Depositors Economic Protection Corporation): In_re
Advi Opinion to the Governor: Public Drinki
Water Protection Act of 1987, 556 A.2d 1000, 1001 (R.I.
1989) (Rhode Island Water Resources Board); Opinion to
the Governor, 112 R.I. 151, 156-57, 308 A.2d 809, 812
(1973) (Rhode Island Housing and Mortgage Finance
A-14
Corporation); Opinion to the Governor, 107 R.I. 651, 655,
270 A.2d 520, 522 (1970) (Rhode Island Water Resources
Board); see also Adviso inion tot vernor, 113
R.I. 586, 590-91, 324 A.2d 641, 641-45 (1974) (EDC's
predecessor, the Rhode Island Port Authority and
Economic Development Corporation).
Indeed, in our 1974 advisory opinion concerning
the bonds issued by the EDC's predecessor corporation, we
concluded that use of the same capital-reserve funding
mechanism contained in section 1 of the Enabling Act did
not pledge the credit of the state or create a state
obligation. Adviso inion t Governor, 113 R.I. at
590-91, 324 A.2d at 644-45. We also opined that the mere
creation of a capital reserve fund provision as described in
§ 42-64-18(d) "did not constitute the incurring of a debt or
pledge of the state's credit because the General Assembly
retained its right" to refuse to contribute to any capital
reserve fund that may be established by failing to
appropriate moneys for this program. 113 R.I. at 591, 324
A.2d at 645.
Our bedrock rationale for all these opinions is that
public corporations of the state have "a distinct legal
existence from the state and [do not constitute] a
department of state government." See, e.g., § 42-64-4(a)
(discussing the EDC). Although payments to the Project's
developer are to be secured for a term not exceeding
twenty years by a so-called capital-reserve fund to be
established by the EDC, the General Assembly is under no
legal compunction to make any annual appropriation to
fund this capital-reserve account, and no creditor can force
the state to do so. Thus, because the General Assembly,
year in and year out, "still retains its right to concur or
disagree" with the proposed funding of this reserve
A-15
account, the statute "in no way constitutes an
unconstitutional incurrence of a debt or a pledge of the
state's credit. See Opinion to the Governor, 112 RI. at
157, 308 A.2d at 812; see also Advisory Opinion to the
Governor, 113 R.I. at 591, 324 A.2d at 645.
Although the state's credit rating as determined by
various bonding agencies and financial authorities may
well be affected by the level of debt incurred by a public
corporation like the EDC and by its capital-reserve-fund
provisions that are intended as security for such
obligations, these allegations, even if proven, would not
convert these public-corporation obligations into state
debts or pledges by the state of its faith and credit. This is
so because the challenged provisions neither create any
legally enforceable obligation or debt collectible from the
state nor pledge as a matter of law the faith or the credit of
the state to secure such debts.
In the future, it may well be that as a practical
matter (and depending on its then-existing priorities) the
General Assembly will be strongly inclined to fund
whatever capital-reserve-fund payments are contemplated
by the Enabling Act—especially if its failure to do so
would adversely affect the state's credit ratings—but "the
controlling factor is not whether the legislature will
exercise its discretion in a given manner, but rather
whether the right of discretion exists." Opinion to the
Governor, 97 R.I. 200, 206-07, 196 A.2d 829, 832 (1964).
Here, that discretion to fund or not to fund plainly exists.
For these reasons we have rejected plaintiffs’
argument that the Enabling Act is invalid under article VI,
section 16, of the Rhode Island Constitution for not having
been approved by voters in a statewide referendum.
A-16
ae |
Il
The Challenged Legislation
Does Not Improperly Delegate Legislative Power.
Section 4 of the Enabling Act (amending § 42-64-
20(c)) allows the EDC to authorize its statutory tax
exemption to be used by a lessee or sublessee of the
corporation's properties.'° The plaintiffs have argued that
Section 4 of the Enabling Act provides in
pertineni part:
"For purposes of the exemption from
taxes and assessments upon or in respect of
any project under subsections (a) or (b) of
this section, the corporation shall not be
required to hold legal title to any real or
personal property, including any fixtures,
furnishings or equipment which are
acquired and used in the construction and
development of such project, but such legal
title may be held in the name of a lessee
(including sublessees) from the corporation.
Such property, which shall not include any
goods or inventory used in such project after
completion of construction shall be exempt
from taxation to the same extent as if legal
title of such property were in the name of
the corporation, provided that the board of
directors of the corporation adopts a
resolution confirming use of such tax
exemption for such project by such lessee.
Such resolution shall include findings that
A-17
this delegation to a public corporation of the Legislature's
power to exempt property from taxation is too broad and
standardless to pass legal muster. We disagree.
Before a lessee or sublessee of the EDC can take
advantage of these tax-exempt provisions, the EDC must
first adopt a resolution that contains the following specific
findings: "(1) the project is a project of the [EDC] under
R.I. Gen. Laws § 42-64-3(p) and (2) it is in the interest of
the [EDC] and of the project that legal title be held by the
lessee from the corporation." See, supra, note 10. In
considering whether to make such findings, the EDC's
board of directors is expressly empowered to consider "the ©
interest of the corporation and of the project."
When reviewing the Legislature's deleyation of any
of its powers, we must interpret the provisions in light of
the act as a whole and in conformity with the purposes of
the EDC. See Davis v. Wood, 427 A.2d 332, 336 (RI.
(1) the project is a project of the corporation
under R.I. Gen. Laws 42-64-3(p) and (2) it
is in the interest of the corporation and of
the project that legal title be held by the
lessee from the corporation. In adopting
any such resolution, the board of directors
may consider any factors it deems relevant
to the interests of the corporation or the
project including, for example, but without
limitation, reduction in potential liability or
cost to the corporation or designation of the
project as a ‘Project of Critical Economic
Concern’ pursuant to Chapter 117 of Title
42 of the General Laws."
A-18
1981) ("[{i]n determining whether a statute contains
sufficient standards, we must read the act as a whole; the
provision in question should not be isolated, but must be
construed with reference to the entire act"). Among the
purposes of the EDC are "[t]o promote and encourage the
preservation, expansion, and sound development of new
and existing industry, business, commerce, agriculture,
tourism, and recreational facilities in the state, promoting
thereby the economic development of the state and the
general welfare of its citizens." Section 42-64-5(c), as
amended by 1995, ch. 370, art. 12, § 8. Although the
standards for authorizing a tax exemption are broadly
drawn, when interpreted in light of the EDC's statutory
purposes, they serve to guide and to constrain the EDC in
the exercise of its authority to permit property held in the
name of a lessee or sublessee to be tax exempt (to the
same extent as if legal title where held by the EDC).
Moreover, the mere fact that the Enabling Act is
contingent on the approval, the execution, and the delivery
of specified agreements between the EDC and the Project
developer does not impermissibly delegate legislative
power. The entry into these agreements is simply part of
the process whereby the EDC carries out its delegated
powers pursuant to the standards and the purposes set forth
in the legislation.
Because we have already twice approved the
General Assembly's delegation of powers to the EDC and
its subsidiary entities as "constitutionally permissible,'' we
See In re Advisory Opinion to the Governor
(Rhode Island Airport Corporation), 627 A.2d 1246, 1252
(R.I. 1993); Advisory Opinion to the Governor, 113 RI. at
A-19
need only repeat what was said before: "We see no reason
to reexamine this issue * * *" In re Advisory Opinion to
the Governor (Rhode Island Airport Corporation), 627
A.2d at 1252.
Here, the function that has been delegated—
determining the tax-exempt status of certain economic-
development projects—is certainly important but
nonetheless narrow. The standards accompanying the
delegation are also clear: the project in question must be
an EDC project, and it must be in the interest of the EDC
and the project that legal title be held by the lessee. These
determinations must be made in light of the practical,
project-specific considerations that are consistent with
EDC's economic-development purposes. And finally, the
safeguards provided in the Administrative Procedures Act
may, in certain circumstances, serve to check potentially
arbitrary EDC action. See id. at 1253.
Our approach to legislation like this, which has
been challenged for an alleged lack of a proper delegation
of legislative authority, is a utilitarian one. We evaluate
such challenges in light of the practical recognition that a
modern Legislature has a frequent need "to utilize an
administrative agent to accomplish the purpose of the
legislation * * *." J.M. Mills, Inc. v. Murphy, 116 R.I. 54,
61, 352 A.2d 661, 665 (1976). Here, the Enabling Act
reflects a legislative decision that the EDC, as an
administrative agent, can best decide whether to allow a
tax exemption to be used for particular EDC projects in
which property is held in the name of a lessee. This is
exactly the kind of fact-specific, market-oriented, project-
596, 324 A.2d at 647.
A-20
by-project determination in which such a legislative power
may be delegated most expediently to an administrative
agent, especially when the General Assembly retains the
power not to fund the capital-reserve account that secures
the Project's debts. In any event we see no constitutional
reason to second-guess that legislative judgment.
Conclusion
We have carefully considered these and each of the
other arguments raised by the plaintiffs in their appeal, and
we find them to be unpersuasive. Here, there were no
material facts in dispute that were outcome
determinative.'? Thus, even in ruling on the defendants’
motion to dismiss, see Super R. Civ. P. 12(b)(6), it was
proper for the Superior Court to apply a "beyond a
reasonable doubt" standard in deciding whether the
plaintiffs’ challenge to the constitutionality of the Enabling
Act should be upheld or rejected. See, e.g., Chartier Real
Estate Co. v. Chafee, 101 R.I. 544, 565, 225 A.2d 766,
777-78 (1967) (since plaintiffs failed to carry their burden
of establishing "beyond a reasonable doubt" that, as a
matter of law, certain legislation was unconstitutional, the
'2Even assuming that the plaintiffs would have been
able to prove at trial that as a practical matter the financial
community, or some significant constituents thereof, may
consider the obligations in question to be a pledge of the
state's credit or a de facto state debt, this proof would not
matter for the purposes of this decision because from a
legal standpoint these obligations simply do not fall into
that category and no court would be entitled to enforce
them as such.
A-21
trial justice did not err in granting defendants’ motion to
dismiss).
For the reasons previously stated, we have affirmed
the judgment of the Superior Court and denied and
dismissed the plaintiffs’ appeal.
A-22
STATE OF RHODE ISLAND SUPERIOR COURT
PROVIDENCE, SC.
WARWICK MALL TRUST,
BLISS PROPERTIES,
INC., and IRVING
SCHWARTZ :
Plaintiffs : P.C. No. 95-6940
V.
STATE OF RHODE ISLAND,
and the HONORABLE
LINCOLN C. ALMOND,
in his capacities as Governor of
the State of Rhode Island and
Chairman of the Rhode Island
Economic Development
Corporation, and PROVIDENCE :
PLACE GROUP LIMITED
PARTNERSHIP
Defendants
ORDER
This matter came for a hearing before the
Honorable Thomas Needham on February 28 and 29,
1996, on Defendants’ Motion to Dismiss and on the
Motion of the Attorney General to Certify Issues to the
Supreme Court. Upon consideration thereof, it is hereby
ORDERED
l. The Attorney General's Motion to Certify is
denied.
A-23
a Plaintiffs’ complaint is dismissed with
prejudice as to all counts.
3. Judgment shall be entered for Defendants.
SO ORDERED: ENTER:
/s/ Qhomas Ho. Needham /s/
Judge Thomas H. Needham Clerk
March 4, 1996
SUBMITTED BY:
|s/ Pisa Dinexman
Lisa Dinerman #2689
Special Assistant Attorney General
72 Pine Street
Providence, Rhode Island 02903
401/274-4400 ext. 2357
CERTIFICA F SERVICE
I hereby certify that I caused a copy of the
foregoing Order to be forwarded to all counsel of record,
postage prepaid, this 4th day of March, 1996. -
/s/ Lisa Dsscomcass
A-24
RECEIVED MAR 26, 1996.
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
PROVIDENCE, Sc. SUPERIOR COURT
WARWICK MALL TRUST, BLISS PROPERTIES, ) COPY |
INC., AND IRVING SCHWARTZ ) |
) |
vs. ) PC/95-6940
) |
)
THE STATE OF RHODE ISLAND, ET AL
HEARD BEFORE MR. JUSTICE THOMAS H. NEEDHAM
FEBRUARY 28 and 29, 1996
APPEARANCES: |
J. WILLIAM HARSCH, ESQUIRE ........... FOR THE PLAINTIFFS.
JOHN MARKS, ESQUIRE ................... FOR THE PLAINTIFFS. |
LISA DINERMAN, ESQUIRE |
SPECIAL ASSISTANT ATTORNEY GENERAL ......... FOR THE STATE.
JOSEPH S. LARISA, ESQUIRE |
EXECUTIVE COUNSEL TO THE GOVERNOR ... FOR THE DEFENDANT.
MARK A. POGUE, ESQUIRE .................. REPRESENTING THE |
INTERVENER, PROVIDENCE PLACE GROUP. |
|
JOHN G. KESTER, ESQUIRE ................. COUNSEL ADMITTED |
PRO HAC VICE ON BEHALF OF THE INTERVENER. |
|
MICHELE M. SNIZEK, RPR |
COURT REPORTER |
Michele M. Snizek, RPR
A-25
1 ‘ * * *
2| ot
3 There was a case that I took up this morning when’
4 | arrived that I'd like some comments on as it relates to a
5 12(b)(6) motion, and what the Supreme Court is
6 attempting to say to the trial court. That case is Chartier.
7 The Supreme Court in Chartier Real Estate Company,
8 Incorporated vs. John H. Chaffee, the case is in 225.
9 Atlantic Reporter 2d 766. In that case there was a act of
10 the General Assembly that indicated that a referendum
11/would be submitted for approval to the voters providing
12 for the issuance of five million dollars in bonds for the
13 acquisition of land for the recreation and conservation
14 purposes. The matter came before Judge Carrellas, and
15| Judge Carrellas at the trial level denied the prayer for,
16 permanent injunction and he dismissed the complaint.
17| ‘There was an appeal that went to the Supreme Court. The
18'Supreme Court addressed the issues raised in that
19 complaint, and this is the language that foilows, the very
20\end of the opinion, "In our judgment the plaintiffs have not
21\sustained their burden of proving beyond a reasonable
22'doubt that Chapter 169 is unconstitutional, and therefore
23 have failed to state a claim against the defendants which
24/relief may be granted. We hold accordingly that the trial
25 justice did not err in denying the plaintiff's prayer for a
26 permanent injunction and granting the defendant's motion
27,\to dismiss."
28
29) I'm troubled about that language that was used in
30\that case. The standard, the test on a motion to dismiss
31/seems to run contra to that. In other words, a motion to
32/\dismiss would be denied if the Court can, in inspecting the
Michele M. Snizek, RPR
A-26
Oo ee ee
complaint, not say to itself there is no basis. I have
conviction beyond a reasonable doubt that this plaintiff
cannot sustain relief from this defendant under the
‘complaint. Mr. Justice Carrellas, evidently, in dismissing
the complaint, came to that conclusion. But when the
Supreme Court reviewed it, the Supreme Court seems to
have placed the burden on the plaintiff to show that the
statute is unconstitutionai. |
Ww PMID UMN FWD bP
What I have before me in the first instance is a
12(b)(6) motion. Applying the standard test to that, I test
12/the sufficiency of the complaint against that standard.
13} Would someone like to comment as to whether or not the
14 |plaintiff at this time on this motion must convince me of
15/|the unconstitutionality of the statute in order to remain in
16/the arena, so to speak? Or, stated another way, on a
17) 12(b)(6) motion, does the presumption of constitutionality
18'have to be overcome in order to defeat the motion for a
19|12(b)(6) dismissal? I'm going to leave you with that
20|thought for a moment and I'm going to take a—stay where
21/you are. I'm going to take a short trip in my chambers, but
22/|stay where you are. Do not get up.
Hb
rH Oo
23 |
24 (Brief pause)
25
26 THE COURT: Let me continue with my thought as
27\it involves why this case disturbs me. When we had our
28\chambers conference, I suggested that since motions to
29/dismiss had been filed, that we should handle those
30|motions to dismiss. Most of your briefs and memoranda, |
31/particularly as it relates to Count 1 and Count 2, read like
32\a brief, on both sides, for and against a motion for
Michele M. Snizek, RPR
A-27
1 summary judgment. There's one thing lacking, of course,
2 and I haven't seen any stipulation, but I think you treat in
3 your briefs the fact that no election has taken place i in
4 Providence or will take place in Providence, and there's no
5 statewide election that will take place, and you present a
6 very exhaustive brief and memoranda which reads as’
7 though one is in favor of a motion for summary judgment
8 and another is opposed to it. So I asked myseif earlier,
9 considering your motions, as to whether or not a 12(b)(6).
10 motion brings before me a phase of the case which reaches
11 the constitutionality of the enactment. Ordinarily, a
12 12(b)(6) motion is merely a test on pleading and it's a very
13 very low hurdle that the plaintiff has to get over, until I
14 read this case, and when I read this case, and it's an older;
15 case—J ohn Chafee hasn't been governor since the late
16/60's; the case, I believe, was a 1967 case—but the
17 Supreme Court seems to say on appeal that the plaintiff
18 did not sustain his burden of proving that the act was
19 unconstitutional. Therefore, the judge did not err in
20 dismissing it. I originally did not think that a 12(b)(6)
21 motion presented a phase of the case which would bring
‘ ° '
22 the constitutionality of the enactment before me. There's
23 no question on a motion for summary judgment, that phase
24\of the case certainly would bring the constitutionality of
25\the enactment before me. In the Weiner case, I can't
26|/remember the other party, but it was a case involving an
27 action by Bill McKenzie, Judge McKenzie. He was faced
28 with a motion to certify the question to the Supreme Court.
29 And in the old days when he didn't have the kind of filing
30|we have, we had little bundles, and the Supreme Court,
3 1) when it got the certification mentioned in its decision the
32\docket entry and so forth and so on, came to the
33/conclusion there was nothing before the trial justice at the
Michele M. Snizek, RPR
A-28
1 time he granted the motion for certification, taking the
2 position that there must be some phase of the litigation
3 before him which would give rise to his having to decide
4 the constitutionality of the matter which he certified. I
5 think a fair reading of the Chartier case seems to say by
6 necessary implication that when judge Carrellas granted
7 the motion to dismiss, that the constitutionality was before
g'him at that particular time. He denied the injunctive relief
9\and granted the motion to dismiss. That case, like this
10/one, is perhaps pretty close to being on all fours; an act of
11\the General Assembly was involved, it was alleged to be
12/\unconstitutional, and there was a prayer for permanent,
13) preliminary and permanent injunction, and I would assume
14 \that there were no factual disputes. The act was just
15 presented to the justice and he denied the prayer for
16 |injunctive relief, and dismissed the action. When it got to)
17\the Supreme Court, they said the plaintiff had not shown
18\below beyond a reasonable doubt that the act was
19 unconstitutional, and therefore, we approve of what he did.
20
21) In reading that, I perhaps have to take a second look
22/\at what I originally thought was merely a pleading stage,
23\and that in deciding whether the complaint would not be!
24 ‘susceptible of a factual or a legal basis for relief against
25| ithe defendant; that I wasn't reaching the constitutional
26, question. I will tell you here and now I have decided to
27\dismiss some of the complaints. Is there anyone that has
28) read the case that would like to comment on it? |
29) |
30 MR. LARISA: Your Honor, I haven't read the case
31) recently, but I'd like to comment on a couple of points, if
32) II may. I think what's troubling the Court here, your
Michele M. Snizek, RPR
A-29
1 Honor, is the distinction in this case between, with respect
2 to a 12(b)(6) motion when facts are in dispute, and when
3 the same motion presents a pure question of law. It is
4 clear that a 12(b)(6) motion, when there are no facts in.
5 dispute, can be granted on constitutional questions, and
6 this Court and the Supreme Court do that everyday, and.
7 they affirm them everyday. Take an easy example: Say
8 these plaintiffs instead of alleging the present case, were
9 alleging the state incorne tax was unconstitutional, and the
10 Attorney General was here today arguing on a 12(b)(6)
11/motion to dismiss; that that case was decided long ago,
13 There are no facts in dispute. I think we'd all agree that!
14 there's no question that there's no reason to delay ruling on,
15 that. The Court has the authority and would immediately
16 enter a 12(b)(6), grant the motion to dismiss on that claim.
17)
18) We submit that this case is no different, and that
19 Chartier correctly explains what the law is with respect to
20 a 12(b)(6) motion to dismiss. The plaintiff in this case has
21 raised constitutional issues. There are no facts in dispute.
22/All that this Court is asked to do is to take P.L. 400 law,
23 take each of the constitutional provisions that the plaintiffs
24\invoked in their complaint, along with the case law that
25) accompanies those provisions, and decide as a pure matter
26\of law whether any of those provisions under any facts
27)|potentially relevant to resolution of this matter could result
28/in a finding of unconstitutionality. The defendant's briefs
29\in this matter address exhaustively how, one, it conceded
30\on Count | there are no factual disputes; it's a pure
31/examination of law, so it really is no different than the
32\income tax example; and two, with respect to the other
Michele M. Snizek, RPR
A-30
1 counts, the plaintiffs have raised no factual disputes that
2.are relevant to this Court's resolution of the pure
3 constitutional issues. They raised a few factual issues;
4 such as, an expert affidavit regarding what full faith and
5 credit means. We provided a plethora of case law which
6 says that issue is already resolved; and therefore, since that
7\ fact is entirely irrelevant, we submit to your resolution of
8 the constitutional claim you are perfectly entitled and|
9| should enter a 12(b)(6) motion to dismiss on that claim
10) and that pattern follows throughout all counts, one through
11) eight, so we don't view Chartier as really having much of
12/any bearing here because whether the burden is on them to
13 prove beyond a reasonable doubt, or on us to prove that.
14\they have failed to state a claim, it's a simple matter of
15 taking the counts of the complaints, the constitutional
16 |provisions they cite, putting them with the statute, and
17\deciding as a pure question of law whether or not those
18 provisions state a cause of action that would defeat a)
19|motion to dismiss.
20! |
21, MR. MARKS: Mr. Larisa uses the example of a
22\complaint challenging the state income tax at this late date.
23|That brought to mind a case, the style of which I do not
24\recall, but I certainly remember when it was decided. It
25}was more than twenty years ago, and it was decided by,
26\Judge Pettine, and that was a case in 1974 challenging
27 enactments of the General Assembly of the state of Rhode
28\Island allegedly impinging upon the so-called privacy
29\right inherent allegedly in abortions. My recollection back’
30 from 1974 is that Judge Pettine said there are certain
31 legislative enactments for which the presumption of
3 2|constitutionality can be overrided simply by reading them,
Michele M. Snizek, RPR
A-31
1 and it was my recollection that Judge Pettine granted the
2 plaintiff's complete relief before the defendant's had had an
3 Opportunity to answer the complaint.
4
5 So perhaps we can posit two kinds are bubbles.
6 You have your stainless steel bubbles like the income tax
7 and all the law construing it saying it's constitutional, and
8 when somebody brings a complaint seeking to overturn the
9 income tax on constitutional grounds, they find that the
10 presumptions of constitutionality is unburstable. It's
11 stainless steel. No matter how hard you hit it, it isn't going
12 to burst. However, you think your run of the mill statute,
13 specially one that impinges upon fundamental rights; such
14 as, the franchise for voting, certainly we're well aware and
15 agree that there is a presumption of constitutionality for’
16 any-legislative enactment that is formal upon its face. I
17 also have not read the Chartier case in some weeks. There’
18 was, as I recall, quite a few cases involving Governor
19 Chafee and the various constitutional challenges to his|
20 conservation initiative. Frankly, they have all begun to
21 blur together, but I think you have a situation where the
22 presumption of constitutionality is akin to one of those
23 burstable bubble presumptions of the plaintiff who comes,
24 in and says, as we do here, that we have a general enabling
25act which enables every city and town in the state of
26 Rhode Island to enter into tax treaties for ten years, and
27| ‘then the General Assembly goes and creates a category of,
28 one. That category is the city of Providence. The city of
29 Providence is enabled to get into a tax treaty for 30 years.
30) I think the presumption has been burst, and I'd like to.
31 | Suggest that if the mechanism doesn't work in that way, or
32 in some functional equivalent, then I'd be so bold as to say,
Michele M. Snizek, RPR
A-32
STON ge ere
1 that that language in Chartier was a slip of the pen that has
2not been followed in Rhode Island constitutional
3 jurisprudence since then because it would create an
4 insurmountable hurdle for the plaintiff who wishes to
5 prove that the disparate impact of the statute that is regular
6 and unobjectionable on its face. How can you prove,
7 beyond a reasonable doubt a disparate impact case if that's.
syour burden at the pleading stage? It just can't can.
9 reconciled with the pass 20 odd years of constitutional
10 litigation jurisprudence in Rhode Island. That's all I have
11 to say, except for the fact that we probably would agree:
12 ‘that once you establish that there has been no election in.
13 Providence, that Count | is ripe for summary judgment.
14'But regarding Count 2, we think that there are material
15 facts in dispute, not just facts in dispute, but material facts
16 in dispute, and to my knowledge the issue of the full faith
17\and credit of what we can call hostage-taking argument, |
18\was not brought before the DEPCO Court. Thank you,
19 your Honor. |
21) MR. KESTER: Your Honor, if I may, I have three
22 points. First, the Court, I believe, reads the Chartier case
23 quite correctly. Chartier does have bearing, and I don't
24|understand the State to say otherwise. What we can say |
25\about what Chartier says is that it represents a typical,
26 instance in which on a 12(b)(6) motion if'a plaintiff comes
27\in with a complaint that doesn't state a legal claim, that!
28 complaint is dismissed. It could be dismissed for failure
29\0f pleading. We recognize novice pleadings allow)
30 eee quite a bit of leeway, but if the complaint simply
31 doesn't comply with the requirements to state a legal’
32\claim, it's dismissed under 12(b)(6), and if a plaintiff)
Michele M. Snizek, RPR
A-33
1 comes in and says an act of the General Assembly is
2 unconstitutional, and the cases are there as they are, that
3 show that this law is plainly constitutional, then what is
4 called for is a dismissal under 12(b)(6). It doesn't have to
5 be a pleading here. This is a failure to state a claim as a
6 matter of law.
7
8 Second point, I confess I didn't understand what my:
9 friend said about bubbles. I don't think this case is about
10 bubbles. I think this case is about Rule 12(b)(6) and the.
11 fact that under the constitutional law of Rhode Island and
12\the United States this complaint doesn't stand up. They
13 haven't made claim. And I think they recognize that, your
14 Honor, because what I heard Mr. Marks kind of hinting at
15 and slipping around as he was talking here, is stated much
16 more starkly in the plaintiffs papers on Page 4 of their
17 memorandum, they say, and I'm quoting, it says, "The
18\usual presumption of constitutionality should not apply.” |
19|Now, your Honor, I've been involved in constitutional
20|cases in state and federal courts for, I guess, 25 years now. |
2111 have never been before a court in a constitutional case’
22 where the challengers were telling the Court to abandon or
23 |reverse the presumption of constitutionality. And I would’
24| say further, your Honor, I don't think I have ever been in
25\a jurisdiction that has as strong a presumption of
26 ‘constitutionality as the state of Rhode Island because the
27 \state of Rhode Island, as the Court well knows, and as the
28|Court indeed pointed out to all of us, doesn't just state the
29/acts of the General Assembly are presumed constitutional.
30/Rhode Island says the acts of the General Assembly are.
31 presumed constitutional unless they are shown otherwise’
32 beyond a reasonable doubt. This complaint doesn't do.
Michele M. Snizek, RPR
A-34
a —Een
1 that. It doesn't begin to do that, your Honor, on any of the
2 counts, and the entire complaint on that basis alone could
3 be dismissed.
4 | |
5 Apart from that, of course, as the Court is well
6 aware, there's a motion of the Attorney General to certify,
7 and the Court doesn't, if the Court has any question as to
8 dismissability of any of the counts, I don't think the Court
9 should, of course, they could be certified. |
10
11) THE COURT: I take it you feel that if on a)
12, 12(b)(6) motion in a constitutional challenge of an act of
13 the General Assembly that the constitutionality of that
14/statute is before the Court on that motion? |
15)
16 MR. KESTER: Absolutely, your Honor. Your
17 Honor, it happens all the time. It just happens ail the time.
18) ; |
19 THE COURT: I'm aware that it happens all the
20 time, but I suppose in the appellate court the Appellate
21\Court is not going to necessarily review the judge's,
22 decision on the motion under 12(b)(6). It's going to decide
23|whether the act is, in fact, constitutional or not. |
24)
25. MR. KESTER: The constitutionality of the act,
26 your Honor, I believe is put in issue by the filing of the,
27 complaint and the State's motion to dismiss saying that
28\that complaint does not state a cause of action, and that
29 puts it in issue. That makes it certifiable at that point. The,
30 ‘issue has been joined on whether that complaint taken on!
31 its face shows that there is a constitutional violation. The)
Michele M. Snizek, RPR
A-35
1 Appellate Court looks at it again. It's a pure question of
2 law. It goes up under a pure question of law. And again,
3 I would say this: Many many constitutional cases, as your
4 Honor knows, appear in the books coming up to the
5 Supreme Court, Supreme Court of the United States, in the
6 federal system, and the State's 12(b)(6) is patterned on the
7 federal rule, and it happens all the time under the federal
8 rule as well. It's simply a fairly common method in which
9 constitutional issue is joined. I think it's joined here.
10
11) * * * |
12 |
13 MR. MARKS: Your Honor, may I be heard very
14 briefly? : |
15| |
16) THE COURT: Very briefly. |
17,
18 MR. MARKS: Thank you, your Honor. I'd just
19 like for a moment to direct the Court's attention to the
2 ) 1954 United States Supreme Court decision of Brown vs.
21 Board of Education. Now, in Brown vs. Board of
22: Educa cation, United States Supreme Court overturned about
23.70 years of well-settled constitutional jurisprudence. Any
24 competent lawyer knew, up until that Monday morning in
25,1954, that segregated separate public school systems did
26 not offend the constitution. It's as simple as anything.
27) How then do you go about changing the law if there is this
28 insurmountable threshold hurdle that you look at the St.
29) Louis School Department, and you look that they have got
30, ‘one track for black students and another track for white
31/\student, and gee, at the threshold this plaintiff cannot
Michele M. Snizek, RPR
A-36
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
prove beyond a reasonable doubt with no inquiry into the)
facts how this offends the constitution. So, are we to
conclude that the United States Supreme Court with no)
factual records before it, just read some newspaper,
articles, magazines, learned journals, and decided to
change the law? I don't think that's really how these things
work. And I think what the defendants are speaking for
here is kind of like the pre Hammurabi Babylonia cult
where once the law was written down, it could never be
changed. Thank you. |
| |
| MR. KESTER: May I respond even more briefly,
your Honor? |
THE COURT: If you keep to even more briefly.
MR. KESTER: I shall. I think that the plaintiffs
have really made our point. If Supreme Court precedent
is clear and if it's to be overruled, the way that happens is
that the case comes up the lower court following the
precedent and the Supreme Court can say, if it wants to, |
"Well, we are going to overrule our prior decision." That's
what the plaintiff is really asking for, for a massive
overruling of the case up in the Supreme Court. And what
this Court's job at this point is, your Honor, is, I think, is|
to say all right, the constitutional issue has been raised. I
will follow the Supreme Court precedents. If the Supreme
‘Court wants to overrule, it's up to them. |
MR. MARKS: One sentence please, your Honor?)
‘That happens at the end ofa trial. That happens at the end,
Michele M. Snizek, RPR
A-37
1 of the trial when there's been a factual record made. The
2 factual record is made, then the Court says, "Yep, I'm
3 going to apply the law be thoroughly decisive." But there
4 aren't any facts here. We're at the pleading stage. |
5
6 * . *
7
8 THE COURT: I'm going to leave my comments on
9 Count | until the very last. Quite frankly, I still have some
10 thoughts buzzing around in my head with regard to Count’
11/1, so that I'm going to pick up my comments now starting
12 with Count 2.
13
14) As I understand the memoranda submitted by the
15 plaintiffs in the complaints submitted by the plaintiffs, the
16, plaintiffs i in Count 2 claim that the legislative enactment
17 operates as a pledge of the credit of the state and is invalid
18 because it has never been approved by a majority of the
19) qualified electorate as required by Article VI Section 16 of
20 the Rhode Island Constitution. The State contends in its
21 presentment to the Court that the argument raised by this
22) claim asserted by the plaintiff has been ruled upon by the
23 Supreme Court. They cite the Supreme Court's attitude
24 contained i in an Advisory Opinion, In re Advisory Opinion
25 at 113 RI 580, (1974). The State relies on the language of
26|that case, where the Court found that the capital reserve
27) fund as provided in the General Law 42-64-18(d), "did not
28 operate as a pledge of the credit of this state for payment
29) of obligations to another." That State seems to argue to
30! the Court that this bills language is substantially identical
31\to that which was before the Court in 1974. The plaintiff
3 alin responding to that says that this bill adopts an.
Michele M. Snizek, RPR
A-38
1 ‘unprecedented mechanism allowing the state to give a
2 percentage of the project's annual sales tax revenues to the
3 developer. Plaintiff contends that this was done for two.
4 reasons. First, the current general assembly recognized it
5 ‘could not pass a bill requiring a certain apportionment by
6 a future general assembly in a future term. And second,
7 the General Assembly did not want to create a present debt
8 by promising a developer a certain amount of money over
9a term of years. Such an act, plaintiffs contend, would be
10 subject to a statewide referendum that the General,
11 Assembly recognized would probably be defeated. The
12 State filed a replyl memo to that argument which the state
13|rejected notions that the bill operates to pledge the credit,
14\to the state. Initially, the state focuses on the bill's,
15 language which provides that obligations occurred under
16 ‘it, "chall not constitute a debt, liability, or obligation of the)
17)state. . . .or a pledge of the faith and credit of the state."
18 The State then, for the benefit of the Court, what it termed.
19/to be an "unbroken line" of cases holding that issuance of
20 notes and bonds by public corporations do not pledge the
21 credit of the state and therefore are not prohibited by)
22|Article VI, Section 16. |
23 |
24) The Court in reviewing the memoranda and the
|
.
25 various contentions has concluded that this count does not)
26 take a claim upon which relief can be granted, and I do so,
27\because the plaintiffs’ claim has been addressed by our
28|Supreme Court, that the plaintiffs’ claim ignores the plain)
29 language of the bill as passed which does provide in
30/\part,"obligations issued under the provisions of this
31/\chapter. . shall not constitute a debt, liability or obligation.
32\of the state. . .or a pledge of the faith and credit of the
Michele M. Snizek, RPR
A-39
1 state." Obligations incurred by the Economic
2 Development Council are just that, they are not obligations
3 of the State. The EDC is a public corporation with a legal
4 existence separates and distinct from that of the state. As
S was true in the case of the Water Resources Board which
6 was the issue before the Court in In re Advisory Opinion,
7 107 RI 651, (1970). The General Assembly was careful,
8 "to exclude. . .from. . indebtedness of the state any debt
9 incurred by. . .the Board.” Our Supreme Court has
10 repeatedly rejected claims that the issuance of notes and
11 bonds by public corporations constitute a pledge of credit
12\0f the state in violation of Article VI, Section 16, to the’
13 same event, In re Advisory Opinion involving DEPCO,
14 593 A.2d 943, Rhode Island case, 1991. Likewise, another
15 In re Advisory Opinion (1970), 107 RI at 655-56; Since
16 this justice in passing upon whether this presents an issue
17\to which plaintiff states a claim upon which I feels he's
18 entitled to relief, the Court rules that this issue has
19 heretofore been adjudicated. It's the same issue that was
20| faced by our Supreme Court, and I dismiss the action for
21 the reasons stated.
22)
23 | * * *
24
25) Count 5 is the non-delegable duty. is suppose 5 and
26,6 are somewhat interrelated. They certainly were
27\interrelated by the parties in their memorandum to the
28/Court, and some of them, some memoranda didn't mention
29 Count 5 and Count 6, non-delegable duty without
30 sufficient guidelines. But, in Count 5, the State complains
31\that the bill constitutes an invalid delegation of non-
32\delegable duty. In my analysis and review of that, The
Michele M. Snizek, RPR
A-40
1\state didn't really directly respond to that allegation. The
2 plaintiffs did not specifically address the count in their
3 memorandum. Like the State, they seem to focus their
4 attention on allegations which were contained in Count 6,
5 the delegation lacked sufficient guidelines. Treating them
6| separately, it seems to the Court that the delegation, or the
7) powers delegated to the EDC cannot be deemed, "non-
gidelegable," in light of the Court's opinion in, In In_re
9 Advisory Opinion 113 RI 586 (1974). It was in that case
10 the Court found that the powers delegated to the Port
11/Authority and the Economic Development Corporation
12|were adequately delineated and therefore did not constitute
13 an unlawful delegation of legislative authority. Implicit in
14 that decision is the fact that the powers of the type
15 involved here are delegable. One need only look at both
16\acts to come to the conclusion that we are talking about
17 \the same genus; that being, delegated. As a general rule,
18 there are very few powers that are non-delegable. And as
19/one reflects, the power to hear criminal cases can't be
20\delegated, and perhaps the power to consider jury trials
21 could not be delegated to some administrative agency. It
22 |seems to the Court these powers which were given to the
23|Economic Development Corporation are not the kind that!
24 are classified as non-delegable. The Court will dismiss on
25/'Count 5.
ae |
| 27 Count 6 is the twin brother of Count 5. The
28|plaintiff alleges that if we assume the powers are
29\delegable, that that delegation by the General Assembly
30\lacks adequate guidelines and standards. The Court!
31\specifically reviewed both the State and the plaintiffs’
32\memorandum. I spent more time—State consumed four:
Michele M. Snizek, RPR
A-41
1 pages in outlining its position as it relates to the delegation
2 and powers argument. The Plaintiff's was a bit more
3 wordy, taking six pages, and when the State filed its reply, |
4 they set out in some, 18 to 27, some additional nine pages
S in discussing this particular issue. I'm not going to put on
6 the record an analysis of what your arguments were, but I
7 think that when you treat it, Count 6, that they were,
8 addressing in Count 5 as well, and most of your comments
9 related to both Count 5 and Count 6. The Court feels that
10.as with Count 5, the Court's guided by the opinion In re
11 Advisory Opinion at 113 RI at 586, the plaintiff has made
12 a bold allegation that the EDC has "unbridled discretion"
13 that are conclusions urged upon the Court, ignores the very
14 language of the delegation, and is contained by way of
15 limitation in the legislative enactment. Plaintiffs claim
16 seems to claim that the delegation must be viewed in light)
17/of a "relaxed" non-delegation doctrine under which the
18 Supreme Court has recognized a need, "to enable the
19 Legislature to carry out its responsibilities through
20 administrative bodies." The Court finds some authority,
21 for itc actions in Town of East Greenwich vs. O'Neil, a
22/1992 case cited at 617 A.2d 104. The Legislature has used
23 administrative delegation of some of its powers so that the
24 Legislature may have assistance in carrying out its
25 functions and responsibilities. The Court must examine
26 the legislation to find the specifics, the specificity of the
27 functions delegated, the standards accompanying the
28\delegation, and the safeguards against administrative
29,abuse. In looking at this legislation, the bill grants the
30|EDC the ability to determine whether lessees should be
31/exempt from taxation "to the same extent as if legal title of
32|such property were in the name of the corporation."
Michele M. Snizek, RPR
A-42
It seems to the Court this is a very narrow function.
You cannot ignore that it is narrow, but that narrow
delegation does not violate the first prong of my analysis.
That is, a look at this specificity of the functions delegated.
Secondly, the standards accompanying the delegation
provides sufficient guidelines to govern its usage. The
EDC may grant a tax exemption only when, "the project is
a project of the corporation under General Laws 42-35-,
3(p), and it is in the interest of the corporation and the’
project that legal title be held by the lessee from the
corporation." In determining, "the interest of the
corporation,” the EDC is bound by the purposes set forth
in its enabling statute. General Laws 42-64-5. There was
a case of J.M. Mills vs. Murphy, 115 RI 54, a 1976 case.|
In that case the Court indicated, "the statements of purpose
and policy contained in that Act adequately limited the!
discretion of the director." |
he
CU MIAN PWD PB
|
ae ae
PWD
an alll oe
IHW
=
@
Concerning the final analysis; that is, what
safeguards are involved, the fact that the actions of the)
21|Economic Development Counsel are subject to the same
22\contained in the Administrative Procedures Act, General
23 ‘Laws 42-35-1, which also includes availability of judicial’
24\review, the Court's judgment guards against any arbitrary
25|\capricious act of the agency in carrying out the functions
26\delegated to it. The Court will likewise dismiss the
27\argument in Count § which many relates to the language
Ww
Oo Oo
28|standards.
29
30 I will say here and now and for at least one trial
31 judge’ s opinion of the Supreme Court, I believe the
32 | Supreme Court stated the proper standard to be applied by
SA pA ES A
Michele M. Snizek, RPR
A-43
i the trial bench when it decided Sweeney. I'm not overly
2 impresed by the fact that other cases have been certified to
3 the Supreme Court involving declaratory judgment
4 actions. It seems that since deciding Sweeney, indicating
5 to the trial court the trial court should impose upon the
6 generosity of the attorneys appearing before them and do.
7 its own research and to resolve the issues confronting the
8 trial court before considering whether the justice is in
9 doubt as to the constitutionality of the statute for him, this.
10 justice has tried, with the assistance of my able law clerk's
11 research ability to address the issues presented to me on
12 the motion to dismiss. I'm indebted to counsel appearing
13 ad hac vice before me for the expressions that helped me
14 re-focus the Court's obligation. It seems to the Court if
15 there were factual issues in the complaint, that perhaps the
16) hurdle on a 12(b)(6) motion would not necessarily bring
17| the constitutionality of the statute before the Court. The
18 12(b)(6) motion applies to all kinds of litigation.
19 Complaints may very well be addressed under a 12(b)(6)
20 motion where there are certain facts alleged as a basis for
21'the relief sought. The caveat, therefore, that the Court
22 must consider is whether there is any basis of any set of
23 facts which would entitle the plaintiff to relief. The Court
24 is admonished it should not dismiss the compliant. Seems
25/to this justice that that is a valid test except in the area we
26 are asking by way of declaratory judgment to consider the
27\constitutionality of the statute. Both parties in their
28|memoranda and in their argument as to Count 1 and Count
29\2 have conceded that no election has taken place in
30|Providence nor is by the legislation required to take place
31/\in Providence, or no statewide election under Count 2 is
32|contemplated nor has it taken place. Seems to the Court
33 |that the issue, the constitutionality of the act of the General
Michele M. Snizek, RPR
A-44
1\Assembly is therefore likewise in Count 1 specifically
2 before the Court on the Motion to Dismiss. Again, I had
3 you spread your thoughts upon the record as it relates to
4\that is before me on Count 1. Your memos are, quite
5 honestly, most exhaustive in the authorities in which you
6
7|
8)
rely upon.
I've had time to think about and consider the
comments made by the plaintiffs in particular as it relates
10 |to their contention that they are aggrieved, particularly the
11 individual plaintiff who is alleged to be a resident of
12/Providence. This statute does enjoy at this particular time
13 the presumption of its constitutionality. The person who
14/attacks that statute has a heavy burden, whether that
15 | burden be discharged in the Superior Court, or whether it
16|be discharged in the Appellate Court. Well, none of us.
17/who sit on issues such as this are infallible. And Count 1
18 | presents, in the Court's judgment, an issue which should be
19| resolved at this particular time. Seems to the Court that in
20 order for the plaintiff to be deemed to have stated a valid
21/claim in Count 1, which claim is a violation of Article XIII
22|Section 4 of the Rhode Island Constitution, the bill must
23\not be one of, "statewide concern," quoting Marro vs.
24;General Treasurer 108 RI 192. In that case the Supreme
25|Court said, "the power of the General Assembly remains
26/exclusive and undiminished as to matters of statewide
27 concern." Where the legislation at issue, "affects only a|
28/|single community," it is a matter of local concern and must
29\be approved by the voters of that community. Citing
30|McCarthy vs. Johnson, 574 A.2d 1229, 1990 Supreme:
31/Court opinion. In contrast, where it appears that uniform|
32\regulations throughout the state is necessary or desirable,
|
Michele M. Snizek, RPR
A-45
FE Ae Oe ee RE ee Tee en ee
1 where the particular matter is traditionally within the
2 historical dominion of one entity or where the legislation
3 has a significant effect upon people outside of the home:
4 rule town or city, the legislation is apt to be deemed a
5 matter of statewide concern. The language comes from
6 East Greenwich vs. O'Neil 617 A.2d 104. In passing this
7 bill, the Legislature made a series of findings concerning
8 the bill's statewide impact. Specifically, the Legislature:
9 found that the project would help alleviate chronic
10 unemployment and underemployment, would assist the
11\state in achieving its clean air quality goals, would
12 increase state tax revenues, and would provide statewide’
13 economic benefits by recapturing a significant amount of
14 out-of-state purchasing currently made by Rhode Island
15) residents.
16)
17 Now, there is no question as stated by plaintiffs"
18 counsel that many of the so-called findings of fact might’
19 be classified by the plaintiffs as rosy predictions of the’
20 future, but in the Court's judgment, those findings of fact,
2 1 while not facts presently in existence, do comport with the
22 Court's conclusion that this bill has statewide impact and
23|statewide interest. I think that to come to a different
24 conclusion would be like the ostrich who buries its head in
25) the sand. Our Supreme Court has noted that while the
26, General Assembly is not required to make findings in
27 order to pass legislation, that when it does make such
28/findings, they are entitled to great deference by the
29\judiciary. The Supreme Court did not say they were
30 entitled to great deference period. They went on in the
31|Advisory Opinion in DEPCO to say that they were entitled!
|
|
Michele M. Snizek, RPR
A-46
1 to great deference by the judiciary which prompted the
2 question that I asked at the beginning of the afternoon. |
3, |
4 There was a second argument advanced by the State
Slas it relates to language in the case on taxation. The
6 defendant quotes, the plaintiff quotes, I believe the case is,
7 one of the parties was Nolan, for the support that where a
8 public body is clothed by statute with power to do an act
9 which public interest requires to be done, the execution of
10 the power may be insisted on as a duty, though the statute
11\conferring the power only appears to be permissive in|
12\terms. In such circumstances the construction of the word
13 /"may' and "shall" is well established. I did look at the
14\legislation, and while there are other cases which are
15/replete in other context, indicating when the Court would
16\construe the word "may" which by it's definition is
17 permissive to be interpreted as "shall," there is no such
18 mandate contained in the legislation to which the Court
19 finds any relevance to the Nolan citation.
20. |
21) In the last analysis one has to ask one's self, does:
22 the physical presence of the Providence Place project,
23 within the confines of Providence equate the project as a,
24\local concern? The plaintiff says that the State in
25 providing for a method of financing in this project and for
26) allowing continued negotiations between the city and the
27 project developer, and by not having finalized some of the
28 agreements, and that by granting authority to the city of
29 Providence in the tax field, that therefore, some election or
30 referendum addressed to the city of Providence voters is
31 required. Under the trust of his complaint in Count 1, the
32|mere fact of the unusual nature of this legislation and the
Michele M. Snizek, RPR
A-47
1 novelty provided by the General Assembly in order to’
2 have government and private money create the Providence
3 Place project, does not in and of itself raise the mantle of
4 unconstitutionality. I have found nothing in the arguments
5 of counsel nor the reading of the statute enacted by the
6 General Assembly, nor the scheme adopted by the General
7 Assembly for a statewide project that violates the Home
8 Rule Charter of the city of Providence. Consequently, the
9 Court will dismiss Count | of this complaint. |
|
10,
11 It would seem to the Court now that having,
12 dismissed all of the complaints, I dismissed three counts
13 which I felt at the time I dismissed them were so clearly
14 self-evident that I wanted to dispose of them immediately,
15\but I have effectively dismissed the entire complaint of
16 these claims. The plaintiffs exception to the Court's ruling
171i ‘is noted. Counsel representing the defendants will prepare
18) and submit an order memorializing the Court's ruling.
19)
20 | * * *
Michele M. Snizek, RPR
A-48
42-63.2-3. Property Taxes. Notwithstanding the
provisions of any other general or special law to the
contrary, the EDC and the City are hereby authorized to
enter into and execute a tax treaty agreement with the
developer with respect to all real and personal property
‘axes or payments in lieu of such taxes which related to the
Providence Place Project, including, without limitation,
the real property which constitutes the Project Site,
including the real and personal property of owners, tenants
and occupants thereof, as well as provisions dealing with
the revitalization of the downtown district of the City and
the development of the Capital Center District of the City
and such other matters and terms, without limitation, as
both the EDC and the City shall deem advisable. The tax
treaty agreement shall provide, among other things, for (i)
the stated term set forth in paragraph (ii) below, (ii) fixing
the amount of tax payments or payments in lieu thereof
due foreach year of the term as set forth in the following
Schedule A:
SCHEDULE A
BASE ANNUAL
TAXES ASSESSED PAYMENT IN
DECEMBER 31 FOR FISCAL YEAR LIEU OF TAX
1993 “July 1, 1994-June 30,1995 $ 0-
1994 July 1, 1995-June 30, 1996 $ -0-
1995 July 1, 1996-June 30,1997 $ -0-
1996 July 1, 1997-June 30,1998 $ -0-
1997 July 1, 1998-June 30,1999 — $3,500,000.00
1998 July 1, 1999-June 30,2000 — $3,500,000.00
1999 July 1, 2000-June 30,2001 — $3,500,000.00
2000 July 1, 2001-June 30,2002 — $3,500,000.00
2001 July 1, 2002-June 30,2003 — $3,500,000.00
2002 July 1, 2003-June 30,2004 — $4,700,000.00
2003 July 1, 2004-June 30,2005 — $4,700,000.00
2004 July 1, 2005-June 30,2006 — $4,700,000.00
A-49
2005 - July 1, 2006-June 30,2007 — $4,700,000.00
2006 July 1, 2007-June 30,2008 — $4,700,000.00
2007 July 1, 2008-June 30,2009 — $4,700,000.00
2008 July 1, 2009-June 30,2010 — $4,700,000.00
2009 July 1, 2010-June 30,2011 — $4,700,000.00
2010 July 1, 2011-June 30,2012 — $4,700,000.00
2011 July 1,2012-June 30,2013 — $4,700,000.00
2012 July 1, 2013-June 30,2014 — $4,700,000.00
2013 July 1, 2014-June 30,2015 — $4,700,000.00
2014 July 1, 2015-June 30,2016 — $4,700,000.00
2015 July 1, 2016-June 30,2017 — $4,700,000.00
2016 July 1, 2017-June 30,2018 — $4,700,000.00
2017** July 1, 2018-June 30,2019 — $4,700,000.00
2018** July 1, 2019-June 30,2020 — $4,700,000.00
2019** July 1, 2020-June 30,2021 — $4,700,000.00
2020** July 1, 2021-June 30,2022 — $4,700,000.00
2021** July 1, 2022-June 30,2023 — $4,700,000.00
2022** July 1, 2023-June 30,2024 — $5,900,000.00
2023** July 1, 2024-June 30,2025 — $5,900,000.00
2024** July 1, 2025-June 30, 2026 — $5,900,000.00
2025** July 1, 2026-June 30, 2027 — $5,900,000.00
2026** July 1, 2027-June 30,2028 — $5,900,000.00
Total $141,000,000.00
**to be adjusted by the CPI over the prior year
and (iii) dedicating one hundred percent (100%) of such
payments during the first twenty years in which such
payments are required, and ninety percent (90%) during
the next ten years in which such payments are required to
the amortization of costs incurred to finance or refinance
the construction and development of the Providence Place
Garage on which the City will hold an option to acquire a
one-half (4) interest for nominal consideration upon
substantially the same terms as the State's option described
in Section 5, such payments (together with liens related
thereto and the rights to enforce such liens) to be made or
assigned directly to the lender or lenders or trustees for
such lenders (as designated from time to time by the
developer) which are providing the original or subsequent
A-50
financing or refinancing of the Providence Place Garage
(which may be separate or combined with the financing
for the Mall portion of the Providence Place Project), for
such period during the terms of the agreement that the then
outstanding amount of principal, interest or other charges
remaining due under such financing or refinancing is equal
to or greater than the last amount of such payments, and
(iv) dedicating ten percent (10%) of such payment during
the ten (10) years in which such payments are made to the
city of Providence.
The tax treaty agreement described herein is subject
to approval of the city council of the city of Providence.
SECTION 2. General Assembly Approval. The
approval of this Act by the General Assembly constitutes
full compliance with the provisions of Chapter 18 of Title
35 of the General Laws.
42-63.2-4. Additi rovision ubli
nvestment_an V €ment_and Ground Lease.
Notwithstanding the provisions of any other general or
special law, and subject to the approval of and upon terms
acceptable to the EDC, the Public Investment and HOV
Agreement and the Ground Lease shall provide for, among
other things, (i) payment to the developer of an annual
sum payable in monthly installments, for a period of
twenty (20) years, such sum to be calculated in accordance
with the following sentence and evidenced by an economic
development note of the EDC having a term not exceeding
twenty (20) years to be secured by a capital reserve fund
under Section 42-64-18(d) of the General Laws, and (ii) an
option for the State to acquire a one-half (4) interest in the
Garage for nominal consideration to be exercised at any
time during the last year of the initial ninety-nine (99) year
A-51
term of the Ground Lease. The annual payment due under
the Public Investment and HOV Agreement and the
economic development note executed in connection
therewith, in addition to parking revenue from the HOV
spaces in the Garage, during the initial five (5) year period
shall be equal to the lesser of (i) Three Million Six
Hundred Eighty Thousand Dollars ($3,680,000) or (ii)
two-thirds (2/3) of the actual amount of sales tax generated
from retail sale transactions occurring at or within the Mall
during such year reduced by any payments required to be
made to the Rhode Island Depositors Economic Protection
Corporation Special Revenue Fund ("DEPCO") pursuant
to Section 44-19-40 of the General Laws, as it may be
amended, which currently require that six tenths of one
percent (0.6%) of all sales tax revenues received-by the
State be devoted to payments to DEPCO. The annual
payment due during the second fifteen (15) year period
shall be equal to the lesser of (i) Three Million Five
- Hundred Sixty Thousand Dollars ($3,560,000) or (ii) two-
thirds (2/3) of the actual amount of sales tax generated
from retail sales transactions occurring at or within the
Mall during the year reduced by payments required to be
made to DEPCO. In the event the annual payment due in
one or more years is less than the maximum applicable
amount set forth above, and if the actual sales tax revenues
derived from the mall in any subsequent year as so
adjusted for the required DEPCO payments referred to
above exceeds the maximum payment amount specified
for the applicable years set forth above, then the annual
payment due for each such subsequent year during such
initial twenty (20) year period shall be equal to such
maximum amount applicable for the year plus one-half (4)
of the amount by which sales tax revenues derived from
the Mall in each such subsequent year during such initial
twenty (20) year period as so adjusted for the required
A-52
DEPCO payments referred to above exceed such
maximum amounts until the aggregate amount of all
underpayments below such maximum amounts for all
preceding years has been paid to the developer. No
payment under either the Public Investment and HOV
Agreement or the economic development note, shall be
due after the expiration of the initial twenty (20) year
period. Notwithstanding the provisions of any other
general or special law, including, without limitation,
Section 42-64-11, the Ground Lease shall be for an initial
term of ninety-nine (99) years, with four (4) successive
options to extend for additional terms of ninety-nine (99)
years each, subject to the conditions set forth in the
Ground Lease. Subject to annual appropriation by the
General Assembly, the State shall pay to the EDC an
amount equal to the annual payment which the EDC is
required to make to the developer pursuant to the Public
Investment and HOV Agreement or economic
development note described herein.
Notwithstanding the provisions of any other general
or special law to the contrary, including without limitation
the provisions of Section 42-64-18(e) of the General Laws,
the EDC shall have no obligation to repay to the State any
amounts paid to the developer under the Public Investment
and HOV Agreement or the economic development note.
42-64-20. Exemption from taxation— (a) The
exercise of the powers granted by this chapter will be in all
respects for the benefit of the people of this state, the
increase of their commerce, welfare, and prosperity and
for the improvement of their health and living conditions
and will constitute the performance of an essential
A-53
governmental function and the corporation shall not be
required to pay any taxes or assessments upon or in respect
of any project or of any property or moneys of the
corporation, levied by any municipality or political
subdivision of the state, provided, that the corporation
shall make payments in lieu of real property taxes and
assessments to municipalities and political subdivisions
with respect to projects of the corporation located in the
municipalities and political subdivisions during such times
as the corporation derives revenue from the lease or
operation of the projects. Such payments in lieu of taxes
shall be in such amounts as shall be agreed upon by the
corporation and the affected municipalities and political
subdivisions. Failing the agreement, the amounts of
payments in lieu of taxes shall be determined by the
corporation using a formula that shall reasonably ensure
that the amounts approximate the average amount of real
property taxes due throughout the state with respect to.
facilities of a similar nature and size. Any municipality or
political subdivision is hereby empowered to accept at its
option an amount of payments in lieu of taxes less than
that determined by the corporation. If, pursuant to section
42-64-13(f), the corporation shall have agreed with a
municipality or political subdivision that it shall not
provide all of the services therein specified, the payments
in lieu of taxes shall be reduced by the cost incurred by the
corporation or any other person in providing the services
not provided by the municipality or political subdivision.
(b) The corporation shall not be required to pay
state taxes of any kind, and the corporation, its projects,
property, and moneys and, except for estate, inheritance,
and gift taxes, any bonds or notes issued under the
provisions of this chapter and the income (including gain
from sale or exchange) therefrom shall at all times be free
A-54
from taxation of every kind by the state and by the
municipalities and all political subdivisions of the state.
The corporation shall not be required to pay any transfer
tax of any kind on account of instruments recorded by it or
on its behalf.
Cc u of the e tion from taxes and
assessments upon or in respect of any project under
ubsecti thi tion, the oration shall
t uire l title to an r na
includi X ishi ipment
whi i i tion and
v ject e itl e
held i e e includin m
th tion. which t include
any goods or inventory used in such project after
leti i tio
i al title of suc were in
“ name of the corporation, provided that th — of
direct c tion ado ey in
use of su xemption ch proj u “ep
uch i include findi - t co
A-55
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.