Cotton v. City of Fayetteville

Steele Hays, Justice,

dissenting. I find no basis in the record for the assertion in the majority opinion that the tax revenues will be “the principal source of repayment” of the bonds. The record tells us only that the sales and use tax revenues and the revenues generated by the wastewater facility will pay the bonds, we are told nothing of their relative size.

Although the majority opinion notes in passing that this entire project (included the bonds and accompanying sales and use tax) was adopted by the Fayetteville City Council and overwhelmingly approved by the voters of that city (4,885 to 435), the opinion then proceeds to ignore that signal fact altogether.

The majority opinion states with emphasis that we have unfailingly held that our Constitution (Article 16, § 1, Amendment 13) must be complied with if the bonded indebtedness for the municipal improvement would place any burden on the taxpayer, but not if the bonded indebtedness is to be repaid solely by revenues from the improvement. Boswell v. City of Russellville, 223 Ark. 30, 620 S.W.2d 282 (1981); Hogue v. The Housing Authority of North Little Rock, 201 Ark. 263, 144 S.W.2d 49 (1940); Snodgrass v. Pocahontas, 189 Ark. 819, 75 S.W.2d 223(1934); Jernigan v. Harris, 187 Ark. 705, 62 S.W.2d 5 (1933); McCutchen v. Siloam Springs, 185 Ark. 846, 49 S.W.2d 1037 (1932). I have no quarrel with that statement of the law, so far as it goes, but it ignores an important element: our constitutional restraints against burdening the taxpayer with bonded indebtedness apply where the burden is imposed by others, not where the taxpayer voluntarily assumes that burden by the elective process.

. The majority opinion cites cases wherein this court has approved the use of revenues generated by one facility to pay for a different facility [Johnson v. Dermott, 189 Ark. 830, 75 S.W.2d 243 (1934) and City of Harrison v. Braswell, 209 Ark. 1094, 194 S.W.2d 12 (1946), and where we even approved using the general fund of a city to finance an airport if the revenues produced by the airport proved insufficient to pay for the bonds. Parker v. City of Little Rock, 241 Ark. 381, 407 S.W.2d 921 (1966)].

At that point, and with neither discussion nor citation, the opinion abruptly concludes that residents of Fayetteville cannot impose a one cent sales and use tax upon themselves to help finance a desperately needed wastewater treatment plant, even though the public purpose is beyond question and the project has been approved in all respects by an election. Thus, we are denying the right of the City of Fayetteville to do by an election what we have permitted the City of Little Rock to do without an election, (see Purvis v. Hubbell, 273 Ark. 330, 620 S.W.2d 282 (1981) [Purvis I] and Parker v. City of Little Rock, supra), even though our only criticism of the procedure in Purvis was the absence of an election.

The troubling fact is our recent cases affecting revenue bonds are impossible to reconcile. Every objection to bond issues of this kind since this court began the closer scrutiny suggested by our decision in Purvis I relates either to the lack of an approving election, or a public purpose, neither of which is at issue here1. Justice Dudley’s concurring opinion in Purvis v. City of Little Rock, 282 Ark. 102, 667 S.W.2d 536 (1984), [Purvis II] was based on his perceived weakness of the public purpose of the LaQuinta Motel, an understandable concern. Had that issue been otherwise, he would have approved the bonds. (See Purvis v. City of Little Rock, Dudley, J., concurring, supra at 119). Justice Hickman’s dissenting opinion in Purvis I and his concurring opinion in Purvis II state repeatedly (thirteen times by count in Purvis II) that his one objection to the bonds is the absence of an election. Chief Justice Adkisson, Justice Hollingsworth, and I would have approved the bonds in Purvis II notwithstanding the want of an election, because the bonds were payable only from the revenues generated by the motel. So on what basis are we now invalidating bonds overwhelmingly approved by an election of those who alone will pay them? I confess I have no answer and, unfortunately for the litigants and the public, neither does the majority.

I am not overlooking the statement by Justice Purtle in Purvis v. City of Little Rock, 282 Ark. 102, 667 S.W.2d 936 (1984), that the bonds must not have a greater interest rate than six percent and shall not be issued for a longer period than twenty years, but the concurring opinion of Justice Dudley points out that our cases are to the contrary and that a majority of this court disagrees with that position. That assertion has not been challenged. (See Purvis v. City of Little Rock, Dudley, J., concurring, p. 119).