Summary
In Brodhead v. City and County of Denver, 126 Colo. 119, 247 P.2d 140 (1952), this court held that Denver did not have to mortgage the facilities constructed out of the funds from a bond issue, although the voters had approved a mortgage of those facilities.
Summary of this case from Friends of Chamber Music v. DenverOpinion
No. 16,870.
Decided July 21, 1952.
An action for a declaratory judgment involving the validity of municipal bonds. Judgment for plaintiffs.
Affirmed.
1. MUNICIPAL CORPORATIONS — Bonds. The fact that a municipal corporation authorizes the mortgaging of its facilities — a provision which the reviewing court held to be invalid — does not prevent the issuance of bonds on such facilities.
2. STATUTES — Court Functions. "It is not the function of courts to sit in judgment on the wisdom of legislation."
3. MUNICIPAL CORPORATIONS — Revenue. The pledging of municipal revenues from a named source is a limitation on their use for that particular purpose.
4. Acquisition of Land — Off-street Parking. There is no legal restrain to the acquisition by a municipality of land for off-street parking which is already devoted to that use.
5. Bonds — Use Ordinarily a legislative declaration that municipal bonds are issued for a certain purpose is given great weight.
6. Improvements. Where a municipal improvement benefits the whole community, the project falls properly within the classification of being for a public and municipal purpose.
7. Bonds The burden of servicing municipal revenue bonds falls upon the user of the facility being installed.
8. Revenue — Parking Meters. The pledging of revenues from on-street parking meters relates only those meters maintained within the area specified; and there being no obligation by the city to maintain said meters. There is no bargaining away of the police power.
Error to the District Court of the City and County of Denver, Hon. Robert W. Steele, Judge.
Mr. IVOR O. WINGREN, Mr. ALBERT T. FRANTZ, for plaintiff in error.
Mr. LEONARD M. CAMPBELL, Messrs. PERSHING, BOSWORTH, DICK and DAWSON, for defendants in error.
The City and County of Denver brought this action for a declaratory judgment against its treasurer auditor following their refusal to approve the issuance of $4,000,000 off-street parking bonds. The judgment of the trial court being in favor of Denver, the treasurer and auditor bring the cause here by writ of error seeking reversal of the judgment.
The case had its origin in the approval in an election held September 14, 1948, of ordinance No. 106, referred to the qualified electors by the city council. This ordinance provided for the installation of a system of off-street parking and its financing. Following a favorable vote on this ordinance by the qualified electors, its validity and the subsequent proceedings taken by the city were attacked by the auditor, and certain objections raised by him were sustained by our court in the case of McNichols v. Denver, 123 Colo. 132, 230 P.2d 591, in which the ordinance and proceedings are recited at more length. Following this decision the city council, with the purpose of removing the objections which we raised, enacted a new ordinance, No. 269, on December 20, 1951, and an amendment of 1952. These eliminated the optional provision for a call prior to the maturity date of the proposed off-street parking bonds at a premium instead of at par. Provision was definitely made for the sale of any new bonds at public sale, we having reserved the question as to the validity of the sale of the bonds under the former ordinance at what was admitted to be virtually a private sale.
Also there was eliminated from the new ordinance the provision present in the earlier ordinance for securing the bonds by a trust deed running to a private trustee conveying the facilities to be acquired. This feature we held invalid in that it invaded functions of the auditor and treasurer as provided in the Denver charter. We also stated that the provision for mortgaging the facilities, which included power of foreclosure in the trustee in the event of default, made the bonds mortgage bonds and not merely revenue bonds payable solely out of the revenues of the facilities.
The new ordinance of 1951 appears, therefore, to have eliminated the features which we held in McNichols v. Denver, supra rendered certain provisions in the earlier ordinance and the proceedings thereunder either outright invalid or in some respects questionable.
One of the principal attacks by the treasurer and auditors, aimed at the 1951 ordinance is based on the ground that the elimination of the provision for the conveyance of the facilities to be acquired by Denver to a private trustee as additional security for the bonds so altered the nature of the bonds, the issuance of which the voters approved in the 1948 election that a fatal variance occurred when they were not secured by a mortgage on the facilities. The 1951 ordinance contained a provision for the principal and interest of the proposed bonds to be payable from the revenues of the off-street parking facilities to be acquired and provided, as additional security, the revenues from the on-street parking meters within the area.
We agree with the trial judge the fact that the voters authorized the mortgaging of the facilities in the 1948 ordinance — a provision which we held to be invalid — does not prevent the issuance of bonds unsecured by a mortgage on such facilities. The purpose of a mortgage is to give the creditor additional protection or security for the loan he is making to the debtor. But a creditor may, and often does, make a loan without the taking of a mortgage on the property of the debtor; he may waive the giving of such security. So here, if Denver can negotiate this loan without mortgaging its off-street parking facilities, this avoiding the possibilities of such properties falling into the hands of the bondholders through the process of foreclosure, it would seem that the elimination of this provision would be a benefit and not a detriment to the city. It was a provision which Denver was authorized but not compelled to use; it. therefore is severable and its insufficiency does not void the whole proceeding State v. Lake City, 35 Utah 25, 99 Pac. 255.
In the brief in the former off-street parking ease, McNichols v. Denver, supra it was argued that the electorate thought it was voting for merely revenue bonds because of the large caption on the question submitted which so described them. The 1951 ordinance, it seems to us, provides for just such revenue bonds as those for which both parties in their former brief stated that the electors thought they were voting. There is no showing that the voters were misled. Allison v. City of Phoenix, et al., 44 Ariz. 66, 33 P.2d 927, 93 A.L.R. 354; Keigley, et al. v. Bench City Recorder, 97 Utah 69, 89 P.2d 480, 122 A.L.R. 756; Anselmi, et al. v. City of Rock Springs, et al., 53 Wyo. 223, 80 P.2d 419, 116 A.L.R. 1250.
It is argued that the 1951 ordinance has added as additional security for the bonds a pledge of the revenues from the on-street parking meters from the areas surrounding the offstreet parking facilities; that these revenues now fall into Denver's general fund, and their diversion to the servicing to the off-street parking bonds will to that extent deplete the general fund of the city. That is a question that goes to the wisdom of the measure and not to its validity. To determine its validity would be the function of the court, but it has often been pointed out by this and other courts that it is not the function of courts to sit in judgment on the wisdom of legislation. This court might be unanimous in agreeing that this ordinance was unwise and yet must uphold its validity if the attack on it relates solely to its unwisdom. Here the 1948 ordinance approved by the electorate expressly authorized the pledging of the revenues from the on-street parking meters located in the specific areas. It is to be here noted that the ordinance of 1951 does not obligate Denver to maintain parking meters in such areas. It is only the revenues from such parking meters as may, during the life of the bonds, be maintained in the areas. that are pledge. If the Denver officials should see fit to abandon parking meters in the specified areas during the life of the proposed bonds, there would be nothing to prevent it.
It is argued that the city had no right in the 1951 ordinance to pledge the revenues from the off-street parking operations. The portion of the question voted on in 1948 dealing with this reads as follows: "The bonds to be payable from the revenues to be derived from the operation of said municipal parking facilities and additionally secured by a conveyance in trust of the title to said facilities."
It is apparent that the first and principal thought in the proposition is the dedication of the revenues from the off-street parking to the servicing of the bonds. This is the primary security for their payment. It was only after the allocation of these revenues to the payment of the bonds that the clause "and additionally secured by a conveyance in trust of the title to said facilities," was subsequently added.
The electorate clearly gave the council power to earmark, set aside, or pledge the revenues from the facilities for the purpose of paying off the principal and interest of the bonds. The fact this revenues was the first "security" mentioned for these bonds. It was the reason for their being designated "revenue bonds." The mandate of the electorate thus compels the treasurer to set up a special fund into which all the revenues from the operation of these facilities shall be paid and out of which payments of principal and interest on the bonds shall be made until the liquidation of the bonds is completed. The pledging of the revenues from this operation therefore is a limitation on their use to the one purpose of servicing the bonds. The city has voluntarily surrendered the use of this income for any other purpose.
The pledging of the income from the facilities is quite a different thing from conveying the facilities themselves to a private trustee as additional security for the debt. As we pointed out in McNichols v. Denver, supra, the latter contemplates, through the process of foreclosure, the possible loss by the city of its capital assets, whereas all that the holders of the proposed revenue bonds can look to for payment is the revenues from the off-street parking facilities and those from any on-street parking meters that may be located within the prescribed area.
Another objection raised against the ordinance is that Denver may not legally acquire land already devoted to off-street parking. We see no legal bar to this procedure. In Public Service Co. v. City of Loveland, 79 Colo. 216, 245 Pac. 493, we approved condemnation by a city of properties of a utility company furnishing water or light and power where the city was acquiring the property with intention of furnishing the same service. From an economic standpoint it would appear more advantageous to acquire property with no improvements located on it; there being then merely the value of the land for which the vendor can ask compensation. Furthermore, the stipulation signed by the litigants includes the following paragraph: "(e) The city officials also propose at some future time to erect structures on part of the property so acquired by the city and now used as open off-street parking lots, and thereby increase the capacity of said off-street parking facilities."
It also is questioned whether the issuance of the bonds for the purpose of acquiring parking facilities is the issuance of bonds for a public and municipal purpose.
The Denver City Council has declared the issuance of the bonds is for such a municipal purpose. Ordinarily a legislative declaration to such effect is given great weight. Wayne Village President v. Wayne Village Clerk (Parr v. Ladd), 323 Mich. 592, 36 N.W.2d 157, 8 A.L.R.2d 357, and following annotation page 373. We have been supplied with no grounds for overthrowing this legislative finding and declaration, and especially when it comes from a municipality possessing the power granted by the "Home Rule Amendment," namely Article 20 to the Colorado Constitution.
It is argued that the bonds ordinance is discriminatory and conflicts with provisions of the charter relating to public improvements. It is urged that the plan will especially benefit the downtown retail area, and that the proper method of financing should have been through the creation of a special improvement district and the issuance of special improvement bonds. That this might have been an alternate method of financing is not gainsaid; it also is true that the off-street parking project could have been financed by general obligation bonds of the city. Probably most municipal improvements when financed by general obligation bonds are open the criticism that the proposed improvements confer a larger benefit on the district in which the improvements are being installed than upon the rest of the community, such as where a city issue general obligation bonds to pave its business and retail district. That, however, does not lessen the fact that such an improvement benefits the whole community, and the project thus falls properly into the classification of being for a public and municipal purpose.
In later years the use of revenue bonds has been expanding. In the case of such bonds it not so important to determine whether the incidence of taxation should fall upon the community as a whole or upon the district in which the improvements are being erected because the legal burden of servicing the revenue bonds falls upon neither class of taxpayer but upon the user of the facility being installed, whether it be a water system, a light and power system a municipal transportation system a toll-road system, or an off-street parking system. The user is the one who pays for the system. In the case of the last three classes of facilities. the users may be from widely scattered localities, and there is no compulsion on the users to use them. Discrimination cannot be said to thrive on such a soil. Neither do we believe such an arrangement conflicts with the charter provisions relating to public improvements.
There remains the question whether this proposed financing bargains away the police power. We do not think so. The pledge of the revenues from the on-street parking meters, as we have noted already relates only to those parking meters that may at any time be maintained within the area specified. with no obligation on the city to maintain parking meters if the city should at any time see fit to discontinue them.
With respect to the off street parking facilities, the city agrees to maintain the facilities during the life of the bonds — the longest maturity being 1981 — but should it desire to sell the facilities at any time, or the property on which the facilities are located, it has the privilege of calling the bonds on or after December 1, 1961 at par. Even from a technical standpoint, therefore, its mobility of action remains essentially unimpaired.
The judgment is affirmed.
MR. JUSTICE HOLLAND dissents.