We consider in this action the legality under our state constitution of a municipality's proposed purchase of land from the United States government. The question was certified to this court pursuant to RCW 2.60 by the United States District Court for Western Washington. We now answer the federal court's certified questions concerning the constitutionality of the proposed land transaction.
As part of a powerhouse project on the Columbia River planned by the United States Army Corps of Engineers (Corps), the relocation of most of the town of North Bonneville was contemplated. All businesses and most residences and streets were required to be destroyed or moved to accommodate the powerhouse construction. In preparation for the relocation of the town, the Corps and North Bonneville entered into a series of contracts for conveyance of land in the new townsite. Litigation arose in federal court from the Corps' refusal to convey to the municipality certain lands as provided by these contracts.
North Bonneville is an optional code city incorporated under RCW Title 35A. Approximately 700 individuals live there; if the entire original townsite were developed, it could accommodate a population of 1,500. When planning for the powerhouse began, relocation of the townspeople as a community was requested. The Corps asserted a lack of legal authority to relocate the town. This impediment was overcome by congressional enactment authorizing sale, and purchase and resale, by the Corps of land necessary for the relocation. Water Resources Development Act of 1974, Pub. L. No. 93-251, § 83, 88 Stat. 12.
After joint approval of the planning firm's proposals, the town and the Corps entered into two contracts in 1975 for conveyance of land to the town and to individuals relocating within the town. The initial town area, platted and improved to accommodate the current population, was sold to individuals at the price of raw land. The contract provided for the town to purchase additional unimproved land at the price paid by the Corps, plus interest and costs. More than half of this land would, under the proposal, remain municipally owned, as streets, greenbelts, parks, and service facilities. The remainder would eventually be resold or leased to unidentifiable private parties at fair market value at some undetermined time in the future.
The Corps has sold several residential lots in the developed portion of the town to the municipality. However, it has refused to sell any commercial lots to the town or to purchase and resell any lots in the optimum townsite. It formally repudiated the land sale contract with the town in 1976. In 1977 the Corps filed suit in federal District Court for Western Washington, seeking a declaratory judgment relieving the Corps of its obligation to the town under the
The following questions of state constitutional law have therefore been certified for answer by this court:
"1. Whether the City of North Bonneville, an optional code city under the laws of the State of Washington, as part of the relocation of the residents and businesses, is authorized to purchase land for the purpose of devoting such property to both public and private uses including the platting of a portion thereof into streets and lots and sale or lease of lots to unidentifiable private parties according to the general concept such as that shown on the Final New Town Plan, Town of North Bonneville, Washington, attached.
"2. Whether the acquisition of such lands with the intent on the part of the city to resell the platted lands to unidentified parties constitutes an unlawful loan of municipal credit in violation of article 8, section 7 of the Constitution of the State of Washington."
The Corps argues that the proposed land transactions violate the state constitution either because the municipality's expenditure would not be for a "public purpose" or because the purchase and resale by North Bonneville would constitute a "loan of credit" to a private party and is thus not a public use.
MUNICIPALITY'S AUTHORITY/PUBLIC PURPOSE
There being no general prohibition against land transactions of the sort contemplated by the town in this case, it would appear that North Bonneville "is authorized to purchase land", as set forth in the first certified question. However, the Corps argues that constitutional limitations to "public purposes" of the municipality's powers make the proposed land acquisition unauthorized.
The Corps contends that because the acquisition of land by North Bonneville would not be solely for public purposes, it would violate article 7, section 1 (amendment 14) of the state constitution:
The Corps relies on State ex rel. Collier v. Yelle, 9 Wn.2d 317, 115 P.2d 373 (1941), which extended this "public purposes" limitation to expenditures because
State ex rel. Collier v. Yelle, supra at 326.
The Corps argues that the proposed acquisition by the town is not for public purposes because the private individuals who repurchase the land will ultimately benefit. It contends the risk of taxpayers' funds inherent in the land speculation contemplated by the town cannot serve the public purposes that would arise if the acquired land were to be used solely in a public "mode", i.e., in a traditional municipal sense for services, streets, or city facilities. The Corps relies on Healy Lumber Co. v. Morris, 33 Wn. 490, 74 P. 681 (1903), in which this court under article 1, section 16, struck down a statute that granted the owner of timbered lands the right to condemn a right-of-way for logging roads because the judges were
Healy Lumber Co. v. Morris, supra at 509. Article 1, section 16 of our state constitution prohibits the use of the power of eminent domain for other than public uses. The Corps asserts that because the land considered in this case could not be condemned for nonpublic uses, it cannot be indirectly acquired by the town through purchase for the same use "which may incidentally or indirectly promote the public interest."
(Footnote omitted.) 15 E. McQuillin, Municipal Corporations § 39.19, at 32 (3d ed. 1970). More recent cases have required simply that "the object sought to be accomplished is for a public purpose" in order for the requirements of article 7, section 1, to be met. In re Port of Seattle, 80 Wn.2d 392, 396, 495 P.2d 327 (1972) (approving lease of public air cargo warehouses to private parties).
The case of Anderson v. O'Brien, 84 Wn.2d 64, 524 P.2d 390 (1974), which approved a gift of public monies to an Indian tribe for construction of industrial buildings intended to stimulate investment under article 7, section 1, is perhaps most instructive on this subject:
North Bonneville has authority to enter into the proposed land transactions through the congressional enactment authorizing the relocation and through the town's general ability as an optional code city to enter into contracts. The town can rely on two manifestations of public purpose that make the contracts with the Corps constitutional under article 7, section 1. First, public purposes can be seen in the "mode of use" of a large portion of the optimum town, which would be retained by the municipality for municipal uses. Even the Corps acknowledges that purchase of property for streets, parks, and service facilities constitutes a public purpose. Second, the object of insuring the continued economic and social viability of the town by providing for growth to the optimum town size is consistent with the public purposes considered and approved in Anderson v. O'Brien, the last case in which this court specifically considered the applicability of article 7, section 1, to a proposed governmental expenditure. See also RCW 35.21.735 (expressing legislature's belief that "carrying out the purposes of federal grants or programs is ... a public purpose").
LOAN OF CREDIT
The second certified question deals with the constitutionality of the proposed land transactions under article 8, section 7 of the state constitution. It provides:
This provision is similar to that found in many state constitutions. However, this court has traditionally interpreted article 8, section 7, very strictly, striking down municipal financing schemes similar to those that have been approved in other jurisdictions with comparable constitutional provisions. See, e.g., Port of Longview v. Taxpayers, 85 Wn.2d 216, 533 P.2d 128 (1974) (striking down statute authorizing industrial bonds that would have provided tax-free financing for industrial development); contra, State ex rel. Farmers' Elec. Coop., Inc. v. State Environmental Improvement Auth., 518 S.W.2d 68 (Mo. 1975); Green v. Mt. Pleasant, 256 Iowa 1184, 131 N.W.2d 5 (1964).
Lassila v. Wenatchee, supra at 811. In Lassila, the purchased realty was adjacent to a planned community center and "future public benefit" was anticipated. But, as the court stated, "[a] municipality is absolutely prohibited from acting as a financing conduit for private enterprise." Lassila v. Wenatchee, supra at 811. Again, in Port of Longview, this court struck down the statute authorizing industrial bonds:
Those cases in which we have struck down financing arrangements between governmental entities and private individuals and corporations can, however, be distinguished from the case at bar in two ways.
First, unlike Lassila and Port of Longview, in this case no specific recipient of the town's "loan of credit" can be identified. No individuals presently stand to profit from the City's risk, since the realty must by law be sold at fair market value and there is no suggestion that a ready buyer has engineered the acquisition and is now prepared to profit from the purchase and resale. In all the cases striking down financing arrangements under article 8, section 7, an identifiable private party was to immediately profit from the City's risk. Although the City in this case admittedly would be taking some risk in the land transaction, no private entity stands to gain from that loan of credit. The town is not acting as a "financing conduit." Lassila v. Wenatchee, supra at 811.
In PUD 1 v. Taxpayers, we approved the municipality's ownership and development, with private utility companies, of electric power facilities necessary to meet future needs of the district. In approving the investment, the court stated:
PUD 1 v. Taxpayers, supra at 729. In Miller v. Tacoma, supra, the court concluded that "urban renewal legislation is not rendered unconstitutional by reason of the fact that some of the land may be resold ... to private interests":
Miller v. Tacoma, supra at 387, quoting Berman v. Parker, 348 U.S. 26, 99 L.Ed. 27, 75 S.Ct. 98 (1954).
Miller v. Tacoma, supra at 387, quoting Velishka v. Nashua, 99 N.H. 161, 106 A.2d 571, 44 A.L.R.2d 1406 (1954).
Miller v. Tacoma, supra at 388.
Lassila acknowledged that the existence of a public purpose in some instances can save a loan of credit from unconstitutionality by insuring that the municipality's expenditure is not for private use:
Lassila v. Wenatchee, supra at 811 (italics in original). The existence of a public purpose insures the validity of the proposed land transaction under article 8, section 7, when no identifiable private entity is the recipient of the municipality's "loan of credit" in purchasing the land.
Article 8, section 7 was made a part of the constitution in order to prevent abuse by railroads and other powerful private entities that might demand subsidies before locating in communities desirous of their economic and social favors. See PUD 1 v. Taxpayers, supra at 726-27. That danger continued to exist in recent cases in which we have struck down proposed financing arrangements between municipalities and private entities. For instance, in Lassila the facts reflected an "engineered" land acquisition and sale, aided by hurried environmental assessments, solely for the benefit of an individual developer who contacted the municipality prior to the property purchase. In Port of Longview, the multimillion dollar bond issue struck down was created expressly to bring development funds to one large corporation.
For the reasons stated above, therefore, we answer the United States District Court for Western Washington by declaring that the proposed land acquisitions are within the town's authority and that the land transactions do not violate article 8, section 7 of the Washington State Constitution.
UTTER, C.J., and ROSELLINI, STAFFORD, BRACHTENBACH, DOLLIVER, HICKS, and WILLIAMS, JJ., concur.