Opinion
May 21, 2002
R.S. 2:651.4, et seq; R.S. 2:653; R.S. 2:654; R.S. 2:655; R.S. 2:656; R.S. 2:660;
La. Const. Art. I, § 4
Louisiana Airport Authority has the authority to expropriate if for a public purpose and just compensation is paid.
The LAA is subject to the public bid and public lease laws.
Mr. Glen Smith, Chairman Louisiana Airport Authority 429 W. Airline Highway, Suite N P. O. Box 935 LaPlace, LA 70069-0935
You requested the opinion of this office regarding certain questions which have arisen in connection with the Louisiana Airport Authority (the "LAA"). Your first question is:
1. Does the LAA have the ability to expropriate land bought with private funds? It is proposed that the land would then be donated back to the State for the International Intermodal Transportation Center ("IITC") facility.
The LAA was created by R.S. 2:653 as a body politic and corporate and a political subdivision of the state. The Constitution guarantees every person the right to "acquire, own, control, use, enjoy, protect and dispose of private property." This right is "subject to reasonable statutory restrictions and the reasonable exercise of the police power." Further, "Property shall not be taken or damaged by the state or its political subdivisions except for public purposes and with just compensation paid to the owner or into court for his benefit." La. Const. Art. 1, § 4. Since expropriation proceedings derogate from the right of individuals to own property, the law governing these proceedings is strictly construed against the expropriating authority. State v. Estate of Davis, 572 So.2d 39 (La. 1990).
As stated by the Louisiana Supreme Court in City of New Orleans v. New Orleans Land Co., 173 La. 71, 136 So. 91, 93 (1931): "Our conception of the law is that where the state or a municipality seeks to acquire property by the exercise of the power of eminent domain, the primary question is whether or not the taking is for the public use." It is the responsibility of the courts to determine whether a taking is for a public or private purpose. United Gas Pipe Line Company v. Blanchard, 149 So.2d 615 (La.App. 1st Cir. 1963), writ denied, 244 La. 135, 150 So.2d 590 (1963).
As stated by the court in City of Shreveport v. Chanse Gas Corporation, et al., 34,959 (La.App. 2 Cir. 8/22/01), 794 So.2d 962, various guidelines have been established by the courts to determine whether a proposed expropriation is for a public purpose. The courts look to the extent of the public's right to its use rather than the number of persons actually using the property at any given time. Texas Pipe Line Company v. Stein, 190 So.2d 244 (La.App. 4th Cir. 1966), reversed on other grounds, 250 La. 1104, 202 So.2d 266 (1967). In order to show a public purpose there must be a "general public right to a definite use of the property, as distinguished from a use by a private individual or corporation which may prove beneficial or profitable to some portion of the public." River Rail Terminals v. Louisiana Ry. Nav. Co., 171 La. 223, 130 So. 337, 340 (1930).
Expropriation is permitted only "for public purposes and with just compensation to the owner." La. Const. Art. 1, § 4. The finding of public purpose is made by the court on the particular facts presented. Town of Vidalia v. Unopened Succession of Ruffin, 95-580 (La.App. 3 Cir. 10/4/95), 663 So.2d 315. A municipal corporation may expropriate only when "such a course is determined to be necessary for the public interest by the governing authority of the municipality." R.S. 19:102. The expropriating authority must show by a preponderance of the evidence a public need or interest in the expropriation. Recreation and Park Com'n v. C S Development Inc., 97-2652 (La. 7/8/98), 714 So.2d 706. Once the expropriating authority meets its burden with regard to public need, the burden shifts to the defendant to show that the authority has abused its discretion in selecting the site to be expropriated. Id. An expropriating authority abuses its discretion when it "acts in bad faith, without adequate determining principles, or without reason." United States v. Carmack, 329 U.S. 230, 67 S.Ct. 252, 91 L.Ed. 209 (1946). The determination of public necessity "will not be disturbed by the courts if made in good faith." One person's property may not be taken for the benefit of another private person without a justifying public purpose, even though compensation be paid. City of Shreveport, supra.
The court in City of Shreveport, supra, discussed Town of Vidalia, supra, wherein the board of aldermen sought to acquire property on a batture of the Mississippi River "for recreation and tourism purposes * * * and to promote economic growth through tourism." The project included a hotel with commercial retail center, a marina and boat ramp, and other outdoor attractions. The owners of part of the land objected on grounds that the project lacked a public purpose, urging "there must be a general public right to a definite use of the property, as distinguished from a use by a private individual or corporation which may prove beneficial or profitable to some portion of the public." The court disagreed, finding that the jurisprudence has not defined public purpose so narrowly:
Rather, any allocation to a use resulting in advantages to the public at large will suffice to constitute a public purpose. Moreover, a use of the property by a private individual or corporation, when such use is merely incidental to the public use of the property by the state or its political subdivisions, does not destroy an otherwise valid public purpose. 663 So.2d at 319 (emphasis in original).
The court found that the project would "stimulate economic growth in Concordia Parish, an area which has struggled with a poor economy and high unemployment. It is uncontradicted that the Project will contribute to the general welfare and prosperity of the community of Vidalia." In short, the Third Circuit affirmed that a project including a hotel and retail center would promote economic development, thus meeting the requirement of a public purpose and supporting expropriation. In City of Shreveport, supra, the City sought to expropriate three tracts of land for the purpose of building a new convention center and a headquarters hotel. The condemnees challenged the taking on the grounds that economic development was not a proper purpose. The Court, relying on Town of Vidalia, supra, ruled that the City had established a public purpose for the expropriation.
The LAA is given, in R.S. 2:660, the right to expropriate any land, rights, rights-of-way, franchises, easements, or other property within or without the territorial boundaries of the authority necessary or proper for the construction or efficient operation of any airport or airport facility or access thereto under its jurisdiction pursuant to the procedure provided through the expropriation laws of the state.
Accordingly, it is the opinion of this office that, if there is a public purpose for the expropriation and the payment of just compensation to the owner, the LAA may expropriate land for the IITC facility. The origination of funds for this transaction from a private source would be irrelevant.
We are not aware of any statute which would allow the private sources of the funds to be used to expropriate land for the IITC facility to expropriate in their own name. Such statutory authority is required by La. Const. Art. I, Sec. 4 which provides, in pertinent part:
Property shall not be taken or damaged by any private entity authorized by law to expropriate, except for a public and necessary purpose and with just compensation, paid to the owner . . .
As to whether the LAA could donate the IITC facility to the State, we call your attention to La. Const. Art. VII, Sec. 14 which prohibits the state and its political subdivisions from loaning, pledging or donating public funds, assets or property to persons, associations or corporations, public or private. Although La. Const. Art. VII, Sec. 14(B) creates certain exceptions to the general prohibition of Art. VII, Sec. 14(A), the transfer of the IITC facility to the State is not among those exceptions. Pursuant to La. Const. Art. VII, Sec. 14(C), the state and its political subdivisions may engage in cooperative endeavors for public purposes. However, these constitutional provisions must be scrutinized in light of the decision of the Louisiana Supreme Court in City of Port Allen v. Louisiana Municipal Risk Agency, 439 So.2d 399 (La. 1983). Therein, the Supreme Court ruled that La. Const. Art. VII, Sec. 14(A) ". . . is violated whenever the state or a political subdivision seeks to give up something of value when it is under no legal obligation to do so." The Court went on to state that the constitutional authorization for cooperative endeavors, contained in Art. VII, Sec. 14(C), does not provide an exception to the prohibition contained in Sec. 14(A):
There is no indication that [Sec. 14(C)] is meant to be an exception to the rule of Sec. 14(A). . . Thus, even if political subdivisions cooperate for a public purpose, they still may not give away their assets to other political subdivisions, the United States government or public or private associations or corporations merely for a 'public purpose'.
We believe that the proposed transfer of the IITC facility from the LAA to the State is constitutionally questionable.
Your second question is:
2. Is the LAA bound by the Public Bid and Lease Laws if it contracted with a private investor group to be the master developer in the designing, building and operation of the IITC for the State of Louisiana thru a public/private partnership agreement. In addition, does the Public Bid and Lease Laws apply if the LAA provides conduit municipal bond financing to the master developer for certain portions of the development?
The LAA is a political subdivision of the State. Public bidding laws are founded on a policy of protecting the citizens and taxpayers of this State. Martin v. La. Stadium Exposition Dist., 349 So.2d 349 (La.App. 4th Cir. 1977). Generally, the State and its subdivisions must follow public bidding procedures, unless a statute expressly exempts them from doing so. Arnold v. Bd. of Levee Com'rs, 366 So.2d 1321 (La. 1978); Hall v. Rosteet, 247 La. 45, 169 So.2d 903 (1964); Sierra Club v. Louisiana Dept. of Wildlife Fisheries, 519 So.2d 836 (La.App. 4th Cir. 1988).
R.S. 2:654(O) specifically provides that the LAA is subject to the public bid law. The Public Bid Law La.R.S. 38:2211, et seq.) is applicable to all public work exceeding the contract limit as defined in the Public Bid Law, including labor and materials, to be done by a public entity. R.S. 38:2212(A)(1)(a). The provisions and requirements of R.S. 38:2212, those stated in the advertisement for bids, and those required on the bid form shall not be waived by any public entity. R.S. 38:2212(A)(1)(b). "Public work" is defined to mean "the erection, construction, alteration, improvement, or repair of any public facility or immovable property owned, used, or leased by a public entity". La.R.S. 38:2211(A)(11). "Public entity" is defined to include any political subdivision as defined in Article VI, Section 44 of the Louisiana Constitution.
Furthermore, the LAA cannot do indirectly what is directly prohibited by statute. Ops.Atty.Gen. 81-1266, 77-1215, 93-389, 99-25; 01-48. Accordingly, it is the opinion of this office that the Public Bid law is applicable to the LAA in connection with any public work exceeding the contract limit to be done by or on behalf of the LAA.
As to the Public Lease Law contained in Title 41 of the Louisiana Revised Statutes, the Public Lease Law is applicable to leases of state property "in the absence of an express permissive provision in the special law that such leases could be negotiated without advertisement and competitive bidding." Hall v. Rosteet, 247 La. 45, 169 So.2d 903 (1964).
We do not find that the LAA's enabling legislation contains an exemption from the Public Lease Law. The only authorization for the LAA to lease was found in R.S. 2:655(8) and (9) which set forth the general powers of the authority, including:
(8) To acquire, construct, lease, operate, maintain, or manage airports and airport facilities within or without its territorial boundaries, considered necessary to accomplish the purposes of its organization.
(9) To hold, encumber, control, acquire by donation, purchase, or condemnation, construct, own, lease as lessee or lessor, use, and sell real and personal property, or any interest or right therein, within or without its territorial boundaries, for the location or protection of airports and airport facilities and improvements and access thereto, for the relocation of buildings, structures, and improvements situated on lands acquired by the authority, or for any other necessary purpose, or for obtaining or storing materials to be used in constructing, maintaining, and improving airports and airport facilities of the authority. (Emphasis added)
Accordingly, it is the opinion of this office that the LAA is subject to the Public Lease Law.
As to whether the answer to your question would differ if the LAA were to act as a conduit issuer of bonds to provide funds to the master developer, the answer to your question will depend upon what authorization the Authority uses to issue the bonds. In Op.Atty.Gen. 80-1146, this office determined that the public contract law is not applicable to the construction of a plant by a private company in contemplation of industrial development board financing through the issuance of revenue bonds, relying on Farlouis v. LaRock, 315 So.2d 50 (La.App. 1st Cir. 1975). See also Op.Atty.Gen. 93-389.
In JTS Realty Corporation, et al. v. City of Baton Rouge, et al., 499 So.2d 274 (La.App. 1st Cir. 1986) rehearing denied, the court held that an industrial inducement contract executed pursuant to LSA-R.S. 33:4717.2 was not subject to the Public Lease and/or Bid Laws. See also Adams Industries Inc. v. City of Monroe, et al., 385 So.2d 896 (La.App. 2nd Cir. 1980) rehearing denied.
In Hebert v. Police Jury of West Baton Rouge Parish, 200 So.2d 877 (La.App. 1st Cir. 1967) writ refused, the court held that an industrial inducement contract and the issuance of revenue bonds in connection therewith, pursuant to LSA-R.S. 39:991, et seq., were not subject to the Public Lease and/or Bid Laws:
"The third point as to the alleged violation of the Public Lease Law (R.S. 41:1211 to 41:1221, inclusive) and the alleged violation of the Public Contract Law (R.S. 38:2211 to 38:2217, inclusive) are likewise without merit. Recent decisions of our courts have clearly held that the provisions of the Public Lease Law are not applicable to lease agreements entered into by public bodies pursuant to express constitutional or statutory provisions. Kliebert v. South Louisiana Port Commission [La.App.], 182 So.2d 814 (1966); Wright v. Lake Charles Harbor and Terminal Dist.,[La.App.], 188 So.2d 449 (1966). See also LeBlanc v. Police Jury of the Parish of Rapides, supra. This court is well aware of the provisions of the Public Contract Law of this state but the express provisions of R.S. 39:991 clearly provide that the issuing authority may "issue revenue bonds and use the funds derived from the sale of such bonds to acquire industrial plant sites and to acquire, purchase, construct or improve industrial plant buildings and necessary property and appurtenances thereto . . ." The lease in the instant case complies literally with this language in that the Police Jury is obligated to acquire a complete plant facility, including land, buildings and appurtenances, and thereafter proposes to lease it to the Company to accomplish the purposes intended. The Public Contract Law cannot be applied to such a situation and in particular where in many instances complex industrial facilities must be constructed by manufacturers which own or have access to certain trade secrets, patents and other processes that are unavailable to general contractors. The criteria in the lease agreement establishing the purchase price for the facility fully protects the Police Jury as if public bidding were required."
Considering the above, it is our opinion that the provisions of the Public Lease and Bid Laws are not applicable to industrial inducement contracts entered into pursuant to R.S. 33:4717.2 and/or 39:991 et seq. In addition, under the JTS Realty Corporation case, cited supra, the Public Lease and Bid Laws do not govern contracts which are too complex to be the object of bidding. Obviously, this latter exemption is subjective in nature, and reliance thereon must be carefully placed. Any doubt of the complexity of the contracts should be resolved in favor of the lease and bid requirements. Thus, if the Authority's lease contract is not complex, or is not considered an industrial inducement endeavor, then, in that event, the Public Lease and Bid Laws must be followed. Attorney General Opinion Nos. 89-653, 88-166-A, and 83-288.
Furthermore, if the LAA should lease the IITC Project to a private entity who will then build and operate the IITC Project using private funds, the private entity is not subject to the Public Bid Law.
3. Would the LAA be required to seek more than one private investor group thru a Request for Qualifications ("RFQ") or Request for Proposal ("RFP") process? In addition, can the LAA enter into direct negotiation with a private investor group without the RFQ/RFP process?
We are unsure of what relationship the LAA could have with a private investor group and therefore we are unable to respond to your question; however, we would note that the Louisiana Legislature has only authorized the use of RFQs and RFPs in very limited circumstances.
Trusting this adequately responds to your request, we remain
Yours very truly,
RICHARD P. IEYOUB ATTORNEY GENERAL
BY: ________________________________ MARTHA S. HESS Assistant Attorney General
RPI:MSH:jv
DATE RELEASED: May 21, 2002