Opinion
May 17, 2006.
12-B CONVEYANCE OF REAL PROPERTY 15-A CONSTITUTIONAL LAW 49 HEALTH 53 HOSPITALS 90-A-1 PUBLIC FUNDS CONTRACTS 90-A-1-(a) PUBLIC FUNDS CONTRACTS — Constitution 93 SALES 112 STATE — Property
La. Const. Arts. VI, Sec. 23; VII, Sec. 14 La. R.S. 34:1451 et seq.; 46:1051 et seq. La. Atty. Gen. Op. No. 99-162
The Vermilion Parish Hospital Service District No. 2 may purchase one tract of land for the sole purpose of exchanging it for another tract of land. The only reason that the law permits this is the great deference to "public purpose" when medical matters are considered. This action and opinion is not inconsistent with La. Atty. Gen. Op. No. 04-0234 due to differences in the law and policy between port commissions and hospital service districts.
Mr. Bernard F. Duhon Attorney at Law P.O. Box 1169 Abbeville, LA 70511-1169
Dear Mr. Duhon:
On behalf of the Board of Commissioners of the Vermilion Parish Hospital Service District No. 2 ("Hospital Service District"), you have requested an opinion of this Office regarding the legality of a hospital district acquiring property for the sole purpose of exchanging that property for another tract in order to construct a medical office complex on the latter tract. Specifically, you ask the following questions:
1) Can a Hospital Service District acquire property solely for the purpose of exchanging the newly acquired property for a different tract of land needed for a public purpose?
2) Does La. Atty. Gen. Op. No. 04-0234 apply to this scenario, as contrary to the port commission in that opinion, the Hospital Service District that is the subject of this request is authorized to exchange property under La. Const. Art. VI, Sec. 23?
In order to fully appreciate the legal implications of your questions, it is necessary to frame those questions with a recapitulation of the facts that have led to your request. In your request, you note that the Hospital Service District owns tracts two through twelve of a particular block in Vermilion Parish. The Hospital Service District intends to construct a new medical complex on that property, but it needs the entire block for the complex. The owner of tract one of the block (the only remaining tract not owned by the Hospital Service District) is unwilling to sell his property. However, he is willing to exchange the property for another tract. Thus, the Hospital Service District wants to acquire the other tract for the sole purpose of exchanging it for the final remaining tract on the block.
As an initial matter, you note that the Hospital Service District is a political subdivision created under the authority of La. R.S. 46:1051 et seq. This classification is supported by La. Atty. Gen. Op. No. 84-70 and Bertrand v. Sandoz, 255 So.2d 754 (La. 1971).
The Louisiana Constitution, Article VI, Section 23, states, in pertinent part, that, "subject to restrictions provided by general law, political subdivisions may acquire property for any public purpose by purchase, donation, expropriation, exchange, or otherwise" (emphasis added). Louisiana Revised Statute 46:1064(A) clearly grants the power to the Hospital Service District to "purchas[e] and acquir[e] lands . . . necessary to carry out the purposes of" the Hospital Service Districts chapter of the Revised Statutes. It should be noted that there is no clear restriction in the relevant constitutional or statutory provisions against the acquisition of property for the purposes of exchange.
In your request letter, you cite La. R.S. 46:1062 as support for the proposition that the Hospital Service District can acquire the property that it needs through exchange of unrelated property acquired for that specific purpose. We disagree with this interpretation, as it is our opinion that this is an overly broad reading of La. R.S. 46:1062. That statute grants the commissioners of a hospital service district the power to have constructed necessary medical facilities. It does not contemplate how the underlying property on which a medical facility is to be constructed is to be acquired. A similar result follows from your analysis of La. R.S. 46:1052. Again, this provision concerns the operation of medical facilities within a hospital service district, not the acquisition of the property on which those operations are to occur.
Regarding your analysis of La. R.S. 46:1074, concerning the power of hospital service districts with respect to immovable property, we agree that this statute would allow the Hospital Service District to sell or convey immovable property that it owns. This statute states, in pertinent part, that, "a hospital service district . . . may sell and convey immovable property to any person or legal entity if the fair market value of the property, as determined by an appraisal, does not exceed" several amounts that are far in excess of the $30,000.00 that you note would be the value of the property that the Hospital Service District intends to purchase.
A common definition of the term "convey" supports an interpretation that a hospital service district is not restricted from exchanging property. "Convey" is simply defined as "[t]o transfer or deliver to another. To pass or transmit the title of property from one to another." Joseph R. Nolan Jacqueline M. Nolan-Haley, Black's Law Dictionary, 6th ed., 333 (West 1990). The fact that the activity contemplated by the Hospital Service District is permitted is further supported when a definition of the term "exchange" is considered. "Exchange" is defined as "[t]o part with, give or transfer for an equivalent." Id. at 562 (emphasis added). The fact that "convey" and "exchange" both encompass a transfer of property is telling of the fact that the exchange of property for another parcel of property was envisioned by the drafters of La. R.S. 46:1074. Thus, it is our opinion that the Hospital Service District may exchange property for other property of equivalent value without running afoul of the Louisiana Constitution or the Revised Statutes. The matter of equivalency is discussed in more detail below.
Your second question asks how La. Atty. Gen. Op. No. 04-0234 applies, if at all, to this scenario. We can find no language in the law on which that opinion is based, La. R.S. 34:1451 et seq., that is similar to the "sell and convey" language in La. R.S. 46:1074. Thus, it is our opinion that the conclusion of that opinion, that the Krotz Springs Port Commission cannot acquire property for the sole purpose of exchanging it for other property, is not applicable here. What is envisioned by the hospital service district laws' "sell and convey" language is something broader than any of the language related to the Port Commission's powers under La. R.S. 34:1451 et seq. Thus, it is clear that because La. Atty. Gen. Op. No. 04-0234 is based on different law than are the conclusions of this opinion, the two are not in conflict and the narrow property exchange allowance identified in this opinion does not undermine earlier opinions of this Office.
Although La. Const. Art. VI, Sec. 23 allows political subdivisions to acquire property by purchase, which is what the Hospital Service District would be doing to obtain the tract to exchange with the owner of tract one, it also requires this purchase to be accomplished for a public purpose. Can it then be said that the Hospital Service District's proposed purchase of an unrelated tract of land for the sole purpose of exchanging that tract for another tract that is needed to facilitate the construction of a medical complex is a public purpose? Under the reasoning in La. Atty. Gen. Op. No. 04-0234, this question has two parts for exchange purposes: 1) can the necessary property be acquired through other means? and 2) is a public purpose served?
As to question one, unlike the scenario in La. Atty. Gen. Op. No. 04-0234, the Hospital Service District has clearly demonstrated that, due to the reluctance of the current owner of the tract one, the exchange that is the subject of your request is the only means by which tract one may be acquired by the Hospital Service District. Again, as contrasted with La. Atty. Gen. Op. No. 04-0234, the exchange is directly related to a planned project.
As to question two, it is unquestionable that the provision of medical services to a community constitutes a public purpose. In this vein, this Office has previously noted that "the availability of modern, nearby medical facilities, for the needy as well as the general public, serves a public purpose . . . so long as the public benefits from these facilities are commensurate with the amount of the public funds expended." La. Atty. Gen. Op. No. 82-446. See also, La. Atty. Gen. Op. Nos. 98-398; 00-02; 04-0208. Thus, as several other opinions of this Office have allowed attenuated links to the provision of medical services to be considered a public purpose, it is the opinion of this Office that the purchase of unrelated property for the purpose of exchanging that property for another tract that does fulfill a direct public purpose is not a violation of La. Const. Art. VI, Sec. 23. We note that it is the certainty of the use of the purchased property and the medical nature of the intended use that distinguishes this outcome from the outcome in La. Atty. Gen. Op. No. 04-0234.
Although we are of the opinion that the proposed purchase and exchange of property by the Hospital Service District is permissible, as the purchase falls within the relatively narrow definition of public purpose under La. Const. Art. VI, Sec. 23 and because the exchange is permitted by a statute unique to hospital service districts, La. R.S. 46:1074, we must caution the Hospital Service District that it is still limited by the provisions of La. Const. Art. VII, Sec. 14. The reason that we draw your attention to this provision of the Constitution is that, though we opine that the Hospital Service District may purchase property for the sole purpose of exchanging it for a tract of property that is necessary for use in a currently existing project, one that bolsters the availability of medical services in Vermilion Parish, this exchange must not be completely out of proportion as to the value of the two pieces of property. According to La. Const. Art. VII, Sec. 14,
Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private
(emphasis added). Thus, if the property that constitutes tract one is worth disproportionately less than the property that it is being exchanged for, it is our opinion that such a transaction would constitute an unlawful donation of property under La. Const. Art. VII, Sec. 14. See, La. Atty. Gen. Op. No. 99-162. However, if the two tracts are not of disproportionate value, then it is our opinion that the exchange of these two tracts does not run afoul of the prohibition against donations in La. Const. Art. VII, Sec. 14. We do not have the facts necessary to determine the proportionality of the values of these two tracts, but feel it necessary to bring this issue to your attention.
We hope this sufficiently answers your inquiry, however if we may be of further assistance please do not hesitate to contact our office.
Sincerely yours,
CHARLES C. FOTI, JR. ATTORNEY GENERAL
By: ___________________ RYAN M. SEIDEMANN Assistant Attorney General VII 14 46:1064 46:1060 46:1055 46:1072 42:4.2 42:6.1 42:6 46:1055
OPINION NUMBER 99-162 OPINION NUMBER 99-162 90-B-3 PUBLIC LANDS — Public Private domains, distinctions 90-B-4 PUBLIC MEETINGS — State Local governing bodies La. Const. Art. , Sec. (A); R.S. ; R.S. ; R.S. Hon. Charles R. McDonald (A)(4); R.S. (2)(a); R.S. ; R.S. ; R.S. State Representative ; R.S. (3) P.O. Box 1495 Bastrop, LA 71221-1495 Hospital Service District may not pay more than appraised fair market value for land without violating constitutional prohibition of donation of public funds. Open Meetings Law must be adherred to in District conducting hearing on complaints against officers or employees of the District.Dear Mr. McDonald:
You have requested the opinion of this office on the following issues:
1. Can the board of commissioners of a hospital service district (District) purchase real estate that is strategically located adjacent to the hospital's campus and pay a price that exceeds the appraised fair market value?
In response to this question, we would point out that R.S. 46:1064 designates the District as a political subdivision of the state and authorizes Districts to purchase and acquire lands and to purchase, acquire and construct facilities necessary to carry out the health care responsibilities of the District. R.S. 46:1060 grants to the District the "right and power of expropriating property for the purpose of acquiring land for any purpose that it may find necessary in the operation of a hospital service district . . .". However, there are no provisions of state law which dictate procedures to be complied with in the purchase of immovable property by political subdivisions of the state such as a hospital service district. This does nor mean that there are no limitations on what amount may be paid for land since, as with all of their duties, the board of commissioners is required to act prudently and responsibly in making such a negotiated purchase or in deciding to initiate expropriation proceedings.
Article VII, Sec. 14(A) of the Louisiana Constitution provides, in pertinent part:
Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged or donated to or for any person, association, or corporation, public or private.
You have asked whether the District may "pay a price that exceeds the appraised fair market value" for land. We would view payment of more that the fair market value for such property to constitute a donation of the funds by the District to the seller and therefore a violation of the above quoted constitutional provision.
You also ask for guidance in establishing the format for hearings held pursuant to LSA-R.S. 46:1055(A)(4), which authorizes the board of commissioners to, "conduct hearings and pass upon complaints by or against any officer or employee of the district." You present the following questions pertinent to this issue:
1. Are these hearings public or can they be held in executive session?
2. Should the complainant be represented by counsel?
3. Should witnesses be called by the complainant or the board of commissioners?
4. Should these hearings result in a resolution of the problem?
5. Should the verdict be announced publicly or to the complainant only?
LSA-R.S. 46:1072(2)(a) defines a "hospital service district" as a political subdivision of the state. Political subdivisions of the state are considered "public bodies" and therefore subject to the Open Meetings Laws. LSA-R.S. 42:4.2.
LSA-R.S. 42:6.1 provides for exceptions to the Open Meetings Laws and, in part, states:
A. A public body may hold an executive session pursuant to R.S. 42:6 for one or more of the following reasons:
(1) Discussion of the character, professional competence, or physical or mental health of a person, provided that such person is notified in writing at least twenty-four hours before the meeting and that such person may require that such discussion be held at an open meeting, and provided that nothing in this Subsection shall permit an executive session for discussion of the appointment of a person to a public body. . . .
* * * * *
(4) Investigative proceedings regarding allegations of misconduct.
It is conceivable that complaint hearings regarding an officer or employee of the District could involve allegations of misconduct as well as a discussion of that individual's character or professional competence. However, if an executive session is held, the general reason for holding the executive session must be recorded and entered into the minutes of the meeting pursuant to LSA-R.S. 42:6.
You also ask whether a complainant to a matter under hearing before the board of commissioners should be represented by legal counsel. We must defer to the hospital service district's determination on this matter. Beyond the general provision cited above empowering the board of commissioners to conduct hearings and pass on complaints, no other statutory provision mandates how a hospital district is to conduct its hearings. While the Administrative Procedure Act is a good source of reference to ensure that due process rights are secured, those provisions do not apply to hospital districts. See Opinion 94-359(A).
Generally, a complainant's decision whether or not to be represented by counsel is not prohibited by law. However, the complainant's participation in the actual hearing is subject to the board of commissioners' determination. The board of commissioners has the power under LSA-R.S. 46:1055(3), "to make, alter, amend and promulgate rules and regulations governing the hospital." It therefore has the right to adopt by-laws for its internal operation. Lamm v. Board of Commissioners for Vermillion Hospital Service District No. 1, 378 So.2d 919 (La. 1980).
These by-laws should address the procedures to be followed for each district in conducting hearings and processing any complaints, including what legal representation, if any, the complainant should need before the board.
Also, whether witnesses are called by the complainant or the board of commissioners should be addressed in the by-laws. Generally, it is the duty of the investigating body to provide evidence, including any witnesses, in support of a complaint before an entity. But, again, these are generalizations gleaned from the Administrative Procedure Act. Each district's internal by-laws should control on this matter.
Additionally, you ask whether the hearing should result in a resolution of the problem. By the wording of LSA-R.S. 46:1055(A)(4), the board of commissioners should, "pass upon complaints". This connotes a desired finality, whether in support of or against the allegations in the matter. Therefore, a resolution of the matter is suggested.
Finally, you ask whether the decision of the board of commissioners should be announced publicly or to the complainant only. The Open Meetings Laws mandate that no final or binding action can be taken by a public body in executive session. LSA-R.S. 42:6. This requires any final determination by the board of commissioners be taken in open meeting and accessible by the public.
I trust this addresses your concerns. Please contact us if we can be of further assistance.
Yours very truly,
RICHARD P. IEYOUB ATTORNEY GENERAL
BY: _____________________ GLENN R. DUCOTE Assistant Attorney General