Request By:
Hon. William A. Thielen
General Counsel
Kentucky Municipal League
P.O. Box 22736
Lexington, Kentucky 40522
Opinion
Opinion By: David L. Armstrong, Attorney General; Walter C. Herdman, Asst. Deputy Attorney General
This is in response to your letter of June 14 in which you on behalf of the City of Middlesboro, a League member, request an opinion concerning the legality of a proposed method of conducting the city's urban development activities. You refer to the urban development act and particularly KRS 99.350 which authorizes a city to exercise the provisions of the act by three methods: (1) by creating an urban renewal and community development agency; (2) by vesting the urban development authority in the city housing commission; or (3) by the city itself exercising the statutory powers authorized by Ch. 99 KRS.
You further relate that the city has previously exercised the urban renewal authority through the city housing department. However, this department has ceased to exist. The city then attempted to create a commission to conduct the activities but was apparently prevented from doing so by a court order. Recently a private nonprofit corporation proposed to the city a plan for it to operate the urban development activities whereby the city would supply office space, utilities, and $2500 per month until the association was able to carry the load itself. Under the circumstances, you raise the following question:
"May a city legally enter into an agreement with a private, non-profit association whereby the city furnishes offices, utilities, and funding of $2,500 per month for six months in return for which the association will conduct all community development activities within the city?"
Our response to your question would be in the negative. The three authorized methods found under KRS 99.350 are exclusive in our opinion and the city must follow one of these methods if it wishes to operate under Ch. 99 KRS. We have touched briefly on this question in OAG 83-317, mentioned in your letter, and OAG 83-355, copy attached. The latter opinion involved the transfer of urban renewal property and services from the agency established under KRS 99.550 to a private corporation for the operation of the city's urban renewal program.
We also call your attention to the general rule with respect to statutory construction that the terms of a statute cannot be changed, subtracted from or added to where the net result would be one of a conflict. See OAG 78-79, copy attached. In other words, there is no provision under the act for the administration of a community development project by a private corporation or by any method not mentioned in KRS 99.350.
There is also the constitutional objection found under Section 179 of the Constitution concerning appropriating municipal funds to a private corporation for any purpose.
Under the circumstances, we do not believe the city can legally enter into any agreement with a private nonprofit association and appropriate funds thereto, as well as other facilities and services, for the purpose of operating a community development program authorized by Ch. 99 KRS.