Request By:
Mr. Benny Ray Bailey, Ph.D.
State Senator
Route #1, Box 102A
Hindman, Kentucky 41822
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
A minerals company is interested in the construction of a headquarters building for the company in what they term a strategic location in Hazard, Perry County. That location would put them closer to their mineral holdings in Knott, Leslie, Breathitt and Perry Counties. The corporation involved agreed to enter into a long term lease for the facility. The basic plan in such financing is that the city will issue the revenue bonds to fund the newly constructed facility. Then the city will lease the building to the corporation, which rentals will pay the principal and interest of the bond issue. The project would result at the outset in 30 to 50 additional jobs for the people of Perry County.
Conventional financing has been considered, but the high interest rate in connection with a conventional loan is a major barrier to the project.
However, the city of Hazard, though somewhat reluctantly, has adopted a resolution for the issuance of Industrial Revenue Bonds to finance the project. Considering your legislative background and perspective, you believe that the I.R.B. would be a valid financing alternative. The city of Hazard desires our opinion as to the validity of the issuance of such bonds by that city.
In view of the new jobs that such a project would create directly and indirectly, the city of Hazard has declared the project area inside its corporate limits as a revitalization or redevelopment district within the meaning of KRS 103.200(n). Similar kinds of action have been taken recently by the cities of Louisville and Lexington.
You have written that many people believe that the project is authorized under KRS 103.200(1)(n). However, a residual authority, you say, could be KRS 103.200(1)(a) and (i). In any event, the proposed office building would be subordinate to the mining facilities owned and operated by the corporation, Mountain Coals.
Your question reads:
"Can the City of Hazard Lawfully issue revenue bonds pursuant to KRS 103.200 for construction of the proposed coal company office building either based upon designation of the project site as a revitalization or redevelopment district or under subsections (a), (i), or other provisions of KRS 103.200?"
At the outset, KRS 103.200(1) defines "building" or "industrial building" as any land and building or buildings, including office space related and subordinate to any of the facilities enumerated elsewhere in that statute, suitable for the following facilities described in the statute or any combination thereof. Among those facilities enumerated are those described in (a), (i) and (n) of KRS 103.200(1):
"(a) Any activity, business or industry for the manufacturing, processing or assembling of any commercial product, including agricultural, mining or manufactured products, together with storage, warehousing and distribution facilities in respect thereof;
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"(i) Any facilities for the extraction, production, grading, separating, washing, drying, preparing, sorting, loading and distribution of mineral resources, together with related facilities;
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"(n) Any activity, including new construction, designed for revitalization or redevelopment of downtown business districts as designated by the issuer."
Even though the city is presently concentrating on the revitalization and redevelopment part of the statute, i.e., KRS 103.200(1)(n), it is our opinion that under the literal terms of the statute, the city can validly issue industrial revenue bonds pursuant to KRS 103.200(1)(a) and (i). Under the explicit language of the statute, the proposed building would involve office space, which building would be related to and subordinate to the facilities described clearly in subsections (1)(a) and (i).
In
Bailey v. Reeves, Ky., 662 S.W.2d 832 (1984) 834, the Supreme Court of Kentucky ruled that it had a duty to accord to words of a statute their literal meaning unless to do so would lead to an absurd or wholly unreasonable conclusion. Here the literal words of KRS 103.200(1)(a) and (i) are clear and free of any absurdity or unreasonableness in their application to the factual situation you suggest.
For the foregoing reason, we see no need to consider any supportive implications of KRS 103.200(1)(n). The city can very well amend its resolution to add and pinpoint the application of KRS 103.200(1)(a) and (i). The resolution must, of course, meet the applicable requisites of KRS 103.210(1).
The project will promote economic development and relieve unemployment in that area, as envisioned by KRS 103.210.
Since the language in KRS 103.200(1)(a) and (i) is clear and unambiguous, we believe that the courts would accept those portions of the statute as written. See
Griffin v. City of Bowling Green, Ky., 458 S.W.2d 456 (1970); and
Manning v. Kentucky Bd. of Denistry, Ky.App., 657 S.W.2d 584 (1983) 587.
The fact that the building would be constructed in an area of unimproved land in a newly annexed region of the city some five miles from the business district of the city of Hazard poses no problem under our analysis. See