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Price v. City of Mesa

Court of Appeals of Arizona, First Division

December 2, 2014

JOE E. PRICE, Plaintiff/Appellant,
v.
CITY OF MESA, a municipal corporation, Defendant/Appellee

Appeal from the Superior Court in Maricopa County. CV2013-094063. The Honorable David K. Udall, Judge.

For Plaintiff/Appellant: Joe E. Price, Mesa.

For Defendant/Appellee: David A. Pennartz, Landon W. Loveland, Charles W. Wirken, Sarah C. Smith, Gust Rosenfeld, PLC, Phoenix.

OROZCO, Judge. Presiding Judge Patricia A. Orozco delivered the opinion of the Court, in which Judge Randall M. Howe and Judge Maurice Portley joined.

OPINION

Page 651

[236 Ariz. 268]OROZCO, Judge.

[¶1] Joe E. Price appeals the grant of summary judgment in favor of the City of Mesa (Mesa). For the reasons that follow, we affirm.

[¶2] In this opinion, we construe and apply Arizona Revised Statutes (A.R.S.) sections 28-7691 through -7697 (West 2014)[1] and Article 7, Section 13 of the Arizona Constitution and hold that Mesa was not required to obtain voter approval before issuing notes, to finance a light rail extension project.

FACTS AND PROCEDURAL HISTORY[2]

[¶3] In January 2014, the Mesa Mayor and City Council passed Resolution Number 10380. The resolution authorized the issuance of Transportation Project Advancement Notes (TPANS) to advance project costs for a 1.9 mile light rail transit extension on Main Street from Mesa Drive to Gilbert Road and a " Park-and-Ride" lot for light rail patrons. The resolution required Mesa to secure payment on the TPANS' interest and principal by a pledge of " Transportation Project Advance Revenues" (TPARS) and " excise taxes" as defined in A.R.S. sections 28-7691 through -7697. The resolution further noted that TPANS did not constitute " an obligation . . . to levy or pledge any form of ad valorem property taxation nor will [they] constitute an indebtedness of the City . . . within the meaning of the Constitution of the State of Arizona . . . but shall instead be limited obligations payable solely out of the pledged sources of funds . . . ." The project was also to be partially funded with repurposed federal transportation grant funds, which would be used to pay off the TPANS early " if and when received."

[¶4] Price, a Mesa resident, brought suit claiming that Mesa's funding sources were " uncertain and will likely be insufficient to fund the Light Rail extension[.]" Moreover, Price argued that Mesa would have to issue general revenue bonds to fund the project and that the extension " cannot occur without putting the taxpayer approved bonding programs, already submitted and approved by the voters, in jeopardy." Price further argued that Mesa's proposed sale of notes required an election under Article 7, Section 13 of the Arizona Constitution.

[¶5] Mesa maintained that it only intended to pledge excise tax revenues to repay the TPANS and that doing so would not render Mesa or its taxpayers directly liable for their repayment. Mesa also argued that because it did not assume " a general liability to repay the borrowing," the TPANS financing scheme was not subject to the indebtedness limit or the constitutional election requirement of Article 9, Section 8 and Article 7, Section 13 of the Arizona Constitution, respectively.

[¶6] Both parties moved for summary judgment and agreed that there were no genuine disputes of material fact. The trial court granted Mesa's motion, finding that the ...


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