In Re Interrogatories Relating to the Great Outdoors Colorado Trust Fund

913 P.2d 533, 20 Brief Times Rptr. 433, 1996 Colo. LEXIS 46, 1996 WL 128169

• Court: Supreme Court of Colorado
• Decided: March 25, 1996
• Docket: 95SA392
• Status: Published

Opinions

Justice KOURLIS

delivered the Opinion of the Court.

This matter comes before us pursuant to Article VI, Section 3, of the Constitution of the State of Colorado. Under the authority of that section, the Governor of the State of Colorado has propounded three interrogatories to this court that concern the interpretation of Amendment 8, now Article XXVII of the Constitution of the State of Colorado. The interrogatories are:

Interrogatory No. One:

Whether payments made pursuant to Colo.Rev.Stat. § 33-60-103(1)(c) (1993), and to a 1992 refunding of certain obligations of the state enumerated therein, which exceed the payments on obligations described in Article XXVII, Section (B)(1)(c), of the Colorado Constitution (“Amendment 8”) originally due through November 30,1998, are payable from the net proceeds of the Colorado lottery without violating Amendment 8.

Interrogatory No. Two:

Whether savings from the 1992 Refunding of certain obligations described in Amendment 8 can accrue to the benefit of the Capital Development Fund, instead of the Great Outdoors Colorado Trust Fund established by Amendment 8, without violating Amendment 8.[¹]

Interrogatory No. Three:

Whether the last installment payment made under the contract between the State of Colorado and the City and County of Denver concerning the Colorado Convention Center, which was originally scheduled for July 1,1993 and was postponed to September 1, 1993 pursuant to Colo.Rev.Stat. § 33-60-103(l)(b) (1993), violates Amendment 8.

We answer the first two interrogatories in the affirmative and uphold the constitutionality of section 33-60-103, 14 C.R.S. (1993 Supp.) (current version at section 33-60-103, 14 C.R.S. (1995)). We answer the third interrogatory in the negative, concluding that the last installment payment made on the Colorado Convention Center does not contravene Amendment 8.

I.

In 1980, the voters of the State of Colorado adopted an amendment to Article XVIII of the Colorado Constitution approving a state-supervised lottery. See H.R. Con. Res. 1007, 52d Leg., 1st Reg. Sess., 1979 Colo. Sess. Laws 1676-77. The amendment to article XVIII originally provided that net proceeds from the lottery would be allocated to the conservation trust fund for park, recreation, and open space purposes, unless otherwise provided by statute. Colo. Const, art. XVIII, § 2(7). The General Assembly then enacted a statute implementing this amendment in which it declared that 50% of net lottery proceeds were to be appropriated to capital construction costs for the state, 10% to the Division of Parks and Outdoor Recreation and 40% to the Conservation Trust Fund for distribution to local governments. § 24-35-210(4), 10 C.R.S. (1982) (current version at § 24r-35-210, 10A C.R.S. (1995 Supp.)); ch. 100, sec. 1, § 2A-35-210, 1982 Colo. Sess. Laws 371, 380-82.

In 1988, in the wake of significant increases in demand for prison beds, the General Assembly amended the lottery statutes to permit the game of lotto, and altered the funding formula to direct a portion of lottery proceeds to the construction of three named correctional facilities, as well as “such other correctional facilities as shall be designated by the general assembly.” § 24-35-210(4)(f)(D), 10A C.R.S. (1988) (current version at § 24-35-210, 10A C.R.S. (1995 Supp.)); ch. 178, sec. 3, § 24r-35-210(4), 1988 Colo. Sess. Laws 940, 943. As a result of the change in the funding formula, beginning in 1989, the relative shares of lottery proceeds going to the Division of Parks and Outdoor Recreation and to the Conservation Trust Fund began to decrease.

In November of 1992, the voters adopted the Great Outdoors Colorado Amendment (Amendment 8),-which provides that net lottery proceeds, including those from lotto, can only be used for the “preservation, protection, enhancement and management of the state’s wildlife, park, river, trail and open space heritage_” Colo. Const, art. XXVII, § 1(1). Amendment 8 thereby created the Great Outdoors Colorado Trust Fund (Trust Fund), to which the lottery proceeds are to be allocated.

However, Amendment 8 also recognized that certain lottery proceeds had already been dedicated to capital construction projects and that those commitments should be honored. The text of the Amendment therefore permits for payment of identified obligations, providing that the payments are to be made within the “window” period of September 1, 1993, through November 30, 1998. Colo. Const, art. XXVII, § 3(l)(a)(II).

Prior to passage of Amendment 8, the state had financed various lottery-related capital construction projects through the issuance of certificates of participation (COPs). COPs were sold to investors and proceeds were used to pay the construction costs of the projects. The state then entered into lease-purchase agreements with the COP holders, who held title to the projects, and paid rent for the use of the properties. This rent money was ultimately used to pay principal and interest on the COPs, which would eventually result in the state holding title to the properties when the debt payments were completed.

In October of 1992, prior to the November adoption of Amendment 8, the Capital Finance Corporation² refinanced a number of the COPs because of a reduction in interest rates.³ Through this action, the state was able to pay a lower interest rate while reducing the principal in a shorter period of time. The refinancing, or refunding, included the Series 1979 Certificates, the Series 1986 Certificates, the Series 1988 Certificates and the Refunded Series 1989 Certificates, all of which are listed obligations described in subsection (l)(c) of section 3 of Amendment 8. Pursuant to the 1992 refunding, some principal amounts previously due after November 30,1998 were converted into debt service due prior to November 30, 1998 and as a result the amount due during the “window” rose from $163,323,746.14 to $169,921,223.14.⁴

In 1993, the General Assembly enacted section 33-60-103,14 C.R.S. (1995). Ch. 327, sec. 1, § 33-60-103, 1993 Colo. Sess. Laws 2019, 2020-23. This statute implements Amendment 8 in part by delineating a payment schedule for the capital construction obligations listed therein. The schedule identified by the statute incorporates the 1992 refunding of the obligations. § 33-60-103(l)(c), 14 C.R.S. (1995).

The interrogatories posed to us by the Governor raise three issues, the first two of which are interrelated. Issue one requests a determination as to whether Amendment 8 permits payments made pursuant to the 1992 refunding as contemplated by the statute. Issue two inquires about the appropriate disposition of the savings resulting from the 1992 refunding. Issue three addresses the last payment made on the Colorado Convention Center and whether it was untimely under Amendment 8.

II.

There is no dispute among the various parties that the obligations that were subject to the refunding are, in part, the same obligations as those enumerated in section 3(l)(c) of Amendment 8. Therefore, we are not dealing with whether the purpose of the payments was proper, but instead with whether the amount of the payments made from lottery proceeds toward the refunded debt under section 33-60-103 is authorized under the terms of Amendment 8.

The applicable language of Amendment 8 provides that the state treasurer shall distribute net lottery proceeds:

(II) to the State’s Capital Construction Fund for payment of debt service due from and including September 1, 1993, to and including November 30, 1998, on the obligations described in Subsection (l)(c) of this Section 3, but only to the extent such debt service is due during such period according to the terms of the documents originating such obligations, and only if such debt service has not been prepaid or other moneys have not been dedicated or set aside for such debt service payments as of January 1, 1992, or thereafter; provided, however, that such obligations may be refunded and debt service from and including September 1, 1993, or the date of such refunding, if later, on any such refunding obligation shall be payable from Net Proceeds, even if payable after November 30, 1998, to the extent the debt service on such refunding obligation does not exceed the total amount of debt service payable on the applicable refunded obligation from and including September 1, 1993, or from the date of such refunding, if later, to and including November 30, 1998, according to the terms of the documents originating the applicable refunded obligation ....

Colo. Const. art. XXVII, § 3(1)(a)(II) (emphasis added).

In a parallel manner, the language of section 33-60-103 also requires the state treasurer to make distributions from lottery proceeds to the capital construction projects listed in section 3(l)(c) of Amendment 8.⁵ The statute provides:

(4) Pursuant to Amendment XXVII of the state constitution, the sum of all distributions of net lottery proceeds made to the capital construction fund from the fourth quarter of fiscal year 1992-93 through the fourth quarter of fiscal year 1997-98 shall include payment in full of all debt service due from, and including September 1,1993, to and including November 30,1998, on all obligations set forth in section 3(l)(e) of article XXVII of the state constitution.

§ 33-60-103(4), 14 C.R.S. (1995) (emphasis added). However, the statute differs from Amendment 8 in one significant respect: the statute specifically states that payment will be made on the 1992 refunding of the debts. § 33-60-103(l)(c), 14 C.R.S. (1995).

The Great Outdoors Colorado Trust Fund and the Attorney General of the state of Colorado argue that payments pursuant to the 1992 refunding mandated by section 33-60-103(4) are unconstitutional to the extent they exceed the obligations which were extant during the “window” as of January 1, 1992. The Colorado General Assembly responds by asserting that the statute represents a reasonable resolution of ambiguities in the amendment and should be upheld. For the reasons set forth below, we adopt the position asserted by the Colorado General Assembly.

A.

As an initial matter, we note that a court’s duty in interpreting a constitutional amendment is to give effect to the will of the people adopting such amendment. In re Interrogatories Propounded by Senate Concerning House Bill 1078, 189 Colo. 1, 7, 536 P.2d 308, 313 (1975). When the language of an amendment is plain, its meaning clear, and no absurdity involved, constitutional provisions must be declared and enforced as written. Colorado Ass’n of Public Employees v. Lamm, 677 P.2d 1350, 1353 (Colo. 1984).

However, where ambiguities exist, a court should favor a construction that harmonizes different constitutional provisions rather than creates conflict. Bolt v. Arapahoe County Sch. Dist. No. Six, 898 P.2d 525, 532 (Colo.1995). Where possible, courts should adopt a construction of a constitutional provision in keeping with that given by coordinate branches of government. Watrous v. Golden Chamber of Commerce, 121 Colo. 521, 546, 218 P.2d 498, 510 (1950).

We find the language of Amendment 8 to be ambiguous in several significant respects. The most troublesome is the lack of clear meaning of the key phrases “documents originating the obligations” and “documents originating the applicable refunded obligation.” These phrases are used in section 3(l)(a)(II) of Amendment 8 to define the amount payable on a debt during the “window” and thus are integral to a determination of whether the higher payments required by the 1992 refunding are constitutional.

One interpretation of these phrases is by reference to the documents creating the original debts. Under such a reading, section 3(l)(a) would be internally inconsistent with section 3(l)(c)(I), which lists specific obligations that had already been refunded years before Amendment 8 had been written. Also, this interpretation would provide no basis to distinguish the 1992 refunding from any refunding that had occurred five or ten years prior to the Amendment. In addition, the retroactive impact of the Amendment would be pervasive in vitiating all refundings. Such a reading also could not be harmonized with the portion of section 3(l)(a)(II) that anticipates and validates the concept of refunding.

Another interpretation of these phrases relies on the phrase in Amendment 8 which states: “Except to the extent allowed in Section 3(l)(a) above for refunding obligations, debt service on obligations originated on or after January 1, 1992, shall not be payable from Net Proceeds.” Colo. Const, art. XXVII, § 3(l)(e)(ID. The Attorney General and the Great Outdoors Colorado Trust Fund claim that this provision limits all debt payments to those that existed on January 1 of 1992. In arguing this, they are essentially claiming that the phrases “documents originating the obligations” and “documents originating the applicable refunded obligation” refer to the documented debts as they existed on January 1, 1992. If that were the intent of the Amendment, the language would merely need to have referred to the “obligations” as they existed on January 1, 1992. The use of the term “documents originating the obligations” (emphasis added) interjects the concept of the origin of the obligation, not merely its status as of January 1, 1992. Therefore, a clearer interpretation of this provision would be that no capital construction projects initiated after January 1, 1992, were to be financed out of lottery proceeds. Section 3(l)(a)(II) itself also provides no assistance in interpreting the reference to January 1,1992. Instead, the section is silent as to the effect the Amendment is intended to have on refundings that pre-date its adoption.

In enacting legislation, the General Assembly is authorized to resolve ambiguities in constitutional amendments in a manner consistent with the terms and underlying purposes of the constitutional provisions. See Submission of Interrogatories on Senate Bill 93-74, 852 P.2d 1, 11 (Colo.1993). By enacting section 33-60-103, the General Assembly has interpreted the original obligations listed in Amendment 8 as incorporating the 1992 refunding. This interpretation is a reasonable and permissible resolution of the ambiguities created by the language of the Amendment. Section 33-60-103 is consistent with the terms and purposes of Amendment 8, to wit: the net lottery proceeds are directed to the Great Outdoors Colorado Trust Fund, with a portion of the proceeds being used for a period of five years for capital construction debts. Application of section 33-60-103 also takes into consideration the changes wrought by the 1992 refunding and avoids any conflict with the status of the obligations as they existed on the date of the Amendment’s adoption. In addition, by treating the 1992 refunded debts as the original debts referred to in the Amendment, the General Assembly’s interpretation supports the general principle of law that a refunded debt replaces the original debt. 64 Am.Jur.2d, Public Securities and Obligations § 261 (1972).

B.

In addition to being a reasonable and permissible interpretation of Amendment 8, section 33-60-103 also comports with significant rules of statutory construction, while the interpretation set forth by the Attorney General and the Great Outdoors Colorado Trust Fund do not.

Retroactive application of laws is highly disfavored; unless the terms of the amendment clearly show an intent to make it retrospective in operation, it is presumed that a constitutional amendment will be given only prospective application. Bolt v. Arapahoe County Sch. Dist. No. Six, 898 P.2d 525, 533 (Colo.1995); People v. Elliott, 186 Colo. 65, 68, 525 P.2d 457, 458 (1974). In Bolt, this court examined Article X, Section 20(4)(a) of the Colorado Constitution. This section reads as follows: “(4) Required elections. Starting November 4, 1992, district must have voter approval for: (a) ... any new tax ... or a tax policy change directly causing a net tax revenue gain to any district.” Colo. Const. art X, § 20(4)(a). Because the language gives a clear starting date of November 4, 1992, this court found that the electorate intended a retroactive application of the amendment to November 4, 1992. Bolt, 898 P.2d at 533. Unlike the amendment considered in Bolt, the text and format of Amendment 8 are ambiguous and lack a clear mandate to apply the Amendment retroactively.

An additional problem with interpreting the phrases as referring to the debts as they existed on January 1, 1992, is that after the 1992 refunding, the obligations listed in section 3(l)(c)(I) changed and not all remained in existence. Specifically, a part of the Aura-ria portion of the 1989 COPs was refunded, and the 1979, 1986, and 1988 COPs were rolled into the 1992 refunding and were superseded.

A court’s interpretation of a constitutional amendment is constrained by consideration of the state of things existing at the time the provision was framed and adopted. Krutka v. Spinuzzi, 153 Colo. 115, 124, 384 P.2d 928, 933 (1963). The altered status of the obligations listed in section 3(1)(c)(I) as of the Amendment’s adoption in November 1992 argues strongly against applying the interpretation advocated by the Attorney General and the Great Outdoors Colorado Trust Fund.

Finally, statutes enacted by the General Assembly are presumed to be constitutional and are therefore entitled to deference by the courts. See Submission of Interrogatories on Senate Bill 93-71, 852 P.2d at 5 n. 4; see also Firelock, Inc. v. District Court, 776 P.2d 1090, 1097 (Colo.1989). The party challenging the constitutionality of an act bears the burden of proving its unconstitutionality beyond a reasonable doubt. Id.; People v. Riley, 708 P.2d 1359, 1362 (Colo. 1985); People v. Schoondermark, 699 P.2d 411, 415 (Colo.1985).

While the Attorney General and the Great Outdoors Colorado Trust Fund set forth some reasonable arguments, they fail to meet their burden of proving the unconstitutionality of the statutory interpretation of Amendment 8 in section 33-60-103 beyond a reasonable doubt. The ambiguous language of the Amendment does not clearly comport with the interpretation that they present. When courts construe a constitutional amendment that has been adopted through a ballot initiative, any intent of the proponents that is not adequately expressed in the language of the measure will not govern the court’s construction of the amendment. See In re Proposed Initiative on Water Rights, 877 P.2d 321, 327 (Colo.1994).

Thus, we conclude that payments made pursuant to section 33-60-103(l)(c) on the 1992 refunding of certain obligations of the state may be paid- from net proceeds of the Colorado lottery as delineated in that statute without violating article XXVII of the state constitution.

III.

The second interrogatory concerns whether the savings achieved by the state in the 1992 refunding appropriately go to the Great Outdoors Colorado Trust Fund or whether they may accrue to the benefit of the capital construction fund. To address this question we must understand the nature of the savings which this interrogatory contemplates.

By virtue of our answer to interrogatory number one, we ratify the legislative interpretation of the Amendment whereby payments will continue to be made on the 1992 refunded obligations. Therefore, the second interrogatory addresses the money that will ultimately be saved through the 1992 refunding of the obligations listed in section 3(l)(c)(I). The ultimate savings occur in the form of shorter debt service obligation periods.

The 1992 refunding accomplished two goals: 1) it reduced the interest rate on various debts; and 2) it accelerated the payment of principal. The net effect was that the payments due during the “window” period are greater than they were preceding the refunding, but the total amount of principal and interest payments spread over the life of the obligations is lower. The savings in this ease will therefore exist in the form of monies that will no longer be required to be paid out as a result of an overall decrease in debt payments.

The Amendment is silent on the issue of any savings achieved by a refunding of obligations. The statute is similarly silent. The Great Outdoors Colorado Trust Fund and the Attorney General argue that, if payments are to be made on the refunded obligations at all, the Trust Fund should be the beneficiary of any savings generated through that refinancing.⁶ The General Assembly argues that the taxpayers of the state, who paid the costs of the refunding and whose representatives, acting through the Capital Finance Corporation, had responsibility for negotiating and consummating the refinancing, should be the beneficiaries.

The gravamen of this question turns on whether the monies that, as a result of the 1992 refunding, are no longer required to be paid out were originally to be paid from lottery proceeds or from general taxpayer dollars. Under the terms of Amendment 8, any unspent lottery proceeds must go to the Trust Fund.⁷

But if the money no longer required to be spent on the capital construction debts was not originally to be paid from lottery proceeds, then there is no reason for the benefit to apply to the Trust Fund. To do so would, in effect, necessitate a transfer of money from the capital construction fund, or general fund, to the Trust Fund.⁸ There is no basis for such action since there is no language in the amendment or the statute that directs ultimate savings accomplished by refunding of debts to be paid from either the capital construction fund or the general fund to the Trust Fund. Thus, any unspent taxpayer dollars or money from the general fund may appropriately accrue to the capital construction fund.

Our analysis shows that the 1992 refunding will not result in any lottery proceeds set aside for the capital construction debts remaining unspent. Amendment 8 provides a formula from which to determine the highest total amount of lottery proceeds allowed to be applied toward capital construction debts during the window. It does not set aside a specific dollar amount to be paid on the obligations. Under the payment schedule outlined by section 33-60-103, the payments to be made during the window match the highest amounts allowed to be paid.⁹ Thus, there are no lottery proceeds that were originally earmarked for capital construction debts that are not being used for that purpose. Instead, any interest that will no longer be required to be paid out as a result of the 1992 refunding will be in the form of money from the general tax fund that, if not for the 1992 refunding, would have had to have been used to pay the remaining obligations on these capital construction projects.

Therefore, we answer interrogatory number two by concluding that savings resulting from the 1992 refunding of certain obligations of the state described in Article XXVII of the Colorado Constitution do not accrue to the Trust Fund but instead may accrue to the benefit of the capital construction fund.

IV.

We turn lastly to the issue concerning the propriety of the Colorado Convention Center payment. The debt on the Colorado Convention Center is listed in section 3(l)(c)(I) as one of the capital construction obligations to which lottery proceeds are to be allocated during the “window.” The confusion arises because the final payment on the Convention Center debt was originally due July 1, 1993, which would have occurred before the starting date of the permissible payment “window.” The General Assembly delayed the due date of the payment until September 1, 1993, in order for it to fall within the “window” created by Amendment 8. § 33-60-103(l)(b), 14 C.R.S. (1995). The question is whether that delayed payment was permitted by the terms of Amendment 8.

Two rules of statutory construction direct the answer to this interrogatory. First, in interpreting the language of a constitutional amendment, courts should give effect to the intent of the people who adopted the provision. Urbish v. Lamm, 761 P.2d 756, 760 (Colo.1988). Second, in construing constitutional language, each clause and sentence must be presumed to have purpose and use. Reale v. Board of Real Estate Appraisers, 880 P.2d 1205, 1208 (Colo.1994).

In reading Amendment 8, debt due on the Colorado Convention Center Contract is clearly listed as one of the six capital construction obligations to which lottery proceeds will be directed. See supra p. 537-38 n. 5. The payment schedule on the Convention Center Contract is not included in the text of the Amendment. Thus, it is likely that voters were unaware that the final payment on the Convention Center Contract was due before September 1, 1993, and that as a result, technically none of the Convention Center debt fell within the acceptable “window.” Instead, the text of Amendment 8 would lead a reasonable reader to believe that some lottery proceeds would be going towards the Convention Center debt.

To interpret Amendment 8 differently and exclude any payments to the Convention Center would render section 3(l)(c)(I)(C) meaningless. Courts must lean in favor of a construction that will render every word operative, rather than one that may make some words idle and nugatory. Lamborn v. Bell, 18 Colo. 346, 352, 32 P. 989, 991 (1893); see also City of Aurora v. Acosta, 892 P.2d 264, 267 (Colo.1995).

Hence, since technical construction should not be applied so as to defeat the objectives sought to be accomplished by the voters, see Cooper Motors, Inc. v. Board of County Comm’rs, 131 Colo. 78, 83, 279 P.2d 685, 688 (1955), we hold constitutional the General Assembly’s action in delaying the final payment on the Convention Center Contract so that it would fall within the window delineated by Amendment 8.

V.

On the basis of the conclusions set out in this opinion, we respond to the Interrogatories submitted to us as follows:

Interrogatory No. One:

Yes, payment of the 1992 refunded obligations pursuant to section 33-60-108, 14 C.R.S. (1993 Supp.) (current version at section 33-60-103, 14 C.R.S. (1995)), is constitutional.

Interrogatory No. Two:

Yes, savings generated by reason of the 1992 refunding can accrue to the Capital Development Fund.

Interrogatory No. Three:

No, the last installment payment on the Colorado Convention Center did not violate Amendment 8.

LOHR, J., concurs in part and dissents in part, and SCOTT, J., joins in the concurrence and dissent.

1 . We take the reference to the Capital Development Fund to refer to the Capital Construction Fund created in § 24-75-302, 10B C.R.S. (1995 Supp.).

2 . The Capital Finance Corporation is the nonprofit corporation organized to act as lessor of the properties under § 24-82-703, 10B C.R.S. (1988) (amended 1993).

3 . This refunding of obligations will hereinafter be referred to as the "1992 refunding.”

4 . This figure is taken from Attorney General’s opinion. 91 Op. Att’y Gen. 4 (1994). There is some disagreement among the parties as to the exact figures, but these appear generally correct.

6 . To the extent that the Trust Fund and the Attorney General argue that money should have been applied from the capital construction fund to debt service during the "window” period in order to reduce lotteiy proceed expenditure to the level required prior to the 1992 refunding, we have resolved this argument in part II of the opinion.

7 . Amendment 8 provides that net proceeds of every state-supervised lotteiy game operated under the authority of Article XXVII, § 2, shall be allocated to the preservation, protection, enhancement and management of the state's wildlife, park, river, trañ and open space heritage. The concession to the capital construction obligations was included in the Amendment in order to give deference to the state’s preexisting obligations, and to allow a "window” of time within which to phase out the use of lotteiy proceeds for capital construction projects. Hence, the operative premise is that the lotteiy monies go to the Trust Fund unless there is a specific exception identified in the Amendment that would permit them to be allocated elsewhere.

8 . The General Assembly funds the capital construction fund with revenue from the general fund. § 24-75-302, 10B C.R.S. (1995 Supp.). Thus, money taken from the capital construction fund is essentially taken from the general fund.

9 . If the effect of § 33-60-103 had been to require payments during the window of a total amount lower than the ceiling, the result would have been that less lotteiy money than originally earmarked would have had to have been used to pay off the capital construction debts. Any lottery proceeds not used to pay off the capital construction debts would have gone directly to the Trust Fund.