John I. Purtle, Justice.
The Pulaski County Chancery Court declared that the City of Little Rock properly authorized the issuance of $4,000,000 in “tourism bonds” to be used to finance construction of a La Quinta Motor Inn. In the decree the trial court upheld Act 380 of 1971.
On appeal it is urged that Act 380 of 1971 is governed by Amendment 49 to the Constitution of the State of Arkansas and that it was error for the court not to require Act 380 to be so controlled. Also, it is argued that Act 380, the Tourism Act, did not authorize the issuance of tax free revenue bonds to a private entity for construction of a free standing motel such as the La Quinta Inn. We hold that Act 380 is controlled by Amendment 49. Therefore, those provisions of the Act which authorize the issuance of bonds without an election, interest above 6% and maturity dates beyond 30 years are invalid.
The City of Little Rock issued tax exempt bonds in the amount of $4,000,000 for use in construction of a La Quinta Inn at the intersection of Fair Park Boulevard and the Wilbur D. Mills Freeway, across from War Memorial Park and the Zoo. The bonds were issued pursuant to Act 380 of 1971 and are known as “tourism bonds.”
This name attached because the General Assembly defined the tourist business in Arkansas to be an “industry” pursuant to Amendment 49 of the Constitution of the State of Arkansas.
The city actually purchased the property for construction of the motel and leased it to La Quinta for a period of years. Although no taxes will be due on the property the parties agreed that La Quinta would make a payment in lieu of taxes. The bonds are described as limited obligation bonds of the City of Little Rock. They are backed by a letter of credit from Crocker National Bank of San Francisco. The letter of credit expires after 10 years. Payment of the bonds and interest is to be made exclusively from revenues generated by La Quinta on the leased premises.
The same question was before us in Purvis v. Hubbell, Mayor, 273 Ark. 330, 620 S.W.2d 282 (1981) when we gave notice of our intention to reconsider our stand on the issue “at the next opportunity after the present opinion becomes final.” We also stated:
After carefully considering our previous decisions, it appears there has been a gradual expansion of the concept of revenue producing bonds, which require no popular approval, as was authorized for instance in (cite omitted).
The next opportunity has arrived. The Purvis I decision was handed down on July 13, 1981, and rehearing denied on September 21, 1981. The bonds in the present case are dated May 1, 1982. It is obvious from the language used in that decision that we were trying to give a warning that revenue bonds were probably being used for purposes other than the public purposes contemplated by Amendment 49 and Act 380 of 1971 and that bonds were being approved without holding elections as required by the law and the Constitution.
The Arkansas General Assembly stated that Act 380 was in implementation of Amendment 49 and was necessary for the full accomplishment of the public purposes contemplated by the people in adopting the Amendment. The Act legislatively determined that “tourism” was an industry within the meaning of Amendment 49. As stated by the Amendment, bonds issued pursuant thereto are “for the purpose of securing and developing industry within or near the said municipality holding the election . . .” The legislature has the authority to implement a constitutional amendment. Rockefeller, Governor v. Hogue, 244 Ark. 1029, 429 S.W.2d 85 (1968). Legislation implementing a constitutional amendment must be consistent with and not repugnant to the constitutional provision being implemented. Myhand v. Erwin, County Judge, 231 Ark. 444, 330 S.W.2d 68 (1959).
Because of the importance of this case we find it appropriate to review our prior cases and other sources of authority on this subject.
The Arkansas Constitution of 1874, Article 12, Section 4 provides:
No municipal corporation shall be authorized to pass any law contrary to the general laws of the state; nor levy any tax on real or personal property to a greater extent, in one year, than five mills on the dollar of the assessed value of the same . . .
Article 12, Section 4, was amended by Amendment 10 which was approved by the people of Arkansas in the 1924 general election and declared adopted by a special supreme court in Brickhouse v. Hill, 167 Ark. 513, 268 S.W. 865 (1925). This Amendment added three paragraphs to Section 4 of Article 12. The thrust of Amendment 10 was to limit the fiscal affairs of counties, cities and towns. The provision of Amendment 10 which we consider here states:
Nor shall any city council. . . enter into any contractor make any allowance for any purpose whatsoever or authorize the issuance of any contract ... or other evidence of indebtedness in excess of the revenue for such city or town for the current fiscal year . . .
Article 16 of the Constitution is pertinent to the case before us. It states in part:
Neither the State nor any city, county, town or other municipality in this State, shall ever lend its credit for any purpose whatever; nor shall any county, city, town or municipality ever issue any interest-bearing evidences of indebtedness . . .
Article 16, Section 1, was amended by Amendment 13, adopted by the people of Arkansas in 1926. Prior to amendment, Article 16 contained only the first paragraph of the text which appears in volume 1, Ark. Stat. Ann. (1947). The portions of the Amendment we are concerned with read:
Provided that cities of the first and second class may issue by and with the consent of a majority of the qualified electors of said municipality voting on the question at an election held for the purpose, bonds in sums and for the purposes approved by such majority at such election as follows: . . .
For the purchase of rights of way for construction of public streets ... for the purchase . . . and improvement of public parks . . . sewers and comfort stations . . . fire fighting apparatus . . . street cleaning . . . equipment of city halls, auditoriums, prisons, libraries, hospitals . . . garbage disposal plants . . . viaducts . . . bridges . . . for the purpose of purchasing, extending, improving, enlarging, building, or construction of water works or light plants . . .
No bonds issued under the authority of this amendment shall bear a greater rate of interest than six per cent per annum . . .
Said bonds shall be serial, maturing annually after three years from date of issue. . .and no bonds. . .shall be issued . . . for a longer period than thirty five years.
Amendment 49 was adopted by the people of Arkansas in 1958. Section 1 of Amendment 49 states:
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John I. Purtle, Justice.
The Pulaski County Chancery Court declared that the City of Little Rock properly authorized the issuance of $4,000,000 in “tourism bonds” to be used to finance construction of a La Quinta Motor Inn. In the decree the trial court upheld Act 380 of 1971.
On appeal it is urged that Act 380 of 1971 is governed by Amendment 49 to the Constitution of the State of Arkansas and that it was error for the court not to require Act 380 to be so controlled. Also, it is argued that Act 380, the Tourism Act, did not authorize the issuance of tax free revenue bonds to a private entity for construction of a free standing motel such as the La Quinta Inn. We hold that Act 380 is controlled by Amendment 49. Therefore, those provisions of the Act which authorize the issuance of bonds without an election, interest above 6% and maturity dates beyond 30 years are invalid.
The City of Little Rock issued tax exempt bonds in the amount of $4,000,000 for use in construction of a La Quinta Inn at the intersection of Fair Park Boulevard and the Wilbur D. Mills Freeway, across from War Memorial Park and the Zoo. The bonds were issued pursuant to Act 380 of 1971 and are known as “tourism bonds.”
This name attached because the General Assembly defined the tourist business in Arkansas to be an “industry” pursuant to Amendment 49 of the Constitution of the State of Arkansas.
The city actually purchased the property for construction of the motel and leased it to La Quinta for a period of years. Although no taxes will be due on the property the parties agreed that La Quinta would make a payment in lieu of taxes. The bonds are described as limited obligation bonds of the City of Little Rock. They are backed by a letter of credit from Crocker National Bank of San Francisco. The letter of credit expires after 10 years. Payment of the bonds and interest is to be made exclusively from revenues generated by La Quinta on the leased premises.
The same question was before us in Purvis v. Hubbell, Mayor, 273 Ark. 330, 620 S.W.2d 282 (1981) when we gave notice of our intention to reconsider our stand on the issue “at the next opportunity after the present opinion becomes final.” We also stated:
After carefully considering our previous decisions, it appears there has been a gradual expansion of the concept of revenue producing bonds, which require no popular approval, as was authorized for instance in (cite omitted).
The next opportunity has arrived. The Purvis I decision was handed down on July 13, 1981, and rehearing denied on September 21, 1981. The bonds in the present case are dated May 1, 1982. It is obvious from the language used in that decision that we were trying to give a warning that revenue bonds were probably being used for purposes other than the public purposes contemplated by Amendment 49 and Act 380 of 1971 and that bonds were being approved without holding elections as required by the law and the Constitution.
The Arkansas General Assembly stated that Act 380 was in implementation of Amendment 49 and was necessary for the full accomplishment of the public purposes contemplated by the people in adopting the Amendment. The Act legislatively determined that “tourism” was an industry within the meaning of Amendment 49. As stated by the Amendment, bonds issued pursuant thereto are “for the purpose of securing and developing industry within or near the said municipality holding the election . . .” The legislature has the authority to implement a constitutional amendment. Rockefeller, Governor v. Hogue, 244 Ark. 1029, 429 S.W.2d 85 (1968). Legislation implementing a constitutional amendment must be consistent with and not repugnant to the constitutional provision being implemented. Myhand v. Erwin, County Judge, 231 Ark. 444, 330 S.W.2d 68 (1959).
Because of the importance of this case we find it appropriate to review our prior cases and other sources of authority on this subject.
The Arkansas Constitution of 1874, Article 12, Section 4 provides:
No municipal corporation shall be authorized to pass any law contrary to the general laws of the state; nor levy any tax on real or personal property to a greater extent, in one year, than five mills on the dollar of the assessed value of the same . . .
Article 12, Section 4, was amended by Amendment 10 which was approved by the people of Arkansas in the 1924 general election and declared adopted by a special supreme court in Brickhouse v. Hill, 167 Ark. 513, 268 S.W. 865 (1925). This Amendment added three paragraphs to Section 4 of Article 12. The thrust of Amendment 10 was to limit the fiscal affairs of counties, cities and towns. The provision of Amendment 10 which we consider here states:
Nor shall any city council. . . enter into any contractor make any allowance for any purpose whatsoever or authorize the issuance of any contract ... or other evidence of indebtedness in excess of the revenue for such city or town for the current fiscal year . . .
Article 16 of the Constitution is pertinent to the case before us. It states in part:
Neither the State nor any city, county, town or other municipality in this State, shall ever lend its credit for any purpose whatever; nor shall any county, city, town or municipality ever issue any interest-bearing evidences of indebtedness . . .
Article 16, Section 1, was amended by Amendment 13, adopted by the people of Arkansas in 1926. Prior to amendment, Article 16 contained only the first paragraph of the text which appears in volume 1, Ark. Stat. Ann. (1947). The portions of the Amendment we are concerned with read:
Provided that cities of the first and second class may issue by and with the consent of a majority of the qualified electors of said municipality voting on the question at an election held for the purpose, bonds in sums and for the purposes approved by such majority at such election as follows: . . .
For the purchase of rights of way for construction of public streets ... for the purchase . . . and improvement of public parks . . . sewers and comfort stations . . . fire fighting apparatus . . . street cleaning . . . equipment of city halls, auditoriums, prisons, libraries, hospitals . . . garbage disposal plants . . . viaducts . . . bridges . . . for the purpose of purchasing, extending, improving, enlarging, building, or construction of water works or light plants . . .
No bonds issued under the authority of this amendment shall bear a greater rate of interest than six per cent per annum . . .
Said bonds shall be serial, maturing annually after three years from date of issue. . .and no bonds. . .shall be issued . . . for a longer period than thirty five years.
Amendment 49 was adopted by the people of Arkansas in 1958. Section 1 of Amendment 49 states:
Any city of the first or second class, any incorporated town, and any county, may issue, by and with the consent of the majority of the qualified electors . . . voting on the question at an election held for the purpose, bonds in sums approved by such majority. . . for the purpose of securing and developing industry
The Amendment contains other provisions limiting the interest rate to six percent (6%) per annum and limiting such bonds to a period of no longer than thirty (30) years maturity.
Act 9 of 1960 was enacted for the stated purpose of implementing Amendment 49. This Act allows counties and cities to issue industrial revenue bonds without an election. Act 880 of 1971 was also enacted for the stated purpose of implementing Amendment 49. The main thrust of Act 380 was to legislatively determine tourism to be included for the purpose of securing and developing industry as intended by Amendment 49.
No provision of the Constitution nor any amendment expressly provides for the issuance of any type of bond without an election. Both Act 9 of 1960 and Act 380 of 1971 are based upon Amendment 49. This Amendment simply does not provide for bonds of any kind to be issued without approval of a majority of the qualified electors voting in an election held for that purpose.
Revenue bonds were first mentioned by this court in the case of McCutchen v. Siloam Springs, 185 Ark. 846, 49 S.W.2d 1037 (1932).
However, the bonds in the McCutchen case were issued by an improvement district and had been retired from revenues generated by the electric plant by the time the suit was filed. The city had taken over the operation of an electric generating plant which was owned by the improvement district. The suit actually involved a contract for expansion and improvement at the plant. The costs, which were to be paid over a period of 5 years, were to come from revenues generated by the plant. The allegation was that payments over a period of years violated Amendment 10 which prohibits cities from obligating revenues in excess of the current year. It was held that Amendment 10 did not prohibit this multi-year contract because the city incurred no liability since the funds were payable from revenue income from the electric generating plant. There was no election held on the contract.
Acts 131 and 132 of 1933 authorized municipal water works to issue revenue bonds without an election. These Acts were tested in the case of Jernigan v. Harris, 187 Ark. 705, 62 S.W.2d 5 (1933). Although certain parts of these Acts were declared unconstitutional, other sections were held to be valid. The court clearly approved revenue bonds in the language which follows:
A single answer will dispose of both objections. The municipality, as such, does not incur any obligation on account of the bond issues, nor does it assume any responsibility for their payment, nor can payment be enforced out of taxes or other municipal revenues. It is provided in each act that the bonds to be issued shall be payable solely from the revenues of the proposed systems, the waterworks, in one case, the sewer system, in the other, and that such bonds shall not, in any event, constitute an indebtedness of such municipality within the meaning of the constitutional provisions or limitations, and that it shall be plainly stated on the face of each bond that the same has been issued under the provisions of the respective acts and do not constitute an indebtedness of such municipality within any constitutional or statutory limitation.
The court specifically held the revenue bonds did not violate Amendment 10 and that Amendment 13 had no application here.
Act 131 of 1933 was again upheld in the case of Snodgrass v. Pocahontas, 189 Ark. 819, 75 S.W.2d 223 (1934). The Snodgrass court stated that it was the manifest intention of the framers of Amendment 13 to prohibit cities and towns from issuing interest-bearing evidences of indebtedness for which the people or their property would be taxed. The court stated: “It was not the intention to prohibit cities and towns from making improvements and pledging the revenue from the improvements so made alone to the payment of the indebtedness.” Therefore, the revenue bonds issued by the city to pay for improvement of the water works system were approved.
This court has approved a line of cases going back at least to the 1932 case of McCutchen v. Siloam Springs, supra, which hold that municipalities may issue pure revenue bonds for purely essential public purposes without holding an election. Such bonds are not prohibited by the Constitution and were expressly provided for by the General Assembly. We reaffirm these cases. Several cases have arisen pursuant to the provisions of Amendment 49 and acts of the legislature. The cases of Myhand v. Erwin, supra, and Wayland v. Snapp, 232 Ark. 57, 334 S.W.2d 633 (1960), relied upon by appellees, upheld bond issues for which an election had been held. They are not apposite to the question before us. The bonds in the present case were not approved by the electorate. In Purvis I we considered so-called revenue bonds 'which were to be retired primarily from revenues generated by the hotel. However, other sources for bond retirement were present in the case. In any event we issued our caveat and we are now reconsidering the matter of bonds issued without an election.
We were wrong in Purvis 1 where we approved the issuance of revenue bonds pursuant to Act 380 and Amendment 49. However, we did give notice that the matter would be reconsidered at the first opportunity. We expressed serious doubt about bonds being issued without an election. We find no provision of Amendment 49 which allows bonds to be issued without an election. Neither is authorization granted to issue bonds for a period longer than 30 years or at an interest rate greater than 6%.
It was proper for the General Assembly to legislatively determine tourism to be included as an industry as contemplated by Amendment 49. Having so determined, it was not within the authority of the General Assembly to expand the provisions of Amendment 49 to provide for the issuance of revenue bonds without an election. The bonds were not issued for a purely public purpose such as those enumerated in Article 16, after Amendment 13 was approved, and which are set out above in this opinion. Neither were they issued pursuant to Acts 132 or 133 of 1933.
Neither Amendment 49 nor any other constitutional provision permits the issuance of bonds by municipalities without an election. Therefore, Act 380 of 1971 is invalid when it purports to allow bonds to be issued without an election and for interest in excess of 6% and maturity dates beyond 30 years.
We stated in Purvis I that we would reconsider our position on revenue bonds issued by municipalities at the next opportunity. The opinion was final on September 21, 1981. The bond issue before us is dated May 1, 1982. There was time enough for our caveat to have been considered. The city may technically be the title owner of the property where the motel is located but neither it nor any of its agencies operates the La Quinta Inn. No public purpose such as those enumerated in Article 16 and Amendment 13to the Constitution of Arkansas is being served. No election was held. Therefore, the bonds are not valid.
Reversed.
Hickman, J., and Dudley, J. concur. Adkisson, C.J.; Hays, J. and Hollingsworth, J. dissent.