Request By:
William F. Knapp, Jr., Esq.
City Attorney of the City of Dry Ridge
31 Broadway
Dry Ridge, Kentucky 41035
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising several questions concerning KRS 103.200 to 103.285 which deal with "Industrial Buildings for Cities and Counties." Your first question asks:
"Do the provisions of KRS 103.200 to 103.285 permit the Grant County Fiscal Court to sell revenue bonds for the acquisition of land within the corporate limits of the City of Dry Ridge and the construction of an industrial building upon which land and building the Fiscal Court grants tax exempt status, when the Fiscal Court cannot supply water, sanitary sewers, police protection, fire protection, garbage collection, and the benefit of class seven insurance ratings to the building, which services are paid for by the residents of the City of Dry Ridge?"
You state that the city of Dry Ridge has been queried many times in the past as to whether it would participate in financing ventures authorized by either KRS Chapter 58 or KRS 103.200 to 103.285. The city has a long established policy of declining to participate upon the ground that each resident, corporate or individual, should incur his fair share of the cost of municipal services. Apparently the city feels that construction of the contemplated industrial plant would place too much of a strain on the city's ability to furnish the necessary utility services as well as necessary police and fire protection. Furthermore, you state that Grant County has an unemployment rate of two percent according to the latest federal statistics and that rate is nearly the lowest in the Commonwealth of Kentucky. With the city's limited capacity to supply municipal services, it is also believed that the construction of the proposed business may preclude other forms of residential and commercial growth in the city.
KRS 103.210 provides in part that in order to promote the objectives set forth therein, including the encouragement of the increase of industry in this state, any city or county may borrow money and issue negotiable bonds. KRS 103.200 to 103.285 do not specifically authorize a city or county to become involved in a project outside its territorial limits while KRS Chapter 58, for example, provides that a governmental agency may develop a public project and issue revenue bonds when the project is located within or without the territorial limits of such governmental agency.
On the other hand, there is no provision in KRS 103.200 to 103.285 preventing a county from developing a project which is in the county but within the territorial limits of a city in that county. The case of
Norvell v. City of Danville, Ky., 355 S.W.2d 689 (1962), recognized that a municipal corporation may operate beyond its boundaries and authorized a city, pursuant to KRS 103.200 to 103.285, to develop a public project within the corporate limits of another city in the county. Consider also that county government buildings, including the county courthouse, are constructed and maintained within the city limits. While we have not found a specific case authorizing a county to develop a public project within a city in that county, we believe that sufficient authority to do so is contained in KRS 103.200 to 103.285, as that statute has been enacted by the Kentucky General Assembly.
Your next three questions pertain to the actions of the fiscal court in developing a project within the city limits pursuant to KRS 103.200 to 103.285. You ask whether the fiscal court is sovereign within the corporate limits of the city or whether it is on the same footing as a private corporation; whether the fiscal court has to abide by the city ordinances and whether the fiscal court has to obtain a building permit.
Again referring to
Norvell v. City of Danville, Ky., 355 S.W.2d 689 (1962), we direct your attention to page 692 of the opinion where the Court said in part:
". . . Furthermore, when a city operates beyond its boundaries it carries with it none of the prerogatives of sovereignty, but functions in its extraterritorial setting simply as a private corporation. See
City of Cincinnati, Ohio, et al. v. Commonwealth ex rel. Reeves, 292 Ky. 597, 167 S.W.2d 709. Therefore, we are of the opinion that the City of Danville, since it proposes to act here in a purely proprietary or private manner within the purview of KRS 103.200 through 103.285, has full authority to acquire a site in Junction City and locate thereon an industrial plant for its lessee's use."
In connection with the proprietary powers of municipal corporations, see
Faulconer v. City of Danville, Ky., 232 S.W.2d 80 (1950). Furthermore, a county is a quasi-municipal corporation,
Anderson v. Wayne County, 310 Ky. 597, 221 S.W.2d 429 (1949). A county is a quasi corporation and a governmental agency of the state, with no independent sovereignty, and it possesses only such powers as are expressly given or necessarily implied, in statutes constitutionally enacted.
Jefferson County v. Jefferson County Fiscal Court, 274 Ky. 91, 118 S.W.2d 181 (1938). See also the case of Fiscal Court of Jefferson County v. City of Louisville, et al (File No. 76-604), the so-called "County Home Rule Case," where the Supreme Court of Kentucky on December 9, 1977, denied the Petition for Rehearing but modified the Opinion on its face.
Thus, the fiscal court, when acting pursuant to KRS 103.200 to 103.285, to develop an industrial project outside its limits, and inside the limits of a city within that county, carries none of the prerogatives of sovereignty and functions as a private corporation subject to applicable city ordinances.
Your last question asks whether the county attorney may perform all of the customary services of local counsel in financing the project. You cite KRS 61.190 in suggesting that the answer is "No." KRS 61.190 prohibits a public officer from receiving, directly or indirectly, any interest, profits or perquisites arising from the use or loan of public funds in his hands, or to be raised through his agency. If the county attorney's participation in the proposed project causes him to come within the prohibitions set forth in the statute, he will have to refrain from such participation or subject himself to the penalties provided in the statute. We cannot be any more specific since we have none of the particulars as to how the financing of the proposed project is to be handled.