AGO 1996-167.

Case DateMarch 27, 1996
CourtAlabama
Alabama Attorney General Opinions 1996. AGO 1996-167. 1996-167March 27, 1996Honorable Michael S. Harper Schmitt & Harper P.O. Box 606 Tallassee, AL 36078 Municipalities - Industrial Development Boards - Funds - ContractsThe city council does not have the authority to bind successor city councils by an agreement with the Industrial Development Board for multi-year appropriations.Dear Mr. Harper: This opinion is issued in response to your request for an opinion from the Attorney General. QUESTIONS 1. Does the city council have the authority to enter into a resolution/agreement with the Industrial Development Board for multi-year appropriations which is binding and enforceable by the Industrial Development Board? 2. Do the terms of the proposed resolution attached hereto violate any statutes governing the operations of municipal corporations or Industrial Development Boards? FACTS AND ANALYSIS Your request presents the following information. The Industrial Development Board (IDB) of the City of Tallassee has an opportunity to purchase approximately 234 acres of land to be used for industrial development. Under the proposed arrangement, the IDB will purchase the land and will enter into certain promissory notes and mortgages to acquire the purchase money and secure repayment of the loans. In an effort to assist the IDB in its economic development activities, the City of Tallassee desires to enter into an agreement. The substance of this agreement is that the City Council will agree to appropriate to the IDB a certain sum of money each fiscal year to be used in the defraying of the expenses of the IDB. The amount of money is to be appropriated annually over the next 10 years, and is determined by a formula which essentially provides that the City will appropriate a maximum of $10,000 per year less the rental income derived annually from the property to be purchased. There is no obligation in the agreement that the IDB use the appropriation to reduce or liquidate any or all of the principal or interest owed on the mortgage on the property. First, we note that a municipality may not lend its credit to an IDB or make itself liable for the performance of an obligation of the IDB. Code of Alabama 1975, _ 11-54-92, states: "The municipality shall not in any event be liable for the...

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