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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Transpark Appeal Update  Posted: November 16, 2001

COMMONWEALTH OF KENTUCKY

FRANKLIN CIRCUIT COURT

CIVIL ACTION NO. ___________

JOEY ROBERTS APPELLANT

V.

COUNTY DEBT COMMISSION

Serve: Lonnie Campbell, Commission Secretary

Department for Local Government

1024 Capital Center Drive, Suite 340

Frankfort, Kentucky 40601-8204

Serve: Hon. Paul Patton, Chairman

County Debt Commission

Office of the Governor

State Capitol

Frankfort, Kentucky 40601

Serve: Hon. Ben Chandler

Attorney General

State Capitol

Frankfort, Kentucky 40601

and

WARREN COUNTY FISCAL COURT

Serve: Hon. Michael Buchanon

429 East 10th Street

Bowling Green, Kentucky 42101

Warren County Fiscal Court Clerk

Warren County Courthouse

429 East 10th Street

Bowling Green, Kentucky 42101

and

INTER-MODAL TRANSPORTATION

AUTHORITY, INC.

Serve: Dan Cherry, President

2325 Airway Court, Suite C

P.O. Box 20001

Bowling Green, Kentucky 42102-6001

and

MICHAEL BUCHANON,

JUDGE-EXECUTIVE, WARREN COUNTY,

Serve: Hon. Michael Buchanon

429 East 10th Street

Bowling Green, Kentucky 42101

and

THE TAXPAYERS OF WARREN COUNTY,

KENTUCKY APPELLEES

Serve: Michael Caudill, Esq.

Warren County Attorney

923 College Street

Bowling Green, Kentucky 42101

ON APPEAL FROM A DETERMINATION OF

THE COUNTY DEBT COMMISSION

IN THE MATTER OF:

COUNTY OF WARREN, KENTUCKY

INTER-MODAL TRANSPORTATION AUTHORITY, INC.

FIRST MORTGAGE REVENUE BONDS AND NOTES

* * *

INTRODUCTION

Comes the Appellant, Joey Roberts, through counsel, and pursuant to the authority of KRS 66.310(5), files this appeal of a decision of the County Debt Commission ( Commission ) approving and adopting the findings and recommendations of a referee and affirming the decision of the State Local Debt Officer approving the issuance by Warren County, Kentucky of a notes and bonds to finance the construction of an airport and industrial park in that county to be known as the Inter-Modal Commerce Distribution Center and Industrial Park. (Hereinafter Transpark ).

The determination of the County Debt Commission is arbitrary, capricious, unsupported by substantial evidence in the record and is otherwise inconsistent with law and in violation of the statutory requirements of KRS Chapter 13B and KRS Chapter 66 for consideration of appeals from decisions of the State Local Debt Officer. The decision, rendered by the Commission without consideration of the entire record and in a manner contrary to law also violates Article 2 of the Kentucky Constitution and infringes on the constitutional right of Appellant to procedural due process.

Appellant seeks advancement of this appeal on the docket, as provided in KRS 66.310(5), and reversal of the determination of the County Debt Commission and a remand with instructions to the Commission to consider the entirety of the record including the Appellant s Exceptions to the Findings and Recommendations of the Referee, and to render a decision thereon in a manner consistent with KRS Chapter 13B and KRS Chapter 66.

JURISDICTION

1. This appeal is filed pursuant to KRS 66.310(5) seeking review of a final determination of the County Debt Commission rendered on October 9, 2001 and mailed by Lonnie Campbell, Secretary, County Debt Commission, on October 10, 2001.

2. The determination that is the subject of this appeal is in the form of a Resolution Approving and Adopting The Findings And Recommendations Of The Referee And Affirming The Decision Of The State Local Debt Officer . A copy of that resolution is included in the certified record, which is filed with this appeal as required by statute.

3. KRS 66.310(5) provides in relevant part:

Within thirty (30) days, exclusive of Sundays and

holidays, after a decision by the commission, any

interested party or taxpayer of the county, upon

filing bond for costs, may appeal to the Franklin

Circuit Court[.] Appeal shall be taken by filing with

the clerk of the court a copy of the record of the

proceedings and the decision of the state local

debt officer and the decision of the commission.

The commission, the fiscal court, the taxpayers of

the county, and in the case of funding or refunding

bonds, the creditors whose claims or bonds are proposed

to be funded or refunded, shall be made parties to the

appeal. Summons shall be served and class

representatives designated as provided in the Rules

of Civil Procedure. To facilitate adjudication, the state

local debt officer shall, on payment of a reasonable

fee therefore to be fixed by the state local debt officer,

supply a certified copy of the records to any party.

The case shall be advanced on the docket of the Circuit

Court and shall be heard and decided as in the case of a

Declaratory judgment, except that all findings of fact of the

state local debt officer and of the commission shall

be final if supported by any substantial evidence;

however, if only the question of the validity of the

bonds proposed to be funded or refunded is in issue,

is in issue, additional evidence relating to the validity

of the bonds may be presented.

4. The determination appealed from was rendered on October 9, 2001 and served by mail on October 10, 2001. The thirtieth day for taking an appeal, according to KRS 66.310(5), exclusive of Sundays and holidays, would be November 14, 2001, therefore this appeal is timely filed.

PARTIES

5. KRS 66.310(5) provides that any interested party or taxpayer of the county may appeal the decision of the County Debt Commission. Uncontroverted evidence in the record demonstrates that Appellant Joey Roberts, is a resident of Warren County, Kentucky, living at 4234 Scottsville Road in Smiths Grove, which is in Warren County, (Transcript of Referee Hearing Volume 1, p. 128)1 and is a taxpayer in Warren County, paying property taxes and income taxes, (T-1, p. 128), and has an interest in the outcome of this appeal.

6. KRS 66.310(5) further provides that the Commission and the Fiscal Court be named parties to the appeal. They are so-named and in accordance with the Kentucky Rules of Civil Procedure,

7. The Inter-Modal Transportation Authority, Inc. was a party to the administrative proceedings below and has a direct interest in the proposed note and bond issuance, and as such is named as an appellee.

8. KRS 66.310(5) further provides that the taxpayers of the county are to be made parties to the appeal. County Judge-Executive Buchanon is named as a representative and both the County Judge-Executive and County Attorney for Warren County are served. To the extent that the Court deems it necessary in order to comply with KRS 66.310(5), Appellant requests that an Appellee class comprised of the taxpayers of Warren County excepting Appellant, be certified since the class is so numerous that joinder of all members is impracticable; the questions of law and fact are common to the class; the claims and defenses of the representative is typical of the claims or defenses of the class, and the representative will fairly and adequately protect the interests of the class, and CR 23.02(a) and (c) are satisfied. Appellant further requests that this Court determine the manner in which notice shall be provided to the members of the class.

FACTUAL BACKGROUND

9. This case is on appeal from an October 9, 2001 decision of the County Debt Commission, a statutory board established under KRS 66.300 and consisting of the Governor, Lieutenant Governor, the State Treasurer, the Auditor of Public Accounts, the Secretary of State, the Attorney General, the commissioner of the Department of Highways, the secretary of the Finance and Administration Cabinet, and the secretary of the Revenue Cabinet.

10. By Petition dated March 30, 2001, Warren County petitioned the State Local Debt Officer under KRS 66.310 for approval of issuance of up to $25 million dollars in Inter-Modal Transportation Authority, Inc. First Mortgage Revenue Bonds and Notes to provide permanent and interim financing for an Inter-Modal Commerce and Distribution Center and Industrial Park. Warren County created and incorporated the Warren County Inter-Modal Transportation Authority, Inc, (ITA) as an agency and instrumentality of Warren County to acquire, develop and finance the Inter-Modal Park, and proposed that the project would be managed and the bonds and/or notes would be issued by ITA. (Hereinafter Petition For Approval ).

11. As required by KRS 66.310(3) the State Local Debt Officer (hereinafter SLDO) held a hearing and on May 14, 2001, approved the request by Warren County, Kentucky for the issuance of notes and bonds to finance the construction of an airport and industrial park known as the Inter-Modal Commerce Distribution Center and Industrial Park. (Hereinafter Transpark ).

12. The SLDO decision was appealed to the County Debt Commission by Joey Roberts, a property owner and taxpayer in Warren County, on within the time limit provided by KRS 66.310(4) and a hearing was convened and presided over on July 19 and 20 in Frankfort, Kentucky, by Hon. J. Patrick Abell, a referee appointed by the County Debt Commission Chairman pursuant to KRS 66.300(2) to hear and make findings and recommendations concerning the appeal of the SLDO decision.

13. On September 17, 2001, the referee issued Findings and Recommendations recommending to the County Debt Commission that the decision reached by the State Local Debt Officer be upheld and that the proposed financial plan for the issuance of these bonds, including the lease agreement to be entered into by Warren County, be approved.

14. The Findings and Recommendations of the referee

contained this paragraph concerning the filing of exceptions and further review of the recommendations:

Pursuant to KRS 13B.110, any party shall have fifteen (15)

calendar days within which to file exceptions to this

recommended decisions with the County Debt Commission.

Exceptions are to be filed with J. Patrick Abell, Referee,

500 Mero Street, Capital Plaza Tower, Room 1209, Frankfort,

KY 40601. A party aggrieved by the final order entered

in this matter may appeal to the circuit court as provided

in KRS 66.310(5).

15. As provided in KRS 13B.110 and acknowledged to be appropriate by the Referee, Appellant Roberts filed extensive exceptions to the Findings and Recommendations of the Referee, which were timely filed and duly served.

16. On October 9, 2001, the County Debt Commission met and considered the appeal.

17. Commission members present at the meeting were State Auditor Edward B. Hatchett (by proxy), Secretary of State John Y. Brown III, Attorney General A.B. Chandler III (by proxy), Commissioner James Codell (by proxy), and Secretaries Kevin Flanery and Dana Mayton. Lonnie Campbell, the State Local Debt Officer and by statute the Secretary of the County Debt Commission, also attended.

18. At the hearing, counsel for Appellant registered three objections. The first objection was to any participation by the State Local Debt Officer in the deliberations of the County Debt Commission, since the SLDO decision was the subject of the appeal to the County Debt Commission. The second objection was that the members of the County Debt Commission had not been given the Appellant s Exceptions in advance of the meeting and thus had not considered the entire record. The third related exception noted the failure of the Commission members to have considered the transcript of the evidence.2

19. Secretary Kevin Flanery, serving as Chairman of the Commission in the absence of the Governor and Lieutenant Governor, (Transcript at p. 1) acknowledged that the Appellant s Exceptions had not been distributed to the members of the Commission or their proxies in advance of the October 9, 2001 meeting, (Transcript p. 7) and rejected a request that the Commission adjourn in order to allow for consideration of the Appellant s Exceptions, stating that the Commission is operating under KRS Chapter 66 and not under 13B.

20. The Commission decision accepting the findings and recommendations of the Referee was rendered without consideration of the Appellant s Exceptions.

REASONS FOR APPEAL

21. The County Debt Commission decision was rendered in a manner inconsistent with law in that the Commission failed to consider the entire record of the appeal, including the APPELLANTS EXCEPTIONS TO REFEREE S FINDINGS AND RECOMMENDATIONS filed under KRS Chapter 13B.110:

a. The County Debt Commission is an agency within the meaning of KRS 13B.020(1).

b. The appeal pursuant to KRS 66.310(4) and KRS 66.300(3) of the decision of the State Local Debt Officer to the County Debt Commission is an administrative hearing within the meaning of KRS 13B.020(1).

c. The administrative hearing authorized in KRS 66.310(4) and KRS 66.300(3) is not exempted under KRS 13B.0920.

d. Neither KRS 66.300(3) nor KRS 66.310(4) specifically refer to the filing of exceptions from the recommendations and findings of the referee appointed under KRS 66.300(3).

e. The provisions of KRS 13B.020 supercede any other provision of the Kentucky Revised Statutes to the extent that the other provision is duplicative or in conflict.

f. KRS Chapter 13B.110 governs the filing of exceptions from a recommended order of a hearing officer.

g. The Findings and Recommendations of the Referee constitute a Recommended Order under KRS 13B.110, and thus are subject to the filing of exceptions under KRS 13B.110(4), which provides that:

A copy of the hearing officer s recommended order

shall also be sent to each party in the hearing and

each party shall have fifteen (15) days from the date

the recommended order is mailed within which to

file exceptions to the recommendations with the

agency head. Transmittal of a recommended order

may be sent by regular mail to the last known

address of the party.

h. The Referee s Findings and Recommendations in this case bore a date of September 17, 2001, with a metered date of Sep 17 01. The stamp of the United States Post Office indicating the actual date of mailing of Sep 18 2001. Utilizing either September 17th or 18th as the date from which the fifteen (15) day period for filing exceptions is calculated, the Appellant s Exceptions were timely filed and properly served.

i. The Referee s Findings and Recommendations in this case acknowledged and instructed that exceptions could be filed pursuant to KRS 13B.110[.]

j. The County Debt Commission refused to consider the exceptions duly filed and served, on the erroneous assumption that KRS 13B.110 was inapplicable.

k. This failure is inconsistent with KRS 13B.012(1), which requires that the final order issued by the agency head (in this case, the County Debt Commission), shall consider the record including the recommended order and any exceptions duly filed to a recommended order.

l. The failure to comply with KRS 13B.120(1) renders the decision arbitrary, capricious, inconsistent with law and violative of the protection afforded Appellant by Kentucky Constitution Section 2 against arbitrary government action.

22. By adopting the Referee s Findings and Recommendations, the County Debt Commission acted in a manner contrary to law and lacking in substantial evidence in the record considered as a whole, since:

a. the Referee s Findings and Recommendations failed to include necessary and adequate findings of fact as required by KRS 13B.110 and Kentucky Constitution Section 2 and failed likewise to adequately respond to the legal arguments presented by Appellants that the State Local Debt Officer s decision approving the bond issue was in error and contrary to law;

b. the Recommendation of the Referee to uphold the approval of the bond issue and lease agreement by the State Local Debt Officer was contrary to the weight of the evidence and lacked support of substantial evidence in the record considered as a whole and thus arbitrary, capricious, and otherwise inconsistent with law;

c. the Referee committed clear error in failing to properly assign the burden of proof with respect to the appeal of the State Local Debt Officer s decision; and

d. the Referee s Findings and Recommendations ignored substantial evidence in the record demonstrating that the requisites for approval of the bond and lease agreement were not met since the best interests of the county and its taxpayers would not be served, and that the appellant had proven that the county would not be able to meet bond principal and interest obligations without adversely affecting the county s ability to meet other obligations, and would be exposed to significant adverse financial liability for the payment of principal and interest obligations on the bond issue if the project terminated at Phase I, or if the project is viewed as a unitary airport-industrial park project.

CONCLUSION

Wherefore, for the reasons stated above, Appellant respectfully requests that the decision of the County Debt Commission be reversed and remanded with instructions, and for an award of cost and expenses and any other relief to which Appellant may appear entitled.

_______________________

Tom FitzGerald

Kentucky Resources Council, Inc.

P.O. Box 1070

Frankfort, Kentucky 40601

(502) 875-2428

CERTIFICATE OF SERVICE

I hereby certify that, in addition to service on the parties required by KRS 66.310(5), a courtesy copy of the foregoing was served by mail on Hon. J. Patrick Abell, Hearing Officer, Tourism Development Cabinet, 500 Mero Street, Capital Plaza Tower, Room 1209, Frankfort, KY 40601, State Local Debt Officer Lonnie Campbell, Department for Local Government, 1024 Capital Center Drive, Suite 340 Frankfort, Kentucky 40601, Frank Chuppe, Esq., PNC Plaza, 500 West Jefferson Street, Louisville, KY 40202-2898; Charles E. English, Sr., Esq., David Anderson, Esq. and Whayne C. Priest, Jr., Esq., 1101 College Street, P.O. Box 770 Bowling Green, KY 42102-0770, and Stephen Catron, Esq., P.O. Box 1220, 918 State Street, Bowling Green, KY 42102-1220, fax 270-842-4720, and upon each statutory member of the County Debt Commission, this 13th day of November, 2001.

____________________

Tom FitzGerald

1 The transcript of the two-day hearing, conducted on July 19 and 20, 2001, consists of four volumes identified as Volumes I, II, III and IV. References to the transcript will be identified as T (Volume) and (page).

2 A transcription by the Department for Local Government of the tape recording of the October 9, 2001 County Debt Commission meeting reflects that the Appellant preserved these objections both in the presentation of Mr. FitzGerald to the Commission (Transcript at p. 2) and by renewing that objection immediate prior to the Commission decision (Id. p. 7).

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