Complaint as to Issuance of Bonds for Statehouse Renovation Was Moot, But Failed on the Merits Regardless

Wisniewski v. Murphy, ___ N.J. Super. ___ (App. Div. 2018).  In 2017, the State Capitol Joint Management Commission (“JMC”) resolved to renovate the Statehouse, the building that houses (among other things) the Governor’s office and the Legislature, at a cost of up to $300 million.  Parts of the building date to 1772, and it was determined that a less expansive renovation would not suffice.  Resolutions to sell bonds for the work and to enter into a sale-leaseback transaction connected to the project and the bonds were adopted.  Plaintiff, then a state Senator, sued for a declaratory judgment that the resolutions were invalid.

But the bonds had already been issued, on the same day as the resolutions were adopted, so the defendants (then-Governor Christie, the JMC, the New Jersey Economic Development Agency, which had a key role in the sale-leaseback, and other state agencies involved) moved to dismiss the case as moot.  The Law Division granted that motion.  Plaintiff appealed.  Today, the Appellate Division, speaking through Judge Carroll affirmed the dismissal.  The panel found that the case was moot, but reached the merits anyway, on the grounds that the procedure of issuing bonds on the same day as resolutions “is of substantial importance, likely to reoccur in the future, and capable of evading review.”

That mootness discussion consumed most of the panel’s opinion.  Turning to the merits, the basis for plaintiff’s action was his claim that the issuance of the bonds violated the Debt Limitation Clause of the New Jersey Constitution, Article VIII, section 2, paragraph 3.  That provision bars the Legislature from creating “a debt or debts, liability or liabilities of the State” greater than 1% of the amount appropriated in a given fiscal year unless “submitted to the people at a general election and approved by a majority of … voters.”  Here, of course, there was no such popular vote.

But there was no violation of the Debt Limitation Clause on the facts here, Judge Carroll ruled, after canvassing a number of prior cases involving the Clause and the issuance of bonds.  “This is so because the debt was assumed by the NJEDA, an independent authority, the bonds were used to fund capital expenditures, the bonds stated on their face the State would not be indebted, and the NJEDA had a separate source of revenue, the rental payments, to pay the debt.”

The purpose of the Clause was to avoid “binding the State” to large future financial obligations.  The Clause, Judge Carroll said, “is not implicated when debt is created by an independent authority, distinct from the State that has its own source of revenue.”

Plaintiff’s other argument was that the agencies lacked the power to issue the bonds and lease the Statehouse complex.  The panel made short work of that contention.  The JMC is statutorily authorized to (among other things) maintain, improve, and operate the Statehouse.  “Acquiring funds to accomplish the renovation was an implied power of the JMC,” and entering lease arrangements that would generate rental income was consistent with the JMC’s duty to maintain the building.  The JMC’s decision that it had these powers was not arbitrary or capricious, so plaintiff’s argument failed.

 

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