|Legal Opinion: |
Text of Document: June 23, 1995
I am writing in response to your question regarding whether the city may enter into a fifteen year contract with the YMCA to allow city residents to use their pool. It is my opinion that the City Charter gives the city authority to enter into such a contract.
Article II, Section 1(10) of the City Charter provides that the City "shall have the power . . . [t]o make contracts with any person, firm, association or corporation, for public utilities and public services to be furnished the City and those therein. . . . Such contracts may be entered into for the period of twenty-five (25) years or less from the date of execution, but not longer." A public swimming pool can reasonably be classified as a public service to furnish to the city's citizens and the proposed fifteen-year contract is obviously within the limitations established by the Charter.
In addition, Article IX, Section 11 of the Charter, Incurrence and discharge of obligations, which provides that an obligation may not be incurred against an appropriation unless there is an amount sufficient to meet such obligation or to make the expenditure, also states that "nothing herein shall be construed to prevent the making or authorizing of payments or contracts for capital improvements . . . or to prevent the making of any contract or lease providing for payments beyond the end of the fiscal year. Based on these two provisions, I think the legislative intent was clearly to provide the board with authority to enter into certain contracts both beyond the end of the fiscal year and beyond the term of the board.
As a general rule, long term contracts involving expenditures of municipal funds are looked upon with disfavor, primarily because they may restrict future elected officials in the efficient discharge of their public duties. See McQuillen, Municipal Corporations, Vol. 10A § 29 .100. However, the Tennessee Court of Appeals has stated that "in the exercise of business or proprietary powers, a board may contract as any individual . . . contracts pertaining to the ordinary business affairs of a municipality or county, such as contracts for water supply, street lighting, and the leasing of municipal property to private parties, are ordinarily upheld, although extending beyond the term of office making them, in the absence of fraud or other inequitable circumstances." Cox v. Greene County, 26 Tenn.Ct. App. 622, at 632, 175 S.W.2d 150, citing 43 Am.Jur. Public Officers § 292, at 101 (1942). Another case you might want to review is Washington County Board of Education v. Marketamerica, 693 S.W.2d 344 (1985). In this case, the Tennessee Supreme Court upheld a long-term contract between the school board and a private business. Although the court's holding in Marketamerica is very narrow, it does give some idea as to what factors a court should consider in evaluating long term contracts.
Therefore, considering the legislative authority granted the city through its charter and the rationale in Tennessee cases regarding this matter, it is my opinion that the city may enter into the proposed contract. Please feel free to contact me if you have any questions concerning this or any other matter.