Knowledgebase-Renting City Equipment and Raising the Salaries of City Commissioners


Information Product

Title:Renting City Equipment and Raising the Salaries of City Commissioners
Summary:MTAS was asked about the renting of city equipment by the city and the legality of
raising the salaries of city commissioners during current terms of office.
Original Author:Bingham, Pamela
Co-Author:
Product Create Date:01/12/2000
Last Reviewed on::04/19/2010
Subject:Purchasing--Lease agreements
Type:Legal Opinion
Legal Opinion:

Reference Documents:

Text of Document: You have asked two questions:

1) Can a city rent city equipment to private parties provided that the rental rate is at the fair market value?

Response
Yes. Under the general law City Manager-Commission Charter, which governs your city (T.C.A. ' 6-18-101et seq .), the municipality has the discretion and plenary power over its real and personal property. T.C.A. '6-19-101 provides in part as follows:
' 6-19-101. Ordinance powers.

Every city incorporated under chapters 18-22 of this title may:

***

(8) Acquire or receive and hold, maintain, improve, sell, lease , mortgage, pledge, or otherwise dispose of property, real or personal , and any estate or interest therein, within or without the city or state...(emphasis added).

This statutory provision is in accord with the general rule of law with regard to a municipality's disposition of real and personal property that has not been appropriated and in use solely for the public benefit: The sale, lease or disposal of such property must be in good faith, upon adequate consideration, and upon reasonable terms. 10 McQuillen Mun. Corp ' ' 28.37, 28.42.30. "Adequate compensation" is considered the same as "just compensation" and is defined in Black's Law Dictionary as follows:

Under the Fifth Amendment, a fair payment by the government for property it has taken under eminent domain, usually the property's fair market value , so that the owner is no worse off after the taking. (emphasis added). Page 277.

Other sources and authorities support this premise. The general rule is that adequate compensation for sale or lease of the property is its fair market value. See generally Op.Tenn. Atty. Gen. No. 83-122 (a lease of a county building so purchased at a fair market value rental to an individual industrial tenant does not constitute a lending of the credit of the county); Loveday v. Barnes , 909 S.W.2d 448, (Tenn.Ct. App. 1995) (To fix damages for the breach of contract, the measure stated is the difference in the contract price which...[the parties] agreed to pay for their property and the fair market value of the property at the time of the breach of contract)..
Other sources and authorities support this premise. The general rule is that adequate compensation for sale or lease of the property is its fair market value. See generally Op.Tenn. Atty. Gen. No. 83-122 (a lease of a county building so purchased at a fair market value rental to an individual industrial tenant does not constitute a lending of the credit of the county); Loveday v. Barnes , 909 S.W.2d 448, (Tenn.Ct. App. 1995) (To fix damages for the breach of contract, the measure stated is the difference in the contract price which...[the parties] agreed to pay for their property and the fair market value of the property at the time of the breach of contract)..

2) Does T.C.A. ' 6-20-204 in the general law City Manager Commission Charter allow for the salaries of commissioners to be raised during their terms of office provided that the raise is approved by a b vote of the commission and does not exceed the maximums established in T.C.A. ' 6-20-204?
Response Yes. T.C.A. ' 6-20-204(a) is provides in part as follows:

(a) The salary of the mayor shall not exceed three hundred dollars ($300) per month, and the salary of each other commissioner shall not exceed two hundred fifty dollars ($250) per month; except that in cities which have a population of not less than one thousand (1,000) according to the federal census of 1970 or any subsequent federal census, the salary of the mayor shall not exceed five hundred dollars ($500) per month, and the salary of each other commissioner shall not exceed four hundred fifty dollars ($450) per month. No increase in the salaries permitted by this section shall become effective unless approved by a two-thirds (2/3) vote of the board of commissioners.

Subsection (b) of T.C.A. ' 6-20-204 sets higher salary limitations for mayors and commissioners in cities exceeding 1,000 in population; however those higher amounts do not apply to the City since (b)(2) limits its application to counties having a population of between 470,000 and 480,000. Thus, by statute, the salaries of the commissioners may not exceed $450.00 per month.

While the commissioners are elected for definite terms of office pursuant to T.C.A. ' 6-20-101, there appears to be no statutory or constitutional prohibition s against increasing the salaries of the commissioners during their terms of office as long as they do not exceed $450.00 per month, as established by the General Assembly.

Article XI, Section 9 of the Tennessee Constitution provides that:
The General Assembly shall have no power to pass a special, local or private act having the effect of removing the incumbent from any municipal or county office or abridging the term or altering the salary prior to the end of the term for which such public officer was selected....

Article XI, Section 9 accomplished the following: The Legislature has no power to pass a special, local or private act which has the effect of (1) removing an incumbent from a county or municipal office, (2) abridging the term of such office, or (3) altering the salary of such office during the term thereof. Shelby County v. Hale, 200 Tenn. 503, 292 S.W.2d 745 (1956).

In applying this constitutional mandate to the instant analysis, it is clear that the Legislature intentionally vested in the Board of Commissioners the authority to raise salaries subject to the required b approval. Therefore, there are no constitutional impediments to preclude the Board from adjusting such compensation.

The state Attorney General addressed this same issue in an opinion relative to the City of Dunlop and adjusting the compensation of its Board of Mayor and Commissioners. In Op. Tenn. Atty. Gen. U95-004 (January 20, 1995), the Attorney General said:

We see no problem with the Dunlap Board of Mayor and and Commissioners changing compensation of the mayor or the board members during their terms. The Tennessee Constitution, Article 11, Section 9, states that 'the General Assembly shall have no power to pass a special, local or private act having the effect of removing the incumbent from any municipal or county office or abridging the term or altering the salary prior to the end of the term for which such public officer was selected... ' This means the General Assembly cannot, by private act, change the charter of Dunlap or otherwise to alter the salary of an incumbent mayor or elected official during his or her term. However, the General Assembly has not done so. Rather, the Board of Mayor and Commissioners has been consistently empowered during the terms of the current incumbents to alter the salary/compensation of the mayor and board.....The Dunlap Charter only states that the city judge's salary cannot be altered during the judge's term, which is a statement consistent with requirements of the Tennessee Constitution, but currently makes no prohibition against mid-term changes to the mayor's compensation. (Emphasis in the original)

Op. Tenn. Atty. Gen. U95-004 (January 20, 1995).

As in the above factual scenario, it is my opinion that there are no constitutional or statutory provisions that prohibit the Board of Commissioners from raising the salaries of the commissioners during their terms of office. Cf. Op. Tenn. Atty. Gen. No. 98-135 (by express provisions under the Cleveland City Charter, the mayor and all members of the council must wait until the expiration of the terms of the mayor and all council members in office when the salary increase ordinance was enacted before they can receive the salary increase provided for in the ordinance).


Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.