Rider

In this case we determine whether a lease-back financing arrangement to fund improvements to San Diego Jack Murphy Stadium (stadium) is valid. Under this arrangement, (1) the Public Facilities Financing Authority of The City of San Diego (agency) will lease the stadium from The City of San Diego (city), construct the improvements to the stadium and finance the construction by selling bonds to the public; (2) the city will then lease the improved stadium back from the agency pursuant to a “facility lease"; and (3) the agency will repay bondholders from rent the city pays under the facility lease. The financing arrangement is being effected without a vote of the electorate.

California Constitution, article XVI, section 18 (hereafter article XVI, section 18), prohibits the city from “incur[ring] any indebtedness . . . exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the qualified electors . . . .” Under *1478 Supreme Court authority referred to as the Offner-Dean rule, a public entity may incur contractual liability without voter approval and not offend the constitutional debt limitation if the contract “creates no…

While this case presents a number of important and challenging legal issues, I am afraid in the end the majority opinion has not resolved them successfully. I write separately and at some length because in my opinion, the conclusions the majority reaches about the city’s financing arrangements undermine the continuing viability of the well-established Offner-Dean doctrine. In particular, in its treatment of the arcane area of reletting by a landlord, the majority has developed theories which would permit municipalities to incur debt solely for the purpose of having the debt collected. Needless to say, I do not believe this theory is consistent with the Constitution or existing Supreme Court authority.

Because of these concerns, and for the reasons set forth more fully below, I cannot join in the majority opinion.

A. Principles

I begin my analysis by setting forth those areas where I believe there should be no doubt or confusion. A municipal government may, without incurring a debt proscribed by article XVI, section 18 of our Constitution, enter into long-term contracts which in the future will require payment of substantial sums of money for services, products or other…

In this case we determine whether a lease-back financing arrangement to fund improvements to San Diego Jack Murphy Stadium (stadium) is valid. Under this arrangement, (1) the Public Facilities Financing Authority of The City of San Diego (agency) will lease the stadium from The City of San Diego (city), construct the improvements to the stadium and finance the construction by selling bonds to the public; (2) the city will then lease the improved stadium back from the agency pursuant to a "facility lease"; and (3) the agency will repay bondholders from rent the city pays under the facility lease. The financing arrangement is being effected without a vote of the electorate.

California Constitution, article XVI, section 18 (hereafter article XVI, section 18), prohibits the city from "incur[ring] any indebtedness ... exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the qualified electors...." Under Supreme Court authority referred to as the Offner-Dean rule, a public entity may incur contractual liability without voter approval and not offend the constitutional debt limitation if the contract "creates no…