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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Staudenmaier v. Municipality of Anchorage (07/21/2006) sp-6027

Staudenmaier v. Municipality of Anchorage (07/21/2006) sp-6027, 139 P3d 1259

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

THOMAS G. STAUDENMAIER, )
) Supreme Court No. S- 11446
Appellant, )
) Superior Court No.
v. ) 3AN-03-9809 CI
)
MUNICIPALITY OF ANCHORAGE )
and BARBARA GRUENSTEIN, )
Clerk, ) O P I N I O N
)
Appellee. ) No. 6027 - July 21, 2006
)
          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Dan A. Hensley, Judge.

          Appearances:  Kenneth P. Jacobus,  Anchorage,
          for Appellant.  Joseph D. OConnell, Assistant
          Municipal Attorney, and Frederick H.  Boness,
          Municipal Attorney, Anchorage, for Appellees.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          CARPENETI, Justice.
          MATTHEWS, Justice, concurring.

I.   INTRODUCTION
          In  this  case we must determine whether two initiative
petitions submitted by Thomas Staudenmaier were properly rejected
as improper appropriations in violation of article XI, section  7
of  the Alaska Constitution.  The initiatives called for the sale
of  city-owned  utilities,  and  the  Anchorage  municipal  clerk
rejected the petitions on the grounds that they violated  article
XI,   section  7s  prohibition  against  initiatives  that   make
appropriations.   The  superior  court  affirmed  that  decision.
Staudenmaier   argues  first   that  the  initiatives   are   not
appropriations  and  second that, even  if  the  initiatives  are
appropriations,  they  must  be  allowed  because  the  municipal
charter  provision authorizing those initiatives is not  governed
by   statutes  applying  article  XI,  section  7  to   municipal
governments.  We reject both arguments and affirm the judgment of
the superior court.
II.  FACTS AND PROCEEDINGS
          The  facts  of  this case are undisputed.  Staudenmaier
submitted  five  initiative petitions to the Anchorage  municipal
clerk,  Barbara  Gruenstein, in June 2003.  The  municipal  clerk
refused  to certify two petitions dealing with the sale  of  city
assets.1    The   first   rejected  initiative   instructed   the
municipality to sell and dispose of the total current and accrued
assets of the Anchorage Municipal Light & Power Utility, Inc.  at
fair  market  value, and directed that the sale of  the  utilitys
assets,  generation  facilities,  headquarters  buildings,  power
lines,  equipment  field crews and total accrued  liabilities  be
completed within one year of certification of the election.   The
initiative  also  granted Chugach Electric  Association,  Inc.  a
right  of  first  refusal  to  purchase  the  municipal  electric
utility.   In  2003 the municipalitys electric utility  had  $356
million  in  assets; it averaged $85.6 million in yearly  revenue
during  1998-2003.  The second initiative called for the sale  of
the  Anchorage Municipal Refuse Collection Utility to the highest
bidder.   In 2003 the refuse utility had a book value of  roughly
$2.6  million; it averaged $5.6 million in yearly revenue  during
1998-2003.   The  clerk refused to certify the petitions  on  the
grounds  that  each  initiative cannot be  certified  as  legally
sufficient  in  that  allocating  public  assets  constitutes  an
appropriation which may not be enacted by initiative or  repealed
by referendum.
          Staudenmaier  appealed the rejection  to  the  superior
court, and both parties moved for summary judgment.  Staudenmaier
offered   two   arguments:   (1)   the   initiatives   were   not
appropriations;  (2) the initiatives were authorized  by  section
16.02  of  the  Anchorage Municipal Charter,  which  states  that
[t]his  section permits the sale of a utility to  be  started  by
initiative.  A valid initiative will go directly to a vote on the
question  of  sale. . . .  Superior Court Judge  Dan  A.  Hensley
affirmed  rejection of the initiatives.  Judge Hensley held  that
the  initiatives constituted appropriations because they directed
that  municipal assets be used for a specified purpose,  required
that income-producing assets be converted into cash, and overrode
the  municipal  assemblys  decision  to  provide  public  utility
services.   He  also held that because the statutory  prohibition
against   appropriation  by  initiative  applied  to  home   rule
municipalities, a charter provision allowing such initiatives was
invalid.  Staudenmaier appeals.
III.      STANDARD OF REVIEW
          We  review  a grant of summary judgment de novo.2   The
interpretation  of  the constitutional term  appropriation  is  a
question of law to which we apply our independent judgment.3   In
exercising our independent judgment, we adopt[] the rule  of  law
          most persuasive in light of precedent, reason, and policy.4
          Regarding  initiatives, the usual rule is  to  construe
voter  initiatives  broadly  so  as  to  preserve  them  whenever
possible.   However, initiatives touching upon the allocation  of
public  revenues and assets require careful consideration because
the  right  of  direct  legislation  is  limited  by  the  Alaska
Constitution. 5
IV.  DISCUSSION
          Staudenmaier   renews  before  us  the  two   arguments
rejected  by  the  superior  court,  maintaining  that:  (1)  the
initiatives  do  not make appropriations; and (2)  the  statutory
prohibition against appropriation by initiatives did not apply to
the  Municipality of Anchorage when it enacted section  16.02  of
the  Anchorage Municipal Charter, which specifically  allows  for
the sale of municipal utilities by voter initiative.6  Because we
conclude  that the initiatives are appropriations  and  that  the
municipality  was  statutorily bound by the  prohibition  against
appropriative initiatives, we affirm the superior  court  in  all
respects.
     A.   The Proposed Initiatives Violate Article XI, Section  7
          Because They Would Make Appropriations.
          
          Article  XI,  section  7  of  the  Alaska  Constitution
prohibits the making of appropriations by voter initiative.7   We
have  noted that this provision is designed to serve two parallel
purposes.8   First,  it works to prevent the passage  of  popular
programs that would give away state resources to members  of  the
public  because such measures could lead to rash, unwise spending
that  would threaten the state fisc.9  Second, we have also  held
that  article XI, section 7 was designed to further the  goal  of
ensur[ing]  that  the  legislature,  and  only  the  legislature,
retains  control  over  the  allocation  of  state  assets  among
competing needs.10  Initiatives implicate this rationale when they
would  set aside a certain specified amount of money or  property
for  a specific purpose or object in a manner that is executable,
mandatory  and  reasonably definite with no  further  legislative
action.11
          In  Alaska  Conservative Political Action Committee  v.
Municipality  of  Anchorage (ACPAC),12 we  relied  on  the  first
rationale   to   invalidate  an  initiative  that  directed   the
Municipality  of  Anchorage to sell its electric  utility  for  a
dollar  to the same private enterprise that would have the  right
of  first  refusal  under the initiative in  this  case,  Chugach
Electric Association, Inc.  The present case differs from  ACPAC,
however,  since the initiatives at issue here direct the assembly
to  sell  the electric utility and the refuse collection  utility
for  market  price  rather  than for a  dollar.   Therefore,  the
present  initiatives cannot be said to propose  an  impermissible
give-away,  as was the case in ACPAC.13  However, in McAlpine  v.
University  of  Alaska,14 we extended ACPAC  and  enunciated  the
second  rationale: the term appropriation covers not  only  give-
aways,  but also allocations that deprive the legislature of  its
discretion to designate the use of public assets:15
          Outside  the  context of give-away  programs,
          the   more   typical  appropriation  involves
          committing   certain  public  assets   to   a
          particular purpose.  To whatever extent it is
          desirable  for the legislature to  have  sole
          responsibility  for  allocating  the  use  of
          state  money,  it is also desirable  for  the
          legislature  to  have the same responsibility
          for  allocating  property other  than  money.
          Otherwise,     the    prohibition     against
          appropriations   by   initiative   could   be
          circumvented  by  initiatives  changing   the
          function  of  assets the State already  owns.
          We    conclude    that   the   constitutional
          prohibition    against   appropriations    by
          initiative applies to appropriations of state
          assets,  regardless of whether the initiative
          would  enact  a give-away program  or  simply
          designate the use of the assets.[16]
          
In McAlpine we concluded that an initiative section that required
creation  of a state community college system was unobjectionable
because the section did not dictate the manner by which the state
would have to comply.17  However, we rejected another section  of
the  same initiative in McAlpine because it specified the  amount
of  state  assets  to  be  transferred to the  community  college
system,  allowing the state only the discretion to designate  the
precise  articles or parcels to be transferred.18  Similarly,  we
recently rejected a municipal initiative that would have reserved
a  specific  amount  of  land as a park because  the  initiatives
dedication requirement necessarily intrude[d] on the legislatures
control over future designation.19
          Staudenmaier offers an essentially circular argument as
to   why  the  initiatives  in  this  case  do  not  violate  the
prohibition against appropriative initiatives.  He maintains that
because   section  16.02  of  the  Anchorage  Municipal   Charter
specifically provides for the sale of municipally-owned utilities
through  voter initiative, the Anchorage Assemblys authority  was
always restrained by the possibility of such an initiative.   But
this  argument only raises the question whether section 16.02  is
constitutional given the prohibitions of article XI, section 7 of
the Alaska Constitution, made applicable to municipalities by  AS
29.26.100.
          The    Alaska    Constitutions   prohibition    against
appropriating  public assets by initiative is meant  to  re[tain]
control  .  .  . of the appropriation process in the  legislative
body.20  Generally speaking, an initiative is unobjectionable  so
long  as  it  grants  the  legislature sufficient  discretion  in
actually  executing  the  initiatives purpose.21   But  where  an
initiative controls the use of public assets such that the voters
essentially usurp the legislatures resource allocation  role,  it
runs afoul of article XI, section 7.22  Thus, the initiatives also
run  afoul  of the constitution by requiring the sale  of  public
assets.   Accordingly,  the  Anchorage  clerk  did  not  err   in
rejecting the initiative petitions.23
     B.   The  Prohibition  Against Appropriation  by  Initiative
          Applies to Home Rule Municipalities.
          Article  XI, section 7 has been applied by  statute  to
initiatives   affecting  municipal  governments.24   Staudenmaier
argues  that  even  if these initiatives are appropriations,  the
initiatives  must  be  allowed because the  statutory  provisions
applying article XI, section 7 did not cover the Municipality  of
Anchorage  at  the time it enacted section 16.02 of its  charter.
This is so, he reasons, because the Municipality of Anchorage  is
merely  a  continuation  of  the prior  City  of  Anchorage.   We
disagree.
          In  an effort to demonstrate that former AS 29.13.05025
which Staudenmaier admits required that city charters comply with
article  XI, section 7  does not limit the municipalitys charter,
Staudenmaier relies on former AS 29.13.010.  That statute allowed
a  home  rule municipality  to amend its charter or adopt  a  new
one.   Staudenmaier  maintains that former AS 29.13.050  did  not
apply  to pre-existing home rule municipalities that adopted  new
charters.
          Staudenmaier  grounds his argument  on  the  fact  that
former  AS 29.13.050 was not listed in AS 29.13.100, which stated
that  [o]nly the following provisions of this title apply to home
rule  municipalities as prohibitions on acting otherwise than  as
provided.  Both former AS 29.13.050 and .100 were passed as  part
of  the 1972 amendments to the municipal code,26 and Staudenmaier
reasons  that  the  failure  to  list  section  .050  among   the
restrictions on home rule municipalities evinces the legislatures
intention  to  apply former AS 29.13.050(c) only to  general  law
municipalities.   He also cites to legislative  reports  for  the
proposition  that  AS 29.13.050 did not apply  to  municipalities
that  already  had  home rule charters when the  amendments  took
effect.27   Thus,  he asserts that home rule municipalities  that
existed  before  the  1972  amendments could  enact  new  charter
provisions that did not comply with article XI, section 7.
          Staudenmaier applies similar reasoning to AS 29.26.100.
This  statute  was passed as part of the 1985 amendments  to  the
municipal code28 and provides that [t]he powers of initiative and
referendum  are  reserved  to  the residents  of  municipalities,
except the powers do not extend to matters restricted by art. XI,
7 of the state constitution.  Because the provision is not listed
among the prohibitions on home rule municipalities,29 Staudenmaier
argues  that it is only applicable to general law municipalities,
and  thus  maintains that the 1985 amendments do  not  invalidate
home rule charter provisions that do not comply with article  XI,
section  7.30  While he concedes that AS 29.10.030 does apply  to
home  rule  municipalities, he maintains that this  provision  is
limited  in  scope; he argues that it only requires  that  future
home rule charter sections comply with article XI, section 7, and
that  prior provisions, including section 16.02 of the  Anchorage
Municipal Charter, remain in effect.
          However, we need not parse Staudenmaiers interpretation
of  the  1972  or the 1985 amendments because he  has  failed  to
establish  a  necessary component of his argument.  Specifically,
he  maintains  that  the municipality was able  to  pass  charter
          provisions that did not comply with former AS 29.13.050 (and thus
article  XI,  section 7) because the municipality existed  before
the  1972  enactment of this statute.  Staudenmaier  argues  that
because  the  municipality  can  relate  back  to  the  City   of
Anchorage,  which became a home rule municipality  in  1959,  the
municipality  predated  the 1972 amendments.   In  response,  the
municipality argues that it did not exist before 1975,  when  the
City  of  Anchorage merged with the Greater Borough of  Anchorage
and  adopted the Anchorage Municipal Charter, and argues that  it
is improper to equate the City of Anchorage with the Municipality
of   Anchorage.   The  municipalitys  position  is  supported  by
Municipality of Anchorage v. Frohne.31 In that case we noted that
the  municipality  was  not bound by the Greater  Anchorage  Area
Boroughs  approval of an initiative because the municipality  was
subsequently  created and not yet in existence when  the  borough
approved the petition.32  The conclusion that the municipality did
not  exist  prior to the merger of the borough and  the  City  of
Anchorage  in  1975  defeats  Staudenmaiers  argument  that   the
municipality predates the 1972 amendments.33
          Moreover,  the former AS 29.68.400 stated  that  [u]pon
ratification,  the  charter  of a  unified  municipality  .  .  .
operates  to  dissolve all local governments within the  area  of
unification in accordance with the charter.  Thus, the  governing
law at the time of the creation of the municipality also prevents
Staudenmaier  from  relating  the  municipality   back   to   its
predecessor  entities.  The municipality emerged as a  new  legal
entity upon the merger of the Greater Anchorage Area Borough  and
the  City  of  Anchorage in 1975, and so even under Staudenmaiers
reasoning, it was bound by  former AS 29.13.050s requirement that
initiative  provisions not exceed the limits set out  in  article
XI,  section 7 of the state constitution.  Accordingly, we reject
Staudenmaiers  argument  that  section  16.02  of  the  Anchorage
Municipal  Charter was validly enacted and conclude instead  that
it  was  void  at  its  inception because it violated  former  AS
29.13.050(c)   and  article  XI,  section   7   of   the   Alaska
Constitution.34
V.   CONCLUSION
          The  Anchorage  municipal  clerk  acted  correctly   in
rejecting the municipal utility initiative petitions because  the
initiatives  would  have  been  appropriations  that  would  have
allocated  the municipalitys resources, and would have eliminated
the  assemblys discretionary authority by requiring the  sale  of
specific  municipal  assets.  While Anchorage  Municipal  Charter
section  16.02 ostensibly allows such initiatives, the  provision
was  void  at  inception because it did not  comply  with  Alaska
Constitution,   article  XI,  section  7s   prohibition   against
appropriation by initiative.  We therefore AFFIRM the judgment of
the superior court.
MATTHEWS, Justice, concurring.
          I  agree with todays opinion.  I write these additional
words  to  dispel any possible conclusion that the  courts  broad
interpretation  of the term appropriations prohibits  substantive
lawmaking  by  initiative  that properly  should  be  within  the
initiative power.  The proposals with which we are concerned seek
to  get  the Municipality of Anchorage out of the electrical  and
garbage  collection  utility  businesses.   But  they  do  so  by
requiring the Municipality to sell the tangible property that  it
uses in those businesses.
          The anti-appropriations clause of article XI, section 7
of  the  Alaska Constitution does not prohibit the  objective  of
these  proposals, only their means.  Thus, if the proposals  were
phrased  to  directly  prohibit the Municipality  from,  after  a
certain  date,  selling or distributing electricity  or  offering
garbage collection services, the anti-appropriations clause would
not  render  the  proposals illegitimate.  The lesson  of  todays
opinion is that laws effecting substantial changes in policy  can
be made by initiative, but when they create surplus property, the
disposition  of  such property is a matter for the representative
lawmaking body.
_______________________________
     1     Another  petition  was rejected for  vagueness.   That
petition is not at issue in this case.

     2    Alaska  Action Ctr., Inc. v. Municipality of Anchorage,
84 P.3d 989, 991 (Alaska 2004).

     3    Id.

     4     Id.  (quoting Pullen v. Ulmer, 923 P.2d 54, 58 (Alaska
1996)).

     5     Pullen,  923 P.2d at 58 (quoting City of Fairbanks  v.
Fairbanks  Convention  & Visitors Bureau,  818  P.2d  1153,  1155
(Alaska 1991)).

     6    Section 16.02 states in relevant part:

          The   municipality  may   sell,   lease,   or
          otherwise dispose of a municipal utility only
          pursuant   to  an  ordinance  or   initiative
          proposition approved by three-fifths  of  the
          qualified voters voting on the question.
          
     7    Article XI,  7 of the Alaska Constitution provides:

          The  initiative shall not be used to dedicate
          revenues,   make  or  repeal  appropriations,
          create  courts,  define the  jurisdiction  of
          courts  or  prescribe their rules,  or  enact
          local  or special legislation. The referendum
          shall  not  be  applied  to  dedications   of
          revenue,  to  appropriations,  to  local   or
          special legislation, or to laws necessary for
          the  immediate  preservation  of  the  public
          peace, health, or safety.
          
     8    City of Fairbanks, 818 P.2d at 1156.

     9     Id. (citing and discussing Thomas v. Bailey, 595  P.2d
1,  7  (Alaska  1979)); see also Pullen, 923 P.2d  at  63  ([T]he
prohibition  was  meant  to prevent an  electoral  majority  from
bestowing state assets on itself.).  Under this rationale we have
struck  down initiatives that gave state land to members  of  the
public,  Thomas, 595 P.2d at 6-8; and that required the state  to
give  sport,  personal,  and subsistence  fishers  priority  over
commercial fishers, Pullen, 923 P.2d at 61-64.

     10    City of Fairbanks , 818 P.2d at 1156 (quoting McAlpine
v.  Univ. of Alaska, 762 P.2d 81, 88 (Alaska 1988)) (emphasis  in
original);  see  also  Pullen, 923 P.2d at  63  (The  prohibition
[against  appropriative initiatives] was designed to preserve  to
the  legislature  the  power  to make  decisions  concerning  the
allocation of state assets.).

     11     City  of  Fairbanks, 818 P.2d at 1157  (holding  that
second   rationale   did  not  invalidate  initiative   repealing
allocation of bed tax revenues to convention and visitors bureau,
since  returning  control over revenues to city council  expanded
councils discretion over budgetary matters).

     12    745 P.2d 936 (Alaska 1987).

     13    Id. at 938.

     14    762 P.2d 81 (Alaska 1988).

     15    Id. at 88-89.

     16    Id. at 89.

     17    Id. at 91.

     18    Id.

     19    Alaska Action Ctr., Inc. v. Municipality of Anchorage,
84 P.3d 989, 995 (Alaska 2004).

     20      City of Fairbanks v. Fairbanks Convention & Visitors
Bureau, 818 P.2d 1153, 1156 (Alaska 1991) (emphasis added).

     21     See McAlpine, 762 P.2d at 91 (holding that initiative
section   creating   community  college   system   was   not   an
appropriation  because  it left legislature  with  discretion  to
determine size and manner of relevant payments).

     22    See Alaska Action Ctr., 84 P.3d at 994-95.

     23     Staudenmaier also argues that because the initiatives
involve[]  a  simple  substitution of  one  municipal  asset  for
another    a municipal utility for its fair market value in  cash
no  give-away program is involved.  Because we conclude that  the
initiatives  are  impermissible in that they  designate  how  the
Anchorage  Assembly is to make use of municipal assets,  we  need
not  decide whether the fact that the initiative exchanges public
assets  for  fair market value affects whether the initiative  is
also an impermissible giveaway.

     24    See Alaska Action Ctr., 84 P.3d at 991 (By statute, the
power  of  lawmaking by initiative on the local level is reserved
to the people of a home rule municipality.  Also by statute, this
power  may  not  be  used to take any of the  actions  listed  in
article  XI,  section 7 of the Alaska Constitution.)  (citing  AS
29.26.100 and AS 29.10.030(c)).

     25    Former AS 29.13.050 stated in relevant part:

          (a)  Municipal  charters  shall  provide  the
          procedures for the initiative and referendum.
          
          . . . .

          (c)  A  charter may not permit the initiative
          and  referendum  to  be used  for  a  purpose
          prohibited  by   7,  art.  XI  of  the  state
          constitution.
          
     26    Ch. 118,  2, SLA 1972.

     27     Specifically,  Staudenmaier cites to  a  Supplemental
Conference Report which states:

          The   code  standardizes  the  procedure  for
          adopting  a  charter in either a first  class
          city  or  borough.  The power  of  home  rule
          municipalities  to amend an existing  charter
          or to adopt a new one is expressly recognized
          in   this  chapter  (Sec.  29.13.010),   and,
          insofar  as  the  provisions  of  Article  1,
          Charters  are  concerned,  only  the  general
          requirements   governing  charter   amendment
          (Sec.   29.13.080)  apply  to  municipalities
          having home rule charters when the code takes
          effect as law.
          
1972 House Journal 1718, 1720.

     28    Ch. 74,  9, SLA 1985.

     29    Former AS 29.13.100 and current AS 29.10.200 both list
restrictions on the conduct of home rule municipalities.

     30     As  the  municipality notes, former AS 29.28.060  was
identical to current AS 29.26.100 and was similarly not listed as
a  restriction  on home rule government action.   See  former  AS
26.13.100.  Although Staudenmaier does not refer to this statute,
his  argument  suggests that this provision was also inapplicable
to home rule municipalities.

     31    568 P.2d 3 (Alaska 1977).

     32    Id. at 7-8.

     33    Moreover, Staudenmaier offers no reason why the City of
Anchorage,  and  not  the borough, should  be  taken  to  be  the
municipalitys   predecessor  for  the  purposes   of   the   1972
amendments.   He focuses on the city because it was a  home  rule
municipality,  which supports his argument that the  municipality
was  exempt from AS 09.13.050.  But it is equally plausible  that
the  borough is the proper predecessor entity, and its lack of  a
charter  undercuts Staudenmaiers attempt to free the municipality
from AS 09.13.050.

     34     Staudenmaiers  failure to prove a  key  part  of  his
argument   that the city is the municipalitys predecessor   makes
it   unnecessary  for  us  to  consider  the  validity   of   his
interpretation of the relevant statutes.  However, we  note  that
his  interpretation  is unsupported by the  legislative  history.
Staudenmaier  admits  that  AS 29.10.030  applies  to  home  rule
municipalities, but he maintains that its predecessor, former  AS
29.13.050, had a markedly different effect and did not  apply  to
home rule municipalities.  However, not only does the legislative
record  of the 1985 amendments fail to support this argument,  it
contains  evidence to the contrary.  Specifically, draft versions
of  AS  29.10.030 in the House and Senate changed the  text  from
municipal charter to  home rule charter, but legislative analyses
stated  that this change had no substantive effect.  See  1985-86
Senate Finance Comm., Sectional Analysis of Proposed HB 72, at  9
(on   file  with  the  Legislative  Reference  Library,   Juneau,
microfiche  No.  2317)  (No substantive  change);  1985-86  House
Community & Regl Affairs Comm., Sectional Analysis of Proposed HB
72,  at  10  (on  file  with the Legislative  Reference  Library,
Juneau,  microfiche  No.  3214.10)  (new  language  caused   [n]o
change).

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