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In the case of Immel v. Tulsa Public Facilities Authority, 2021 Okla. LEXIS 41 (Okla. Sup. Ct. 6/22/2021), the issue on appeal before the Oklahoma state supreme court was “whether Defendants/Appellees Tulsa Public Facilities Authority (TPFA) and the City of Tulsa (City), Oklahoma, can sell 8.8 acres of parkland held in a public trust to a private developer for construction of a commercial shopping center.” The plaintiffs, a group of Tulsa citizen taxpayers (Taxpayers), claimed TPFA and the City lacked the legal authority to sell the land because the parcel was “held in a public trust expressly as a park for the people.”
Helmerich Park History
The 8.8 acres of parkland in dispute (hereinafter “Tract A”) is a small part of 67.3 total acres of unimproved land acquired by the City from the First National Bank of Oklahoma for $4.5 million in 1991. The City’s acquisition of the 67.3 acres of land is the result of a public/private endeavor to purchase the riverfront property for the specific use as a city park.
The City provided tax funds of $2.25 million for half of the purchase price, and the other half of the purchase price was donated to the City by private parties, expressly for the purchase of the land to be used as a city park. The City used $2.25 million from its surplus 1985 sales tax funds to pay for half of the purchase price for the parkland. The sales tax funds were designated for “Park Facilities Improvements.” The $2.25 million the City received from private donors for half of the purchase price for the parkland was placed in the City’s “Park and Acquisition Fund” pursuant to ordinances adopted in May 1991.
The City transferred the $4.5 million in funds to the TPFA, so that it could be used to purchase the land from the bank. Under state law, the TPFA is a public trust and the City is its sole beneficiary. Legal title to the land also was placed in the name of the TPFA.
On June 27, 1991, the City’s park board met and named the park “Helmerich Park” after Walter Helmerich III, the principal private donor. Helmerich Park is a public park in Tulsa and has operated as such from 1991 to the present. From 1991 to April 2017, all 67.3 acres of Helmerich Park was operated, maintained and managed by the City’s park department as a public park.
During this same time period, improvements were made to Helmerich Park under the supervision of the City. The improvements included: 10 volleyball courts, a playground, a splash pad, a picnic area, restrooms, a parking lot and a driveway. The improvements were ultimately made possible by private funds donated by Walter Helmerich III; however, the City’s park department also sought $1,175,000 in improvements specifically earmarked for Helmerich Park as part of its 2015-2019 capital improvements plan.
Economic Development Land Sale
In 2013, the City’s economic development director decided to try and sell or lease some of the City’s unused or underutilized property in an attempt to, hopefully, increase sales tax revenue and generate revenue based on recommendations from an outside third party who prepared a study of the City’s property. Helmerich Park was identified as a potential candidate by the outside third party’s study to be leased or sold.
Once identified as a potential candidate to be leased or sold, the City’s economic development director discovered legal title to Helmerich Park was held by the TPFA, not by the City. As a result, the City’s economic development director and the City’s staff prepared a request for proposal (RFP) offering Helmerich Park for long-term lease in hopes of attracting new businesses that would lease the property and thereby increase sales tax revenue. The RFP provided that it was from both the TPFA and the City. Ultimately, the RFP was unsuccessful.
In 2014, a private developer became interested in a small portion of the property — specifically Tract A, which runs along the east bank of the Arkansas River — for commercial development. The City’s economic development director, through private negotiations, initially thought he was successful in negotiating a long-term lease for Tract A with the private developer. However, the long-term lease ultimately culminated into a contract for the purchase and sale of Tract A to the private developer for the construction of a commercial shopping center.
After lengthy negotiations, the TPFA and the private developer agreed on a purchase and sale contract (Contract) for Tract A on August 11, 2015. The TPFA approved the Contract during one of its scheduled meetings. The remaining 58.5 acres of Helmerich Park was to continue to be held in trust by the TPFA for the public’s use as a city park.
Challenge to Sale Contract
On August 11, 2015, Plaintiff Craig Immel sought to prevent the sale of Tract A by seeking an injunction and a temporary restraining order against the TPFA. On January 7, 2016, Immel filed an Amended Petition to include the City of Tulsa as a defendant and added four other individual Tulsa taxpayers as plaintiffs.
On March 1, 2017, the Tulsa City Council passed two resolutions concerning Tract A. The first resolution provided that the City would abandon Tract A and support its sale if the TPFA and the developer would revise its contract to include terms requested by the City. The second resolution provided up to $570,000 of the City’s tax funds to be paid to the private developer for infrastructure improvements to Tract A in connection with the construction of the shopping center if the contract was revised. The TPFA and the developer revised the Purchase and Sale Contract (Amended Contract), which the City approved on March 3, 2017.
In response to the two resolutions passed by the City Council and the City’s approval of the Amended Contract for the sale of Tract A, Taxpayers petitioned the trial court for a declaratory judgment on the following points:
(1) The TPFA and the City cannot sell Tract A to a private developer for commercial use because the park land is held in a public trust, expressly as a park for the people; (2) Tax funds would be misappropriated if the sale of the restricted park land occurred; and (3) The sales price was so low and other considerations so minimal, that it would result in an unconstitutional gift by the TPFA and the City to the private developer
Taxpayers also alleged actual abandonment of Tract A of the park had not occurred and that the $570,000 to be paid to the private developer would be an illegal expenditure.
All parties moved for summary judgment in the trial court in January 2018. In April 2018, the trial court granted the TPFA and the City’s joint motion for summary judgment as to all issues without stating the grounds to support its decision and denied the Taxpayers’ motion for summary judgment. Taxpayers appealed the trial court’s order granting summary judgment in favor of the TPFA and the City. The state supreme court granted appeal.
Summary judgment would only be appropriate when there is no genuine controversy as to any material fact, and the moving party (in this case, TPFA and the City) was entitled to judgment as a matter of law.
On appeal, the state supreme court first considered whether the Taxpayers had “standing as citizens and taxpayers to bring this action in equity to challenge the prospective unauthorized expenditure of funds.” As noted by the court: Standing refers to a person’s legal right to seek relief in a judicial forum. Moreover, to establish standing a person must possess “a legally protected interest.” Under Oklahoma law, the state supreme court recognized the right of a taxpayer to “challenge illegal taxation or expenditure of public funds.” In this case, TPFA and the City claimed the sale of real property did not constitute the expenditure of public funds.
The state supreme court, however, found a taxpayer also would have standing to challenge “the prospective unauthorized expenditure of public funds or a prospective unauthorized act related to public funds,” which would include the sale of real property. In addition, the court found the Taxpayers had standing based on their claim, alleging “the $570,000 in City funds to be paid to the private developer would be an illegal expenditure.”
Sale of Public Trust Land
On appeal, the Taxpayers claimed “TPFA and the City cannot sell Tract A of the Park to the private developer because the land is held in a public trust for the use and benefit of its citizens as a public park.” As noted by the state supreme court, “the common law public trust doctrine is well established in Oklahoma” and subject to the following “general rule”:
[M]unicipal property held in a governmental capacity, which is for public use, cannot be sold without special legislative authority unless the public use has been abandoned or the property has become unsuited for continued use.
Accordingly, since this particular parcel of parkland was “held in a public trust for the use and benefit of its citizens,” the City and the TPFA could not sell the parkland absent a finding “the [parkland] has been lawfully abandoned and/or unfit for its particular purpose.”
Further, the court recognized the following general legal principle that a municipal corporation holds property in two distinct capacities:
There is a clear distinction, recognized by practically all authorities, between property purchased and held by municipal corporations for the use of the corporation as an entity, and that purchased and held by such corporation for the public use and benefit of its citizens.
For property acquired for strictly corporate uses and purposes, the court acknowledged “the power of the corporation to dispose of it is unquestioned.” On the other hand, the court found the municipal power to dispose of property dedicated to public use is limited to circumstances in which “the public use has been abandoned, or the property has become unsuitable or inadequate for the purpose to which it was dedicated.”
In this particular instance, TPFA and the City had argued the City’s charter, the City’s amended charter and other statutory provisions provided “general power to sell Tract A of Helmerich Park.” The state supreme court rejected this argument:
First, the park land is held by the TPFA, a public trust, for the use and benefit of the citizens as a public park. Second, because the park land is held in a governmental capacity for use by the public, it cannot be sold without special legislative authority. It is undisputed there is no special legislative authorization empowering the TPFA and the City to sell Tract A of the Park to a private developer for commercial use.
In so doing, the court also rejected the claim that Tract A could be sold to the private developer for commercial use because TPFA, not the City, held legal title to the tract. Despite having transferred legal title to a public trust, the court found the “City still had an equitable interest in the land”:
As the City’s sole beneficiary, the TPFA holds Tract A in trust for the public specifically for use as a city park and this is true despite the fact that legal title to the park land was deeded from the City to the TPFA. Additionally, a municipal public trust cannot do something its beneficiaries cannot do, except as authorized by statute.
As cited by the court, state law provided that “a municipal public trust can be created for the furtherance and accomplishment of any authorized and proper public function or purpose of the municipality.” Moreover, the court noted the powers of a public trust “may not exceed those authorized and proper public functions of its municipal beneficiary.” The court, therefore, acknowledged “a municipal public trust cannot convey real property if its municipality cannot.”
In this particular instance, the state supreme court found “the legislature has not authorized municipalities to sell land held in trust for the people, except under specific statutory procedures, which are not applicable to the sale of Tract A of Helmerich Park.” As a result, the court held TPFA, as a municipal agency, is “equally bound by the public trust doctrine with respect to property held in trust for the people, just as the municipality itself would be.” Further, the court found the City of Tulsa Charter, as amended, did not include a grant of power to “alienate parks” or sell park property. Similarly, the court found “no specific statutory provision authorizing the City (or the TPFA acting on its behalf) to convey or otherwise dispose of the [parkland] held in such a capacity.”
Moreover, the court found “the [parklands] in this case, where Helmerich Park, including Tract A, has continually been in use as a city park since 1991 and continues to this day to be in use as a city park.” As the result, the state supreme court found the trial court had erred in granting summary judgment to the City and TPFA on the proposed sale of parkland.
TPFA and the City had argued this interpretation of the public trust doctrine would “mean that Tract A of the Park or the entire Park can never be sold.” The state supreme court rejected this argument. According to the court, in order to sell Tract A of the park, “the burden is on the TPFA and the City to prove that Tract A of the Park has been lawfully abandoned and/or is no longer fit for its intended use as a public park.”
In so doing, the state supreme court reiterated that applicable rule of law: “municipal property held in a governmental capacity that is for public use cannot be sold without special legislative authority unless the public use has been abandoned or the property has become unsuited for continued use.” In the absence of special legislative authority, the issue before the state supreme court was, therefore, whether there was evidence that “Tract A of the Park has been lawfully abandoned by the TPFA and the City.”
As cited by the state supreme court, under Oklahoma law, “to constitute abandonment in respect to property, there must be a concurrence of the intention to abandon and an actual relinquishment of the property so that it may be appropriated by the next comer”:
In determining whether one has abandoned his property, the intention to abandon is the first and paramount object for inquiry. There can be no abandonment without the intention to abandon. Because abandonment rests upon the intention to relinquish the premises, it is a question of fact for the jury.
The court further acknowledged: “The TPFA and the City unquestionably have the burden of establishing abandonment.” In this particular case, the court found there was “conflicting evidence in the record concerning whether Tract A of the Park has been lawfully abandoned by the TPFA and/or the City.”
To establish abandonment, the TPFA and the City had pointed to the two Resolutions passed by the City Council as evidence of the City’s intent to abandon Tract A. In claiming Tract A had been abandoned, the TPFA and the City also maintained it was “impractical and unreasonable to erect a fence around the 8.8 acres of [parkland] for purposes of establishing actual relinquishment of the property.”
At the same time the resolutions were passed, the Taxpayers had argued “the land was not actually relinquished” because “Tract A and the entirety of Helmerich Park was still in use and open to the public as a city park.” Moreover, the Taxpayers contended “the TPFA and the City conceded Tract A had not been abandoned when they acknowledged Tract A was still in use as a public park in their joint motion for summary judgment.”
As characterized by the state supreme court: “The two Resolutions passed by the City Council may be affirmative official acts by the City Council indicating the City’s intention to abandon Tract A.” On the other hand, the court acknowledged that these two resolutions “may also be viewed as an attempt by the City to validate its authority, in conjunction with the TPFA, to sell Tract A to the private developer in the first place”:
The City Council passed the two Resolutions approximately one year and seven months after the original Purchase and Sale Contract was approved by the TPFA in August 2015. Whether the TPFA and the City had the intent to abandon Tract A and whether there was an actual relinquishment of the property are questions for the trier of fact [i.e., a judge or jury that determines questions of fact in a trial].
In light of such “conflicting evidence in the record concerning whether Tract A of the Park has been lawfully abandoned by the TPFA and/or the City,” the state supreme court reversed the summary judgment in favor of TPFA and the City and remanded this case to the trial court “for a determination on the merits as to whether Tract A has been lawfully abandoned.”
On appeal, the state supreme court further noted “disputed material facts concerning whether the ‘public purpose’ requirement was met.” As cited by the court, the Oklahoma Constitution “restricts the use of public funds to expenditures for a public purpose” to prevent “the investment of public funds in private enterprises.” That being said, the court acknowledged the term “public purpose” should not be construed “in a narrow or restrictive sense.” As defined by the court: “A public purpose affects the inhabitants of the state or taxing district as a community.”
Within the context of a legal “public purpose,” TPFA and the City had argued “Tract A of the Park can be sold to promote economic development.” Under the state constitution, the state supreme court acknowledged that “economic development is a legitimate public purpose for which public funds may be expended.” Further, the court noted an “economic development plan did not lose its public purpose merely because it involved a private actor.”
That being said, the court held “this power is restrictive” in structuring plans for economic development. Specifically, the court found a city “must obtain adequate consideration and accountability from a private actor in exchange for the expenditure of public funds.”
In this case, Taxpayers had claimed: “Tract A is being sold for about 20 [percent] of its market value and that the private developer will be given more than a halfmillion dollars in tax funds for infrastructure development in violation of the public purpose requirement.” Moreover, “once the contract is entered into and the commercial shopping center is built,” Taxpayers argued “the TPFA and the City of Tulsa will not maintain control over Tract A and its operation,” including “no control over the future disposition of the property.” In response, the TPFA and the City claimed increased sales taxes and employment would satisfy the public purpose requirement.
In the opinion of the state supreme court, there were “clear material facts in dispute concerning whether the expenditure of the public funds in this case would meet the public purpose requirement.” As a result, the court reversed the summary judgment of the trial court in favor of TPFA and the City and remanded (i.e., sent back) this case for further proceedings to resolve these disputed facts and determine “the constitutionality of the sale of Tract A to the private developer and whether those facts support the public purpose requirement” under the Oklahoma Constitution.
Having found “Tract A is [parkland] held in a public trust expressly for the use and benefits of its citizens as a city park,” the state supreme court held “Tract A of the Park can only be sold by the TPFA and the City to a private developer for commercial use if Tract A has been lawfully abandoned and/or is no longer fit for its intended purpose as a public park.” On remand, the state supreme court directed the trial court to resolve whether: (1) Tract A of the Park was lawfully abandoned by the TPFA and the City; and (2) the public expenditure of funds to be paid to the private developer meets the public purpose requirement under the Oklahoma Constitution.
James C. Kozlowski, J.D., Ph.D., is an Attorney and Associate Professor in the School of Sport, Recreation and Tourism Management at George Mason University. Law review articles archive (1982 to present)