Board of Supervisors of Fairfax County v. Massey
Virginia Supreme Court
169 S.E.2d 556 (1969)
Facts
Fairfax County (the county) entered an agreement with other governments in Virginia, Maryland, and the District of Columbia to establish the Washington Metropolitan Area Transit Authority (WMATA). WMATA was designed to provide mass-transit services for the counties and cities subject to the agreement. All parties to the agreement agreed to share in the costs of constructing the transit system. To pay for its share, WMATA issued revenue bonds. In addition to the underlying agreement, the county signed a service agreement with WMATA. Under this agreement, the county was required to make service payments to WMATA, but only if WMATA revenues were inadequate to cover its operating expenses, and thus its bond payments, for a given period. In effect, the county agreed to guarantee any operating-expense deficits that WMATA incurred. At issue was whether the county’s service-payment obligations constituted a debt subject to the county’s constitutional debt limit. The Board of Supervisors of Fairfax County argued that the payment obligation constituted a contingent liability and not a present indebtedness.
Rule of Law
Issue
Holding and Reasoning (I’Anson, J.)
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