Dykes v. Northern Virginia Transportation District Commission

The Fairfax County Board of Supervisors (the county) (plaintiff) proposed a contract with the Northern Virginia Transportation District Commission (the commission) (plaintiff) for construction of the Fairfax County Parkway. Under the contract, the commission would issue revenue bonds, and the county would make payments on the bonds. The payments were to be made from the county’s general revenues; there was no new or additional county fund. The contract provided, however, that county payments could not be made absent appropriation by the county. Further, the contract expressly stated that future county boards of supervisors were not bound to make any such appropriations. The county and the commission instituted a bond-validation proceeding. Certain county taxpayers (defendants) opposed the validation, arguing that the county’s financing of the project qualified as county debt constitutionally requiring voter approval. The Virginia Supreme Court (Whiting, J.) held that the contract’s nonappropriation clause was not sufficient to exempt the county’s obligations under the contract from categorization as debt. The court held that although the county’s payments were contingent on appropriations and the contract expressly permitted the county to get out of its obligations, the practical effect of the county exercising this option would be disastrous. The county valued its fiscal integrity and implicitly acknowledged that county boards of supervisors would never let that disaster occur. The practical effect of the contract thus was to create a long-term debt without voter approval in violation of the constitution. As a result, the court invalidated the bonds. The dissent (Carrico, C.J.) asserted that the proposed contract expressly stated that the county was not bound to make any appropriations to pay for the commission’s bonds. The dissent claimed that the majority incorrectly turned that into the county being bound long-term. The county filed a petition for rehearing.