In re Board of Regents , 201 Okla. 54 ( 1948 )

WELCH, J.

The Board of Regents for Oklahoma Agricultural and Mechanical Colleges has filed in this court an application for approval of a series of bonds proposed to be issued under the provisions of chapter la of Title 70, Session Laws of Oklahoma 1945, as amended by chapter 45e of Title 70, Session Laws of Oklahoma, 1947 (70 Okla. Stat. Ann. §§2071, 2072, 2073; 70 O. S. Supp. 1947- §§2071, 2072, 2073.)

The Board, by resolution adopted July 29, 1948, provided that the existing utility system of Oklahoma Agricultural and Mechanical College should be improved and extended through the acquisition of a water supply system, including transmission, treatment and pumping facilities, improving and extending the water distribution system, and improving and extending the power and heating plant system in accordance with stated plans, specifications and estimates; that for the purpose of paying the cost of improving and extending such utility system there should be borrowed on the credit of the income and revenues to be derived from the operation thereof, the sum of $3,000,-000, and that to evidence the sum so borrowed and in anticipation of the collection of such income and revenues there be issued the negotiable bonds of the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges in the total principal sum of $3,-000,000; that said bonds be known as “Utility System Revenue Bonds, Series 1948,” and be dated September 1, 1948, and be issued in the denominations of $1,000, to be numbered 1 to 3,000, inclusive.

The resolution provides that the revenues to be derived by the Board of Regents from the operation of the system shall be the proceeds from student fees, a fee to be charged every student in attendance at the regular or summer sessions of the College for the use or availability of the services afforded by the system and the proceeds and income derived from the sale of the products and services thereof, sales to be made only when a surplus exists or after all the institution’s needs have been met. It is provided that all such revenues shall be used for the maintenance and operation of the utility system and to pay interest, principal and redemption premiums on the bonds.

The resolution provides for the form of each of the bonds to be issued and that each bond shall bear the following recitation:

“This bond is one of an issue of $3,-000,000 bonds of like date and tenor, except as to number, interest rate, maturity and option or redemption, issued for the purpose of improving and extending the utility system of the Oklahoma Agricultural and Mechanical College, and payable from the net revenues to be derived from the operation of said system, including the proceeds of student fees to be charged all students in attendance at the college, under and pursuant to the Constitution and statutes of Oklahoma, and particularly Chapter la of Title 70, Session Laws of 1945, as amended, and pursuant to resolution duly adopted by the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges on July 29, 1948, to which resolution reference is hereby made for a statement of the funds and revenues from which said issue of bonds is payable.

“This bond is not an indebtedness of the State of Oklahoma or the Oklahoma Agricultural and Mechanical College or the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges, but is a special obligation payable solely from the aforesaid revenues.”

This application for the approval of the bonds to be issued is authorized by statute (S. L. 1945, Title 70, ch. la, §9, 70 Okla. Stat. Ann. §2079; 70 O. S. Supp. 1947 §2079) and has been filed in accordance therewith and due notice of hearing on the application has been given as provided. It is the duty of this court, if satisfied that the bonds have been properly authorized in accordance with the statutes mentioned in the first paragraph herein, and that the bonds when issued will constitute valid obligations in accordance with their terms, to approve the bonds.

The statutes, supra, specifically authorize the Board of Regents of Oklahoma Agricultural and Mechanical Colleges for and in behalf of the Oklahoma Agricultural and Mechanical College to construct and install a utility plant and system as is here involved of a capacity not in excess of the present and reasonably contemplated future needs of the institution, to issue and sell bonds to cover the cost thereof, and to charge and collect student fees for the use or availability of the services made available by such plant and system, and where the services supplied by any such plant and system temporarily shall be found to be in excess of the requirements of the College, to sell the surplus to other public or nonprofit consumers and to pledge the revenues to be derived from such fees and such sales to the payment of such bonds. In re Application of Board of Regents of University of Oklahoma, etc., 200 Okla. 442, 195 P. 2d 936.

Section 2071, supra, which authorizes the Board of Regents to acquire utility plants and systems for the College when deemed necessary by said Board, for the comfort, convenience and welfare of the students, contains the following proviso:

“(Provided, that such Board of Regents shall not construct or acquire, for their respective institutions, such utility plants or systems whose capacity is in excess of the present or reasonably contemplated future needs of such institution.)”

The following question is here presented :

Is the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges acting within its authority in authorizing the construction of the water supply system to be financed with a part of the proceeds of the bonds, of the size and capacity of the water gup-ply system proposed to be constructed?

We are favored with a report and survey of the present water supply system available and in use by the Agricultural and Mechanical College and a report and survey of the project authorized by the Board of Regents verified by a well known engineer of recognized high professional standing. It is shown that the source of supply of raw water available to the facility now serving the College is failing, and that the equipment for treating the water is such that the pressing water needs of the College are not being met and cannot be met by the present facility. The large increase in student enrollment and enlargement of the physical plant of the institution is shown and the consequent increase of the water needs of the institution and the overall present water needs of the institution. The plans, specifications and estimates of the proposed construction are shown and the estimates of the water supply to be made available thereby. It is apparent that some future growth in enrollment and growth in the physical plant of the college is reasonably to be expected.

It is unnecessary to copy herein the sworn statement above mentioned or set out in detail the information contained in said statement. As to water, the proposed plant will not only serve the College campus, but will deliver sufficient water to serve auxiliary, and collateral needs of the College off the campus itself, but in proximity thereto. Frank disclosure is made of such purpose with detailed showing as to the extent thereof, and the definite need of the College itself, its students, its teachers, and its widespread activities for all such furnishings of service beyond the campus boundaries.

We find that this furnishing of service, though off the campus itself, is well within the reasonable needs and necessities of the College itself and there appears no abuse of discretion in the conclusion of the Board of Regents that such utility and such service is necessary for the comfort, convenience and welfare of the students of A. & M. College (70 O. S. Supp. 1947 §2071).

It is sufficient to say that upon the evidence submitted, we find that the size and capacity of the water supply system proposed to be constructed is not in excess of the present and reasonably contemplated future needs of the institution, and from the showing made it does not appear that the proposed improvement and extension of the power and heating plant and system of the college will increase its size and capacity beyond the present and reasonably contemplated future needs of the institution.

Pending growth and development of the College to its maximum size and enrollment as envisioned in the resolution, it is contemplated by the Board of Regents that the proposed water plant will fully serve the College, and will also deliver a present surplus of water which can and will be sold to the city of Stillwater. The statutes above cited, authorizing such a revenue bond issue, make provision for the sale of such a surplus, and we find the contemplated purpose here to be fairly and reasonably within the statutory authorization.

We conclude that the Board of Regents was acting within is authority in authorizing and providing for construction of the water supply system of the size and capacity proposed to be constructed, and in authorizing the improvement and extension of the power and heating plant and system of the College, all to be financed with the proceeds of the bonds here involved.

We are satisfied that the bonds involved herein have been properly authorized in accordance with the statute first mentioned herein and that when issued the bonds will constitute valid obligations in accordance with their terms. We therefore approve the issuance of the Board of Regents for the Oklahoma Agricultural and Mechanical College Bonds, designated “Utility System Revenue Bonds, Series 1948” in the principal sum of $3,-000,000 proposed to be issued pursuant to the provisions of the statute, supra, and upon resolution adopted by the said Board of Regents on July 29, 1948.

Our attention is directed to language in the resolution as to use of surplus of revenue from the operation of the utility here involved. In that connection we observe that the statute under which these bonds are issued is specific as to the uses to which such revenue may be devoted. 70 O. S. Supp. 1947 §2076. We do not find in this resolution any desire or intention on the part of the Board of Regents to depart from the statutory or lawful use of this revenue.

These bonds are issued on the theory that the law will be complied with as to the use of all revenue from the utilities involved, and are approved by this court on the same theory.

It is ordered that any person desiring to file petition for rehearing herein must file such petition within seven days.

HURST, C. J., DAVISON, V. C. J., and CORN, ARNOLD, and LUTTRELL, JJ., concur. RILEY, BAYLESS, and GIBSON, JJ., dissent.