## Facts

- Iron County’s jail was about fifty years old, overcrowded, and failed minimum standards; the county faced lawsuits and studies supported building a new facility.
- The county’s voters rejected a proposal to finance a new jail with voter-approved general obligation bonds.
- The county created a municipal building authority under the Utah Municipal Building Authority Act to finance construction through 20-year revenue bonds.
- The authority planned to acquire a site, build the jail, and issue revenue bonds payable solely from authority revenues, with bondholders limited to foreclosure on the authority’s interests and no recourse to county taxes or credit.
- The county would lease the jail from the authority on a year-to-year basis, with rent set to cover bond obligations and subject to annual appropriation; title would transfer to the county after the bonds were retired.
- The plan also included conveying the county’s fee interest in the existing jail site to the authority as part of the overall transaction.
- County fiscal officers (auditor, treasurer, and clerk) refused to proceed, asserting constitutional and statutory defects and alleging an open meetings violation.
- The district court upheld the Act and financing plan and found no open meetings violation; the fiscal officers appealed.

## Issues

1. Whether the revenue-bond/annual-lease financing plan created unconstitutional county debt requiring voter approval under Utah Constitution article XIV, section 3.
2. Whether the building authority’s obligations should be treated as county obligations because the authority functioned as a county subdivision or alter ego.
3. Whether the county could lawfully convey its fee interest in the existing jail property to the authority without adequate consideration.
4. Whether adoption of the financing plan violated Utah’s Open and Public Meetings Act.

## Decision

- The Utah Supreme Court affirmed in part and reversed in part.
- The court upheld the Utah Municipal Building Authority Act and approved the authority’s issuance of nonrecourse revenue bonds coupled with the county’s year-to-year lease.
- The court held the plan did not create county debt triggering the constitutional voter-approval requirement because the county was not legally bound beyond annual appropriations and bondholders had no claim on county taxing power.
- The court rejected the Open and Public Meetings Act challenge.
- The court invalidated the proposed transfer of the county’s fee interest in the existing jail property to the authority because it lacked adequate consideration.

## Legal Principles

- A county does not incur constitutional “debt” requiring voter approval when payments are structured as annually renewable lease obligations contingent on yearly appropriation, and creditors have no recourse to county taxing power or general credit.
- Revenue bonds issued by a statutorily separate building authority may be treated as the authority’s obligations, not the county’s, when the legal documents limit bondholder remedies to the authority’s revenues and property interests.
- Disposition of county property must comply with statutory and fiduciary constraints, including a requirement of adequate consideration; a conveyance lacking such consideration is unlawful.
- Compliance with open meetings requirements is assessed based on the adequacy of the public body’s procedures and record for the actions taken.

## Conclusion

The court permitted Iron County to finance a new jail through a separate building authority’s nonrecourse revenue bonds and an annually appropriated lease-back arrangement without a bond election, but it barred transferring the county’s existing jail property to the authority absent adequate consideration and otherwise upheld the county’s meeting procedures.


Municipal Bldg. Auth. of Iron Cnty. v. Lowder, 711 P.2d 273 (Utah 1985)