Could Savannah Lakes Village contract with a nonprofit fire department and fund runs outside its district?

Plain-English summary

McCormick County asked whether the Savannah Lakes Village Special Tax District could contract with a nonprofit fire department and whether district tax funds could support fire runs, facilities, hydrants, and other services outside district boundaries. In 2015, the Attorney General predicted a court would allow a contract with a nonprofit for fire protection, subject to the district retaining adequate supervision and staying within its public authority.

The AG did not give blanket approval to each proposed outside-district expense. It expected a court generally to uphold contract terms lawfully adopted by the governing authority, but emphasized that tax money collected for fire protection had to be used within the legal limits on the district's purpose and funds. It said the specific terms remained subject to judicial review and suggested legislative clarification of the district's contracting authority.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could the special tax district hire a nonprofit fire department?
A: The AG predicted yes, subject to the district adequately supervising the nonprofit and other limits discussed in the opinion.

Q: Did the opinion approve every fire run and facility expense outside the district?
A: No. It said lawful contract terms would likely stand but specifically cautioned about using district tax funds for services or equipment beyond district boundaries.

Q: Who had to approve the contract's terms?
A: The opinion said terms should be entered with the governing authority's consent and remained subject to judicial review.

Background and statutory framework

The opinion followed an earlier request about the same district. It compared prior AG opinions permitting public bodies to contract with private nonprofit entities under supervision with the constitutional and statutory limits on taxing and spending for a district's purposes. It left final treatment of particular contract terms to a court.

Citations and references

• The AG predicted the district was “authorized to contract for fire protection with a nonprofit corporation” subject to stated limitations.
• It said a court would likely leave terms intact “except where they violate the law.”

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/november-12-2015-1/
• Original PDF: https://www.scag.gov/wp-content/uploads/2015/11/Callison-GP-OS-9965-FINAL-Opinion-11-12-2015-00797181xD2C78.pdf

Original opinion text

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Alan Wilson

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Attorney General

November 12. 2015

G.P. Callison, Jr., Esquire
McCormick County Attorney
Callison Dorn Law Firm, P.A.
Post Office Box 3208
Greenwood, SC 29648
Dear Mr. Callison:

Attorney General Alan Wilson has referred your letter dated September 14, 2015 to the Opinions section

for a response. The following is this Office's understanding of your question and our opinion based on that understanding. Issues (as a follow-up opinion request with clarification to our August 24, 2015 opinion to you (See Op. S.C. Att'v Gen.. 20 1 5 WL 5254329 (August 24, 20 1 5))): 1)

May the Savannah

Lakes Village ("SLV") Special

Tax District contract with a nonprofit

corporation for fire protection services?

2)

If Savannah Lakes Village Special Tax District is authorized to contract with a nonprofit corporation for fire protection services, can Savannah Lakes Village Special Tax District use tax funds to support fires and services rendered by Sandy Branch Fire Department outside of the boundary lines of the District? More specifically, a.

may funds received by the SLV Special Tax District from the Special Tax District tax be

lawfully spent, pursuant to the Agreement of Services between the SLV Special Tax District Commission with the Board of Directors of Sandy Branch Volunteer Fire Department (a nonprofit corporation), for fire protection services provided by Sandy Branch Volunteer Fire Department to persons and property outside the SLV Special Tax District?;

b.

may the SLV Commission lawfully pay the Sandy Branch Volunteer Fire Department the contractual fee of $25.00 per person per Fire Run for all Fire and First Responder runs; including runs: i.

(a) outside the SLV Special Tax District but within the Sandy Branch Volunteer Fire Department's area it contractually serves; and

ii.

mutual

aid

fire

runs

totally

outside

the

Sandy

Branch

Volunteer

Fire

Department's area it contractually serves and outside the SLV Special Tax District?;

c.

may SLV Special Tax District tax funds be used to construct and maintain fire houses, and/or

fire

hydrants

outside

SLV

but

within the

Sandy

Branch

Volunteer

Fire

Department's area it contractually serves?;
d.

may SLV Special Tax District tax funds be used to test and flush fire hydrants installed outside the SLV Special Tax District?:

e.

if the SLV Special Tax District employed part-time or full-time firefighters, would it

RembertC. Dennis Building

•

Post Office Box 11549

•

Columbia, SC 2921 1 -1549

•

Telephone 803-734-3970

•

Facsimile 803-253-6283

G.P. Callison, Jr., Esquire

Page 2
November 12, 2015

be lawful for those firefighters to participate in Fire Runs outside the SLV Special Tax District, including mutual aid fire runs outside the SLV Special Tax District?; f.

if the Sandy Branch Volunteer Fire Department employed paid part-time or full-time firefighters, could the SLV Commission lawfully reimburse Sandy Branch Volunteer Fire Department for either: i.

their full salaries and administrative expenses; and/or

ii.

a portion of their salaries and administrative expenses proportional to the

percentage of the paid firefighters runs within SLV Special Tax District to their total runs? If not, is there a formula or method by which the SLV Commission may reimburse all or part of these costs? Law/Analysis: By way of background, it is this Office's understanding the Sandy Branch Volunteer Fire Department is a nonprofit corporation registered with the South Carolina Secretary of State's Office.

It is also now our

understanding there is no Sandy Branch Fire District, but any such reference to it refers to the territory that the Sandy Branch Volunteer Fire Department serves contractually.

As you are likely aware, counties have specific statutory authority to contract for fire protection with nonprofit corporations. S.C. Code § 4-21-10.

Counties, municipalities and political subdivisions are

given authority to agree with the State or another political subdivision for the joint administration of any function or exercise of power. S.C. Const, art. VIII, § 13.

Moreover, the South Carolina Constitution

gives local government broad powers to be "liberally construed in their favor" and include those "fairly

implied and not prohibited by this Constitution." S.C. Const, art. VIII, § 17. If the county were providing fire protection to the Savannah Lakes Village Special Tax District, the county could hire Sandy Branch

Volunteer Fire Department to provide fire protection service. S.C. Code § 4-21-10; S.C. Const, art. VIII,
§ 13. Moreover, South Carolina provides for a separate filing with the Secretary of State for an organization that is a nonprofit corporation financed by certain federal or State funds. S.C. Code § 33-36 10, etc. Those nonprofit corporations financed by government funds are authorized by statute to contract for fire protection with individuals, corporations and other political subdivisions. S.C. Code § 33-36-270. However, the statute creating such nonprofit corporations was enacted after the Sandy Branch Volunteer Fire Department was organized as a nonprofit with the South Carolina Secretary of State. ]d.

It is

unknown to us whether Sandy Branch would qualify to file as a nonprofit corporation financed by certain federal or State funds pursuant to Section 33-36-10. Thus, there remains the question of whether a nonprofit corporation not organized pursuant to S.C. Code § 33-36-10 could contract to provide fire protection service. Certainly by the creation of such a filing status and by granting specific statutory authorization for a nonprofit organized pursuant to S.C. Code § 33-36-10, the South Carolina Legislature has contemplated and even condoned a private nonprofit corporation contracting to serve for fire protection.

This Office addressed a similar question whether in the absence of express statutory authorization the South Carolina Department of Corrections could contract with a private corporation in management of a State correctional facility. See Op. S.C. Att'v Gen.. 1985 WL 166051 (August 8, 1985). Some portions of that opinion are very applicable to your situation, and we recommend reading that opinion for further

analysis, in addition to seeking legislative clarification. In that opinion we stated: It is well established that the State may properly maintain supervision and control through the use of a contract. As a general matter, any employment contract

G.P. Callison, Jr., Esquire
Page 3
November 12, 2015

contemplates supervision and control by the employer over his employee. More specifically, a private corporation 'may be employed to carry a law into effect. ' 16

C.J.S., Constitutional Law. § 137. As stated in Amer. Soc. P.C.A. v. Citv ofN.Y.. 199N.Y.S. 728, 738(1933),

While it is true that strictly governmental powers cannot be conferred upon a corporation or individual . . . still it has been held by a long line

of decisions

that

such

corporations

may Junction

in

a

purely

administrative capacity or manner.
While 'an administrative body cannot delegate quasi judicial functions, it can

delegate the performance of administrative and ministerial duties . . ..' Krue v. Lincoln Nat. Life Ins. Co.. 245 F.2d 848, 853 (5th Cir. 1957); see also. 73 C.J.S.,

Public Adm. Law and Procedure. § 53; McQuillin, Municipal Corporations. §

29.08, n. 6. This is consistent with the law in South Carolina. See. Green v. Citv of Rock Hill. 149 S.C. 234, 270, 147 S.E. 346 (1929) (contract between a city and private company for the control, management and operation of waterworks plant

is valid).
This law has been applied to analogous situations such as the administration of hospitals. In Robinson v. Citv ofPhil.. 400 Pa. 80, 161 A.2d 1 (1960), for example, the Supreme Court of Pennsylvania upheld a contractual agreement between a municipality and two private universities relating to the operation, management and control of the city's general hospital. Reviewing the contract in detail, the Court concluded:

It will suffice us to say that our study of the contract convinces us that

neither the city ofPhiladelphia nor the Board of Trustees ofPhiladelphia General

Hospital

has

unlawfully

delegated

their

powers

and

responsibilities in and by the above mentioned contract.
161 A.2d at 4. In Government and Civic Emp. Etc. v. Cook Co. School ofNursinv. 350 lll.App. 274, 112 N.E.2d 736 (1953), the Court upheld a contract between a

county and a nonprofit corporation which required the corporation to 'furnish, direct and perform the nursing services requiredfor the proper care and nursing ofall patients in the County Hospital . ..." 112 N.E.2d at 737. And in Bolt v. Cobb. 225 S.C. 408, 415, 82 S.E.2d 789 (1954), our own Supreme Court upheld a contract between a county and a private entity for the 'performance of a public, corporate function ', i.e. medical services in the form of a hospital. Only recently, in S.C. Farm Bureau Marketing Assoc. v. S.C. State Ports Auth.. 278 S.C. 198, 293 S.E. 2d 854 (1982), our Court found a contract between a private association and the State for the management and operation of a grain elevator and storage facilities to be constitutionally valid. As mentioned earlier, our Court has upheld a contract between a city and a private corporation for the management of a water plant. Green v. Citv of Rock Hill, supra. See also. 16 C.J.S., Constitutional Law. § 137 (a State may validly use a private corporation as an agent for the treatment of inebriates). See also. Murrow Indian Orphans Home v. Children. 171 P. 2d 600

(Okl. 1946). In these instances, the governmental entity maintained supervision and control over the corporation by virtue ofa contractual agreement.

G.P. Callison, Jr., Esquire
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November 12, 2015

It is well recognized that there must exist statutory authority for an administrative officer or agency to subdelegate any portion of the authority which has been

delegated to him by statute. 73 C.J.S., Public Administrative Law and Procedure. §

56. However, if it is reasonable to imply the authority to subdelegate, such an
    implication may legally be made. State v. Imperatore. 92 N.J. Super. 347, 223 A. 2d

498 (1966); 73 C.J.S., Public Administrative Law and Procedure, supra. Of course, as expressly noted in 1974 Op. Attv. Gen.. No. 3855 the State, through its prison officials must maintain supervision and control over its prisons and the

prisoners sentenced thereto. Consistent with this is the general constitutional principle that

ftjhe Stale's power to contract is subject to the further limitation that a state cannot by contract divest itself of the essential attributes of sovereignty and its governmental powers.

81 C.J.S., States. § 155. In essence, no governmental agency can by contract or

otherwise suspend its governmentalfunctions. Nairn v. Bean. 48 S.W.2d 584 (Tex. 1932).

Op. S.C. Att'v Geri.. 1985 WL 166051 (August 8, 1985).

Furthermore, this Office affirmed the 1985

opinion in two opinions issued earlier this year. See Ops. S.C. Att'v Gen.. 2015 WL 5896029 (September

28, 2015); 2015 WL 5896030 (September 28, 2015). Quoting from those opinions, we stated: In other words, our 1985 opinion concluded that the use of a private entity by a

public body to assist it in carrying out its duties was not unauthorized so Ions as the public body or entity maintained sufficient supervision and control so as not to

constitute an unlawful delegation to a private corporation. The validity ofany such delegation ultimately depended upon all the facts and circumstances, which this Office cannot adjudge in a legal opinion. In Tavlor fv. Richland Memorial Hospital. 329 S.C 47, 495 S.E.2d 431 (1997)], the Court rejected the argument that the arrangement constituted a violation of Art. X, § 11 of the State Constitution as a joint venture between a governmental entity and a private corporation. The Tavlor Court said this: Article X, § 11 prohibits governmental entities from becoming either 1) a joint owner of or 2) a stockholder in a private company, association or corporation .... Not every joint endeavor between a public entity and private business is constitutionally prohibited. See Gilbert v. Bath. 267

S.C. 171, 227 S.E.2d 177 (1976); Chapman v. Greenville Chamber of Commerce. 127 S.C. 173, 120 S.E. 584 (1923). We have approved arrangements where governmental entities leased assets to private entities withoutfinding a violation ofthe joint ownership clause. Johnson v. Piedmont Mun. Power Aeencv. 277 S.C. 345, 287 S.E.2d 476 (1982); Gilbert v. Bath, supra: Chapman, supra.

Id. In those opinions, this Office concluded that the State still needed to adequately supervise any such corporation it contracts with so as not to delegate its authority unlawfully, id. This Office believes those

G.P. Callison, Jr., Esquire
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November 12, 2015

same principles expressed in the 1985 opinion and later affirmed in the 2015 opinions would apply to your question but ultimately your question would benefit from legislative clarification. Regarding Question 2 and its subparts, the terms of the contract between the Savannah Lakes Village Special Tax District and the Sandy Branch Volunteer Fire Department, this Office believes a court is

likely to uphold the terms of a contract, as we have previously opined that as long as a contract was lawfully entered into (i.e. no fraud or abuse of discretion) between two political subdivisions, a court will hold up such a contract in spite of what might appear to be an unwise deal. Op. S.C. Att'v Gen.. 1990 WL 482417 (March 14, 1990). Even though the contract is between a nonprofit and a political subdivision,

we believe a court is likely to uphold the contract as long as it was lawfully entered into. However, this Office understands you have concerns in regards to the use of funds collected for fire protection. As the South Carolina Supreme Court stated in Watson v. City of Orangeburg. 229 S.C. 367, 375, 93 S.E.2d 20,

24 (1956), "[t]he power of taxation being an attribute of sovereignty vested in the legislature subject to constitutional restrictions, taxes can be assessed and collected only under statutory authority." The South Carolina Constitution grants the General Assembly authority to "vest the power of assessing and collecting taxes in all of the political subdivisions of the State, including special purpose districts, public service districts, and school districts ..." S.C. Const, art. X, § 6. Our State Constitution and laws require uniform assessment throughout the State. S.C. Const, art. X, § 6; S.C. Code § 12-43-210. See also S.C.

Const, art. VIII, Section 14 and article X, Section 1 (regarding uniform assessment and taxation). This Office has also previously opined that taxation levied by a special purpose district must be uniform within the boundaries of the public service district. See, e.g.. Op. S.C. Att'v Gen.. 1977 WL 46015 (April 5, 1 977). Moreover, our State Constitution requires the consent of the people for a tax, subsidy or charge to be established. S.C. Const, art. X, § 5. Additionally, in another such opinion, this Office concluded that "[tjaxes collected for specific public purposes cannot be diverted to fund unbudgeted expenses unless the purpose for which the tax was levied is first satisfied." Op. S.C. Attv. Gen.. 1991 WL 474751 (April 1,

1991). Furthermore, it is unlawful to use the proceeds of a tax specifically levied by a municipal corporation for any purpose other than what it is levied for. S.C. Code § 5-21-130. Moreover, our State Constitution requires "[a]n accurate statement of the receipts and expenditures of the public money shall be published annually in such manner as may be prescribed by law." S.C. Const, art. 10, § 9.

Nevertheless, "[n]o governing body may spend public funds... beyond its corporate purpose." Op. S.C. Att'v Gen.. 2014 WL 1398594 (March 12, 2014) (quoting Op. S.C. Att'v Gen.. 2003 WL 21790882 (July 28, 2003)). While we believe a court will uphold the terms of the contract, there is a concern that funds are being used to provide services and equipment outside the jurisdiction of the District. While we defer to a court's interpretation, this Office believes just as two political subdivisions may agree to share services, as long as the contract was lawfully entered into, a court will likely uphold the terms of the contract.

Conclusion: This Office believes unless and until the Legislature clarifies its position on the matter, a

court will likely determine that the special purpose tax district is authorized to contract for fire protection with a nonprofit corporation subject to the cautions and limitations expressed in our August 8, 1985 opinion. See Op. S.C. Att'v Gen.. 1985 WL 166051 (August 8, 1985). Regarding the terms of the contract entered into for fire protection with a nonprofit corporation, this Office would caution that negotiations with a nonprofit corporation will inherently be scrutinized and that any such negotiation is subject to judicial review. Nevertheless, the specific terms of any such agreement should be entered into with the consent of the governing authority based on the legal advice of its counsel and subject to our State's limitations on the use of funds collected for fire protection, as noted above. Therefore, we will presume a court will leave any such terms intact except where they violate the law. However, this Office

G.P. Callison, Jr., Esquire

Page 6
November 12, 2015

is only issuing a legal opinion based on the current law at this time.

Until a court or the Legislature

specifically addresses the issues presented in your letter, this is only an opinion on how this Office believes a court would interpret the law in the matter. Additionally, you may also petition the court for a declaratory judgment, as only a court of law can interpret statutes and make such determinations. S.C. Code § 15-53-20.

If it is later determined otherwise or if you have any additional questions or issues,

please let us know.
Sincerely,

^

^

Anita S. Fair
Assistant Attorney General
REVIEWED AND APPROVED BY:

7?

Rof)drt D. Cook
Solicitor General

.