Can a South Dakota city sign a 30-year lease to operate a privately built home for the aged next to its municipal hospital, and can the existing hospital board manage it, without a public vote?
Plain-English summary
The City of Brookings had built a municipal hospital in 196f (apparently 1964 or 1966, the date is garbled in the source) with county financial help. Because the county contributed, the hospital's Board of Trustees was a joint body under SDC 1960 Supp. 27.19A03: three members appointed by the city, two by the county. Brookings then wanted to add a home for the aged. The plan was for a private corporation to build the facility, after which the city would take a 30-year lease and operate the home as a municipal project. The city asked four questions: could it sign the lease, did the electorate need to vote, could the existing hospital board run the new home, and could the county also contribute financially.
AG Boyd Rasmussen (era Attorney General) answered all four in ways that cleared the path for the project.
On the lease, the answer was yes. SDC 45.0201(13) gave every municipality express authority to acquire real property by lease for any purpose authorized by law. The 30-year term was not an obstacle; municipal lease authority did not turn on length. The purpose, operating a home for the aged, was authorized by SDC 45.0202(2), which had been amended in 1964 and again by Chapter 180 of the 1968 Session Laws to include "nursing home or home for the aged" within municipal hospital powers.
On the vote, the answer was no, no electorate approval was required. The legislature had granted the municipal authority directly. Nothing in the controlling statutes conditioned the lease or operation on a public referendum.
On the board, the answer was yes, the existing hospital board could manage the home. SDC 27.19A03(4) required county representation on the trustees when the county had furnished aid to the hospital. Since the county had not been repaid, the county-appointed trustees still served. The home for the aged was being operated in connection with the municipal hospital, so unless the city created a separate board, the joint hospital board could simply add the home to its responsibilities. The county-appointed trustees did not make the board incapable of managing a city-only project.
On the county contribution, the answer was a qualified yes. SDC 12.0617-2, as amended in 1963, authorized county commissioners to contribute up to $20,000 per year to nonprofit, self-sustaining corporations for the care of aged persons. The AG inferred from the statute that a county could provide up to $20,000 in annual financial support for a home for the aged of the kind Brookings contemplated.
Currency note
This opinion was issued in 1968. 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. The municipal hospital statutes, the county aid framework, and the elder-care licensing regime have all been substantially restructured since 1968, including renumbering from SDC to SDCL and substantial expansion of state long-term-care regulation. A city considering a similar project today should consult current SDCL Title 9 (Municipalities), Title 34 (Public Health), and the South Dakota Department of Health licensing rules.
What the opinion meant at the time
For the City of Brookings, the opinion green-lit the project. The city could sign the lease without a vote, install the home for the aged as a municipal operation, use the existing hospital board for governance, and accept county financial help up to $20,000 per year.
For other South Dakota cities considering similar arrangements with private developers, the opinion was a useful roadmap. The combination of SDC 45.0201(13) (general lease power) plus the 1964 and 1968 amendments to SDC 45.0202(2) (expanded hospital powers including homes for the aged) meant that municipalities could effectively partner with private builders on senior-care facilities without statutory amendments or charter changes.
For county commissioners, the opinion confirmed that SDC 12.0617-2 was a usable funding tool. A county could provide annual operating support to a city-run home for the aged, as long as the support was within the $20,000 cap and the operation served the broader population. The "available to all residents of the county" framing in the city's question was the policy hook the AG used to justify the contribution.
For municipal hospital boards with mixed city-county composition, the opinion confirmed that the board could expand its scope to manage adjacent facilities, as long as the legal authority for those facilities (here, the city's lease and operating authority) was sound. The county-appointed members would not have a veto over a city-only project, but they could still participate in joint governance.
Common questions
Q: Why didn't the 30-year lease length raise any flags?
A: The AG noted that municipal lease authority was the same regardless of duration, "except in unusual cases." A long-term lease for a legitimate municipal purpose under SDC 45.0201(13) was within the city's normal powers.
Q: Could the city have built the home itself instead of leasing from a private developer?
A: The opinion did not address that directly, but SDC 45.0202(2) authorized municipalities to "establish and maintain" hospitals and nursing homes. Either acquisition (build) or lease (under 45.0201(13)) was within authority.
Q: What if the county had been repaid for its original hospital contribution?
A: SDC 27.19A03(4) keyed the county's right to board representation to its provision of "county aid." If the county had been repaid, the statutory ground for county-appointed trustees would presumably have lapsed, and the city would have controlled the full board. The opinion noted that the city had not represented that repayment had occurred, so the joint board remained in force.
Q: Was the county's $20,000 contribution a one-time grant or annual?
A: SDC 12.0617-2 authorized counties to "annually contribute" up to $20,000. The contribution was renewable each year at the county commissioners' discretion, not a one-time grant.
Q: Did the home need to be open to all county residents to get county money?
A: The city had framed its fourth question that way ("if such home were made available to all residents of the county"). The AG accepted that framing in answering. A facility that limited admission to city residents only might not have qualified for the county contribution under SDC 12.0617-2, which was aimed at broader public-benefit elder care.
Background and statutory framework
South Dakota's framework for municipal hospitals had been built up over several decades. SDC Title 27 governed public health institutions. SDC 27.19A03 was the joint city-county hospital governance statute, requiring county representation on the trustees when the county provided construction aid. SDC 27.1209 created a separate vehicle for nonprofit corporations to care for the aged, which had its own administrative and tax characteristics.
The municipal powers in SDC 45.0201 were the standard menu of authorities every city had: contracting, acquiring property, taxation within authorized limits, employing personnel, and so on. Subsection (13), the property-acquisition power, was the workhorse for projects like this one, because it covered "real and personal property and easements and rights-of-way" for any purpose authorized by law.
SDC 45.0202(2) was the municipal-hospital substantive authority. Originally it referred to "hospitals" in the traditional sense. Chapter 140 of the 1964 Session Laws and Chapter 180 of the 1968 Session Laws successively expanded the definition to include nursing homes and homes for the aged. This was a legislative response to the growing recognition that elder care belonged in the same statutory family as acute medical care, at least for purposes of municipal authority.
SDC 12.0617-2, the county-contribution statute, was a budgetary authorization. It capped the annual contribution at $20,000, which in 1968 dollars was a meaningful sum for an operating budget but not a major capital amount. The cap reflected a legislative judgment that counties should support elder care but should not bankroll it outright.
The opinion did not need to wrestle with whether the city could borrow to build the home itself, because the question presented contemplated lease-not-purchase. Had the city wanted to issue bonds, the analysis would have been substantially different, involving SDC's borrowing and election provisions.
Citations and references
Statutes:
- SDC 45.0201 (general municipal powers)
- SDC 45.0201(13) (lease, purchase, gift, condemnation)
- SDC 1960 Supp. 45.0202(2) (hospital authority including nursing home/home for aged), as amended by Ch. 140 (1964) and Ch. 180 (1968) Session Laws
- SDC 1960 Supp. 27.19A03 (joint city-county hospital trustees)
- SDC 1960 Supp. 27.19A03(4) (county trustees keyed to county aid)
- SDC 1960 Supp. 27.1209 (nonprofit elder care)
- SDC 1960 Supp. 12.0617-2 (county annual contribution up to $20,000), as amended by Ch. 38 (1963) Session Laws
Source
Original opinion text
Municipalities. City may lease facilities next to city hospital for use as Municipal Home for the Aged.
You have requested my official opinion based upon the following factual situation:
"A Municipal Hospital was constructed by the City of Brookings, with county aid, as provided by statute, in 196f. By virtue of SDC 1960 Supp. 27.19A03, the Board of Trustees of such hospital, consists of two members appointed by the County Commissioners and three by the governing body of the City of Brookings."
"At the present time the City of Brookings is considering the propriety of having a home for the aged constructed adjacent to such Municipal Hospital. It is the present intention that a private corporation will construct such Home for the Aged, and thereafter the building, when constructed, will be leased to the city for a relatively long term thirty (30) years, during which time said home will be managed and operated as a municipal project."
In connection with this factual situation you have submitted these questions:
"1. May the City of Brookings enter into a thirty (30) year lease of a home for the aged to be operated by the city?
"2. If the answer to question 1 is in the affirmative, would the propriety of such lease be subject to approval by the vote of the electorate of the city?
"3. As there is contemplated that the County of Brookings will not render financial aid to the city for the construction of such home for the aged, would it be proper for the present hospital board of trustees (representing both the city and the county) to administer the operations of such home for the aged?
"4. Could the County of Brookings furnish financial assistance to the City of Brookings to operate and maintain such home for the aged, if such home were made available to all residents of the county?"
I have been advised that the "Home for the Aged" comprehends intensive medical care for the aged, and that, while not necessarily furnishing hospital care, certainly such institution will furnish more than just room and board for the residents, and such institution may resemble a nursing home in the care it furnishes.
QUESTION 1: It is elementary that no municipality possesses any inherent authority, but can exercise only such authority as expressly granted by the Legislature, or such as is necessarily implied from such legislative grant. Therefore, the length of time of such lease, except in unusual cases, has no bearing on the problem.
Every municipality in South Dakota, however, possesses many powers. Mainly, these are collected in SDC 45.0201, and amendments thereto, and SDC 1960 Sup. 45.0201-1. Among such powers all municipalities possess is the following, provided in SDC 45.0201 (13), which provides that all municipalities shall have power:
"to acquire by lease, purchase, gift, condemnation or other lawful means and hold in its corporate name or use and control as provided by law, both real and personal property and easements and rights-of-way within or without the corporate limits for all purposes authorized by law or necessary to the exercise of any power granted."
By virtue of SDC 1960 Supp. 45.0202(2), as last amended by Chapter 140 of the Session Laws of 1964, municipalities are authorized by law to establish and maintain "hospitals" which include "a nursing home or home for the aged." (Also amended by Chapter 180 Session Laws of 1968.)
The answer to Question No. 1 is YES.
QUESTION 2: It is my opinion that as the authority is granted to the "municipality" or city to establish and maintain such hospitals, such lease of a home for the aged may be entered into without the consent or favorable vote of the electorate at an election held for that purpose.
Question No. 2 is answered NO.
QUESTION 3: The provisions of SDC 1960 Supp. 37.19A03(4) require that the county which furnishes county aid to a municipal hospital have representation on the board of trustees by the selection of two members. I must assume that the county has not been repaid the funds that it furnished for the original construction, so such county representation on the hospital board of trustees is required.
As it is intended to operate such home for the aged in connection with the municipal hospital, while there is no statutory requirement that the county have representation on such board. Unless it is intended to have a separate board of trustees to manage such home for the aged, the presence of county appointed members on such board of trustees would not render such present hospital of trustees incapable of managing such home for the aged or make it an invalid board.
As long as it intended that the hospital board of trustees will manage such home for the aged, it is my opinion that Question No. 3 should be answered YES. The present board of trustees, notwithstanding the presence thereon of two members appointed by the County Commissioners can properly manage the affairs of such municipality operated old peoples' home.
QUESTION 4: SDC 1960 Supp. 12.0617-2, as last amended by Chapter 38 of the Session Laws of 1963, authorizes the Board of County Commissioners of the several counties, in their discretion, to annually contribute a sum not exceeding twenty thousand dollars to non-profit self-sustaining corporations for the care and accommodation of aged persons under SDC 1960 supp. 27.1209.
I infer from this statute, authority is given the County Commissioners to furnish financial assistance up to twenty thousand dollars annually to operate and maintain such home for the aged.