Appeal No. 118,035: Jayhawk Racing Properties LLC and Heartland Park Raceway LLC v. City of Topeka, Kansas
Archived oral argument video
The City of Topeka entered into an agreement with private owners to assume full ownership of a motor speedway, the rights to which would be paid through Sales Tax and Revenue (STAR) bonds. The City subsequently decided not to fulfill the terms of the agreement. The private owners filed suit seeking damages for breach of contract. Holding the agreement was an exercise of a governmental function and not binding on successive city councils, Shawnee County District Court granted the City's motion to dismiss. The Court of Appeals reversed, holding the agreement was an exercise of an administrative function, and remanded for proceedings on the breach of contract action. The Kansas Supreme Court granted review. Writing for the court, Justice Eric Rosen affirmed the district court and reversed the Court of Appeals. The court held city revenue projects may be divided into two categories: projects that serve a governmental or legislative function, and projects that serve a proprietary or administrative function. The development, introduction, or improvement of services are, by and large, considered governmental, and the power to levee a tax generally belongs to the class of governmental power. One city council may not bind a subsequent one to its political decisions involving the exercise of government functions, so the new city council was not obligated to carry out the terms of the agreement. Justice Caleb Stegall wrote a concurring opinion in which he questioned the ongoing validity and viability of the legal distinction between governmental and proprietary municipal functions.