Supreme Court Rules Topeka Helicopter Purchase, Deposit Void

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The Supreme Court today upheld a Shawnee County decision that the City of Topeka’s 2008 contract to purchase a $740,000 helicopter violated the state’s cash basis law, because only five of the 10-member governing body voted for the lease-purchase, instead of six required under the law.

Today’s unanimous decision also affirms Shawnee County District Judge Larry D. Hendricks’ ruling in the case that a $74,000 deposit paid to Schreib-Air, the helicopter dealer, must be returned. The case arose in December 2007 when the city council voted 5-3 to authorize the city manager to enter into a lease-purchase agreement to buy a Robinson helicopter from Schreib-Air with financing by Municipal Services Group (MSG).

The city manager at the time subsequently signed the contract with Schreib-Air, but Topeka Mayor Bill Bunten vetoed the council action authorizing the contract. “Despite the veto, on January 4, 2008, Schreib-Air billed the city for the $74,000 deposit, which the city manager authorized MSG to pay,” the Court ruled. The mayor also vetoed a follow-up council resolution that was approved 5-4 in April 2008 authorizing a lease-purchase agreement with MSG to finance the helicopter purchase. “Not surprisingly, that resolution was again vetoed by the mayor,” the Court ruled.

The lawsuit was filed by former Shawnee County District Attorney Robert D. Hecht, but the City filed a motion to dismiss, claiming that the issues were moot because the helicopter was never actually purchased.

Schreib-Air contended on appeal that its contract with the City was valid at the time it was signed and that any violations of the case-basis law related to the City’s financing agreement with MSG, not the contract for purchase. The company also contended that the payment it received was from MSG, not the City; therefore, Schreib-Air had no obligation to the City to return the deposit. Instead, it suggested that the City’s obligation, if any, was to MSG alone.

But the Supreme Court ruled today that the facts clearly show that the lease-purchase agreement with MSG was never approved by six affirmative votes.

“The city council could only muster five votes in favor of the lease-purchase agreement with MSG, and the mayor repeatedly vetoed the agreement. Accordingly, the agreement with MSG was never validly authorized under the cash-basis law, rendering that agreement void. Consequently, without a valid means of financing the purchase of the helicopter, the City’s agreement with Schreib-Air was…void and unenforceable due to the agreement being entered into in violation of the cash basis law,” the Supreme Court ruled.