DISTRICTS ‑- PARKS AND RECREATION ‑- BONDS ‑- TAXATION ‑- FUNDING OR REFUNDING OF REVENUE BONDS
(1) A parks and recreation district is not legally authorized to issue general obligation bonds for the purpose of refunding previously issued revenue bonds although such a district may issue new revenue bonds to refund its earlier bond issue.
(2) A parks and recreation district is not legally authorized to use property tax revenues, including those from an excess levy, to retire outstanding revenue bonds previously issued by such a district.
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September 20, 1977
Honorable C. W. "Red" Beck
2400 Beach Drive
Port Orchard, Washington 98366 Cite as: AGLO 1977 No. 38
Dear Senator Beck:
By recent letter you have requested our opinion with respect to the authority of a parks and recreation district (1) to issue general obligation bonds or (2) to use revenue received from a special millage election, to retire outstanding revenue bonds previously issued by such a district.
For the reasons set forth in our analysis we believe that both parts of your question must be answered in the negative.
The statutes governing the issuance of bonds, including refunding bonds, by a parks and recreation district are contained in RCW 36.69.350-36.69.410. Under those statutes, however, the only type of bonds which such districts have been authorized to issue are revenue bonds. See, RCW 36.69.350. Moreover, although RCW 36.69.400 further authorizes the issuance [[Orig. Op. Page 2]] of refunding bonds, the third paragraph of that statute expressly provides that:
". . .
". . . the tax revenues of the district may not be used to pay, secure, or guarantee the payment of the principal of and interest on such bonds.
". . ."
In addition, a similar prohibition also appears in RCW 36.69.380 with respect to any original revenue bonds themselves. Again we quote, this time from the second paragraph of RCW 36.69.380 as follows:
". . .
"The bonds shall be negotiable instruments within the provision and intent of the negotiable instruments law of this state, even though they shall be payable solely from such special fund or funds, and the tax revenue of the district may not be used to pay, secure, or guarantee the payment of the principal of and interest on such bonds. The bonds and the coupons attached thereto shall state upon their face that they are payable solely from such special fund or funds. If the county fails to set aside and pay into such fund or funds, the payments provided for in such resolution, the holder of any such bonds may bring suit to compel compliance with the provisions of the resolution." (Emphasis supplied)
Therefore, insofar as the provisions of Chapter 36.69 RCW are concerned, it would appear quite clear that a parks and recreation district may not issue general obligation bonds for the purpose of refunding revenue bonds ‑ because the only type of refunding bonds authorized are additional revenue bonds. RCW 36.69.400,supra. Nor may such a district utilize tax revenues to pay outstanding revenue bonds because of an express prohibition to that effect as contained in RCW 36.69.380,supra.
[[Orig. Op. Page 3]]
The only question remaining is whether, perhaps, either or both of those negative propositions might be overcome by resort to some other law. Particularly, we have in mind the refunding bond act which is to be found in Chapter 39.53 RCW.
On the basis of the definitions of "governing body" and "public body" which are contained in RCW 39.53.010(1), (2), we would think it entirely plausible to conclude that the provisions of the refunding bond act are applicable to a parks and recreation district established pursuant to Chapter 36.70 RCW. Specifically, those two subsections of RCW 39.53.010 read as follows:
"(1) 'Governing body' means the council, commission, board of commissioners, board of directors, board of trustees, board of regents, or other legislative body of the public body designated herein in which body the legislative powers of the public body are vested: PROVIDED, That with respect to the state it shall mean the state finance committee.
"(2) 'Public body' means the state of Washington, its agencies, institutions, political subdivisions, and municipal and quasi municipal corporations now or hereafter existing under the laws of the state of Washington.
". . ."
Notwithstanding that fact, however, the first point to be noted is that nothing contained in Chapter 39.53 RCW would in any way purport to permit a parks and recreation district to use tax revenues for the purpose of paying revenue bonds in spite of the express prohibition contained in RCW 36.69.380,supra. Therefore, the refunding bond act is of absolutely no utility insofar as that facet of your request is concerned.
On the other hand, the possible applicability of the refunding bond act as a statutory basis for issuing general obligation bonds for the purpose of refunding previously issued revenue bonds presents a slightly closer question. RCW 39.53.020, which is the basic substantive provision of the refunding bond act, provides that:
[[Orig. Op. Page 4]]
"The governing body of any public body may by ordinance provide for the issuance of bonds without an election to refund outstanding bonds heretofore or hereafter issued by such public body or its predecessor, only (1) in order to pay or discharge all or any part of such outstanding series or issue of bonds, including any interest thereon, in arrears or about to become due and for which sufficient funds are not available, or (2) in order to effect a saving to the public body: PROVIDED, That refunding bonds shall not be issued unless the state finance committee or the public body authorized to issue refunding bonds pursuant to chapter 39.53 RCW finds that such saving will be effected by the refunding. To determine whether or not a saving will be effected, consideration shall be given to the interest to fixed maturities of the refunding bonds and the bonds to be refunded, the costs of issuance of the refunding bonds, including any sale discount, the redemption premiums, if any, to be paid, and the known earned income from the investment of the refunding bond proceeds pending redemption of the bonds to be refunded."
Although that statute most certainly does, by its express terms, impose some significant limitations upon the ability of a public body to issue refunding bonds of any kind, it does not, upon its face, purport to require that the refunding bonds be of the same class as the bonds to be refunded;i.e., general obligation bonds for the purpose of refunding other general obligation bonds ‑ or revenue bonds for the purpose of refunding other revenue bonds. Accordingly, an argument might be framed to the effect that the governing body of a public body could, under RCW 39.53.020, supra, issue general obligation bonds for the purpose of refunding revenue bonds ‑ or vice versa.
In our opinion, however, there are two problems with that approach insofar as a parks and recreation district is concerned. First, as above noted, a parks and recreation district simply does not possess the requisite statutory authority to issue general obligation bonds at all. And secondly, even in the case of those public bodies which do [[Orig. Op. Page 5]] possess the authority to issue both classes of bonds, it appears that the legislature has, by a further section of chapter 39.53 RCW, impliedly limited the issuance of general obligation bonds for the purpose of refunding revenue bonds to the state itself ‑ as distinguished from political subdivisions or municipalities. See, RCW 39.53.140, which reads as follows:
"Thestate may issue general obligation bonds to refund any special revenue or limited obligations of the state or its agencies at or prior to the date they mature or are subject to redemption. The payment of such refunding general obligation bonds may be additionally secured by a pledge of the revenues pledged to the payment of the special revenue or limited obligations to be refunded.
"If the payment of such special revenue obligations to be refunded as general obligation bonds of the state is secured by (1) fees collected by the state as license fees for motor vehicles, or (2) excise taxes collected by the state on the sale, distribution or use of motor vehicle fuel, or (3) interest on the permanent school fund, then the state shall also pledge to the payment of such refunding bonds the same fees, excise taxes, or interest that were pledged to the payment of the special revenue obligations being refunded." (Emphasis supplied)
No similar statute exists, however, in the case of municipalities. Accordingly, a rather clear negative implication would appear to be in order to the effect that the legislature did not similarly intend to authorize those public bodies, likewise, to do the same thing ‑ expressiouniusestexclusioalterius. Furthermore, had the issuance of general obligation bonds to refund revenue bonds (or vice versa) been deemed to have been authorized by the earlier provisions of RCW 39.53.020,supra, the enactment of RCW 39.53.140 would simply have been unnecessary ‑ and we are not to attribute to the legislature an intent to enact useless or unnecessary legislation. Knowles v. Holly, 84 Wn.2d 694, 513 P.2d 18 (1973) and cases cited therein.
[[Orig. Op. Page 6]]
For the foregoing reasons, then, we must answer both aspects of your question in the negative. A parks and recreation district may not issue general obligation bonds for the purpose of refunding previously issued revenue bonds, nor may it use tax revenues for the purpose of retiring such outstanding revenue bonds.
We trust that the foregoing will be of some assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General