DISTRICTS ‑- PORT ‑- ACQUISITION OF FERRIES ‑- REVENUE BONDS ‑- AUTHORITY TO LEASE FERRIES TO WASHINGTON TOLL BRIDGE AUTHORITY; AUTHORITY OF STATE AGENCY.
A port district and the Washington Toll Bridge Authority have the statutory authority to enter into an agreement for the acquisition of ferries whereby the port district will (1) purchase the ferries and lease them to the Washington Toll Bridge Authority; and (2) issue revenue bonds to finance the purchase, payable solely out of the rental received from leasing the ferries.
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March 15, 1965
Honorable Charles P. Moriarty, Jr.
State Senator, 36th District
Cite as: AGO 65-66 No. 13
By letter previously acknowledged you have requested the opinion of this office concerning the legality of a proposed plan whereby certain port districts would purchase ferries and lease them to the Washington Toll Bridge Authority.
For convenience we have divided and paraphrased your questions as follows:
1. May the Washington Toll Bridge Authority legally acquire ferries by lease from a port district?
2. Does a port district have corresponding authority to purchase ferries and lease them to the Washington Toll Bridge Authority?
3. Would the method of financing be legal whereby a port district would issue revenue bonds to finance the purchase of such ferries, payable solely out of revenues derived from the leasing of the ferries to the Toll Bridge Authority?
We answer your questions in the affirmative.
[[Orig. Op. Page 2]]
In answer to your first and second questions, there is statutory authority for the Toll Bridge Authority and for port districts to execute such leases, as lessee and lessor, respectively.
Both state and municipal agencies, such as the Toll Bridge Authority and the port districts of this state, have only those powers conferred upon them by statute, either expressly or by necessary implication. State ex rel. Eastvold v. Maybury, 49 Wn. (2d) 533, 304 P. (2d) 663 (1956); also,Pacific Etc. Ass'n v. Pierce County, 27 Wn. (2d) 347, 178 P. (2d) 351 (1947).
Express statutory authorization has been given to the Toll Bridge Authority to execute such agreements by RCW 47.60.010, providing in pertinent part as follows:
"The Washington toll bridge authority . . . is hereby authorized to acquire by lease, charter, contract, purchase, condemnation or construction, . . . and to thereafter operate, improve and extend, a system of ferries . . . such system of ferries to include such boats, vessels, wharves, . . . as shall be determined by the authority to be necessary or desirable for efficient operation of the ferry system and best serve the public. . . . In addition to the powers of acquisition herein granted the authority is hereby empowered to enter into any contracts, agreements or leases with any person, firm or corporation and to thereby provide, on such terms and conditions as it shall determine, for the operation of any ferry or ferries or system thereof, whether acquired by the authority or not."
See, also, AGO 61-62 No. 183 [[to Wilbur Hallauer, State Senator on December 17, 1962]]. See, also, AGO 61-62 No. 183.
The word "persons" generally includes the state and its subdivisions and other public agencies. RCW 1.16.080. Therefore, the "persons" with whom the Toll Bridge Authority may [[Orig. Op. Page 3]] execute such leases of ferries include port districts as well as other governmental bodies, provided there is a corresponding power granted to such other public body. Port districts have such corresponding authority by virtue of RCW 53.08.020 providing in pertinent part that:
"A port district may construct, condemn, purchase, acquire, add to, maintain, conduct, and operate . . . ferries, . . ."
and RCW 53.08.080 providing in pertinent part:
"A district may lease all lands, wharves, docks, and real and personal property owned and controlled by it, upon such terms as the port commission deems proper: . . ."
RCW 53.08.140 further provides as follows:
"Port districts may enter into leases and contracts of every kind and nature with the United States of America or any of its departments, the state of Washington or any of its departments, or its political subdivisions or with any municipal corporation or quasi municipal corporation of the state of Washington, without requiring said port district or public bodies to provide bonds to secure the performance thereof. All such leases or contracts heretofore entered into are hereby ratified."
Raine v. Port of Seattle, 118 Wash. 168, 203 Pac. 61 (1922).
Answering your third question, there is ample authority for the specific financing arrangement described in your letter; namely, the issuance of revenue bonds by the port district to be paid out of revenues from the operation or leasing of the ferries acquired in that manner. RCW 53.40.010 provides as follows:
"The port commission of any port district is authorized for the purpose of carrying out the lawful powers granted port districts by the laws of the state to contract indebtedness and to issue revenue bonds evidencing such indebtedness in conformity with this chapter."
[[Orig. Op. Page 4]]
RCW 53.40.020 emphasizes that:
"All such revenue bonds . . . may be issued and sold by the port district from time to time and in such amounts as is deemed necessary by the port commission to provide sufficient funds for the carrying outof all port district powers,. . ." (Emphasis supplied.)
Finally, RCW 53.40.040 provides in pertinent part that:
"Bonds issued under the provisions of this chapter shall be payable solely out of operating revenues of the port district. . . ."1/
Our research discloses no objection to such a plan on constitutional grounds. There is no express constitutional prohibition against the execution of a long-term lease by a public agency, and such a lease under ordinary conditions does not fall within the debt limitation provisions of either § 1, or § 6, Article VIII, Washington State Constitution. See,State ex rel. Wash. Etc. v. Yelle, 47 Wn. (2d) 705, 289 P. (2d) 355 (1955). See, also, on this point 3 Tiffany, Landlord & Tenant, § 879, 3rd Ed. (1939); and AGO 53-55 No. 222 [[to C. I. Sears, State Senator on March 15, 1954]]. For a recent case as to 3rd Ed. (1939); and AGO 53-55 No. 222. For a recent case as to what is a "debt" within the meaning of Article VIII, § 1,supra, the state limitation of indebtedness, see State ex rel. Wittler v. Yelle, 65 Wash. Dec. (2d) 639 (1965) [[65 Wn.2d 660]].
As to the proposed financing arrangement, state or municipal obligations payable solely from the revenues of a facility, without any pledge or guarantee payable out of tax revenues, are not included within the meaning of "debts" limited by the state constitution. See,State ex rel. Wash. Toll Bridge Authority v. Yelle, 195 Wash. 636, 82 P. (2d) 120 (1938); State ex rel. Finance Comm. v. Martin, 62 Wn. (2d) 645, 384 P. (2d) 833 (1963).
Finally, to the extent that the port district might be considered as lending credit to the Washington Toll Bridge Authority by virtue of its leasing-financing arrangement, we have examined Article VIII, § 7, of the Washington State Constitution, which provides as follows:
[[Orig. Op. Page 5]]
"No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation."
However, the lending of credit by one public agency to another public agency, such as the Washington Toll Bridge Authority, is not prohibited by Article VIII, § 7,supra. State ex rel. Wash. Toll v. Yelle, 56 Wn. (2d) 86, 104, 351 P. (2d) 493 (1960);Rands v. Clarke County, 79 Wash. 152, 139 Pac. 1090 (1914).
In summary, we conclude that a plan for the acquisition and operation of ferries which involves (1) acquisition by a port district, (2) leasing such ferries to the Washington Toll Bridge Authority, and (3) financing of such acquisition of ferries by revenue bonds of the port district to be paid solely out of the rental derived therefrom, is authorized by existing statutes and violates no constitutional provisions.
We trust that this information will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
Assistant Attorney General
*** FOOTNOTES ***
1/It is evident from the language of the statute that "operating revenues" means gross revenues exclusive of taxes.