TOLL BRIDGE AUTHORITY ‑- AUTHORITY OF COUNTIES TO SUPPORT BONDS OF
(1) The authority of King County under RCW 47.56.250 to support the payment of interest on Toll Bridge Authority bonds issued for the construction of the second Lake Washington Bridge is not beyond question.
(2) The provisions of Chapter 47.57 RCW provide a means for the creation of a new municipal corporation to guarantee the payment of interest on bonds issued by the Toll Bridge Authority. However, for practical purposes it may be difficult for such a district to carry out its objectives.
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October 18, 1957
Honorable Charles O. Carroll
County City Building
Seattle 4, Washington Cite as: AGO 57-58 No. 126
This letter is written in answer to your request for an opinion from this office on several questions relating to the second Lake Washington Bridge which the legislature has authorized to be constructed in King County under the provisions of chapter 266, Laws of 1957. We paraphrase your questions as follows:
(1) May the board of county commissioners guarantee the payment of interest on bonds issued by the Toll Bridge Authority to finance the construction of the second bridge across Lake Washington?
(2) If Question (1) is answered in the affirmative, to what extent may the county guarantee interest payments on revenue bonds issued by the Toll Bridge Authority to finance construction of the bridge?
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(3) If Question (1) is answered in the affirmative, is it necessary for the voters to approve the action of the county commissioners?
The answers to your questions are contained in the analysis.
In answering your questions, it is necessary to consider the effect of two separate statutory provisions: RCW 47.56.250 and chapter 47.57 RCW. We will consider RCW 47.56.250 first.
The question of whether or not a county may legally guarantee the payment of interest on bonds issued by the Toll Bridge Authority was litigated in 1948 by Pierce County prior to the construction of the Narrows Bridge by the Toll Bridge Authority. A reference to the facts and legal issues involved in that case is desirable.
Pierce County entered into an agreement with the Toll Bridge Authority, allegedly under authority of RCW 47.56.250, whereby the county agreed to issue general obligation bonds in the sum of $1,500,000.00. The proposed bond issue was within the one and one‑half percent authorized indebtedness, and, consequently, a vote of the electors of the county was not required. The proceeds of the bond issue were to be deposited with the bank, to be retained by it in a trust fund designated as the "Tacoma Narrows Toll Bridge County Aid Fund." Upon certification by the Toll Bridge Authority that current revenues were insufficient to pay the interest due on the bonds issued by the Toll Bridge Authority, the amount of the deficiency was to be transferred to the Toll Bridge Authority from the "Tacoma Narrows Toll Bridge County Aid Fund." As the Toll Bridge Authority redeemed its bonds, a certain portion of the "Tacoma Narrows Toll Bridge County Aid Fund" was to be released to the county. The Toll Bridge Authority contracted that, if necessary, it would continue the tolls on the bridge after all of its bonds were redeemed in order to reimburse Pierce County for any sums withdrawn from the trust fund to pay interest on the Authority's bonds.
Pierce County commenced an action under chapter 7.24 RCW and chapter 7.25 RCW to determine the validity of its agreement with the Toll Bridge Authority and the validity of the proposed bond issue. The superior court ruled in favor of [[Orig. Op. Page 3]] the county on both issues. On appeal to the State Supreme Court, the matter was heard by eight judges, due to the inability of one of the judges to participate in the hearing. After deliberation, the eight judges divided four in favor of affirming the decision of the superior court and four in favor of reversing it. The effect of this inability to secure a majority in the Supreme Court was to affirm the decree of the superior court. Due to the emergent nature of the matter, the Supreme Court did not issue an opinion discussing the legal issues raised in the case. SeeState ex rel. Taxpayers v. Remann, 29 Wn. (2d) 843. Consequently, we are unable to determine the ground upon which four judges of the Supreme Court believed the transaction illegal.
We understand that King County does not have sufficient funds available to support Toll Bridge Authority bonds and therefore the county must incur an indebtedness and issue general obligation bonds to accomplish this purpose. We doubt that it is possible for King County to secure a purchaser for such bonds without obtaining a court decision validating the bond issue. In view of the decision in the Remann case, supra, and the apparent necessity for another legal action prior to the sale of bonds by King County, we do not deem it necessary or advisable for this office to issue an opinion anticipating the result that our Supreme Court will reach when the matter is again before it. However, for your information, we will point out and consider the various objections raised by the taxpayer in the Remann case, supra, because they are applicable to the proposed transaction involving King County.
The first objection raised in the Remann case was that the proposed transaction was in violation of Article VIII, § 7 of the Washington State Constitution, which prohibits a county from giving or loaning 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.
The constitutional provision reads as follows:
"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." (Art. VIII, § 7, Wash. State Constitution)
Our Supreme Court has considered the above quoted provision in several cases wherein a municipal corporation joined with the Federal Government, the state, or another municipal corporation to finance a public improvement. In [[Orig. Op. Page 4]] Lancey v. King County, 15 Wash. 9, an injunction was sought to prevent King County from condemning land for a right-of-way and contributing it to the Federal Government for a ship canal connecting Lake Union and Lake Washington with Puget Sound. In answering the objection, the court stated:
". . . It is clear that neither the state nor the United States is an 'individual, association, company or corporation,' within the meaning of this section, and cannot legitimately be brought therein by any judicial construction thereof. . . ." (Page 11.)
InRands v. Clarke County, 79 Wash. 152, our Supreme Court held the constitutional provision inapplicable to a transaction for the joint construction of a bridge by Clarke County, Washington, and Multnomah County, Oregon. The court stated:
". . . But it will be noticed that the prohibition is against the giving or loaning of money to or in aid of any individual, association, company or corporation, and it is clear that, unless the word, 'corporation' can be held to include a county in a foreign state, the county of Multnomah is not included within the prohibition. We think the word cannot be held to have this meaning. Plainly by the terms which precede it, the framers had in mind individuals, associations, companies and corporations engaged in purely private enterprises, or enterprises only quasi public, not to enterprises carried on by the corporations whose functions are wholly public, such as the Federal or state government, or some branch thereof. This we determined inLancey v. King County, 15 Wash. 9, . . . where we held that King county could appropriate money in the aid of a ship canal proposed to be constructed in that county; . . ." (Page 157.)
See alsoState ex rel. Board of Commissioners v. Clausen, 95 Wash. 214;Foster v. Commissioners of Cowlitz County, 100 Wash 502; andKadow v. Paul, 134 Wash. 539.
The second and third objections raised in the Remann case, supra, were (a) that the proposed indebtedness violated Article VIII, § 6 of the Washington State Constitution, in that the purpose for which the indebtedness would be [[Orig. Op. Page 5]] incurred was not a "strictly county" purpose, as required by that section of the constitution, and (2) that the authority granted by the legislature to issue bonds was limited to "general county purposes" and that the transaction under consideration was not such a purpose.
The constitutional and statutory provisions relied on by the taxpayer read, in pertinent part, as follows:
"No county, city, town, school district or other municipal corporation, shall for any purpose become indebted in any manner to an amount exceeding one and one‑half per centum of the taxable property in such county, city, town, school district, or other municipal corporation, without the assent of three‑fifths of the voters therein, voting at an election to be held for that purpose, nor in cases requiring such assent shall the total indebtedness at any time exceed five per centum of the value of the taxable property therein, to be ascertained by the last assessment for state and county purposes previous to the incurring of such indebtedness, except that in incorporated cities the assessment shall be taken from the last assessment for city purposes: Provided, That no part of the indebtedness allowed in this section shall be incurred for any purpose other than strictly county, city, town, school district, or other municipal purposes. . . ." (Article VIII, § 6, Washington State Constitution, as amended by the 27th Amendment.) (Emphasis supplied.)
"A county through its board of county commissioners may contract indebtedness for general county purposes, not exceeding in amount, together with the existing indebtedness of the county, one and one‑half percent of the last assessed valuation of the taxable property in such county, to be ascertained by the last assessment for state and county purposes previous to the incurring of such indebtedness." (RCW 36.67.010) (Emphasis supplied.)
Our Supreme Court has held in several cases that an indebtedness may be for a "strictly county purpose" under Article VIII, § 6, although the project for which the indebtedness is incurred is jointly financed or constructed.
InLancey v. King County, supra, the court stated:
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"It is next insisted that the act is obnoxious to the provisions of § 6, art. 8, of the constitution, which prohibits a county from incurring debt for any other than strictly county purposes, it being contended that the tax to be levied in the prosecution of said undertaking is not for a county purpose, but that it is for a state or federal purpose. But it is beyond question that the proposed undertaking is a public improvement. It is entirely within the limits of King county, and is for the purpose of connecting two large public waterways with the Pacific ocean, and it seems to us that such a canal can more properly be considered a public improvement than a railway for the construction of which it is well settled that aid may be granted by a municipality when authorized to do so by the legislature, there being no constitutional prohibition. The word 'strictly' lends little or no additional meaning to the provision. It could not have been intended thereby to limit counties to ordinary running expenses, and a canal may be as strictly a county purpose as a highway or a bridge, etc. It is apparent that the benefits resulting from this particular improvement will be largely local, notwithstanding the fact that it may also be of great general benefit, and it results that the purpose of the tax is local as well as public. . . ."
InGrant v. Evans, 163 Wash. 484, the question was again considered in connection with the issuance of bonds by King County to participate with the state and the city of Seattle in the construction of the Aurora Avenue Bridge. The court relied on theLancey case, supra; State ex rel. Board of Examiners v. Clausen, 95 Wash. 214; and Rust v. Kitsap County, 111 Wash. 170. The court stated:
"We feel that it is definitely settled in this state that, if the purpose is a county purpose, even though it be performed concurrently with this, or another state, or a city, it is, nevertheless, a strictly county purpose. . . ." (Page 487)
The effectiveness of the second and third objections has been further weakened subsequent to the decision in the Remann case by the amendment of RCW 47.56.250 in 1953, quotedinfra, to specifically authorize a county to issue bonds for the purpose of contributing money to the Toll Bridge Authority. In our opinion, this constitutes a legislative declaration of fact that an indebtedness incurred for such a purpose is a strictly county purpose. While this legislative declaration is not absolutely binding on the court, it is entitled to [[Orig. Op. Page 7]] great weight and respect and will be upheld unless it plainly appears beyond any reasonable doubt to be a mere pretense or dissimilation. Rust v. Kitsap County, supra, at page 173.
The final objection raised in the Remann case was that while the legislature had authorized the county to contribute money to the construction of toll bridges, the authority granted did not extend to the use of such money to guarantee the payment of interest on the bonds issued by the Toll Bridge Authority. The statute, as it existed at the time the action was commenced, read in pertinent part as follows:
"A city, county, or other political subdivision may upon the request of the director of highways or the authority advance or contribute money, rights-of-way, labor, materials, and other property toward the expense of building a toll bridge, and for preliminary surveys and the preparation of plans and estimates of cost therefor and other preliminary expenses. Appropriations for such purposes may be made from any funds available, including county road funds received from or credited by the state. . . ." (Emphasis supplied.)
As amended in 1953, the pertinent portion of the statute reads as follows:
"A city, county, or other political subdivision, or counties contiguous to a county or counties where a proposed toll bridge shall be erected, directly or indirectly benefited thereby, may, either jointly or separately, at the request of the Washington state highway commission or the authority advance or contribute money, or bonds, rights of way, labor, materials, and other property towardthe expense of building a toll bridge, and for preliminary surveys and the preparation of plans and estimates of cost therefor and other preliminary expenses. Appropriations for such purposes may be made from any funds available, including county road funds received from or credited by the state, or funds obtained by the issuance of general obligation bonds for this purpose. . . ." (Emphasis supplied.)
In theRemann case, the taxpayer argued that guaranteeing interest on Toll Bridge Authority bonds was not an "expense of building a toll bridge" and that under the rule of ejusdem generis, the phrase "other preliminary expenses" must be interpreted to include only expenses similar to the expenses previously referred to; that is, the cost of "surveys and the preparation of plans and estimates of cost."
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On the other hand, the county argued that the Toll Bridge Authority could not secure a purchaser for the bonds without a guarantee by the county for the payment of interest and, therefore, an indebtedness for such a purpose was "an expense of building a toll bridge" within the purview of the statute.
The briefs of the parties in the Remann case cited no authority directly in point on the precise question presented. Our research has met with like success. The case ofState ex rel. Eastvold v. Maybury, 49 Wn. (2d) 533, has some similar features, but it can be distinguished both on the facts and on the law.
It is apparent from the above that the authority of King County to incur an indebtedness and issue bonds for the purpose of guaranteeing payment of interest on bonds issued by the Toll Bridge Authority for the construction of a second Lake Washington Bridge is not beyond question.
Assuming, without deciding, that the county can legally incur an indebtedness and issue bonds to support interest payments on the bonds issued by the Toll Bridge Authority under RCW 47.56.250, the extent to which the county can make such a guarantee is limited only by the constitutional provisions and statutes restricting a county's indebtedness and bonding capacity. Washington State Constitution, Art. VIII, § 6, as amended by the 27th Amendment; RCW 36.67.010 through 36.67.030.
A vote of the people is not specifically required to approve the action of the board of county commissioners. However, as in other cases, a vote of the people may be necessary if, due to the county's financial condition, a vote is required to incur the indebtedness or issue bonds. Washington State Constitution, Art. VIII, § 6, as amended by the 27th Amendment; RCW 36.67.010 through 36.67.030; Art. VII, § 2, as amended by the 17th Amendment; RCW 84.52.056; RCW 39.40.010.
Your attention is, however, directed to the necessity for a request from the Washington State Highway Commission or the Toll Bridge Authority for the county's participation in the project under RCW 47.56.250.
We now turn our attention to chapter 47.57 RCW. This act was adopted in 1951 to authorize the creation of a "bond guarantee district" as a separate and distinct municipal corporation for the purpose of guaranteeing the payment of principal and/or interest on bonds issued by the Washington Toll [[Orig. Op. Page 9]] Bridge Authority to finance toll bridges. RCW 47.57.010 and RCW 47.57.030. It should be noted that this act does not authorize King County, as such, to support Toll Bridge Authority bonds.
As a practical matter, the provisions of this act may be of little or no assistance in financing the bridge in question for the following reasons:
(1) The act does not authorize the bond guarantee district to issue bonds; consequently, the district's ability to secure a bond guarantee fund is wholly dependent on tax levies.
(2) The act contemplates a levy not to exceed three mills in any one year and for levies over a period of years. At the present time the aggregate levy against property in the City of Seattle is at least thirty-nine and possibly forty mills. Under our constitution (Art. VII, § 2, as amended by the 17th Amendment), the aggregate levy of all taxing districts in any year is limited to forty mills, unless excess tax levies are authorized by the voters.
(3) Whether or not the legislature has authorized a bond guarantee district to seek authority from the voters to impose excess tax levies is questionable. However, assuming that such power exists, further practical difficulties arise. Under Article VII, § 2, as amended by the 17th Amendment, the people may authorize an excess tax levy only for one year at any single election. Consequently, the bond guarantee district would have to secure all of the necessary capital with one excess tax levy, or, in the alternative, have an election each year it desired to secure authority to impose an excess tax levy. This latter method would not appear to offer much security to bond holders due to the ability of the voters to reject a levy at any election.
We conclude, therefore:
(1) That the authority of King County under RCW 47.56.250 to support the payment of interest on Toll Bridge Authority bonds issued for the construction of the second Lake Washington Bridge is not beyond question.
(2) That the provisions of chapter 47.57 RCW provide a means whereby a new municipal corporation could be created to guarantee the payment of [[Orig. Op. Page 10]] interest on bonds issued by the Toll Bridge Authority, but that for practical purposes, it may be difficult for such a district to effectively carry out its objectives.
We trust that the above information will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
ELVIN J. VANDEGERG
Assistant Attorney General