Source: http://courts.mrsc.org/supreme/094wn2d/094wn2d0422.htm
Timestamp: 2019-06-25 17:50:45
Document Index: 382017584

Matched Legal Cases: ['art. 8', 'art. 8', 'art. 8', 'art. 8', 'art. 8', 'art. 8']

94 Wn.2d 422, LOUTHAN v. KING COUNTY
CITE: 94 Wn.2d 422, 617 P.2d 977
CAUSE NUMBER: 46625
CASE TITLE: Richard Louthan, Appellant, v. King County,
Chalmers O. Ekness, et al, Appellants, v. King
[1] Statutes - Validity - Presumptions - Burden of Proof. Upon judicial review of a challenged statute or ordinance, a presumption exists that the enactment is valid. The burden of overcoming this presumption rests heavily upon the challenger.
[2] Constitutional Law - Gift of Money or Credit - Valuable Consideration. Receipt of valuable consideration prevents the payment of public funds from being a gift within the meaning of Const. art. 8, 7.
[3] Property - Development Rights - Nature of Right. The right to use and subdivide land for residential, commercial, or industrial purposes is an interest in property and a valuable right.
[4] Statutes - Construction - Prior Enactments - Effect. Legislative bodies, including the electorate acting in a legislative capacity, are presumed to be familiar with existing statutes affecting the matter upon which they are legislating.
[5] Municipal Corporations - Bonds - Interest Rate - Voter Approval - Effect. A bond issue authorized at an election may not be sold at a higher interest rate than that approved by the voters.
NATURE OF ACTION: The authorization of bonds for the purchase of development rights to agricultural lands by a county was challenged on constitutional and statutory grounds.
Superior Court: The Superior Court for King County, Nos. 79-2-00368-0, 80-2-05233-1, Frank D. Howard and Robert M. Elston, JJ., on November 2, 1979, and April 21, 1980, entered summary judgments in favor of the county.
Supreme Court: By order entered June 3, 1980, the court AFFIRMED the judgment validating the right of purchase, but REVERSED the judgment upholding the higher interest rate. In this opinion giving the reasons for the order, the court holds that development rights are a valuable right in property but that the rate of interest permitted on the county bonds was fixed by the statute in effect at the time of voter approval of the bond issue.
COUNSEL: RICHARD LOUTHAN, pro se.
MAJORITY OPINION: These cases, consolidated on appeal, were granted direct and accelerated review in this court because of an imminent deadline in the sale of certain King County general obligation bonds. The sale was dependent upon a resolution favorable to the County of the issues raised in these actions.
The King County Council desires to preserve certain open space and farmland in King County. To achieve this objective, the council proposed to sell County general obligation bonds and use the proceeds to purchase the "development rights" «1»
«1» "'Development Rights' means an interest in and the right to use and subdivide land for any and all residential, commercial and industrial purposes and activities which are not incident to agricultural and open space uses.'" King County Ordinance No. 4341, 3(3).
of particular property if voluntarily offered to it. Appellant Louthan objected to this scheme as violative of Const. art. 8, 7, which prohibits the loan or gift of public moneys.
In a separate action, appellants Ekness and Rogstad challenged the County's proposed sale of its bonds at an interest rate in excess of 8 percent per annum. In summary judgment proceedings, the trial court in each instance held for King County. The cases were consolidated and set for an expedited review before this court, sitting en banc, on May 28, 1980. In view of the urgency of the issues raised, the court entered an order on June 3, 1980, affirming the trial court as to Louthan and reversing as to Ekness and Rogstad. This opinion sets forth the court's reasons for its order.
"The Bonds shall be sold at public sale in the manner required by law, shall bear interest payable at such times . . . as hereafter authorized by the Council and as provided by law. . . . The exact date, form, terms, redemption options and maturities of each series of the Bonds shall be as hereafter fixed by ordinance of the Council.
Meanwhile, March 13, the state legislature, then in session, enacted Substitute House Bill 1090. The act amended RCW 36.67.040 to permit counties to pay a 12 percent effective maximum annual interest rate on general obligation bonds. The legislation contained an emergency clause and it became effective April 1, 1980, the date it was signed by the Governor. Laws of 1980, ch. 145.
Richard Louthan initiated his action July 10, 1979, shortly after the King County Council adopted ordinance No. 4341. His basic theory was that the County could substantially achieve its purpose through use of its police power without the necessity of expending public funds. He alleged that the vigorous and ongoing programs by King County to preserve farmlands and open space were sufficient without the purchase of "development rights". Louthan concluded that the sale of general obligation bonds and use of the proceeds to purchase an intangible (development rights), which the County is by law already entitled to control, is a gift of public funds contrary to Const. art. 8, 7.
As noted above, Louthan opposes this plan as a giveaway of public funds violative of Const. art. 8, 7. He asserts that no real consideration for the sale exists and thus, the transaction is a gift. Louthan vigorously expounded and urged the efficacy of this theme. He contends the principles to be followed in matters of this kind were early set forth in JOHNS v. WADSWORTH, 80 Wash. 352, 354, 141 P. 892 (1914), as follows:
As a contrary example of a benefit not properly within the governmental function, Louthan cites PORT OF LONGVIEW v. TAXPAYERS, 85 Wn.2d 216, 533 P.2d 128 (1974) (under an authorizing statute, the port district sold revenue bonds to purchase leaseholds of pollution control equipment to be subleased back to original owners). The net effect of the procedure in PORT OF LONGVIEW was to give the private users the benefit of the port district's ability to obtain lower interest rates through the sale of tax exempt bonds. The risks to the port district were minimal and it incurred no net expense in carrying out the plan. Nonetheless, when the scheme was challenged, this court struck it down as contrary to Const. art. 8, 7.
The wisdom of the King County plan is not for the consideration of this court - its constitutionality is. We hold the PDR program to be constitutional.
A legislative body of a home rule charter county has wide discretion in the methods that it selects to solve perceived social problems within its jurisdiction. Here, the King County Council has identified loss of farm and open space lands as an ongoing adverse condition with which it must contend. For several years it has attempted to preserve its agricultural and open space lands by the use of zoning, tax benefits, and deferred road and utility assessments. As stated in the finding and declaration of purpose of ordinance No. 4341, it is the conclusion of the county council that these methods have not proved to be completely effective. In an effort to better achieve its desired results, the council devised the PDR program and submitted it to the voters for approval. With the foregoing, Louthan disagrees.
[2, 3] For purposes of Const. art. 8, 7, a gift is a transfer of property without consideration and with donative intent. Receipt of valuable consideration assures that a transaction is not a gift. LASSILA v. WENATCHEE, 89 Wn.2d 804, 576 P.2d 54 (1978). Although less than a fee interest, development rights are beyond question a valuable right in property. PENN CENT. TRANSP. CO. v. NEW YORK, 438 U.S. 104, 57 L. Ed. 2d 631, 98 S. Ct. 2646, REHEARING DENIED, 439 U.S. 883, 58 L. Ed. 2d 198, 99 S. Ct. 226 (1978). Since the County acquires a valuable right for the funds it expends, there is no merit in the contention that the expenditure of the funds for development rights is in reality a gift. The choice of method of acquiring or controlling such rights is within the ambit of legislative power of the county council. The decision of the trial court is affirmed.
We do not hold that the voters may not authorize a bond issue that would permit a different maximum interest rate than the statutory maximum existing at the time of the voter approval. What is authorized depends upon what is submitted to the electorate. Here, we hold that under the circumstances existing, an 8 percent effective maximum interest rate is all that was authorized.