Opinion ID: 2631774
Heading Depth: 1
Heading Rank: 4

Heading: Whether the Initiative is Beyond the Scope of the Initiative Power

Text: ¶ 20 At the heart of this case is the trial court's grant of summary judgment to Malkasian based on its conclusion that the initiative was within the scope of the initiative power. A motion for summary judgment is properly granted where there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). The standard of review on appeal from an order on summary judgment is de novo. Sane Transit v. Sound Transit, 151 Wash.2d 60, 68, 85 P.3d 346 (2004). The appellate court engages in the same inquiry as the trial court. Citizens for Responsible Wildlife Mgmt. v. State, 149 Wash.2d 622, 630-31, 71 P.3d 644 (2003); Herron v. Tribune Publ'g Co., 108 Wash.2d 162, 169, 736 P.2d 249 (1987). ¶ 21 The city contends that the initiative is beyond the scope of the initiative power because it usurps authority granted to the legislative body of the city under chapter 35.41 RCW. In contrast, Malkasian claims that the legislature granted authority to the city as a corporate entity. Malkasian is incorrect. ¶ 22 An initiative is beyond the scope of the initiative power if the initiative involves powers granted by the legislature to the governing body of a city, rather than the city itself. See, e.g., Leonard, 87 Wash.2d at 853, 557 P.2d 1306 (a grant of power by the legislature to the legislative body of respondent, the city council of the city of Bothell, precludes a referendum election); State ex rel. Guthrie v. City of Richland, 80 Wash.2d 382, 384, 494 P.2d 990 (1972) (where the general law grants authority to the governing body of a city, the exercise of that authority may not be subject to repeal, amendment or modification by the people through the initiative or referendum process) (citation omitted); State ex rel. Bowen v. Kruegel, 67 Wash.2d 673, 678-79, 409 P.2d 458 (1965) (discussing, inter alia, State ex rel. Haas v. Pomeroy, 50 Wash.2d 23, 308 P.2d 684 (1957); Neils v. City of Seattle, 185 Wash. 269, 53 P.2d 848 (1936)). ¶ 23 In this case, the legislature unambiguously granted the legislative body of the city the authority over revenue bonds under multiple provisions in chapter 35.41 RCW. RCW 35.41.010 provides in part that the the legislative body of any city or town may authorize, by ordinance, the creation of a special fund or funds (emphasis added) for purposes of providing funds for defraying all or a portion of the costs of, among other activities, planning, purchase, leasing, or other acquisition of any municipally owned public land, building, facility or utility. ¶ 24 By ordinance, the  legislative body  may obligate the city to set aside and pay into a special fund or funds all or a portion of revenues or fees derived from municipally owned utilities or facilities. RCW 35.41.010. Furthermore, the legislative body may also authorize the creation of a special fund or funds to defray all or a part of the costs of any certain park property involving municipally owned off-street parking space or facilities. Id. Under RCW 35.41.030, [i]f the legislative body of a city or town deems it advisable to, among other actions, purchase, lease, construct, develop, or improve land, building, facility, or utility and the legislative body adopts an ordinance authorizing such action and to provide funds for defraying all or a portion of the costs thereof from the sale of revenue bonds, such city or town may issue revenue bonds against the special fund or funds created solely from revenues. The legislative body is required to seek ratification by the voters (voter approval) prior to the issuance of such revenue bonds when only the original acquisition, construction or development is required to be ratified by the voters under the provisions of RCW 35.67.030 and RCW 35.92.070. RCW 35.41.030. [5] ¶ 25 Such revenue bonds may be sold in any manner and for any price  the legislative body  of any city or town deems to be for the best interest of the city or town. RCW 35.41.060. Additionally, the  legislative body  may provide in any contract for the construction or acquisition of the proposed facility or utility or maintenance or operation thereof that payment will be made only in revenue bonds or warrants. RCW 35.41.060. The  legislative body  may provide by ordinance for fixing of revenue rates and charges for the furnishing of service, use, or benefits. RCW 35.41.080. ¶ 26 The  legislative body  is also given authority to waive certain connection charges for low-income persons and to fix charges at rates that will be sufficient to provide for payment of bonds and warrants. RCW 35.41.080(1) and (2). The  legislative body  may, in setting the rates to be charged, include all costs and estimated costs in issuing said bonds, including certain construction and engineering costs. RCW 35.41.090. The  legislative body  may also pledge certain utility local improvement district assessments to provide additional security for revenue bonds used for water and sewage systems. RCW 35.41.095. Finally, RCW 35.41.100 provides in part that no restriction, limitation, or regulation relative to the issuance of such bonds contained in any other law shall apply to the bonds issued hereunder. ¶ 27 Given the multiple provisions explicitly providing authority in chapter 35.41 RCW to the legislative body of a city or town, we conclude that the legislature granted authority over these types of revenue bonds to the legislative body of the city. This conclusion is consistent with a thoughtful opinion by the Court of Appeals in Priorities First, 93 Wash.App. 406, 968 P.2d 431, examining chapter 35.41 RCW while this case was pending on appeal. ¶ 28 In Priorities First, an initiative was proposed by certain voters in the city of Spokane requiring in part that an ordinance adopted by the city council authorizing the creation of a fund and pledging of certain revenue under chapter 35.41 RCW be subject to voter ratification prior to implementation. Voter ratification is not required by statute. In that case, the Spokane city council approved a plan to develop an area in downtown Spokane, which included building a parking garage, pledging certain revenues from parking meters, and the issuance of bonds to pay for construction. In finding that the initiative was beyond the scope of the initiative power, the Court of Appeals said that [w]e agree with the superior court that Initiative 97-1 interferes with authority the Legislature has granted to the City Council in RCW 35.41 to create a special fund to defray costs of a municipally owned facility. Priorities First, 93 Wash.App. at 411, 968 P.2d 431. ¶ 29 In reaching its conclusion, the Court of Appeals pointed to both RCW 35.41.010 and RCW 35.41.030. Id. Under RCW 35.41.030, the legislative body of the city of Spokane (the city council) was authorized to create a special fund by ordinance obligating the city of Spokane to set aside and pay a portion of revenues from certain parking meters into the fund. And, pursuant to RCW 35.41.030, if the legislative body of the city of Spokane deems it advisable to, among other actions, acquire, construct, or develop any facility and adopts an ordinance authorizing such action and to provide funds for defraying the cost, the city may issue revenue bonds against the special fund created solely from revenues. The Court of Appeals explained that requiring voter approval before the City Council pledges or uses city funds sources for off-street parking facilities, the proposed initiative interferes with the power the Legislature granted the city council in these statutes. Priorities First, 93 Wash.App. at 412, 968 P.2d 431. ¶ 30 The court explained that an initiative cannot interfere with the exercise of power delegated by state law to the governing body of a city. Id. at 411, 968 P.2d 431 (citing Guthrie, 80 Wash.2d at 384, 494 P.2d 990) (holding that a referendum requiring voter approval of bonds was outside the scope of the referendum power, grant of power was to the governing body). Stated another way, the court said that the people cannot deprive the city legislative authority of the power to do what the constitution and/or a state statute specifically permit it to do. Id. (citing King County v. Taxpayers of King County, 133 Wash.2d 584, 608, 949 P.2d 1260 (1997) (holding that initiative requiring voter approval on bonds was outside the scope of the initiative power)). ¶ 31 It is well-settled that in the context of statutory interpretation, a grant of power to a city's governing body (legislative authority or legislative body) means exclusively the mayor and city council and not the electorate. See, e.g., Bowen, 67 Wash.2d at 677-78, 409 P.2d 458; Whatcom County v. Brisbane, 125 Wash.2d 345, 350, 884 P.2d 1326 (1994); Citizens for Financially Responsible Gov't v. City of Spokane, 99 Wash.2d 339, 344-45, 662 P.2d 845 (1983); Snohomish County v. Anderson, 123 Wash.2d 151, 156, 868 P.2d 116 (1994); Neils, 185 Wash. at 276-81, 53 P.2d 848; Benton v. Seattle Elec. Co., 50 Wash. 156, 159, 96 P. 1033 (1908). When the legislature grants authority to the governing body of a city, that authority is not subject to repeal, amendment, or modification by the people through the initiative or referendum process. Brisbane, 125 Wash.2d at 351, 884 P.2d 1326; Anderson, 123 Wash.2d at 156, 868 P.2d 116; Guthrie, 80 Wash.2d at 384, 494 P.2d 990; Pomeroy, 50 Wash.2d at 24-25, 308 P.2d 684; Neils, 185 Wash. at 283, 53 P.2d 848; Bidwell v. City of Bellevue, 65 Wash.App. 43, 49, 827 P.2d 339 (1992). ¶ 32 In chapter 35.41 RCW, the legislature unambiguously granted the legislative body of the city, the city council (and mayor), power over revenue bonds. [6] The initiative conflicts with that power by requiring that revenue bonds authorized under chapter 35.41 RCW be subject to voter ratification when not required by statute and by requiring that such revenue bonds also be subject to regulations and laws applicable to general obligation bonds regarding notification, publication, and election. These provisions clearly limit and restrict the authority granted by the legislature to the legislative body of the city under chapter 35.41 RCW. Thus, the subject matter of the initiative is not proper for direct legislation. ¶ 33 Malkasian contends, though, that because RCW 35.41.030 provides in part that such city or town may issue revenue bonds, the grant of power is to the city as a corporate entity, not to the legislative body. As further support, Malkasian points to RCW 35A.40.080, which he quotes as providing the city, a code city: [i]n addition to any other authority granted by law, a code city shall have authority . . .; to issue revenue bonds, coupons and warrants as authorized by chapter 35.41 RCW. Thus, he claims that because the city has the authority to act under chapter 35.41 RCW, the Municipal Revenue Bond Act, the legislature delegated the authority to the city as a corporate entity, bringing matters legislated under that act within the initiative power. ¶ 34 Malkasian's claims are without merit. As discussed above, the legislative body is authorized to take multiple complex acts requiring significant understanding of financial markets regarding revenue bonds including creating special funds and pledging of revenues and fees (RCW 35.41.010, .095), authorizing by ordinance the purchase or construction of facilities and providing funds through revenue bonds (RCW 35.41.030), the sale and pricing of revenue bonds and warrants (RCW 35.41.060), and setting the rates and charges for services to pay for revenue bonds or warrants (RCW 35.41.080, .090). The reference in RCW 35.41.030 to a city or town being able to issue such revenue bonds does not change or alter the authority granted to the legislative body. Rather, it refers to the legal relationship of the revenue bonds. The city or town is the issuer of the revenue bonds because it is the legal entity responsible for payment, not the city council (the legislative body). See, e.g., RCW 35.41.070 (providing in part that the holder of any bond may bring suit against the city or town to compel the city or town to set aside and pay into the special fund if such city or town fails to do so). ¶ 35 Moreover, Malkasian fails to fully set forth the provisions in RCW 35A.40.080. Malkasian provided only a few words from that statute mentioning the city's ability to issue revenue bonds authorized by chapter 35.41 RCW. RCW 35A.40.080 entitled BondsForm, terms, and maturity provides in full: In addition to any other authority granted by law, a code city shall have authority to ratify and fund indebtedness as provided by chapter 35.40 RCW; to issue revenue bonds, coupons and warrants as authorized by chapter 35.41 RCW; to authorize and issue local improvement bonds and warrants, installment notes and interest certificates as authorized by chapter 35.45 RCW; to fund indebtedness and to issue other bonds as authorized by chapters 39.44, 39.48, 39.52 RCW, RCW 39.56.020, and 39.56.030 in accordance with the procedures and subject to the limitations therein provided. RCW 35A.40.080 (emphasis added). ¶ 36 When viewed in its entirety, RCW 35A.40.080 provides the city with the authority to issue only revenue bonds under chapter 35.41 RCW. It does not provide the authority to ratify or to authorize such revenue bonds as it does with reference to chapter 35.40 RCW or chapter 35.45 RCW, which is consistent with the other provisions cited above in chapter 35.41 RCW. Malkasian also ignores the last part of RCW 35A.40.080, providing that the authority granted to a city or town must be exercised in accordance with the procedures and subject to the limitations therein. As discussed above, RCW 35.41.100 expressly provides that no restriction, limitation, or regulation relative to the issuance of such bonds contained in any other law shall apply to the bonds issued hereunder. Accordingly, consistent with First Priorities, we hold that the initiative in this case is outside the scope of the initiative power of the residents of Sequim. We hold that the initiative exceeded the initiative power of the residents of Sequim and that the trial court erred in granting summary judgment in favor of Malkasian. [7]