Court Opinion

ID: 9558249
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:05:12.693718+00
Date Added: 2024-06-11T09:08:31.148344
License: Public Domain

Goodloe, J.
(concurring in part, dissenting in part) — I concur with the majority's dispositions of the preelection representations, delegation of power, and lowest debt service requirement issues. I dissent from the majority's holding that the bonds may bear a maximum, effective (average) interest rate of 8 percent. I would hold that the interest paid in any 1 year cannot exceed 8 percent.
Two statutes, RCW 36.67.040 and RCW 39.44.030, in effect when the bond issue was authorized by the voters, affect the bonds and must be construed.
In 1979, RCW 36.67.040 stated:
The bonds shall bear the date of issue, shall be made payable to the bearer and bear interest at a rate of not *13exceeding eight percent per year, payable semiannually, with coupons attached for each interest payment.
(Italics mine.)
In 1979, RCW 39.44.030 provided, in pertinent part:
Before any general obligation bonds issued by any county . . . shall be offered for sale the governing body issuing such bonds shall designate the maximum effective rate of interest said bonds shall bear, which shall not be in excess of that allowed by law. . . .
(Italics mine.)
RCW 36.67.040 is specific, clear, and unambiguous. It provides the amount of interest allowed by law; the amount cannot exceed 8 percent per year. RCW 36.67.040 can be harmonized with RCW 39.44.030 without this court adding to RCW 36.67.040 by its interpretation the language "an effective rate of" before "8 percent per year". This court should not judicially amend statutes.
The Legislature added the word "effective" before "rate of interest" throughout RCW 39.44.030 in 1965. Laws of 1965, 1st Ex. Sess., ch. 74, § 3. p. 1893, effective April 2, 1965. The Legislature did not add "effective" to RCW 36.67.040.
"Effective" is not defined in the statutes. The parties agreed that "'[e]ffective' interest rate is a weighted average of the various coupon rates over the life of the bonds." Clerk's Papers, at 27. Accepting this definition, the two statutes can be harmonized without thp majority's judicial amendment. A governing body could select a maximum effective rate of interest of, for example, 7 percent. This selection would be limited by the "not exceeding eight percent [interest] per year" language of RCW 36.67.040. However, as long as the maximum of 8 percent interest in any one year was not exceeded, the interest rates over the life of the bonds could be averaged.
King County ordinance 6808 states that the bonds shall bear interest at the lowest net effective interest rate of 8 percent or less. The Notice of Bond Sale requires that the following appear on the bids:
*141. The net effective interest rate on the bonds shall not exceed 8% per annum, and each installment of interest on each bond shall be evidenced by a single rate.
2. One or more interest rates may be fixed for the bonds but such rate or rates must be in multiples of 1/8 or 1/20 of 1 %.
3. A single interest rate must be fixed for all bonds maturing on the same date.
4. The spread between the highest and lowest coupon rates shall not exceed 2%.
5. Interest rates specified for bonds maturing on December 1, 1998, and thereafter, shall not be less than the interest rate specified for the preceding maturity year.
6. Each bid shall provide for payment of accrued interest to date of delivery and shall specify either (a) the lowest rate or rates of interest and premium above par at which the bidder will purchase the bonds, or (b) the lowest rate or rates of interest at which the bidder will purchase the bonds at par.
7. Each bid shall state the total interest cost, total premium, the net interest cost to the County and the net effective interest rate thereunder, but such statements shall not be considered a part of the bid.
The County may reject any and all bids and readver-tise the bonds for sale in the manner provided by law. No bid for less than the entire issue will be considered. The County Council reserves the right to waive any irregularities that may appear in any bid or the bidding process.
(Italics mine.) Exhibit B of Plaintiff's Exhibit 8, at 2.
Given the definition of "effective" as a "weighted average", King County's selection of a net effective interest rate which equals the actual interest rate allowed by law makes it possible that the actual interest rate of 8 percent in one year may be exceeded. This is not allowed.
The statutory language focuses on the interest in any one year, not the coupon rate. However, the Notice of Bond Sale requirements mandate that "each installment of interest on each bond shall be evidenced by a single rate" and " [a] single interest rate must be fixed for all bonds matur*15ing on the same date." Exhibit B of Plaintiff's Exhibit 8, at 2. Therefore, the coupon rate and amount of interest paid in any one year under this plan will be a constant figure. Averaging the various constant interest rates on different series of bonds over the life of the bond issue to get an average of 8 percent enables some series of bonds to bear a single interest rate of more than 8 percent. Because I believe this contravenes the clear mandate of RCW 36.67-.040,1 dissent.
Dore, J., concurs with Goodloe, J.