Lead Opinion
Dear Mr. Gatewood,
This office is in receipt of your request for an Attorney General's Opinion regarding the disposition of excess funds remaining after the payment or defeasance of certain general obligation bonds (the Bonds") authorized in accordance with a proposition (the "Proposition") approved by the electorate of Washington. Pertinently, the Proposition approved by the voters with respect to the issuance of the Bonds provided:
"Shall the Parish of Washington, State of Louisiana, incur debt and issue bonds for the purpose of constructing a Parish jail system and facilities, with component parts thereof at Franklinton and at Bogalusa, respectively, including any necessary site acquisitions and site improvements, and acquiring the necessary equipment and furnishings therefore, which bonds shall be payable from ad valorem taxes in the manner provided by Article
VI , Section33 of the Constitution of the State of Louisiana of 1974 "
According to your correspondence:
"The Town of Franklinton owns some property, including a building which currently houses the Franklinton Police Department and Franklinton Volunteer Fire Department. These entities are moving to a new location. The property is contiguous to the Washington Parish Jail property in Franklinton which was the subject of the bond issue.
Washington Parish Government currently rents some "off-site" office space for some agencies of the Washington Parish Sheriff's Office. If it is possible to purchase the existing property from the Town and relocate the off-site offices, it should provide savings and add convenience."
Specifically, you have asked this office to address two questions, the first of which is as follows:
"Can Washington Parish Government use the excess money generated from payment of General Obligation Jail Bonds be used to purchase immovable property contiguous to the Washington Parish Sheriff's Office in Franklinton; said property to be used for housing of offices by the Washington Parish Sheriff?"
It has long been the opinion of this office that once a general obligation bond issue has been defeased or paid in full, any surplus tax proceeds remaining should be returned pro-rata to the taxpayers, if practical. If the expenses of the pro-rata return make this impractical, e.g., when the expenses involved in the return would amount to a larger sum than the amount returned, the funds should be used for a purpose similar to those for which the bonds were issued and authorized by the electorate. Attorney General's Opinions Nos. 04-0072, 03-0112, 02-0221,93-294, 93-211, 89-444, 88-566, 88-430, 88-407, 88-281, 83-707, 81-1353,75 — 1034. In this regard, I am enclosing a copy of Attorney General'sOpinion No. 81-1353, which quotes somewhat extensively from AttorneyGeneral's Opinion No. 74-805, and sets out how a pro-rata return should be accomplished.
If the Parish governing body makes a determination that it is impractical or impossible to distribute the balance of the sinking fund to the taxpayers after payment of the bonds or defeasance occurs, it is the opinion of this office that it would be appropriate for the balance in the sinking fund to be used for purposes similar to the purposes for which the Bonds were issued, namely, for the purpose of "constructing a Parish jail system and facilities including any necessary site acquisitions and site improvements, and acquiring the necessary equipment and furnishings therefore".
Assuming the additional office space will be used for purposes ancillary to the Sheriff's functions associated with his operation of the jail, use of the excess funds in question for the acquisition of a building to house Sheriff's offices at a site contiguous to the parish jail would be an appropriate use of the excess funds.
The second question presented for our attention is:
"Would the property be limited to use by the Washington Parish Sheriff through the Washington Parish Government?"
In accordance with the language of the proposition, it is the opinion of this office that excess bond funds can only be used to provide facilities to be used for purposes associated with the operation of the jail. We are unaware of any parish entities or officials, other than the Sheriff, involved in the operation of the Parish Jail. As such, it is our opinion that if excess bond funds are utilized to purchase the building, it could only be used by the parish to provide space to the Sheriff.
Trusting the foregoing adequately responds to your request, I remain,
Yours very truly,
CHARLES C. FOTI, JR. Attorney General
BY: __________________________________ JEANNE-MARIE ZERINGUE BARHAM Assistant Attorney General
CCF, jr./JMZB/dam
Addendum
Dear Mayor Cockerham:
This is in response to your opinion request concerning the use of the proceeds of a property tax millage which generated funds in excess of the amount needed to retire the bonds which it secured.
In your request, you state that the Town of Ridgecrest issued public improvement bonds, Series A in the amount of $49,000, Series B in the amount of $49,000, and Sewer District #I in the amount of $49,000, all three issues maturing on June 1, 1983.
The assessment of this property tax millage has been discontinued; however, a surplus was generated in an amount exceeding $15,000. You request whether it would be permissible for the Town to combine all tax bond funds and utility bond funds and pay all outstanding indebtedness on June 1, 1982, which includes the three issues mentioned above and a Utility Revenue Bond.
Act No.
As you set forth in your request, the excess is minimal and it would not be reasonable to consider returning the proceeds to the taxpayers on a pro rata basis.
Concerning the use of similar excess taxes, this office rendered an opinion on June 19, 1974, Number 74-805, which provides in part as follows:
"If a surplus is accumulated despite efforts not to do so, then it is the opinion of this office that a pro rata return of the surplus tax proceeds should be made to the taxpayers when practicable. In some instances a pro rata return would not be practicable, e.g., when the expenses involved in the return would amount to a larger sum than the amount to be returned. When a return is practicable, however, such pro rata return should be made to every tax payer possible beginning with the last year's tax roll and going back to each previous year in order. Amounts refundable that cannot be refunded for whatever reason should be set aside according to year. This process should be followed until funds are exhausted.
When a surplus is accumulated and it is not practicable to make a pro rata return, or there are amounts left over after an effort at complete pro rata return, then such funds may be transferred to the general fund and used for any purpose similar to the purpose for which the bonds were authorized to be issued, e.g., such unreturnable funds may be applied to the next year's debt service or used on another drainage project. To use the surplus for an entirely different purpose would not be in keeping with authorization received at the polls, and to say that the surplus funds could not even be used for a similar purpose would result in idle funds."
The foregoing considered, it is the opinion of this office that the Town of Ridgecrest is legally empowered to utilize these surplus tax funds to retire the Series A, Series B and Sewer District #I bonds along with the utility revenue bonds of the Town.
This office suggests that along with all other considerations, your town consider the rate of interest being earned on these excess sinking fund monies compared with the interest being paid on the debt to be retired, before utilizing the funds to retire said bonds.
If this office can be of further assistance to you in this regard, please do not hesitate to contact me.
Sincerely,
William J. Guste, Jr. Attorney General
By David E. Henderson Assistant Attorney General