Burks v. Monterey Regional Water Pollution Control Agency

Opinion

KING, J.

Richard Burks and Dinna Silacci appeal from a judgment of dismissal. They challenge the trial court’s determination that the Monterey Regional Water Pollution Control Agency (the Agency) was authorized to issue revenue bonds at a maximum interest rate of 10 percent per year instead of 8 percent. We affirm the judgment.

In June 1979 the Agency adopted a resolution authorizing the issuance of nonvoted revenue bonds in the amount of $25 million, at a rate of interest

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not exceeding 8 percent, to finance construction of sewerage improvements. The issuance was based on the Revenue Bond Law of 1941 (Gov. Code, § 54300 et seq.), a section of which provides that the maximum rate of interest on bonds issued under that law “shall not exceed 8 percent a year.” (Gov. Code, § 54382, subd. (d).)

At the time of the 1979 resolution, Government Code section 53531 provided, “Any provision of law specifying the maximum interest rate on bonds to the contrary notwithstanding, bonds may bear interest at a coupon rate or rates as determined by the legislative body in its discretion but not to exceed 8 percent per year . . . .” (Stats. 1974, ch. 721, § 1.) Effective February 29, 1980, section 53531 was amended to specify a maximum interest rate of 10 percent. (Stats. 1980, ch. 19, § l.)

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In April 1981 the Agency adopted a resolution providing for the issuance and sale of $18 million of the bonds authorized by the 1979 resolution, at a maximum interest rate of 10 percent per year rather than 8 percent.

On June 1, 1981, Burks and Silacci filed a complaint challenging the validity of the 1981 bond issuance. The complaint stated seven causes of action, one of which was that issuance at a maximum interest rate of 10 percent rather than 8 percent violated the Revenue Bond Law of 1941. The other allegations of the complaint are not pertinent to this appeal.

The Agency filed a demurrer and a motion for summary judgment. The court sustained the demurrer and granted the motion. In a minute order the court stated, “The legislature appeared to set uniform rates in 1980 when it enacted Government Code section 53531 and the Agency’s reliance on the statute is appropriate.” The court rendered a judgment of dismissal.