TAX PROPERTY SALES FUND ORDINANCES ‑- SEATTLE

TAX PROPERTY SALES FUND ORDINANCES ‑- SEATTLE

Ordinances Nos. 46473 and 72834 of the City of Seattle established for the handling and protection of delinquent local improvement assessments through a "tax property sales fund" is invalid as being in derogation of the statutory provisions in Rem. Rev. Stat. Supp. 9351-3, 9383, 9384.

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                                                                December 4, 1950

Honorable Lawrence Hubble
Chief Examiner
Division of Municipal Corporations
Olympia, Washington                                                                                                              Cite as:  AGO 49-51 No. 397

Dear Sir:

            We acknowledge receipt of your inquiry concerning the "tax property sales fund" of the City of Seattle, in which you have enclosed copies of Seattle Ordinances Nos. 46473 and 72834, and ask whether the procedure established by said ordinances for the handling and protection of delinquent local improvement assessments is valid in the light of the statutory provisions in section 3, chapter 109, Laws of 1933 (Rem. Rev. Stat. Supp. 9351-3), and sections 3 and 4, chapter 275, Laws of 1927 (Rem. Rev. Stat. Supp. 93839384).

            The conclusion reached may be summarized as follows:

            The procedure established by Ordinances Nos. 46473 and 72834 of the City of Seattle for the handling and protection of delinquent local improvement assessments through a "tax property sales fund" is invalid as being in derogation of the statutory provisions in Rem. Rev. Stat. Supp. 9351-3, 9383, 9384.

                                                                     ANALYSIS

             [[Orig. Op. Page 2]]

            The statutory process for foreclosure of assessment liens for local improvements may be found in chapter 275, Laws of 1927, wherein it is provided in section 3 (Rem. Rev. Stat. Supp. 9383), that:

            "Whenever any property shall be bid in by any city or town or be stricken off to any city or town under and by virtue of any proceeding or proceedings provided in this act said property shall be held in trust by said city or town for the fund of the improvement district for the creation of which fund said assessment was levied and for the collection of which assessment said property was sold;Provided, Such city or town may at any time after the procuring of a deed pay in to such fund the amount of the delinquent assessment for which said property was sold and all accrued interest and interest to the time of the next call for bonds or warrants issued against such assessment fund at the rate provided thereon, and thereupon shall take and hold said property discharged of such trust."

            Section 4 of the same act (Rem. Rev. Stat. Supp. 9384) is as follows:

            "Any city or town may at any time after deed is issued to it under and by virtue of any proceedings mentioned in this act lease or sell or convey any such property at public or private sale for such price and on such terms as may be determined by resolution of the city or town council or other legislative body, any provisions of law, charter or ordinance to the contrary notwithstanding,and all proceeds resulting from such sales shall ratably belong to and be paid into the fund or funds of the local improvement district or districts concerned after first reimbursing any fund or funds having advanced any moneys on account of said property."  (Emphasis added.)

            The City of Seattle, on the other hand, while recognizing that a trust has been imposed by statute on property acquired by the city through foreclosure of delinquent local improvement assessments, has enacted an ordinance providing that the proceeds from the sale of property held in trust be paid into the "tax property sales fund."

             [[Orig. Op. Page 3]]

                        ORDINANCE NO. 46473

            "Section 1. That, in order to facilitate the handling of the property hereinafter mentioned, a special fund to be known as 'Tax Property Sales Fund' be, and the same is hereby, established, into which shall be paid all proceeds derived from the sale of real property acquired by the City through the foreclosure of delinquent local improvement assessments and relieved of the trust imposed thereon by statute."

            Ordinance No. 72834 provides for the assessment of such property and the method of payment on the resale of the property with the proceeds to be paid into the "tax property sales fund."

            "Section 2. That the City Treasurer be and he is hereby, authorized for and on behalf of the City of Seattle to accept deposit money amounting to not less than five per cent.  (5%) of the purchase price of any property proposed to be sold as earnest money and to issue his receipt therefor.  Any such deposit shall be placed in the Guaranty Deposit Fund, and if the depositor fails, through no fault of the City, to enter into a contract for the purchase of the property involved within ten (10) days after the Treasurer notifies him that a duly authorized or approved contract, executed on behalf of the City, is ready for execution on his part, such deposit shall be deemed forfeited and become the property of the City and the amount thereof shall be transferred to the Tax Property Sales Fund.  If the depositor enters into such contract within the time aforementioned, the amount of the deposit shall be credited upon the purchase price agreed to be paid and shall be transferred to the Tax Property Sales Fund.  If the City fails, by reason of any fault on its part, to make available for execution by the depositor such contract of sale within sixty (60) days after the receipt of the deposit, the depositor may, at his option, demand the return of his deposit."

             [[Orig. Op. Page 4]]

            While the creation of the tax property sales fund may well aid in expediting the handling of foreclosure matters in local assessments, in view of the fact that there exists a legislative enactment on the same subject, it is the opinion of this office that the procedure established under the ordinances is invalid and unlawful.  It is a fundamental principle of law that a municipality has no power than that delegated to it by the legislature.  It is equally fundamental that a local ordinance may not be inconsistent with the laws of this state; that there cannot be an ordinance operating as an attempted amendment of the statute.  The provision under Rem. Rev. Stat. Supp. 9394 for uniformity in the handling of local assessment liens is mandatory and controlling.  That the resale of the property held in trust by the city for local improvement districts is part of the collection and enforcement of the assessment provisions of the statute cannot be questioned.  State ex rel. King County Water District v. Stacy, 10 Wn. (2d) 248, 116 P. (2d) 356;Amende v. Finke, 29 Wn. (2d) 290, 187 P. (2d) 317.  The statutory procedure for the handling of local improvement assessments cannot be circumvented by ordinances passed by a municipality.

            It is mentioned in your letter that the proceeds in the tax property sales funds include proceeds of property acquired through foreclosure on guaranteed assessments.  This is contrary to the statutory procedure covering the local improvement guarantee fund as found in section 3, chapter 109, Laws of 1933 (Rem. Rev. Stat. Supp. 9351-3), and therefore must also be held invalid.

Very truly yours,

SMITH TROY
Attorney General

BARBARA L. OHNICK
Assistant Attorney General