July 24, 1981

Mr. Aaron K. Trippler 
Director of Research 
South Dakota Municipal League 
214 East Capitol 
Pierre, South Dakota 57501

Official Opinion No. 81-27

Municipal Bond Elections

Dear Mr. Trippler:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

The City of Garretson held a special election to authorize the sale of general obligation bonds.  The issue did not receive a 60 percent majority favorable vote.

Based on the above factual situation, you have asked the following questions:

QUESTIONS: 

1.  How do the procedures to authorize general obligation bonds and utility revenue bonds differ? 

2.  After a defeat at the special election, when may the voters of the city initiate a new resolution and therefore another vote on the issuance of general obligation bonds?

IN RE QUESTION NO. 1;

SDCL 9-26-3 provides: 

Whenever it is determined by the governing body to be necessary or expedient for any city or town to issue its general obligation bonds the  governing body at a regular meeting thereof or a special meeting duly called shall by resolution declare the necessity thereof and may submit the question of the issuance of such bonds to the electors of the municipality at any annual election or at a special election called for that purpose.

SDCL 9-26-1 provides: 

Unless otherwise provided no bonds which are a general obligation of the municipality shall be issued either for general or special purposes by any city or town unless at an election after published notice in accordance with §  9-13-13, stating the purpose or purposes for which the bonds are to be issued and the maximum amount and maximum rate of interest thereof, the legal voters of such municipality by a sixty per cent vote of all the legal voters voting upon the question shall determine in favor of issuing the same.

SDCL 9-40-5 provides: 

For the purpose of defraying the cost of so erecting, acquiring, and establishing any such utility, every municipality may borrow money and issue negotiable bonds, without pledging or using the credit of such municipality; provided no such money shall be borrowed and no such bonds shall be issued until authorized by an ordinance duly adopted specifying the proposed undertaking, the maximum amount of bonds to be issued, and the maximum rate of interest such bonds are to bear, which rate shall be not more than six per cent per annum, nor until such ordinance has been submitted to the voters of  such municipality at a regular or special election and sixty per cent of the electors voting thereon have voted in favor of such ordinance.  Such ordinance shall be submitted to the voters in the same manner as a referred ordinance, except that no referendum petition need be filed.

In view of the foregoing statutes, it is my opinion that the authorizing procedures for municipal general obligation bonds and municipal utility revenue bonds are basically the same, except that (1) general obligation bonds are authorized by resolution while revenue bonds are authorized by ordinance and (2) notices of election on general obligation bonds are published pursuant to SDCL 9-13-13 while notices of election on revenue bonds are published pursuant to SDCL 9-20-12.

IN RE QUESTION NO. 2:

SDCL 9-20-17 provides: 

No referred ordinance or resolution may be again voted upon by the government of any municipality within one year from the date of the election thereon.

It is my opinion that the waiting period specified in § 9-20-17 is inapplicable to general obligation bond elections insofar as its implementation through § 9-40-5 is only applicable to utility revenue bonds.

It is therefore my opinion that except for the 60 percent vote required by § 9-26-1, any attempt to initiate a general obligation bond must satisfy the requirements of SDCL Chapter 9-20.

Respectfully submitted,

Mark V. Meierhenry
Attorney General