Opinion
September 23, 1982
RE: Whether a metropolitan recreation district may transfer money raised pursuant to a debt retirement mill levy from a debt service fund to the county general fund
Mr. Morgan Smith Director, Department of Local Affairs 1313 Sherman Street Denver, Colorado 80203
Dear Mr. Smith:
This attorney general opinion responds to your request for an opinion dated August 19, 1982.
QUESTION PRESENTED AND CONCLUSION
Does a metropolitan recreation district have the power to transfer money raised pursuant to a debt retirement mill levy from a debt service fund to general operating expenditure funds, assuming that bonds will not be issued and that the transfer of revenue from the debt service fund to the general fund would not cause an expenditure of funds in excess of the 7 percent limitation contained in C.R.S. 1973, 29-1-301 (Supp. 1981)?
My conclusion is "yes." Assuming that bonds have not and will not be issued and that there will be no violation of C.R.S. 1973, 29-1-301 (Supp. 1981), the district has the power to transfer money raised pursuant to a debt retirement mill levy from a debt service fund to the county general fund.
ANALYSIS
As I understand the facts underlying your letter, in August 1981, the voters in a metropolitan recreation district approved a $2 million general obligation bond issue for the district. In anticipation of the issuance of the bonds, the district certified tax levies to raise money for the debt service fund which would be used to pay the interest and principal on the bonds.
Subsequent to the certification of these tax levies, the board of the district decided that it would not sell the bonds. Thus, the district raised a substantial amount of money to pay for the costs of bonds when the bonds were not sold. In effect the district now has money to pay for an obligation which does not, and will not, exist. The district wants to transfer the money to its general fund.
Generally, the budget procedures used by the district are governed by the Local Government Budget Law, C.R.S. 1973, 29-1-101 et seq. (Supp. 1981) unless otherwise stated. Budgetary transfers are governed by C.R.S. 29-1-111.5. Under 111.5:
If, during the fiscal year, the governing body deems it necessary in view of the needs of the various offices, departments, boards, commissions, or other spending agencies, it may: (a) Transfer budgeted and appropriated moneys from one or more spending agencies in a fund to one or more spending agencies in another fund.
When bonds are issued, the governing body issuing the bonds is considered to be the trustee for bondholders of the funds received from the taxes raised to discharge the debt. If the bonds are sold and money is due and owing to the bondholders, the money raised to discharge the debt must be used for that purpose.J. K. Mullen Investment Co. v. Town of Arvada, 128 Colo. 227, 261 P.2d 714 (1953); Town of Haxtun v. Wangnuld, 109 Colo. 518, 127 P.2d 328 (1942). When bonds are outstanding, money may not be transferred.
The statutes governing the bond authority of recreation districts do not address the circumstance where the bond obligations have been paid or have not been incurred, and the taxes raised still remain in the debt service fund. C.R.S. 1973,32-1-1101 (Supp. 1981). Reference then must be made to the transfer of fund provisions contained in C.R.S. 1973, 29-1-111.5. Section 111.5 permits the transfer of money between funds if the criteria in 111.5 are met. Thus, the transfer may be made if there is no money due and owing to bondholders and if the criteria of C.R.S. 1973, 29-1-111.5 and and C.R.S. 1973, 29-1-301 et. seq. are met.
SUMMARY
A metropolitan recreation district may transfer money from its debt service fund to its general fund if there are no bonds to be redeemed, if the revenue expended from the general fund would not exceed the limitations of C.R.S. 1973, 29-1-301 (Supp. 1981) and if the criteria listed in C.R.S. 1973, 29-1-111.5 are met.
Very truly yours,
J.D. MacFARLANE Attorney General
COUNTIES PUBLIC FUNDS
C.R.S. 1973, 29-1-111.5 C.R.S. 1973, 30-26-105 C.R.S. 1973, 30-26-106 C.R.S. 1973, 30-26-303 C.R.S. 1973, 30-26-405
AFFAIRS, LOCAL, DEPT. OF Local Government, Div. of
A metropolitan recreation district may transfer money from its debt service fund to its general fund if there are no bonds to be redeemed, if the revenue expended from the general fund would not exceed the limitations of C.R.S. 1973, 29-1-301 (Supp. 1981) and if the criteria listed in C.R.S. 1973, 29-1-111.5 are met.