NATIONAL ASSOCIATION OF BOND LAWYERS
Voice from the Past
Chapter 1
When I started practicing law in 1950 most of the municipal
bonds being issued were school bonds to build the facilities to
educate the baby boomers. These were general obligation bonds,
approved at elections by the qualified voters, and were required
to be sold at advertised public sale. We had to review the
proceedings calling the election, canvassing the votes, directing
publication of the notice of sale, and authorizing and selling
the bonds, as well as one of the ballots printed for use at the
election and publishers' affidavits with newspaper clippings
attached showing publication of the notice of election and of the
notice of sale. We also had a schedule of fees. We charged $75
for approving a small (under $35,000) issue; for large issues
(over $600,000) we charged sixty cents per $1,000 bonds. If we
prepared the proceedings we charged an extra $50. I objected to
this practice because when some of the local lawyers with whom we
worked prepared the proceedings it took me much more time
correcting them than it would have taken for me to prepare them
correctly in the first place.
The amount of different kinds of law you had to know in
those days was considerably greater in some respects than in the
more recent days of unvoted revenue bonds sold at negotiated
sales. We had to know the quirks in each State where we worked
pertaining to counting the number of days between the first
publication of a notice and the date of the election or sale, and
whether, under the law of the State involved, a publication one
day late was fatal. We had to know how to compute debt limits,
and whether money in a sinking fund could be counted as an offset
against the amount of outstanding debt in determining how much
new debt the issuer could incur (no in Georgia, yes almost
everywhere else). We had to know whether a notice published on
Sunday was effective. And most arcanely we had to know who was
qualified to vote in a bond election.
In fourteen States the right to vote in a bond election was
limited to taxpayers; in Nevada and Wyoming they had one election
for taxpayers only and another, at the same time, for all
qualified electors. There was always the question of whether the
spouse of a taxpayer was a taxpayer; we generally hid behind the
official records -- if a person's name was on the tax roll he or
she was a taxpayer, otherwise not. In Louisiana the vote was not
only limited to taxpayers, but each had to write on his ballot
both his name and the amount of his taxable property in the
jurisdiction; the election had to carry in both number and
amount. In Texas one merely had to have "rendered his property
for taxation" to vote, whether he actually paid a tax or
not.
Nowadays we are likely to think of the taxpayer requirement
as a form of racial discrimination, but I doubt that it was
originally intended that way. In the southern and western States
it was intended to discriminate against those whom the railroads
would cause to move to a town just long enough to cast their
votes for railroad aid bonds and then move on. In New York and
New England it was probably left over from colonial days when
only male property owners were citizens. In any event, the
practice was discontinued when the U.S. Supreme Court held that
such restrictions violated the Equal Protection Clause of the
14th Amendment in the cases of Cipriano v. City of Houma, 395
U.S. 701 (1969), Kolodzeijski v. City of Phoenix, 399 U.S. 204
(1970) and Hill v. Stone, 421 U.S. 289 (1975). I wrote Amicus
Curiae briefs each of those cases and got other bond lawyers who
worked in States with taxpayer qualifications to join me in
submitting them. I also got the chief legal officer of a State
or city to sign, too, because these signatures create exceptions
to the rule that such briefs are not favored in the absence of
approval of all parties to the litigation. The purpose of these
briefs was to make sure that the Court did not say anything that
would make outstanding bonds illegal, but I have sometimes
wondered how much my pointing out to the Court that there were
only 14 or 16 States with such requirements had to do with the
decision to hold them unconstitutional.
Thus all that knowledge about the intricacies of complying
with taxpayer requirements for voting in bond elections was made
obsolete. I recall one Louisiana lawyer lamenting about all the
horrible things that would happen when everyone could vote in
such elections; he was only partly mollified when I pointed out
that Mississippi did not have such a qualification and nothing
much bad seemed to have resulted from that State's
liberality.
It's nice to think of the old days as simpler and more
pleasant than current times. It used to be that our opinion
would be double spaced yet occupy only one page. It expressed
the view that the bonds were valid and legally binding payable
from taxes to be levied on all taxable property in the
jurisdiction without limitation as to rate or amount. Period.
No tax language was necessary because all municipal bonds were
exempt and everyone knew it. No bankruptcy exceptions were
invoked because our opinion was that the bonds were legal, not
that they were collectable. No SEC language was used because we
never looked at whatever meager information was sent to
investors. We did require evidence that bonds were supported by
a source of payment that would make default unlikely, not because
we considered it our duty to the bondholders but because we did
not want to be associated with bad bonds; the fact that we
examined such evidence was not mentioned in our opinion; there
just wasn't any opinion if the evidence was not satisfactory.
Yet I have found a remedy for this nostalgia. I just try to
recall the last time my bill for approving a bond issue was $75.