C. SPECIAL PURPOSE DISTRICTS, GENERALLY

Special purpose districts are governmental entities and political subdivisions of the State of Washington that are created by the Washington legislature to carry out certain limited functions. These functions are specified in statutes. The House Committee on Local Government defines a special purpose district as “... any municipal or quasi-municipal corporation that can be created in this state other than counties, cities, towns and townships.” The most common types of special purpose districts in Washington are fire protection districts and school districts.

Special purpose districts are created to carry out specific, statutorily defined, purposes, for the benefit of the residents of the districts as well as other persons served by the district. Generally, special purpose districts perform functions that are not, for one reason or another, performed by general purpose governments (counties, cities, or towns).

Special purpose districts are municipal corporations, which means that they possess powers unique to governmental entities. For example, they may finance their activities through tax levies, condemn property, hold elections, and join forces with other governmental entities in cooperative ventures. By the same token, special purpose districts are limited by constitutional, statutory and regulatory provisions in the same manner as other governmental entities. For example, they are prohibited from lending public credit, owning stock or giving away public property as gifts.

This latter point is critical to understand. As creations of the legislature, special purpose districts must exercise their powers within the limits of the legislation authorizing their creation. They are also limited by other constitutional, statutory and regulatory provisions. The general rule is that municipal corporations are limited to powers expressly granted by the legislature and to powers necessarily or fairly implied in or incident to the powers expressly granted. In other words, if there is no statute that specifically authorizes a special purpose district to engage in an activity, or such authority cannot be necessarily or fairly implied, the district is prohibited from engaging in such activity.

Further Legal Background

This strict interpretation by the courts of the powers of municipal corporations is known as Dillon’s Rule. It was applied by the Washington State Supreme Court in [Chemical Bank v. WPPSS, 99 Wn.2d 772 (1983)], where the court, citing earlier cases, said:

The message from this language by the state’s highest court clearly states that if a special purpose district engages in an activity that is not authorized by the legislature, that action is void.

Although the powers of special purpose districts are generally construed strictly, the courts do recognize a distinction between “governmental” and “proprietary” powers as to whether a particular power can be fairly implied. In recent years, courts have concluded that when a governmental function is involved, less opportunity exists for liberally construing implied powers. However, when the legislature authorizes a municipal corporation to engage in a business, courts have concluded that municipal corporations have broad authority and may exercise their business powers in much the same way as business corporations so long as they act within the purposes of their statutory grants.