Judge Rejects Gadfly’s Bond Case : Courts: Self-styled watchdog had delayed city’s $250-million issue by arguing that it violated Proposition 13. The challenge is dismissed without trial.

Despite the efforts of a City Hall gadfly, a Superior Court judge on Friday validated plans by Los Angeles to sell $250 million in bonds to pay off a court judgment.

Judge Dvintra I. Janavs granted a summary judgment without a trial in favor of attorneys for the city, who argued that the city could issue the bonds to repay revenues collected from an illegal business tax.

Leonard Shapiro of Granada Hills had tried to stop the proposed bond sale and had delayed the city’s plans for four months. Janavs’ ruling, delivered without comment except to say she supported the city’s position, prompted Shapiro, who was in the courtroom audience, to leap to his feet.

“You mean we don’t get a trial!” Shapiro cried out. “I don’t believe this.”

The court action stemmed from the City Council’s approval of the bonds to repay an estimated $230 million plus interest to about 40 savings and loans and other financial firms from whom the city had collected a business tax. The tax was challenged in 1982, and last summer the California Supreme Court ruled that the business tax was illegal.

Because cities rarely move to pay a court judgment through a bond issue, the city sought a judge’s ruling to validate the action.

Shapiro, 72, a self-proclaimed civic watchdog, challenged the proposal after learning about it through a newspaper legal notice.

The complaint he filed caused a delay in the judicial proceedings that city officials complain has cost taxpayers because the judgment continues to accumulate interest at 7%, adding $190,000 a month to the total price tag.

Shapiro charged that the bond issue violated provisions of Proposition 13, which requires a two-thirds approval by voters.

But attorneys for the city argued that voter approval was not required because the bonds will be backed by general city revenues and not the unlimited property tax powers that require voter approval.

Kenneth O’Rourke, an attorney with O’Melveny & Myers, representing the city, argued at the court hearing that “the city has broad authority to issue bonds.”

Shapiro’s attorney, Michael R. Mitchell, responded that a bond issue was the wrong way to satisfy the debt. “The city can sell property or we can have a vote. That’s what we’re entitled to.”

O’Rourke said the bond issue was actually going to save taxpayers about $22 million because of lower interest rates available through bond sales.

“The issue is not whether or not the city has to pay back the money, the issue is what is the least expensive way,” O’Rourke said. Attorney Kathryn Sanders said the bonds will probably be issued in July.

But Shapiro and his attorney said they are considering an appeal.