De&ember 14, 1950

Hon. Claude Isbell Executive Secretary Board of Regents Texas State TeachersColleges Austin, Texas Oplnlon~No. V-1133.
Re: Issyance of Revenue Bonds under Article 2654c-1,V.C.S.
Dear Sir:
In your recent letter you state that the Board of Regents of the Texas State Teachers Colleges desires to Issue certainbonds in behalf of one of the colleges for the purpose of constructinga classroom building and a boys' dormitory on the campus of the college, these bonds to be issued under the provisionsof Article 2654c-1, V.C.S. (Acts 47th Leg., R.S., 1941, ch. 560, p. 908) and secured by a pledge of the buildinguse fee authorizedby such statute and a pledge of the net revenues to be derived from the operation of the boys' dormitory.

Section 7 of the statuteprovides that governing boards of the colleges "shallnot be permitted to contract bonded Indebtednessunderthe terms of this Act In excess of eighty (80) per cent of the amount which can be amortizedwlEh ihi rknues from said bulldln use fee estimatedat the time of thexhorlza Ion of such rev- -7L--

enue bonds." (Emphasis added.)

You state that the contemplated bonds could not be amortizedby eighty (80) per cent of the building use fee, but that such bonds can easily be financed by such fee and pledged net revenues of the~dormltory,If the llmltatlon Imposed by Section 7 would not prevent the issuance thereof. Therefore,you wish to know whether the llmltatlon contained In Section 7 Is applicablewhere net revenues from the operation of the dormitoryare pledged In addition to a pledge of the buildinguse fee.. -.

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: Hon. Claude Isbell - Page 2 (v-1133)

Article 2654c-1 authorizesthe Issuanceof revenue bonds by the State Institutionsof higher learning named therein for the purpose of constructing and equlp- .plngbulldingsand power plants, the,pavlrig ot'streets, the purchase of land, and for' such..other

capital lmprovements as may be needed from'tlme"tot'lme; .:In~:qrder

to pay the Interest on and principalof.s.uch'bondgj.~the gov- .ernlng boards of the Institutionsareauthorized to charge studentsa building use fee of not less than Five Dollars ($5.00)per semester.

i+ .vlded: Moreover, In Section 6 of the statute it Is pro- .',

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. To assure the prompt payment of the pr&lpal and Interest of sald‘bdnds .iuch Board Is authorized to pledge aII or anyrportlon of the proceeds of the bulldlng ,use fee authorizedIn Section 1 of,thls'Act,',anp said bonds may be addltlonaIly'secured~.by a,pIedge of the net revenues from-bulldlngs~and',facl~,lties to be constructed;acqulred,".or 1,mproved with the proceeds of such bonds and from other buildings or facilitiesheretoforeor her,iafter constructedor acquired." Therefore,under the statute'cleariy'the govern- 'lngboard~hasthe authority to pledge not only,the building use fee but also the net revenues of the buildings to be constructed.

.lows: Section 7 of the statute~provldeklnpart as fol-

"The governingBoards of the aforesaidlnstl-. tutlons shall not be permittedto contract. bonded Indebtednessunder the terms of this Act In excess of eighty (80) per cent of t,he amountwhich can be amortlzed.wlth the revenu'es from said building use fee:estlmated at the time of the authorizationof such revenue. bonds. - . .'I The quoted language of Section 7, standingalone, Is clear and unambiguous,and would appear to prohibit the Issuanceof any bonds "under the terms of this Act" unless -the bonds could be paid with not more than 8% of the bulldlng use fee estimated at the time that the bonds are issued, regardlessof whether net revenues of.the Improvements areHon. Claude Isbell - Page 3 (V-1133)

pledged also. Standing alone, the provlslonsof Section 7 would be "so expllclt that lt ~111 admlt of no construction." City of Houston v. Allred, 123 Tex. 334, 350, 71 S.W. 2d 251, 259 (1934) D However, It 1s a fundamental rule of statutory constructionthat the entfre statutemust be consideredIn arriving at the Intent of the Legislature. It Is our oplnlon that the LegislatureIntendedno such constructionto be placed on the provlslonsof Section 7.

Sectl~cn

6 of the statuteprovldes that, when the revenue bonds are secured solely by the bulldlng use fee, the overnlzig

bod shall flx the amount of the fee (within the f5.00 maximum

5 sufflclentto meet the bond requirements and set up a reasonablereserve In the Interest and sinking fund. Section 6 also provides:

I( D 0

. When such bonds are secured In whole or In part by a pledge of the net Gvezfrorn bulldlngs or facllltles,lt shall be the duty of such governingbody to fix rentals and charges for the buildingsand facllltleswhose net revenuesare thus pledged, at rates sufficientto pay the maintenance and operatlon expense of such buildings and facllltlesand to pro&acenet revenueswhich, to ether wlth the bulldln use fee authorized kofloi??hdwm besufflclent to pay the interestand irlnclpalof such bonds as they accrue and mature." (Emphasisadded.) The statute in Sectlon 6 speaks of lssulng bonds secured ln whole by the net revenuespledged therefor. If Section 'ET;oere

glven a literal lnterpretatlon, this provlslon would be meaningless. In other words, If, bonds were payable solely from net revenues,as Is provided In Set-, tlon 6, then they could never be issued because of the 8% buildinguse fee provlslon of Section 7.

It 1s our oplnlon that, construfngthe act as a whole, the Legislature intendedthat Section 7 should be literallyfollowed only when the revenue bonds are secured solely by the bulldlng use fee. It 1s also our opinion that the Leglslatureestablishedan 8% safety rule ln an effort to preclude the posslbllityof lnssfflclentfunds to meet the bond requlrementa,Hon. Claude Isbell - Page 4 (V-1133)

You are advised that It Is the opinion of this office that, if the requirementsof the bonds can be met with not more than 80$ of the revenues of the building use fee and pledged net revenues estimatedat **the** time of the authorizationof the bonds, the provisionsof Section 7 will be satisfied.
SUMMARY
Revenue bonds secured by a bulldlng use fee and net revenues from building facllities may pe Issued on behalf of the State lnstltutlonsof higher learningunder Article 2654~~1,V.C.S., If the requirementsof the bonds can be met with not more than 80$ of the revenues of the buildinguse fee and pledged net revenues estimatedat the time of the authorizationof the bonds, provided the proceedingsare otherwiseproper.

APPROVED:
Everett Hutchlnson ExecutiveAssistant Charles D. Mathews First Asilstant
GWS : em Yours very truly,
PRICE DANIEL Attorney General

BY~~*)~&-~L/ Georg W. Sp ks Assistant