The Attorney General of Texas 

biay 30, 1981 

MARK WHITE 

Attorney General 

Honorable Charles W. Evans 

Chairman 

House Committee on Government 

Organization 

P. 0. Box 2910 

Austin, Texas 78769 

Opinion No. Mu-352 

Re: Questions regarding proposed 

legislation placing the National 

Guard Armory Board under the 

administrative control of the 

Adjutant General’s Department 

Dear Representative Evans: 

You inform us that proposed legislation may amend articles 5931-l - 

5931-13, V.T.C.S., the provisions governing the National Guard Armory 

Board. House Bill 2082 would amend article 5931-4 by adding subsection (b) 

requiring the armory board to use the personnel of the Adjutant General’s 

Department to administer the act. It would also authorize the board to 

obtain services necessary to administer the act from other state agencies 

and to compensate them for these services. The bill would in addition delete 

from article 5931-5 subsection 4, which presently authorizes the board to 

hire an executive secretary, other officials, lawyers, agents and employees, 

and to prescribe their duties and fix their compensation. The other powers 

of the armory board would be left intact. These include the power to sue 

and be sued, to make contracts, to acquire property, to construct buildings, 

and to issue and sell bonds, debentures, and other evidence of indebtedness 

to fund authorized projects. 

You ask the following questions concerning the proposed legislation: 

Would such action: (1) have the effect of prohibiting 

the National Guard Armory Board from borrowing 

money, or issuing bonds, debentures, or other 

evidences of indebtedness for the purpose of 

constructing, remodeling, repairing, and equlping one 

or more buildings; and (2) would the recommendation 

violate cr cause to be violated by the National Guard 

Armory Board any existing covenants, agreements, 

contracts, or other obligations of the board relating 

to the indebtedness of the board? 

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Honorable Charles W. Evans - Page Two GiW-352) 

We answer both of your questions in the negative. 

We note initially that the armory board could have elected to use personnel of 

the Adjutant General’s Office under the provisions of the Interagency Cooperation Act, 

article 4413(32), V.T.C.S. The armory board is a state agency within the provisions of 

this act. Section 2 defines “agency” to include “board. ” The armory board is a “state 

agency” for purposes of the Sunset Act. V.T.C.S. art. 5931-la; see V.T.C.S. art. 5429k, 

R02(1l(A). It has been a department of state government fo*urposes of requesting 

Attorney General Opinions. See Attorney General Opinions H-24 (1973); M-890 0971); 

M-396 (1969); C-242 (1964); O-5505 (1943). It is funded in the General Appropriations 

Act. which aoorooriates monev “for the suooort of the Judicial. Executive and 

Legislative Br&h& of the State Government .‘.‘. .I’ Acts 1979, 66th Leg., ch. 843, at 

2445, 2453, 2591. See Id. art. III, s1, at 2564. See also Texas National Guard Armory 

-- 

Board v. McCraw, 126 S.W. 2d 627, 640 (Tex.m(dissenting opinion). Although 

Attornev General Ooinion G-5505 (19431 stated that the armorv board was “more nearlv 

like a municipal cor*poration or city than a State d-epartment,‘;that was for the purposk 

of determining that the board did not have to request rental space through the Board 

of Control. A governmental entity may be a state agency for purposes of some statutes 

and a political subdivision for others. Compare Attorney General Opinion M-316 0968) 

with Attorney General Opinion M-1266 09721 (community mental health centers). 

As a state agency within article 4413(32), V.T.C.S., the armory board may enter 

into a contract with other agencies of the state “for furnishing necessary and 

authorized special or technical services, including the services of employees. . . .I’ 

Sec. 3. Contracts are to be approved by the board of control which must consider 

“1~1 hether the proposed arrangements serve the interests of efficient and economical 

administration of the State Government.” Sec. 5(b). 

Thus, House Bill 2082 merely requires of the board what was formerly a legal 

option under the Interagency Cooperation Act. Contracting under this statute for the 

services of adjutant general personnel does not affect the power of the armory board 

to issue bonds or other evidences of indebtedness under section 8 of article 5931-5. It 

simply permits the board to operate more efficiently by pooling resources with the 

adjutant general or other state agencies to acquire the services of employees. 

We note that the indebtedness which the armory board may incur is not 

indebtedness within sections 49 and 50 of article III of the constitution. Texas 

National Guard Armory Board v. McCraw, 126 S.W. 2d 627 (Tex. 1939); Charles 

Scribner’s Sons v. Marrs, 262 S.W. 722 (Tex. 1924). Constitutional %Iebt” is an 

obligation supported by tax monies, for which there must be specific constitutional 

authorization. The National Guard Armory Board has no authority to issue taxsupported obligations. Its authority extends only to the issuance of revenue bonds;, 

which are not debt in the constituticnal sense. See generally City of Dayton v. Allred; 

68 S.W. 2d 172 (Tex. 19341, Atkinson v. City of Dallas, 353 SW. 2d 275 (Tex. Civ. App. - 

Dallas 1961, writ ref’d n.r.e.1, cert. denied, 370 U.S. 939 (1962). The act granting 

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Honorable Charles W. Evans - Page Three (Mw-352) 

power to the board to issue revenue bonds, payable from lease revenues from the 

Adjutant General’s Department, was held constitutional in Texas National Guard 

Armory Board v. McCraw, -. The conduit financing thus approved is not a debt of 

the state. The legislature appropriates funds to the adjutant general, from which said 

department pays rent to the armory board for the armories constructed by the board. 

Those rents are the only security for the board’s revenue bonds issued to construct the 

armories; the full faith and credit of the state does not lie behind the bonds. 

An amicus brief submitted for the armory board advances the position that by 

causing the board to utilize administrative staff of the adjutant general, the board 

loses all independence, that, in effect, once the board must utilize the staff of the 

adjutant general, the adjutant general would be both lessor (presently the role of the 

armory board) and lessee. In terms of indebtedness incurred by the board, according to 

the position advanced by the brief, the adjutant general would be both the 

issuer of the bonds and the security for the payment of same; he would “in one 

capacity pledge to himself in another capacity the amounts which he would pay as 

rentals to meet the bond obligations. ” Brief of attorneys for the armory board at page 

9. We submit that no substantive change has actually occurred in the security for the 

bonds or in the issuer of the bonds. The board still retains, inter alia, the right to sue 

or to be sued, the right to enter contracts, to acquire property, to issue bonds. The 

security for such bonds has not changed. That security is still in the lease payments of 

the adjutant general to the armory board, not out of the general revenues of the state, 

but from the state appropriation to the adjutant general. 

The board retains by the proposed amendment all the characteristics it had save 

the ability to hire its own administrative staff. The adjutant general is still required 

to make lease payments, subject to a legislative appropriation for such. The board can 

still be brought to court in event of a default. Unless there is some infirmity in the 

legislature ordering to be done what could be done optionally formerly, we can see no 

way in which the security of the boards outstanding bonds or the ability to issue future 

bonds would be impaired. 

In holding the act establishing the National Guard Armory Board constitutional 

the Texas Supreme Court stated: 

. . . The Legislature has seen fit to enact this law for the 

purpose of procuring sites and erecting armories, and has 

furnished the method for financing the plan. The wisdom or 

expendiency of this law ls left exclusively to the Legislature to 

determine, and courts are concerned only with its validity. 

Te supra, at 631. Since the court found the law 

valid, implementation is clearly left in the hands of the legislature. The court 

certainly appears to recognize the plenary power of the leglslature to prescribe the 

method of implementation in the constitutionally valid undertaking. See also Attorney 

General OpiniOn G-6598 0943) at 11 (opinion also cites powers of the board, of which 

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Honorable Charles W. Evans - Page Four (MW-352) 

the power to maintain an administrative staff is one power out of seven enumerated). 

There ls no negative effect on the power of the armory board to issue bonds brought 

about by mandating that the board should utilize administrative services of the 

adjutant general. The board retains all powers which would go to their ability to issue 

bonds and Secure such bonds or other evidences of indebtedness. 

The second part of your query concerns the possible violation of existing 

covenants by the change in the act. Since the board effected an advance refunding 

under article 717k. V.T.C.S.. the oroceedines relatinrr to such refundinu contain all 

extant covenants. . See National duard Ariory Boari Refunding Bonds;Scrics 1979, 

Resolution AuthorizE the Issuance of Bonds, August 25, 1979, section 22. These 

covenants contain no guarantee to maintain the administration as then constituted. 

The covenants do pledge efficient and economical management (Resolution, su ra, 

section 22, at (cl). A purpose of the Interagency Cooperation Act is to serve ef + icient 

and economical administration of state government. The board could effect through 

this statute the same administrative changes that the proposed amendment to the 

enabling legislation mandates. No violation of outstanding covenant is effected by the 

proposed chanae. Bondholders have no vested rizht azainst a chanee in the law. unless 

bondholders took the bonds with notice of such legislation and with notice that the 

board could voluntarily undertake to use another entity’s administrative staff. Were 

this to comprise a substantial impairment of their contract, there would have been 

covenants proscribing utilization of the Interagency Cooperation Act in the bond 

resolution. As we have demonstrated above, mandating what could have been 

voluntarily undertaken is permissible. If the voluntary act would not have impaired 

existing covenants, there is no basis for concluding that legislation mandating the act 

will impair covenants, and certainly no basis for concluding that the mandate goes to 

substantial rights under the contract. 

SUMMARY 

Legislation requiring the armory board to utilize the 

administrative facilities of the adjutant general will not 

preclude the board from issuing bonds or other evidences of 

indebtedness, nor wlll such action violate existing covenants 

relating to the board’s indebtedness. 

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Honorable Charles W. Evans - Page Five (NW-352) 

MARK WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY, III 

Executive Assistant Attorney General 

Prepared by Susan L. Garrison 

Assistant Attorney General 

Susan Lee Voss 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Rick Gilpin 

Jim Moelinger 

Susan Lee Voss 

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