July 2, 1974

The Honorable Leroy Jeffers President, State Bar of Texas P. 0. Box 12487 Austin, Texas 78711 Dear **Mr.** Jeffers: Opinion No. H- 348 Re: Proposal for financing and constructing State Bar Center

You have requested our opinion onthe legality ofaplan for financing and constructing a newState Bar Center. Since your original request was submitted you have altered your financing plans andhave submitted a revised question reflecting those changes. Your question is:

Can the State Bar bfTexas under the applicable law enter into a contract for the construction of a new‘building onthe site ofits present building and enter into a contract or contracts for the financing or partial financing ofthe costs of such construction so long as such contract or contracts does not obligate or encumber the dues revenues ofthe State Bar of Texas beyond revenue for the current year at the time ofentering such contract or contracts and so long as the sums that become due and payable under such contract or contracts are payable only from (1) monies contributed or pledged to be contributed to afund for the express purpose ofaiding in the payment ofthe costs of construction ofsuch newState Law Center; (2) revenues derived or which may become due andpayable for the rental of space to others in the new building cashwdd by theState Bar of Texas; and (3) ,such funds as may be contributed or pledged to be contributed to the costs of such construction by the Texas Bar Foundation, aprivate corporation, which is not an agency ofthe State ofTexas?
p. 1586The Honorable Leroy Jeffers, page 2

The State Bar ofTexas was created by the State Bar Act, Article 320a-1, V. T. C.S. Subdivision (a) ofSec. 2 ofthat Act provides: There is hereby created the State Bar, which

is hereby constituted an administrative agency ofthe Judicial Department ofthe state, with power to contract with relation toits own affairs and which may sue and be sued and have such other powers as are reasonably necessary to carry outthe purposes ofthis Act. Pursuant tothe clear language ofthe statute **this** office has consistently held that the State Bar of Texas is a state agency. Attorney General Opinions WW-202 (1957); MS-83 (1953); V-1299 (1951); V-480 (1948); O-2784 (1940). The same subdivision creating the Bar as an instrumentality ofthe State gives it broad power to conduct its own affairs. Surely it is necessary .for the Bar to acquire adequate office space ifitis~to carry outits responsibilities under the Act, and construction ofa new building is a reasonable means ofobtaining that space. . The plan for construction ofthe proposed State Bar Center is similar to the method used for financing and constructing the existing building. Given the failure ofthe Legislature over 20years to object to this procedure onthe part of the State Bar coupled with the Legislature’s failure toinclude this type building program in the general purview ofthe State Building Construction Administration Act, Article 678f, V. T. C.S., we are unable to say that the suggested procedure is illegal. The Bar is, ofcourse, subject tothe requirements of the State Bar rules. Your revised question does not seek an interpretation of those rules, and for the purposes ofthis opinion we assume that the construction and financing ofthe building will be authorized in conformity with the State Bar rules.

.. Any financing plan used by the B.ar is limited by Article 3, Sec. 49 ofthe Texas Constitution which provides: p. 1587The Honorable Leroy Jeffers, page 3

No debt shall be created by or onbehalf of the State, except to supply casual deficiencies of **revenue,** repel invasion, suppress insurrection, defend the State inwar, or pay existing debt; and the debt created to supply deficiencies inthe revenue, shall never exceed in the aggregate at any one time, two hundred thousand dollars. However, the definition ofdebt, as used in this portion ofthe Constitution, has been given a narrow meaning. Debt does notinclude obligations payable solely from revenues generated by renting or operation ofthe project. Texas National Guard Armory Board v. McGraw, 126S.W. 2d 627 (Tex. 1939); Attorney General Opinion O-1694 (1939). Furthermore, no debt is created when payment is to be made from current ~revenues only. Charles Scribner’s Sons v. **Marts.** 262 S.W. 722 (Tex. 1924); Attorney General Opinion M-656 (1970). Under the proposal you submitted alender could look only to rental revenues and voluntary contributions for payment infuture years. You have notproposed amortgage of state property. Under these facts we do notbelieve the Constitution- or statutes would prevent the Bar from constructing and financing a new State Bar Center. As we have been given noproposed contract we pass solely onthe general outline you have presented. The l,egality ofany particular contract would depend onits thermsand provisions, and this opinion is necessarily limited to the query posed. SUMMARY

The Constitution and statutes do notpreclude the State Bar of Texas from constructing and financing anew State Bar Center where apledge ofvoluntary contributions and revenues generated bythe building is the only source towhich the lender can look for +Lment in future years.

p. 1588The Honorable Leroy Jeffers. page 4

DAVID M. KENDALL, Chairman Opinion CornnGttee

p. 1589