### ATTORNEY GENERAL OFTEXAS GREG ABBOTT

September 14,2006

The Honorable Robert Duncan Chair, Committee on State Affairs Texas State Senate Post Office Box 12068 Austin, Texas 7871 l-2068 Opinion No. GA-0455
Re: Whether Government Code section 2306.6710, which requires the Texas Department of Housing and Community Affairs to score and rank low-income housing tax-credit applications according to statutorily specified criteria, violates Texas Constitution article II, section 1,the Separation-of-Powers Doctrine (RQ-0457-GA)
Dear Senator Duncan:
You ask if Government Code section 2306.6710, which requires the Texas Department of Housing and Community Affairs to score and rank low-income housing tax-credit applications according to statutorily specified criteria, violates Texas Constitution article II, section 1, the Separation-of-Powers Doctrine.’ The federal government offers tax credits to private developers to stimulate investment in and.construction of low-income housing. See generally 26 U.S.C.A. 5 42 (West 2002 & Supp. 2006). These federal tax credits are allocated among the states and awarded atthe state level by a designated housing credit agency. See id. 542(h), (m). InTexas, the legislature, under Government Code chapter 2306, subchapter DD, has designated the Texas Department of Housing and Community Affairs (“TDHCA”) to administer the state’s low-income housing tax-credit program. See TEX. GOV’TCODEANN. 5s 2306.6701-.6734 (Vernon Supp. 2006); see also id. §2306.053(10) (Vernon 2000) (authorizing TDHCA to “administer federal housing, community affairs, or community development programs, including the low income housing tax credit program”). The Internal Revenue Code requires TDHCA, as administrator of this tax-credit program, to allocate tax credits according to selection criteria laid out in a“qualified allocation plan.” See 26 U.S.C.A. $42(m)(l)(B)-(C) (West 2002 & Supp. 2006). Texas law implements the federal law by requiring the TDHCA board to annually adopt a qualified allocation plan, see TEX. GOV’T CODE

‘See Letter from Honorable Robert Duncan, Chair, Committee on State Affairs, Texas State Senate, to Honorable Greg Abbott, Attorney General ofTexas (Feb. 21,2006) (on file with the Opinion Committee, also mailable af hrtp://www.oag.state.tx.us) [hereinafter Request Letter].The Honorable Robert Duncan - Page 2 (GA-0455)

ANN.52306.67022 (Vernon Supp. 2006), which, among other things, provides the threshold scoring and underwriting criteria and procedures for applicants seeking low-income housing tax credits. See id. §2306,6702(a)(lO). While TDHCA has discretion to determine the number ofpoints to assign the underwriting criteria and to score and rank the applications for tax credits, numerous provisions in the Government Code require TDHCA to consider specific funding priorities, information, and preferences in doing so.* And itisthese prescriptive provisions that give rise to your question. See Request Letter, supra note 1,at l-2. Specifically, you ask about Government Code section 2306,6710(b), see id., which requires TDHCA to score and rank tax-credit applications using apoint system that

(1) prioritizes in descending order criteria regarding: (A) frnanciai feasibility ofthe development

. ; (B) quantifiable community participation with respect to the development

. ; (C) the income levels oftenants ofthe development; (D) the size and quality ofthe units; (E) the commitment of development funding by local political subdivisions; (F) the level of community support for the application, evaluated on the basis of written statements j?om state elected officials; (G) the rent levels ofthe units; (H) the cost ofthe development by square foot; and (I) the services to be provided to tenants of the development[.]
TEX.Gov’TCODEANN. 32306,6710(b)(l) (Vemon Supp. 2006) (emphasis added). This office has determined that this section is a mandatory provision that requires TDHCA to rank applications using apoint system that gives the greatest number ofpoints, in descending order, to the nine factors

%X TEX.GOV’TCODEANN. 52306.6725(a) (Vernon Supp. 2006); Tex. Att’y Gen. Op. No. GA-0208 (2004) at 9 11.13(discussing the discretion Government Code section 2306.6725(a) permits TDHCA in assigning points to undenvritingcriteria); see&o, e.g., TEX.GOV’TCODEANN. @2306.11 l(d),(g), .6704(b), .6710(b), .6718@)(Vemon Supp. 2006).The Honorable Robert Duncan - Page 3 (GA-0455)

listed. See Tex. Att’y Gen. Op. No. GA-0208 (2004) at 10. You question whether the sixth factor, subsection (F), requiring TDHCA to assign points to written statements from state legislators, violates the Separation-of-Powers Doctrine in the Texas Constitution. See Request Letter, supra note 1, at 1-2; see also TEX. GOV’T CODE ANN. $5 2306.6710(f) (Vernon Supp. 2006) (requiring asystem ofpositive to negative points for statements ofsupport or objection from state legislators); id. 52306.6718(a)(l) (requiring TDHCA to “provide written notice ofthe tiling of an application to members of the legislature who represent the community containing the development described in the application”).
You question this subsection’s constitutionality because Texas Constitution article II,section ~1, the Separation-of-Powers Doctrine, requires the Texas government tobe divided into three distinct departments-the legislative, the executive, and the judicial. See TEX. CONST. art. II, 5 1. The constitution elaborates that “no person, or collection ofpersons, being of one ofthese departments, shall exercise any power properly attached to either of the others, except in the instances herein expressly permitted.” Id. You note that many times TDHCA awards or refuses tax credits to applicants on anarrow margin ofpoints where the determinative factor will be the points assigned to the application because of the presence or absence of a legislator’s written statement about the application.3 Thus, you suggest that section 2306,6710(b)(l)(F) retains an executive function for individual members ofthe legislative branch, which isinconsistent with the constitution’s language. See Supplemental Letter, supra note 3, at 1. While article II, section 1appears on its face to require absolute division among the various branches, ithas long been understood that arigid application ofthis principle is impossible because not every governmental power tits logically and clearly into any particular department. See Gov ‘t Servs. Ins. Underwriters v.Jones, 368 S.W.2d 560,562 (Tex. 1963) (“[T]heproblemofdetermining that which isjudicial and that which islegislative isoften difficult ofstatement under varying factual circumstances.“); Coatesv. Windham, 613 S.W.2d 572,576 (Tex. Civ. App.-Austin 1981,no writ) (“The proper interpretation ofArticle R,section 1is

. dictated by its context.“). Itismore accurate to state that the Separation-of-Powers Doctrine “prohibits atransfer ofawhole mass ofpowers from one department to another and it prohibits a person of one branch from exercising a power historically orinherently belonging to another department;” Coates, 613 S.W.2d at576. But itdoes not prevent cooperation orcoordination between two ormore branches ofgovernment because that would otherwise hinder effective governmental action. State Bd. ofh. v.Betts, 308 S.W.2d 846, 852 (Tex. 1958). Thus, in application article II, section 1will prohibit the legislature from, for example, authorizing a legislative oversight committee to approve or veto an executive agency’s administrative rules-which rule-approval power isreserved tothe executive branch-but itwill not preclude the commentary orexpressions ofapproval or disapproval by alegislative committeeto an administrative body. See Tex. Att’y Gen. Op. No. MW-0460 (1982) at 2 (observing that no law precludes alegislative committee from providing input to an agency, provided the committee isnot the decision-maker); see also TEX. CONST. art. III, 5 1.

‘See Letter and attachment from Honorable Robert Duncan, Chair, Committee on State Affairs, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas (Mar. 31,2006) (on file with the Opinion Committee) [hereinafter Supplemental Letter].The Honorable Robert Duncan - Page 4 (GA-0455)

Here, section 2306,6710(b)(l) requires only that TDHCA give priority in descending order to the nine enumerated factors listed there; the section, however, does not require TDHCA to assign specific values to those factors. See TEX. GOV’TCODEANN. § 2306,6710(b)(l) (Vernon Supp. 2006); id. ?j2306.6725(a); see also Tex. Att’y Gen. Op. No. GA-0208 (2004) at 10n.15 (referring to TDHCA’s authority to assign values to factors the agency must consider in ranking and scoring tax-credit applications). And asyou note, itis only “possible that the mandatory points awarded or deducted because of a state elected official’s letter could be the deciding factor as to which applications are awarded the tax credits by [TDHCA].” Request Letter, supva note 1, at 2. That possibility applies equally to any of the criteria that TDHCA must consider and score. Given TDHCA’s broad discretion inthis arena, any determinative quality in scoring atax-credit application associated with alegislator’s written statement isnot an executive power retained bythe legislature; rather, that determinative quality iscreated by agency rule in its qualified allocation plan. Thus, we cannot say that the legislature, by requiring that its individual members’ input be assigned a score in atax-credit application to an executive agency, is interfering, with acore power or the mass of powers reserved to TDHCA as a department in the executive branch. Section 2306,6710(b)(l), therefore, does not on its face violate Texas Constitution article II, section 1.The Honorable Robert Duncan - Page 5 (GA-0455)

SUMMARY Government Code section 23066710@)(l), which requires the Texas Department of Housing and Community Affairs to score and rank applications for low-income-housing tax credits in part based on written statements from state elected officials, does not violate the Separation-of-Powers Doctrine in Texas Constitution article II. section 1.

KENT C. SULLIVAN First Assistant Attorney General
ELLEN L. WITT Deputy Attorney General for Legal Counsel NANCY S. FULLER Chair, Opinion Committee Daniel C. Bradford Assistant Attorney General, Opinion Committee