The Attorney General of Texas 

November 5, 1980 

Honorable Warren G. Harding 

State Treasurer 

P. 0. Box 12608 

Capitol Station 

Austin, Texas 78711 

Dear Mr. Hard@: 

Ycu I’ve requested cur opinion 

Opinion No. m-264 

Re: Whether the Texas Housing 

Agency can appoint a custodian of 

its funds other than the state 

treasurer 

as to whether the Texas Housing 

Agency may appoint a custodian for its reserve funds and other funds which 

is not the state treasurer. The Texas Housing Agency Act, V.T.C.S. article 

12691-6, provides that the Texas Housing Agency may create and establish 

with-the state treasurer a reserve fund consisting of proceeds from bond 

salea or other resources as additional security for the agency’s bonds. Sees. 

2(u), 32. Section 32 of the act provides in considerable detail how such a 

reserve fund should be constituted and managed. 

However, we believe the establishment of the reserve fund with the 

treasurer is a permissive and not a mandatory act of the agency. Section 

32(a) states that “[tl here 9 be created and established by the egency,” 

with the state treasurer, the Texas Housing Agency Reserve Fund. 

(Emphasis added). The term “may” generally connotes a permissive function. 

District Grand Lodge No. 25 Grand United Order of Odd Fellows v. Jones, 

160 S.W. 2d 915 (Tex. 1942). Tide Water Oil Co. v. Ross, 123 S.W. 2d 479 

(Tex. Civ. App. -Galveston 1938), aff’d, 145 S.W. 2d 1089 (Tex. 1941). 

Moreover, section 32(g) of article 12691-6 states as follows: 

Notwithstanding the foregoing provisions of this 

section, the sgency may or may not, at its option, 

create or fund the reserve fund and may issue its 

bonds which are not secured by the reserve fund, or 

any account therein, but which may be secured by any 

other or separate reserve fund or account to be kept 

at any place, or secured in any other manner provided 

in the agency’s bond resolutions. (Emphasis added). 

We believe it is clear from this provision that the establishment of the 

reserve fund with the treasurer is optional with the sgency. The agency may 

establish such a fund at any place or secure it in any other manner provided 

by its statute and included in its bond resolutions. 

p. 840 
Honorable Warren G. Harding - Page Two @W-2641 

The agency is also empowered to select a depository for its revenues and funds, 

other than appropriated funds, after taking bids to secure the most favorable interest 

rate. V.T.C.S. art. 12691-6, S19. We note that other agencies have been given authority 

to deposit funds outside the State Treasury. See V.T.C.S. art. 6674v, §§13,14 (Texas 

Turnpike Authority); Letter Advisory No. 132 (19m 

In our opinion, the Texas Housiw Agency has the option of utilizing the state 

treasury as a depository for funds other than appropriated funds under both its enabling 

legislation and general law relating to selection of depositories of state agencies, 

V.T.C.S. article 2529c, section 2. However, the agency is not required to use the state 

treasury for such funds. 

SUMMARY 

The Texas Hous& Agency is not required to create a reserve 

fund in the state treasury to secure its bonds, but may create a 

reserve fund to be kept elsewhere. The sgency may depceit its 

non-appropriated funds in a depository other than the state 

treasury. 

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 Garrison & Susan VOSS 

Assistant Attorneys General 

APPROVED: 

OPINION COMMlTTEE 

Susan L. Garrison, Acting Chairman 

Jon Bible 

Bill Campbell 

Ride Gilpin 

Susan vces 

p. 841