# The Attorney General of Texas November 5, 1980

Honorable Warren G.Harding State Treasurer P.0. Box12608 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 beconstituted 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 “[tlhere 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 apermissive function. District Grand Lodge No. 25 Grand United Order of Odd Fellows v. Jones, 160S.W. 2d 915(Tex. 1942). Tide Water Oil Co. v. Ross, 123S.W. 2d479 (Tex. Civ. App.-Galveston 1938), aff’d, 145 S.W. 2d 1089 (Tex. 1941). Moreover, section 32(g)ofarticle 12691-6states 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 maybesecured byany other or separate reserve fund or account to be kept at any place, or secured inany other manner provided inthe agency’s bondresolutions. (Emphasis added). We believe it is clear from this provision that the establishment of the reserve fund with the treasurer isoptional with the sgency. The agency may establish such a fund at any place or secure it in any other manner provided byits statute and included inits bondresolutions.

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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. Wenote 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 asadepository 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 isnot required to usethe state treasury for such funds. SUMMARY

The Texas Hous& Agency isnot required to create areserve 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 ofTexas JOHN W.FAINTER, JR. First Assistant Attorney General RICHARD E. GRAYIII Executive Assistant Attorney General Prepared bySusan Garrison &Susan VOSS Assistant Attorneys General APPROVED: OPINION COMMlTTEE Susan L.Garrison, Acting Chairman Jon Bible Bill Campbell Ride Gilpin Susan vces

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