### MARK

WHITE Altomey &lieml 

# The Attorney General of 

# Texas
November 16, 1979

Mr. Gerald R. Brown Executive Director TexanIndustrial Commission Box 12728,capitol station Austin, Texas 78711 opinion No. Mw-95 Re: Whether iPsuanceof bon& under the Development Caporation Act of 1979, V.T.C.S. article 5190.6, ia violetive of either article m, aecuon 52or article xl# section 2of the Texas Ccnstitutian. Dear Mr.Bmwm You have mqwJted an cplnh al the following questicne: a, will the kmmnce of tivenue bondsby en industrial developmslt caporaticn pumuant to the provisiam of the Development Corporation Act, article 5190.6, V.T.C.S., of paying the ccet 

### of a project to bc sold cc leased to a private, commadal, menufecttillg cr industrial enterprise or of making a loan to aueh a conuncrda& manufac~ u induatdal enterprbe for the purpcacof provIc?ing

temporary or permanent finnndng or mfimdng of all or part of tha cast 

### of a prcject cmktitute a violation of article RI,section 52 of the Texas Ccnstitutiat Q eny other constitutional cr etatutory requirement? (2) k the Attorney Qeneml% approval 

### of the bonds of an industrial development corporation created and rting purauen t to the provislona 

### of the Act mqdmd before eucha corporatim ten bsue ita revenue bonds? We have cortvidard the 

### following providona of the Constitution of Taart ARTICLERI,SEC. 52(a)

Except an otherwke provided by this sect& tbu Legblatum 8h1Uhave no power to authorize eny county, city, town or other political corporation cr rubdlvidcn of the State to lend its credit Q tc grant publie mcney cr thing of value in aid 

### of, cr to eny Indlvidurl, eaociaticn or cccpcration whetaoevm, cr to become a etockholk in uch ccrpcratia, uodatial u eompeny. .

p. 257, :
.

Mr.Gerald R. Brown - PageTwo (Mw-951

AR’DCLIIXI,SEC. 3 No county, city, or other municipal corporation shall hereafter become a 6ub6criberto the capital of any private cccporetim or amcciation, or make any appropriation cr donation to tbuasme, orin~~~eloanftsmdit;buttMsshsnnotbeconrrtruedtoin any way affect any obllgetlon h6retofcre mdertaken pumuent to **l&W.** It b well established that statutes are presumed to be constltutiaral and that they wIlI not be overturned unlem e qrecific section of the constitution clearly demonstrates thclr lnvalldity. Smith v. Davb, 426S.W.2d827 (Tex. 1968);State v. Cltv 

### of Amtin, 331 S.W.2d737, 747 @es. 1980)-Teuas Neticnal GuardArmcry Board v. **McC!UW,** 126S.W.2d 627 (Teu. 1939). Thus, the knswec to your fhat qusstlat will depend at whather it clearly appear6 that the bsuance of revenue bondsfor ths pupoges euthorlzed w ths Act violates the con6titutiaL The Act authorlxw the creatlm and establbhment of industrial development ~a~t~ncnproflt ~corpcraticnssnd arithoriues such ccrporations to issue revanue

prpcses Secdcn22of ths Act providesthat: Bonds issuedunderthe provbions of thb Act shallbedeemed not to comtftute a debt of the state, or the unit, a- any other polltical ccrpcratim, subQvlsion, or agency 

### of this state cc a pledge of the faith and credit of any 

### of them, but such bonds shsll be payable 6olely frcm the fund6 herein provided therefor from revenuea Ail such revenue bondsrMl contdn onthe 

### face thereofa statement to ths effect that neither the state, the unit, nor any political corporatlm, subdlvbion, u sgency 

### of the state shall be obligated to pay 

### the same or ths interest thereon 

### tmdthat neither the faith and credit nor the taxing power 

### of ths state, the unit, car 6nyother political corporeticn, subdivision, or agency thereof b.plec&ed to the payment of ths principal of or the interest on such bonds. The corporation shall not be authorieed to incur financial obligetiats uhlch csnnot be paid 

### from proceeds 

### of the obligations or from mvenues maliaed frcm the lea6c or 6aIe

### of a project or medical research project or refinance in whole cr in part e project or a medical researchproject..
. . but the corporation b not intended to be and rlau. not be a political s&dIvlsion or a political caporation within the meaning of the constitution and the law6 

### of the state, In&d@ without limitatim Article III,Sectlcn 52 of the Texas ht6titutim, and a unit **6tnU** never d&gate to a ccrporatiat any of Alohti’r attributen of avereignty, indudhg the powa to tax, the powa of eminentdomain, and the police power.

p. 259, \ :.

Mr.Gerald Il. Brown - PageThree (Mw-*5)

8ecticn 25(e)of the Act prov&a in part that: The principal of and intercet cn any bondsIssuedbythe ccrporaticn **6hsP** b66ecumcl bya pie* of the revenue8 end receipts derived by ths eorporaticn from the lease cr 8ale of the project or msdtcal research project 8c financed or from the loan made by the ccrpcretion with meet to the project Q madical rcecarch project eofhmncedorrefinancedendmaybesecuredbyamortgage coveriq all cr part of euch project cr medical rwearch prolect, including any enlargements of and addtlc~ to ouch project or malhl reeeard pojact th6reafter made. Tim Texan Supreme Ceurt hna heM thnt bon& which are peyable solely from revenue6 do not cmate aTlebtwwithin the meaning of the Canatitutian. Ci
Purthar, the Tsxar Supreme Court hsr treeted the question ofVcbtWend ‘lending of F as bedqgidentical @ nature with respect to mvenue bon&. Texea Natiaml Gtmrd a’~ 279

# aw2d 202ff **V.** Beard v. HcCraw~7f44~W.2d 627 (TM. 1929)i s 6rd,

. . lln63, it I6clearly 86tabIbhad tlmt W6btnand %ding of cmdit* do not occur whsn bend66~ b6ued which are pqyabla aobly fmm revenued. Wedo not believe that ‘pubfic mcm@ b invdved in the bsuance of revenue bonds Ly en indwtrial development corporaticn under the Act. The mcney received from the mile of such revenue baqda wffl come solely from private source8 (private investmslt benkece cr tmderwritein), and the money used to pay the principal of and intemet cn such bondawRlelaoeomefremaprivaterource. .TheActepeeifienUyprovldestlmtan indwtrial dcvelcpmmt ecrpcratian creeted pumuant to ‘the Act b not a political **61bdki6ia1** or a polithd corporation within the mWd!Ig of th? oonstituticn end lawa of th state. Awordh@y, it wculd appear that tke could be no wanta cc Wonaticn~of

‘publtc mcnep in any economic u constitutiaml6en6e. k to tha other con6titutional m6traint 6gah6t cupcrate dockholdlng, it appears tint bacawe a capcratian -ted under the4 Act ipfll have no stock end no membaq there will be no vMaticn of ccnstituticnal prohibiti”~ ,““M’” Rlbdvbicn becoming a rlockhclder in a oaparatia See Southem 200tTex. Cemm. App. 1929,j-t adopts tY

. cweng 12&W.2d FInally, we note tht * ldmiler etatutim have been upheld by the courta of eeverrl atete1S LeRlane v. Police Jury of Parbh of Rapida, 189So.2d 121(La. CL App4, writ dustrial Daveloomcnt AuthuriW~ 3$&i& d!!!$&~~~$%~~~~$$est v. hdustrbl Devacpment Scard

1 FitY of PIrmIv. Nelaon, SOS’ P.2d 705, 7lO&r-h-m (en bench elwment Authority ai Gmen v. CitY of Mt.

p. 259Mr.Gerald R. Brown - P-e Pour (m-95)

F’laasmt 131N.W.2dS,17 (Iowa 1964)~ City of Pi rWlnnI9?O)iUhl6v. State a ml. City d Chety~~~~~~~.ZiY “” 5 ’S Bad tpcn the foregoing, it b our opinionthat the bsuance ofsuch bondswouldnot violate artiele RI,6ection 32Q article Xl, lreotianSof the Taxa Constitution. 16 to your wcond quartion, wi?find that the Texan Constitution doss not require that the Attorney Qeneral approve bond6price to their bsuance or 6ale. See Love v. Rockwall Independent School Dbtrict, 228 S.W. 942, 644-45 (Tex. Comm%TmT jdgmt. adopted) Although 6u6happroval b often required bystatute, 6ee art. 709, it **b** &t neceaary that a datute authceizing b6uence of bo -id? v*T.c*a requim arch approval. Amsteter v. An mftl na.e.1~ MaQulllan 275S.W.2d95,103 lTex. Civ. App - Rl Par0 1954,writ el Cqmratiam S 43.46 U970). Aa one treatbe eqUne, **an bsuer**  b nrbjeot ody to th6 requiremat esprmly prarcribed by kw. McQdUan, 6 m at S43.47. It b, ttnm, cur cpinim Unt approW tq the Attornay Qeneral **b** not +t req rad~~a~tion~tedrnderthsActgn~eitsrsvsnuebonda SUMMARY The bmmnce cf rwenue bonds by M indlmtri6tl development corpatian **for** authorized pupoats, pursuant to the Development Cbporation **Act,** article 5190.6, V.T.C.S., will not violate article lIl, 6aetion 52 of th6Texa6Con6titution Q any ether con6titutid cr statutuy requimmatt. Tha **Attorney**Generals approval of atch bond6bnotreqtdredbefare~ 

# zmM

MARK WHITE **Attorney**General of Texnm JOHNW.PNNTRR,JR. Pint **Awiatant Attorney** Ganeral TEDL. HARTLRY R6ecutive krbtant **Attorney**tined Repwed byR&art T. Lewb Ambtant **Attcmay**General APPROVRD: OPINIONCOHMITTEE

. C. Robert Reath, Cha&mq

p. 260Mr.Gerald R. Brown - Page Five (MN-85)

BobGammqe SusanGarrison DM King RobertT. Lewia WilliemGReid

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