DAN MORALES 

ATTORNEY GENERAL 

@ffice of tip !Zlttornep Q&nerd 

&tate of PCexae 

September IS,1993 

Ms. Mary Webb 

Chair 

Texas Agricultural Fhtance Authority 

P.O. Box 12847 

Austin, Texas 78711 

opinion No. DM-255 

Re: Whether the Texas Agriculturai 

Fiice Authority may use bond proceeds 

from the Texas AgticulturaI Fund to 

reimburse the Department of Agriculture for 

administrative expenses incurred on behalf of 

theauthority (RQ-393) 

DWMS. Webb: 

You have requested an opinion co naming the Texas Agricuhural Fiice 

Authoritfs (“the authority”) use of the Texas Agricuhural Fund (“the fund”) for 

rambursrment of administmtive costs. You advise us that the !knd consists of three 

separate accounts: a program account; an interest and sinking tImd account; and a reserve 

al%mnlt.~ Cdy the only business conducted by the authority is related to the 

provision of financial assktance through the fund? The tinance division of the 

Depmtment of Agriculture (“the department”), administers various programs on behalf of 

the authority, preparea the authority’s portion ofthe annual report and covers the authority 

in its internal audits. These eqenses are tinanced by appropriations to the department 

tiom the state’s general revenue fund. You ask whether the authority is prohibited from 

using the tbnd and the investment income contained therein to reimburse the department 

for various administmtive expenses which you state are necessary as “preparation to meet 

the need of providing linancial assistance to the agriathural community.” It is our opinion 

that the authority is not prohibited t?om makhtg expenditures from the fund to pay for 

expemes incurred in administexing the timd in krtherance of the speciftc purposes for 

which it was created. 

p. 1323 
MsMaryWebb - Page 2 @M-255) 

The authority’s enabling legislation provides that: 

The commissione-r with the assistance of the board shall 

administer the Texas Agricultural Fiice Authority. The bomd 

shall reimburse the Department of Agriculture for expenses incurred 

m required by the business of the m&or@ with the approval of a 

majority of the board. 

Agric. Code 3 58.015(a) (emphasis added). You have suggested that the enabling 

legislation, speci6cally the above italicized language, clearly supports the proposition that 

the department shag be reimbursed for various administrative expenses incurred on behalf 

of the authority. We agree. However, the Texas Constitution places a restriction on the 

use of the fund by prohibiting its use for any purpose other thsn to provide tinancial 

assistance to agricultursJ businesses. Speciftcally, article III, section 49-i of the 

constimtion provides in part: 

(a) The Texas agricultural timd shall be used only to prow& 

financial assistance to ahlop, increase, improve, w expand the 

production, processing, marketing, w export of crq or praiucts 

grown orprohcedphtariity in this skzte Sy agrictdtura~ businesses 

domic&d in this state. . . . 

. . 

(c) Income from the invesbnent of money in the jim~!~ that is not 

immediately committed to the payment of the principal of and 

interest on the bonds or the provision of tinancial assistance shall be 

used to create new emplqvment and business opporhnittes in the 

state through diversification and expansion of agricultural or rural 

small businesses, as provided by the legislature. 

Tex. Const. art. III 5 49-i(a), (c) (emphasis added). The specitk grant of power in article 

49-i(a) carries with it by necessary implication the grant of such additional powers as may 

be necessaq to effectuate its purpose. See First Nat? Bank of Port Arthur v. City of Port 

Arthur, 35 S.W.2d. 258 (Tex. Civ. App.-Port Arthur 1931, no writ) (bond proceeds may 

be used in a manner necessarily implied to carry out purpose and intent of constitutional 

provision). 

Furthermore, we are cognizant of the fact that the fund and more speci6cally, the 

bond proceeds may be used for reimbursemem of administrative costs. 

Eligible agricultural businesses or lenders participating in the 

authority’s programs shall pay the costs of applying for, participating 

in, and administering and servicing the program, in amounts the 

board considers reasonable and necessary. Any costs not paid by the 

ehgible agrkultural businesses or lenders shall be paid from the 

p. 1324 
MaMarywebb-Pagc3 (DM-255) 

fimak of the author@, in&ding those@nds establishedfrom bond 

proceeds. (Emphasis added.) 

. . 

Proceeds of the bonds issued under Subsection (c) of this section 

shall be deposited in the Texas agricuhural Smd and applied in 

accordance with the resolution authorizing the bonds: 

(1) to pruviak hncial assistance to cligiile agricultural 

bUSill=; 

(2) to pay costs of issuance of those bonds and the 

administration of any financial assistance program established with 

the money in the Texas agriadtural fund, and 

(3) together with any other available timds, to pay the principal 

of or inter& on or to discharge or raiean, in whole or in part, any 

outstanding bonds isaued by the authority. 

Agric. Code 8 58.03 l(c),(d) (emphasis added). It is clear that to the extent allowed by the 

resolution authorizing the bonds, the bond proceeds may be used to pay for the 

. . admuwtdve expemes of the authority in the administration of authorized purposes as 

enunciated in article III, section 49-i of the Texas Constitution. Hence we conclude that 

such proceeds may also be used to reimburse the department for like expenses on behalf of 

theauthority. 

We now turn to the repayments of financial assistance and the investment income 

which is also contained in the fund. Section 58.032(c) of the Agriadturc Code provides in 

part: 

Repayments of tinancial as&stance under any program funded in 

whole or in part with the proceeds of any series of general obligation 

bonds shah be deposited first in the interest and sinking account as 

prescrii by the board’s resolutions authorizing such series of 

general obligation bonds, and second in the reserve account in 

respect of such series resolutions authorizing such series of general 

obligation bonds until that account is tUy timded as prescribed by 

the board’s resohttions. . . . 

In addition 

To the extent the board determines that any money credited to 

the Texas agricuhural tknd from repayments of tinancial assistance is 

not required by Subsection (c) of this section . . that money may be 

wed by the authori@ to pny the principal of and interest on revenue 

bonds issued by the authority or for any other authorizedpu~ of 

p. 1325 
Ms.MaryW&b - Page 4 (DM-255) 

theauthwity,in- with this chqter and the authri~‘s 

nrsolutians au~gensral ob&atim bomk 

Id. 5 58.032(d) (emphasis added). Furthermore., article III, section 49-i(c) mandates that 

the investment income contained in the iimd which is not obligated to the payment of the 

principalofandintaestonthebondsortheprovisionoffiwrcialassistanceshallbeused 

to provide for speci!ic agricukural purposes, as provided by the legislature. In section 

58.023(c) of the Agriculture Code, the legislature provides that the fund, including 

mvestnainwn&nUlybcusedtopay~expeMesofthefinancialassistanw 

program. Hence, we wnclude that repayments of Glacial assistance and income on 

investmend money wntained in the fhd may be used to pay for the expemzs of 

. . . admmmmgthefund. 

SUMMARY 

The Texas Agricultmnl Furance Authority may use bond 

proceeds Tom the Texas Agriadtural Fund to reimburse the 

Department of Agriculture for administrative Qcpenses incurred on 

behalf of the authority. 

DAN MORALES 

Attorney Oeneral of Texas 

WILL PRYOR 

Ftik+sistantAttomeyoeneral 

MARYELLER 

Deputy Attorney Oeneral for Litigation 

RENEAHICKS 

State Solicitor 

MADELEINE B. JOHNSON 

Chair, Opiion Committee 

Prepared by Toya C. Cook 

AssistantAttO~General 

p. 1326