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 conaming 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: aprogram 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 ofAgriculture (“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 ofproviding 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 itwas created.

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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 shallreimbursetheDepartment ofAgriculture for expensesincurred
m required by the business ofthe m&or@ with the approval of a majority ofthe 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 shagbe 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 inpart:

(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 ofcrq orpraiucts grown orprohcedphtariity inthisskzteSyagrictdtura~businesses domic&d inthisstate.
...

. . (c) Incomefrom the invesbnent ofmoney in thejim~!~ that is not immediately committed to the payment of the principal of and interest on the bonds or the provision oftinancial assistance shall be used to create new emplqvment and business opporhnittes in the state through diversification and expansion of agricultural or rural smallbusinesses, asprovided bythe legislature.
Tex. Const. art. III 549-i(a), (c) (emphasis added). The specitk grant ofpower 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. SeeFirstNat?BankofPortArthur v. City ofPort 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 maybe used for reimbursemem ofadministrative 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 notpaid by the ehgible agrkultural businesses or lenders shall bepaidfrom the

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fimak oftheauthor@, in&ding those@nds establishedfrom bond proceeds. (Emphasis added.)

. . Proceeds ofthe bonds issuedunder Subsection (c) ofthis 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 inthe 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 isauedbythe authority. Agric. Code 858.03l(c),(d) (emphasis added). It isclear 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 suchproceeds may alsobe 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 inthe fund. Section 58.032(c) ofthe Agriadturc Code provides in part: Repayments of tinancial as&stance under any program funded in

whole or inpart with the proceeds of any series ofgeneral 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’sresohttions.

. . . In addition
To the extent the board determines that any money credited to

the Texas agricuhural tknd from repayments oftinancial assistance is not required by Subsection (c) ofthis section

. .that money may be wed by theauthori@ topny the principal of and interest on revenue bonds issued by the authority orfor any otherauthorizedpu~ of

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theauthwity,in- with this chqter and the authri~‘ s nrsolutiansau~gensral ob&atim bomk Id. 558.032(d) (emphasis added). Furthermore., article III, section 49-i(c) mandates that the investment income contained inthe iimd which is not obligated to the payment ofthe 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 ofthe authority.

DAN MORALES Attorney Oeneral ofTexas
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

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