Court Opinion

ID: 4131808
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:19:50.637761+00
Date Added: 2024-06-11T14:26:46.396414
License: Public Domain

The Attorney                General of Texas
                                         October      9,     1980
MARK WHITE
Attorney General
                   Honorable Wilhelmina Delco                       Opinion No.   I+~253
                   Chairman
                   Committee   on Higher Education                  Re:     Whether a nonprofit corpora-
                   P. 0. Box 2910                                   tion acting as ‘a higher education
                   Austin, Texas 78769                              authority   under section 53.47(e) of
                                                                    the Education Code Is governed by
                                                                    other parts of chapter 53

                   Dear Representative    Delco:

                          You request our interpretation    of one provision of chapter 53 of the
                   Education    Code, relating   to the establishment     and operation of Higher
                   Education Authorities.     A Higher Education Authority    may be created by a
                   city.   It has the power to issue revenue bonds to obtain funds to purchase
                   student lcen notes guaranteed     under the provisions of the Higher Education
                   Act of 1965. Educ. Code § 53.47. You inquire about the following provision:

                                  (e) In lieu of establishing      an authority    under the
                               provisions   of this chapter,     the governing body of a
                               home-rule     city or cities may request          a nonprofit
                               corporation     heretofore     organized    to exercise    the
                               powers enumerated        and provided in this section for
                               and on its behalf.          If the corporation      agrees to
                               exercise such powers, the directors of such corpora-
                               tion shall thereafter      be appointed by and be subject
                               to removal by the governing body of the home-rule
                               city or cities, and except as herein provided, Sections
                               53.14, 53.15, 53.31, 53.32, 53.38, and 53.41 through
                               53.43 of the Texas Education Code shall apply to and
                               govern such corporation,      its procedures,   and bonds.

                   Educ. Code § 53.47(e).    You wish to know whether an authority   operating
                   under this provision ls exempt from the sections of chapter 53 not cited in
                   section 53.47(e).

                          Subsection    (e) of section 53.47 provides that a nonprofit corporation
                   heretofore    organized    may exercise the powers enumerated     in this section.
                   Subsection (a) of this section provides that an authority heretofore      created
                   may issue revenue bonds to obtain funds to purchase student loan notes. It
                   states as follows:

                                                     p.    796
Honorable    Wilhelmina   Delco    - Page Two         (I@?-253)

             Revenue bonds issued for such purpose shall be issued in accordance
             with and with the effect provided in this chapter, except Section
             53.36 shall not apply, as said chapter has been modified by Chapter
             3, Acts of the 61st Legislature,      Regular Session, 1969, as amended
             (Article 717k-2, Vernon’s Texas Civil Statutes), and by Chapter 784,
             Acts of the 61st Legislature,     Regular Session, 1969 (Article 717k-3,
             Vernon’s Texas Civil Statutes).        Such bonds shall be payable from
             and secured by a pledge of revenues derived from or by reason of
             the ownership     of student loan notes and investment       income after
             deduction    of such expenses or operating the loan program as may
             be specified   by the bond resolution    or trust indenture.

Educ. Code §53.47(a).      In our opinion, section 53.47(a) subjects the nonprofit corporation
to all provisions in chapter 53 relating to the issuance of revenue bonds except for section
53.36. Thus, sections 53.34, 53.35, 53.37, 53.39, and 53.40, would apply to the nonprofit
corporation    operating pursuant to section 53.47(e) of the Education Code.

       In our opinion, the remaining substantive         provisions of chapter 53 are not applicable
to a nonprofit corporation         operating under section 53.47(e) of the Education Code. Some
of the remaining         provisions give a coherent       body of powers      and attributes     to Higher
Education    Authorities,      which are not applicable      to the nonprofit corporation         operating
under section       53.47(e) of the Education         Code.     For example,     the Higher Education
Authority    organized under chapter 53 may acquire educational               facilities.   Certain other
provisions    of the chapter        are related    to this power.       Public hearings in the House
Committee      on Higher Education on the bill which became section 53.47(e) indicate that
the legislature      was solely concerned      with permitting    certain existing nonprofit corpora-
tions to issue bonds in order to purchase student loan notes. Public hearings on Senate Bill
No. 454, House Committee             on Higher Education,      May 6, 1975, tape filed with Hearing
Reporter,    John H. Reagan Building.           There was no reference        to the power to acquire
educational    facilities.

        Various provisions appear to s&serve          the power to acquire educational          facilities.
These are not, in our opinion, made applicable to nonprofit corporations              by section 53.47.
For example,       Higher Education      Authorities    lack the power to tax and the power of
eminent &main.          Educ. Code §§ 53.31, .32. Of course, these powers do not exist without a
legislative   grant, s      Lasater v. Lopez, 217 S.W. 373 (Tex. 1919); Hall v. Wilbarger County,
37 S.W.2d 1041 (Tex. Civ. App. - Amarillo 1931), aff’d, 55 S.W.2d 797 (Tex. Comm’n App.
1932), but in the case of a nonprofit corporation,          there is less need to rule out the grant of
power by implication.         See Attorney General Opinion H-1067 (1977). A Higher Education
Authority     may issue revenue bonds secured by the revenue from its facilities,                and may
operate its facilities      on certain terms.     Educ. Code §§ 53.33, .44. Finally, the property
owned by the authority is exempt from taxation because it is held for educational purposes
only.      Educ. Code 5 53.46.        Again, these provisions       are not relevant     to a nonprofit
corporation     which does not hold educational      facilities.   Nor is section 53.11, relating to the
creation     of a Higher Education        Authority,     relevant   to a hitherto    existing nonprofit
corporation     operating under section 53.47(e).

                                               p.   797
Honorable   Wilhelmina   Delco   - Page Three           (M+253)

        Section 53.12 of the Education Code states that an authority             comprises  only the
territory    included within the boundaries of the city or cities creating it. Although this
provision is not expressly applicable to a nonprofit corporation            operating  under section
53.47(e), the city using the corporation      is still subject to the general rule that a municipal
corporation’s     powers cease at its boundaries and cannot be exercised beyond them without
the plain manifestation       of legislative intent.    City of Arlington v. Lillard, 294 S.W. 829
(Tex. 1927); Ex parte Ernest, 136 S.W.2d 595 (Tex. Crim. App. 19391; Dallas Power & Light
Co. v. Carrington,        245 S.W. 1046 (Tex. Civ. App. -         Dallas 1922, writ dism’d).      The
nonprofit     corporation   may, but is not required to, limit the purchase of notes to notes
executed by students attending school in a certain geographical            area or by students who
are residents of the area. See Educ. Code § 53.47(d).

       Two final provisions are not expressly made applicable         to a nonprofit corporation
organized under section 53.47(e).     Section 53.45 provides that an authority         may borrow
money and accept grants from and enter into contracts         with the United States, Texas, any
municipal corporation,    and any public or private person or corporation.           The nonpiufit
corporation   certainly has implied power to enter into contracts necessary to issue revenue
bonds and purchase student loan notes and does not need the broader contractual             powers
referred to in section 53.45. Section 53.13 provides that an authority is a body politic and
corporate   having the power to perpetual succession,     that it may sue and be sued, and that
it may make, amend, and repeal its bylaws.            In our opinion, a nonprofit      corporation
organized    under the Texas Non-Profit     Corporation    Act, articles 1396-1.01 to 1396-lLO1,
V.T.C.S., has at least the power of perpetual succession, the power to sue and be sued, and
the power to make, amend and repeal its bylaws consistent                with chapter 53 of the
Education Code, which powers are necessary to its performance          of its duties under section
53.47(e).

                                           SUMMARY

            A nonprofit    corporation operating   under section 53.47(e) of the
            Education Code is subject to the sections of chapter 53 referred to
            in that section as well as those sections relating to the issuance of
            bonds. Although it is not subject to the other provisions of chapter
            53, other laws having similar effect may be applicable        in some
            cases.

                                                  Aw

                                                         MARK        WHITE
                                                         Attorney   General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY Hl
Executive Assistant Attorney     General

                                             p.   798
Honorable    Wilhelmina   Delco   -   Page Four         (MK-253)

Prepared    by Susan Garrison
Assistant   Attorney General

APPROVED:
OPINION COMMITTEE

Susan Garrison, Acting     Chairman
Ride Gilpin
Eva Loutzenhiser
Bruce Youngblood

                                                  p.   799