Court Opinion

ID: 4131555
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:17:03.063224+00
Date Added: 2024-06-11T14:32:34.434118
License: Public Domain

The Attorney          General of Texas
                                                         August 30, 1982

MARK WHITE
Attorney General

                                        Mr. Hal H. Hood, Cormnissioner        Opinion No.   MN-506
Supreme   Court Building
                                        Firemen's Pension Commissioner
P. 0. Box 12546
Austin. TX. 76711. 2546
                                        503-F. Sam Houston Building           Re: Authority of trustees of
512/475-2501                            Austin, Texas   78701                 a    Firemen's   Pension    and
Telex    910/674-1367                                                         Retirement Fund to make certain
Telecopier      5121475~0266                                                  investments

1607 Main St., Suite 1400
                                        Dear Mr. Hood:
Dallas,   TX. 75201-4709
2141742-6944                                 You have requested our opinion regarding the authority of the
                                        trustees of a Firemen's Relief and Retirement Fund to make certain
                                        investments.
4624 Alberta      Ave.. Suite     160
El Paso. TX.      799052793
915/533-3464                                 You state that the trustees of the Firemen's Relief and
                                        Retirement Fund of a city have invested a portion of its surplus funds
                                        in two local ventures. In the first instance, the trustees invested
1220 Dallas Ave., Suite          202
                                        $1.2 million as a loan at 12 percent interest to a limited partnership
HOUSTON, TX. 77002-6966
7131650-0666
                                        venture created for the purpose of converting an apartment complex
                                        into condominiums. One of the trustees of the fund owns an interest
                                        in this limited partnership. In the second instance, the trustees
606 Broadway,        Suite 312          invested a" unspecified sum in a locally owned corporation created for
Lubbock.  TX.       79401.3479
                                        the purpose of land development. This corporation is not listed with
6061747.5236
                                        an exchange registered with the Securities and Exchange Commission and
                                        one of the trustees of the fund owns stock in the corporation.
4309 N. Tenth, Suite S
McAllen,    TX. 76501-1665                   Section 23A of article 6243e, V.T.C.S., provides:
5121662-4547

                                                    (a) This section applies to the Firemen's
200 Main Plaza. Suite 400                        Relief and Retirement Fund in any city having a
San Antonio.  TX. 76205-2797                     population of less than two hundred forty thousand
51212254191                                      (240,000), according to the last preceding Federal
                                                 Census.
 An Equal      OppOrtunitYI
 Affirmative     Action    Employer                 (b) Whenever, in the opinion of the Board of
                                                 Trustees, there is on hand in the Firemen's Relief
                                                 and Retirement Fund a surplus over and above a
                                                 reasonably safe amount to take care of current
                                                 demands upon such fund, such surplus, or so much
                                                 thereof as in the judgment of the Board is deemed
                                                 proper, may be invested in bonds or other
                                                 interest-bearing obligations and securities of the
                                                 United States, the State of Texas, or any county,

                                                                  p. 1822
Mr. Hal Il.Hood - Page 2   (M&506)

         city or other political subdivision of the State
         of Texas; in shares or share accounts of savings
         and loan associations, where such shares or share
         accounts are insured under and by virtue of the
         Federal Savings and Loan Insurance Corporation; in
         first lien real estate mortgage securities insured
         by the Federal Housing Administration under the
         National .Housing Act of the United States, as
         amended from time to time; and in such corporation
         bonds, preferred stocks and common stocks as the
         Board may deem to be proper investments for the
         fund.

            (c) In making each and all of such investments
         the Board shall exercise the judgment and care
         under the circumstances then prevailing which men
         of ordinary prudence, discretion, and intelligence
         exercise in the management of their own affairs
         not in regard to speculation but in regard to the
         permanent disposition of their funds, considering
         the probable income therefrom as well as the
         probable safety of their capital.

             (d) No more than fifty percent (50%) of the
          fund shall be invested at any given time in
          corporate stocks, nor shall more than five percent
          (5%) of the fund be invested in corporate bonds
          and stocks issued by any one corporation, nor
          shall more than five percent (5%) of the voting
          stock of any one corporation be owned.

             (e) Stocks eligible for purchase shall be
         restricted to stocks of companies incorporated
         within the United States which have paid dividends
         for   ten   (10) consecutive years or       longer
         immediately prior to the date of purchase and
         which, except for bank stocks and insurance
         stocks, are listed upon an exchange registered
         with the Securities and Exchange Commission or its
         successors.

     Section 23A does not permit either of the investments you
describe. A limited partnership is not within the restricted category
of permissible investments under subsection (b).         As to the
corporation, you state that it is not "listed upon an exchange
registered with the SEC," nor has it "paid dividends for the ten (10)
consecutive years or longer immediately prior to the date of
purchase." Thus, neither company. on the basis of the facts you have
described, constitutes a permissible repository for surplus monies of
the fund.

                                p. 1823
.   .
        Mr. Hal H. Hood - Page 3   (MW-506)

             You also ask whether meetings of the fund's board of trustees are
        subject to the Texas Open Meetings Act, article 6252-17, V.T.C.S., and
        whether the board must keep minutes of its meetings.         The Open
        Meetings Act is applicable to every deliberation among a quorum of
        members of a "governmental body," defined, inter alla, as:

                  every deliberative body having rule-making or
                  quasi-judicial power    and   classified as     a
                  department, agency, or political subdivision of a
                  county or city.

        V.T.C.S. art. 6252-17, §l(c).

             The board of trustees is composed of city officials serving ex
        officio and members of the fire department elected by the membership.
        V.T.C.S. art. 6243e, §§3. 3A, 3B. The city treasurer, serving as
        treasurer of the Board of Trustees, is custodian of the Firemen's
        Relief and Retirement Fund for the city. Id. 53. The board of
        trustees has the power to receive, handle andcontrol, manage and
        disburse the Firemen's Relief and Retirement Fund. Id. It also has
        power to hear and determine applications for benefits. Id. In our
        opi"io", the board is a deliberative body with quasi-judicial powers
        and classified as an agency of a city. It is a "governmental body"
        subject to the Open Meetings Act. See Attorney General Opinion H-467
        (1974). Furthermore, section 3 of article 6243e requires the board of
        trustees to "hold regular monthly meetings" and to "keep accurate
        minutes of its meetings and records of its proceedings." We conclude
        that the board of trustees is required to keep minutes of its
        meetings.

                                     SUMMARY

                     On the basis of the descriptions you have
                  provided, a city Firemen's Relief and Retirement
                  Fund subject to section 23A of article 6243e,
                  V.T.C.S., Mayo not invest its surplus funds in a
                  local partnership and a local corporation. The
                  board of trustees of the Firemen's Relief and
                  Retirement Fund is subject to the Open Meetings
                  Act, article 6252-17, V.T.C.S., and is required by
                  article 6243e, V.T.C.S., to keep minutes of its
                  meetings.

                                               -MARK        WHITE
                                                  Attorney General of Texas

                                         p. 1824
Mr. Hal H. Hood - Page 4   (MW-506)

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY 111
Executive Assistant Attorney General

Prepared by Rick Gilpin
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison, Chairman
Jon Bible
Bill Campbell
Rick Gilpin
Patricia Hinojosa
Jim Moellinger
Bruce Youngblood

                                      p. 1825