Court Opinion

ID: 4128457
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:38:56.429045+00
Date Added: 2024-06-11T14:33:32.450472
License: Public Domain

ATTORNEY GENERAL OF TEXAS
                                             GREG        ABBOTT

                                               February 13, 2008

The Honorable Marsha Momoe                               Opinion No. GA-0602
Terrell County Attorney
Post Office Box 745                                      Re: Whether, under Local Government Code
Sanderson, Texas 79848                                   chapter 334, Terrell County may borrow money to
                                                         construct an approved venue project, to be repaid
                                                         from the venue project fund (RQ-0618-GA)

Dear Ms. Momoe:

        Local Government Code chapter 334 authorizes a county to construct an approved venue
project and to establish a venue project fund to pay costs associated with the project. See generally
TEX. Loc. GOy'T CODE ANN. ch. 334 (Vernon 2005 & Supp. 2007). You ask whether, under Local
Government Code section 334.042, Terrell County (the "County") may "borrow funds" to construct
an approved venue project.! You explain that "[t]he loan will be paid off from" sales and use taxes
"as they are collected." Request Letter, supra note I, at 1-2; see also TEx. Loc. GOy'T CODE ANN.
§ 334.081(a) (Vernon 2005) (authorizing a county to impose a sales and use tax).

I.      The Relevant Statute: Local Government Code Chapter 334

        Under chapter 334, a county may plan, acquire, establish, develop, construct, or renovate a
venue project if, among other things, voters approve the project. See TEx. Loc. GOy'T CODE ANN.
§ 334.021(a) (Vernon 2005). For purposes of chapter 334, a "venue project" is a venue, such as a
sports facility, a convention center facility, a tourist development area, or a project authorized by
article 5190.6, section 4A or 4B of the Revised Civil Statutes, and related infrastructure "that is
planned, acquired, established, developed, constructed, or renovated under" chapter 334. Id. §
334.001(4)-{5); see also TEX. REy. CIV. STAT. ANN. art. 5190.6, §§ 4A-4B (Vernon Supp. 2007)
(authorizing the creation of development corporations in certain municipalities). An "approved
venue project" is a venue project that has been approved by the county's voters. TEx. Loc. GOy'T
CODE ANN. § 334.001(1) (Vernon 2005).

         I See Letter from Honorable Marsha Monroe, Terrell County Attorney, to Honorable Greg Abbott, Attorney
General ofTexas, at2 (Sept. 4, 2007) (on file with the Opinion Committee, also available athttp://www.oag.state.tx.us)
[hereinafter Request Letter]; see also TEX. Loc. GOV'TCODEANN. § 334.042 (Yernon 2005) (requiring the establishment
of a venue project fund in a municipality or a county in which an approved venue project is located).
The Honorable Marsha Monroe - Page 2                       (GA-0602)

        A county has broad power under chapter 334 to "perform any act necessary" to fully exercise
its "powers under this chapter." Id § 334.041(a). A county has specific authority to finance an
approved venue project by imposing various types oftaxes, including a voter-approved sales and use
tax. See id § 334.081(a), (c). A county also may, under section 334.043(a), issue "bonds, including
revenue bonds and refunding bonds, or other obligations to pay the costs of the approved venue
project." Id § 334.043(a); see also id § 334.043(b) (requiring the bonds and other obligations to
be approved "as required by" Government Code chapter 1202); TEX. GOy'T CODE ANN. § 1202.003
(Vernon 2000) ("Review and Approval ofPublic Securities"). The "bonds or other obligations must
be payable from and secured by the revenues in the venue project fund." TEx. Loc. GOy'T CODE
ANN. § 334.043(c) (Vernon 2005).

       In accordance with section 334.042, a county in which an approved venue project is located
must establish a "venue project fund" into which the county must deposit the proceeds of any taxes
approved by the voters under chapter 334, as well as bond revenues and certain other money. See
id § 334.042(a)-(b). Section 334.042(d) expressly authorizes a county to use its venue project fund
to:

                          (l) reimburse or pay the costs of planning, acqumng,
                  establishing, developing, constructing, or renovating one or more
                  approved venue projects in the ... county;

                         (2) pay the principal of, interest on, and other costs relating
                  to bonds or other obligations issued by the ... county or to refund
                  bonds, notes, or other obligations; or

                         (3) pay the costs of operating or maintaining one or more
                  approved venue projects.

Id § 334.042(d).

II.      Factual Background

         You indicate that in November 2000 County voters approved imposing a sales and use tax
to finance a "venue project[] and related infrastructure."2 Request Letter, supra note 1, at 1-2. The
County has placed the tax proceeds in the County's venue project fund. Id at 2. The County Judge
now asks "whether the [Clounty may borrow funds to pay for construction ofthe convention center
facility, which is part ofthe venue project." Id You further inform us that the loan will be repaid
from the proceeds of the sales and use tax dedicated to the venue project "as they are collected" and

          'Attorney General Opinion GA-0156, issued in 2004, considers another aspect ofthe County's use of venue-
project sales and use tax proceeds. See Tex. Att'y Gen. Op. No. GA-0156 (2004) at 1-2. That opinion analyzes whether
the County could use the proceeds on a venue project consisting of"a convention and visitors center, two annexes to the
center, and related infrastructure." Id at 2. You advise that the County "has proceeded with its venue project in
accordance with that opinion." Request Letter, supra note I, at 2.
The Honorable Marsha Monroe - Page 3              (GA-0602)

that the loan documents will recognize this "repayment scheme." Id. You therefore ask whether
chapter 334 authorizes the County "to borrow funds, to be repaid from the venue tax proceeds, to
pay for the construction of the convention center facility." Id.

III.   Analysis

        On its face, section 334.042(d) authorizes a county to use its venue project fund to pay the
costs ofconstructing an approved venue project, including costs relating to bonds or other obligations
issued to finance the project. See TEx. Loc. GOy'T CODE ANN. § 334.042(d)(1 )-(2) (Vernon 2005).
Consequently, the County may use money from the venue project fund to repay funds borrowed, in
the manner authorized by chapter 334, to construct an approved venue project.

         We next consider a county's authority to borrow funds to pay the costs of an approved venue
project. In general, a county may not borrow money "except through the issuance of bonds,
certificates ofobligation, or other forms ofindebtedness" that are specifically authorized by law. Tex.
Att'y Gen. Op. No. JM-274 (1984) at 1. "Counties have no [general] statutory authority to merely
borrow money from a bank." Tex. Att'y Gen. Op. No. JC-0139 (1999) at 3 (quoting 35 DAVID B.
BROOKS, TEXAS PRACTICE: COUNTY AND SPECIAL DISTRICT LAW § 17.27 (1989»; see also TEx.
CONST. art. XI, § 7 (prohibiting a county from incurring debt without the concomitant provision of
a sinking fund). And "[s]tatutes respecting the power oflocal governments to create a debt must be
strictly and narrowly construed." Lopez v. Ramirez, 558 S.W.2d 954, 957 (Tex. Civ. App.-San
Antonio 1977, no writ); accord Tex. Att'y Gen. Op. No. JC-0036 (1999) at 10.

        A county may borrow funds "to pay the costs ofan approved venue project" only as permitted
by section 334.043, which authorizes a county to "issue bonds ... or other obligations" that are
submitted to the attorney general forreview and approval as Government Code chapter 1202 requires,
that are payable from and secured by the venue project fund, and that mature within thirty years of
"their date of issuance." TEx. Loc. GOy'T CODE ANN. § 334.043(a)-(d) (Vernon 2005). No other
statute in chapter 334 authorizes the borrowing of funds by other means. Thus, consistently with
section 334.043, a county may not borrow money to pay the costs of an approved venue project by
means other than the issuance of bonds or other obligations. See id. § 334.043(a).

        You indicate that the County wishes to borrow money and contemplates a loan, but you do
not further describe the means by which the County proposes to borrow the money or to evidence the
loan. See Request Letter, supra note I, at 1-2; cf Tex. Att'y Gen. Op. No. JC-0139 (1999) at 3,5
(suggesting that a loan may be evidenced by the issuance of "obligations ... sold to purchasers in
exchange for money," but also suggesting that the requestor "would like to obtain a loan ... without
following statutorily required procedures"). Nor do you ask about the legality ofa particular method
of financing. See Request Letter, supra note 1, at 1-2. Consequently, we do not consider whether
any particular means of financing or of evidencing the loan constitutes a permissible issuance of an
obligation under section 334.043. But cf Tex. Att'y Gen. Op. No. JC-0139 (1999) at 3,5 (stating that
statutes that authorize a county to borrow funds for road and bridge construction require the county
to issue and sell bonds or other obligations in compliance with statutory procedures and that these
"procedures are not optional").
The Honorable Marsha Monroe - Page 4            (GA-0602)

                                     SUMMARY

                      A county, such as Terrell County, may use money in its venue
              project fund to pay any ofthe costs ofconstructing an approved venue
              project. The county may borrow money to pay such costs, to be repaid
              from the venue project fund, only by the "issuance of bonds ... or
              other obligations."

KENT C. SULUVAN
First Assistant Attorney General

ANDREW WEBER
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee