Court Opinion

ID: 4130341
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:03:08.652992+00
Date Added: 2024-06-11T14:34:14.631621
License: Public Domain

December 28, 1989

Honorable A. J. Hartel        Opinion No.   JM-1128
Liberty County Attorney
P. 0. Box 9127                Re: Authority of a rural fire
Liberty, Texas 77575-9127     prevention district to borrow
                              money without holding an elec-
                              tion   (RQ-1704)

Dear Mr. Hartel:

     Your letter requesting an opinion of this office asks:

        Does a Rural Fire District have the authority
        to borrow Money from a bank, without a public
        election to approve the loan, if the amount
        of repayment per year is less than the
        revenues to be received per year      from 3
        cent[s] per $100 evaluation ad valorem taxes?
        (No additional   taxes will be raised      to
        support the loan.)

        If the above question is yes, can the bank
        secure the loan with a lien on the financed
        property or must it be secured with a pledge
        of tax receipts?

     Rural fire prevention districts were formerly regulated
by article 2351a-6, V.T.C.S.  In 1989, a non-substantive re-
vision of the law carried the provisions    of that statute
into the new Health and Safety Code as chapter 794 thereof.
See Acts 1989, 71st Leg., ch. 678, at 2230, 3122.        Sub-
chapter E of chapter 794 concerns the financial transactions
of such districts.  The new code became effective   September
1, 1989. Id. ch. 678, § 15, at 3165.1

     1. The 71st Legislature      repealed article    2351a-6,
V.T.C.S., when  its provisions   were incorporated   into  the
Health and Safety Code, but   it also passed  an amendment  to
                                          (Footnote Continued)

                              P. 5937
Honorable A. J. Hartel - Page 2   (JM-1128)

     We understand that the district intends to borrow    an
amount considerably in excess of its funds on hand or the
amount anticipated to be on hand from tax collections    (or
other sources) for a single year. It is to be repaid over a
ten year period, but the amount scheduled to be repaid in a
single year would not exceed the amount anticipated to be
collected in taxes for that year.

     Section 794.071 of the Health and Safety Code provides:

           Except as provided by Section 794.072  and
        Sections 794.076-794.081, a district may not
        contract for an amount of indebtedness in any
        one year that is in excess of the funds ~then
        on hand or that may be paid from current
        revenues for the year.

This provision prevents the proposed transaction, unless  it
is authorized by one of the sections mentioned, because  the
indebtedness incurred would exceed the funds of the district
then on hand or that might be paid from anticipated  current
revenues for the year.

     We have examined sections 794.072 and 794.076 through
794.081, and there is no provision in any of them that would
permit the district to obligate itself by contract to assume
a monetary obligation payable over several years from future
ad valorem taxes without first securing the approval of the

(Footnote Continued)
the repealed  statute. The amendatory provision     has been
saved notwithstanding the repeal because section   311.031(c)
of the Government Code provides:

           (C) The repeal of a statute by a code
        does not affect an amendment, revision,    or
        reenactment of the statute by the same legis-
        lature that enacted the code. The amendment,
        revision, or reenactment   is preserved   and
        given effect as part of the code provision
        that revised the statute so amended, revised,
        or reenacted.

Although the amendment   is tangentially  pe~rtinent to the
issue at hand, it does not affect the conclusion we reach.
See Acts 1989, 71st Leg., ch. 1132, at 4676.

                             p. 5938
Honorable A. J. Hartel - Page 3    (JM-1128)

electorate.  See Attorney General Opinion       JM-453   (1986).
Section 794.077(a) expressly states:

           A district may not authorize     bonds and
        notes secured in whole or in part by taxes
        unless a majority~ of the district's qualified
        voters who vote at an election     called  for
        that purpose  approve the issuance of the
        bonds and notes.

cf. Tex. Const. art. III, 9 52(d).-

     We advise that a rural fire prevention district     does
not possess  authority to borrow money repayable     from ad
valorem taxes to be collected in future years without   first
securing the approval therefor  from the electorate.   We do
not reach your second question.

                       SUMMARY

           Without first securing approval   therefor
        from the electorate, a rural fire prevention
        district is not authorized   to borrow money
        repayable from ad valorem taxes to be col-

                                                 J/a
        lected in future years.

                                   J
                                      Very truly yo

                                          &
                                      JIM     MATTOX
                                      Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Bruce Youngblood
Assistant Attorney General

                               p. 5939