Court Opinion

ID: 4131976
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:21:40.678607+00
Date Added: 2024-06-11T14:33:30.201926
License: Public Domain

The Attorney              General          of Texas
                                        November      16,   1979
MARK WHITE
Altomey&lieml

                Mr. Gerald R. Brown                  opinion No. Mw-95
                Executive Director
                Texan Industrial Commission          Re: Whether iPsuance of bon& under the
                Box 12728, capitol station           Development Caporation Act of 1979,
                Austin, Texas 78711                  V.T.C.S. article 5190.6, ia violetive of
                                                     either article m, aecuon 52 or article xl#
                                                     section 2 of the Texas Ccnstitutian.

                Dear Mr. Bmwm

                      You have mqwJted an cplnh al the following questicne: a, will the
                kmmnce of tivenue bonds by en industrial developmslt caporaticn pumuant
                to the provisiam of the Development Corporation Act, article 5190.6,
                V.T.C.S., of paying the ccet of a project to bc sold cc leased to a private,
                commadal,    menufecttillg cr industrial enterprise or of making a loan to
                aueh a conuncrda& manufac~        u induatdal enterprbe for the purpcac of
                provIc?ingtemporary or permanent finnndng or mfimdng        of all or part of
                tha cast of a prcject cmktitute a violation of article RI, section 52 of the
                Texas Ccnstitutiat Q eny other constitutional cr etatutory requirement? (2)
                k the Attorney Qeneml% approval of the bonds of an industrial development
                corporation created and rting purauent to the provislona of the Act
                mqdmd before euch a corporatim    ten bsue ita revenue bonds?

                        We have cortvidard the following providona of the Constitution of
                Taart

                             ARTICLE RI, SEC. 52(a)

                                   Except an otherwke provided by this sect&
                             tbu Legblatum 8h1U have no power to authorize eny
                             county, city, town or other political corporation cr
                             rubdlvidcn of the State to lend its credit Q tc grant
                             publie mcney cr thing of value in aid of, cr to eny
                             Indlvidurl, eaociaticn or cccpcration whetaoevm, cr
                             to become a etockholk          in uch     ccrpcratia,
                             uodatial    u eompeny.      .

                                                p.    257
,   :        .

        Mr. Gerald R. Brown    -   Page Two (Mw-951

                   AR’DCLIIXI, SEC. 3

                         No county, city, or other municipal corporation shall here-
                   after become a 6ub6criber to the capital of any private cccporetim
                   or amcciation, or make any appropriation cr donation to tbuasme,
                   orin~~~eloanftsmdit;buttMsshsnnotbeconrrtruedtoin
                   any way affect any obllgetlon h6retofcre mdertaken pumuent to
                   l&W.

              It b well established that statutes are presumed to be constltutiaral and that they
        wIlI not be overturned unlem e qrecific section of the constitution clearly demonstrates
        thclr lnvalldity. Smith v. Davb, 426 S.W.2d 827 (Tex. 1968); State v. Cltv of Amtin, 331
S.W.2d 737, 747 @es. 1980)- Teuas Neticnal Guard Armcry Board v. McC!UW, 126 S.W.2d
627 (Teu. 1939). Thus, the knswec to your fhat qusstlat will depend at whather it clearly
        appear6 that the bsuance of revenue bonds for ths pupoges euthorlzed w ths Act violates
        the con6titutiaL

             The Act authorlxw the creatlm and establbhment of industrial development
        ~a~t~ncnproflt         ~corpcraticns snd arithoriues such ccrporations to issue revanue
                       prpcses Secdcn 22 of ths Act provides that:

                   Bondsissuedunder the provbions      of thb Act shall be deemed not to
                   comtftute a debt of the state, or the unit, a- any other polltical
                   ccrpcratim, subQvlsion, or agency of this state cc a pledge of the
                   faith and credit of any of them, but such bonds shsll be payable
                   6olely frcm the fund6 herein provided therefor from revenuea Ail
                   such revenue bonds rMl contdn on the face thereof a statement to
                   ths effect that neither the state, the unit, nor any political
                   corporatlm, subdlvbion, u sgency of the state shall be obligated
                   to pay the same or ths interest thereon tmdthat neither the faith
                   and credit nor the taxing power of ths state, the unit, car6ny other
                   political corporeticn, subdivision, or agency thereof b.plec&ed to
                   the payment of ths principal of or the interest on such bonds. The
                   corporation shall not be authorieed to incur financial obligetiats
                   uhlch csnnot be paid from proceeds of the obligations or from
                   mvenues maliaed frcm the lea6c or 6aIe of a project or medical
                   research project or refinance in whole cr in part e project or a
                   medical research project.. . . but the corporation b not intended to
                   be and rlau. not be a political s&dIvlsion or a political caporation
                   within the meaning of the constitution and the law6 of the state,
                   In&d@       without limitatim Article III, Sectlcn 52 of the Texas
                   ht6titutim,     and a unit 6tnU never d&gate to a ccrporatiat any
                   of Aloh ti’r    attributen of avereignty, indudhg the powa to tax,
                   the powa of eminent domain, and the police power.

                                              p.   259
,   \       :.

        Mr. Gerald Il. Brown       -   PageThree     (Mw-*5)

                  8ecticn 25(e) of the Act prov&a in part that:

                       The principal of and intercet cn any bonds Issued by the ccrporaticn
                       6hsP b6 6ecumcl by a pie*    of the revenue8 end receipts derived by
                       ths eorporaticn from the lease cr 8ale of the project or msdtcal
                       research project 8c financed or from the loan made by the
                       ccrpcretion with meet     to the project Q madical rcecarch project
                       eofhmncedorrefinancedendmaybesecuredbyamortgage
                       coveriq all cr part of euch project cr medical rwearc h prolect,
                       including any enlargements of and addtlc~ to ouch project or
                       malhl reeeard pojact th6reafter made.

              Tim Texan Supreme Ceurt hna heM thnt bon& which are peyable solely from
        revenue6 do not cmate a Tlebtw within the meaning of the Canatitutian. Ci

                  Purthar, the Tsxar Supreme Court hsr treeted the question of VcbtW end ‘lending of
        F           as bedqg identical @ nature with respect to mvenue bon&. Texea Natiaml Gtmrd
                 a’~ Beard v. HcCraw~7f44~W.2d 627 (TM. 1929)i s                                  V.
                  6rd, 279aw  . 2d 202 ff       .

             lln63, it I6 clearly 86tabIbhad tlmt W6btn and %ding        of cmdit* do not occur whsn
        bend6 6~ b6ued which are pqyabla aobly fmm revenued.

              We do not believe that ‘pubfic mcm@ b invdved in the bsuance of revenue bonds
        Ly en indwtrial development corporaticn under the Act. The mcney received from the
        mile of such revenue baqda wffl come solely from private source8 (private investmslt
        benkece cr tmderwritein), and the money used to pay the principal of and intemet cn such
        bondawRlelaoeomefremaprivaterource.              .TheActepeeifienUyprovldestlmtan
        indwtrial dcvelcpmmt     ecrpcratian creeted pumuant to ‘the Act b not a political
        61bdki6ia1 or a polithd   corporation within the mWd!Ig of th? oonstituticn end lawa of
        th state. Awordh@y, it wculd appear that tke could be no wanta cc Wonaticn~ of
        ‘publtc mcnep in any economic u constitutiaml6en6e.

              k to tha other con6titutional m6traint 6gah6t cupcrate dockholdlng, it appears
        tint bacawe  a capcratian -ted       under the4 Act ipfll have no stock end no membaq
        there will be no vMaticn of ccnstituticnal prohibiti”~               ,““M’” Rlbdvbicn
        becoming a rlockhclder in a oaparatia     See Southem          tY      . cweng 12 &W.2d
        200 tTex. Cemm. App. 1929, j-t     adopts
              FInally, we note tht *ldmiler etatutim have been upheld by the courta of eeverrl
        atete1S LeRlane v. Police Jury of Parbh of Rapida, 189 So. 2d 121 (La. CL App4, writ
                                                             dustrial Daveloomcnt AuthuriW~
        3$&i& d!!!$&~~~$%~~~~$$est                              v. hdustrbl Devacpment Scard
                           1                                               elwment Authority ai
        FitY of PIrmI v. Nelaon, SOS’ P.2d 705, 7lO &r-h-m     (en bench Gmen v. CitY of Mt.

                                                     p.   259
Mr. Gerald R. Brown    -   P-e Pour    (m-95)

F’laasmt 131N.W.2d S,17 (Iowa 1964)~City of Pi
rWlnnI9?O)i Uhl6 v. State a ml. City d Chety~~~~~~~.ZiY                         “”   5’S

       Bad tpcn the foregoing, it b our opinion that the bsuance of such bonds would not
violate artiele RI, 6ection 32 Q article Xl, lreotian S of the Taxa Constitution.

      16 to your wcond quartion, wi? find that the Texan Constitution doss not require
that the Attorney Qeneral approve bond6 price to their bsuance or 6ale. See Love v.
Rockwall Independent School Dbtrict, 228 S.W. 942, 644-45 (Tex. Comm%TmT
jdgmt. adopted) Although 6u6h approval b often required by statute, 6ee
art. 709, it b &t neceaary that a datute authceizing b6uence of bo    -id? requim   arch
                                                                                v*T.c*a
approval. Amsteter v. An       275 S.W.2d  95,103 lTex. Civ. App   -  Rl  Par0 1954, writ
mftl na.e.1~ MaQulllan        el Cqmratiam     S 43.46 U970).  Aa one  treatbe  eqUne,
an bsuer b nrbjeot ody to th6 requiremat      esprmly prarcribed by kw. McQdUan,
6 m at S 43.47. It b, ttnm, cur cpinim Unt approW tq the Attornay Qeneral b not
+t
req rad~~a~tion~tedrnderthsActgn~eitsrsvsnuebonda

                                      SUMMARY

           The bmmnce cf rwenue bonds by M indlmtri6tl development
           corpatian     for authorized pupoats, pursuant to the Development
           Cbporation Act, article 5190.6, V.T.C.S., will not violate article
           lIl, 6aetion 52 of th6 Texa6 Con6titution Q any ether con6titutid
           cr statutuy requimmatt. Tha Attorney Generals approval of atch
           bond6bnotreqtdredbefare~

                                        zmM  MARK     WHITE
                                             Attorney General of Texnm

JOHN W. PNNTRR, JR.
Pint Awiatant Attorney Ganeral

TED L. HARTLRY
R6ecutive krbtant Attorney tined

Repwed by R&art T. Lewb
Ambtant Attcmay General

APPROVRD:
OPINIONCOHMITTEE            .

C. Robert Reath, Cha&mq

                                        p.   260
Mr. Gerald R. Brown   -   Page Five   (MN-85)

Bob Gammqe
Susan Garrison
DM King
Robert T. Lewia
WilliemGReid

                                      P. 261