Court Opinion

ID: 4129926
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:58:07.489755+00
Date Added: 2024-06-11T14:31:36.806963
License: Public Domain

@ffice     of tip    !Zlttornep     Q&nerd
                                        &tate of PCexae
DAN MORALES
 ATTORNEY
       GENERAL                           September IS,1993

     Ms. Mary Webb                                 opinion No. DM-255
     Chair
     Texas Agricultural Fhtance Authority          Re: Whether the Texas Agriculturai
     P.O. Box 12847                                Fiice    Authority may use bond proceeds
     Austin, Texas 78711                           from the Texas AgticulturaI Fund to
                                                   reimburse the Department of Agriculture for
                                                   administrative expenses incurred on behalf of
                                                   theauthority    (RQ-393)

     DWMS. Webb:

              You have requested an opinion co naming the Texas Agricuhural Fiice
     Authoritfs (“the authority”) use of the Texas Agricuhural Fund (“the fund”) for
     rambursrment of administmtive costs. You advise us that the !knd consists of three
     separate accounts: a program account; an interest and sinking tImd account; and a reserve
     al%mnlt.~ Cdy           the only business conducted by the authority is related to the
     provision of financial assktance through the fund?            The tinance division of the
     Depmtment of Agriculture (“the department”), administers various programs on behalf of
     the authority, preparea the authority’s portion ofthe annual report and covers the authority
     in its internal audits. These eqenses are tinanced by appropriations to the department
     tiom the state’s general revenue fund. You ask whether the authority is prohibited from
     using the tbnd and the investment income contained therein to reimburse the department
     for various administmtive expenses which you state are necessary as “preparation to meet
     the need of providing linancial assistance to the agriathural community.” It is our opinion
     that the authority is not prohibited t?om makhtg expenditures from the fund to pay for
     expemes incurred in administexing the timd in krtherance of the speciftc purposes for
     which it was created.

                                               p. 1323
MsMaryWebb        - Page 2                 @M-255)

       The authority’s enabling legislation provides that:

               The commissione-r with the assistance of the board shall
          administer the Texas Agricultural Fiice     Authority. The bomd
          shall reimburse the Department of Agriculture for expenses incurred
          m required by the business of the m&or@ with the approval of a
          majority of the board.

Agric. Code 3 58.015(a) (emphasis added). You have suggested that the enabling
legislation, speci6cally the above italicized language, clearly supports the proposition that
the department shag be reimbursed for various administrative expenses incurred on behalf
of the authority. We agree. However, the Texas Constitution places a restriction on the
use of the fund by prohibiting its use for any purpose other thsn to provide tinancial
assistance to agricultursJ businesses.       Speciftcally, article III, section 49-i of the
constimtion provides in part:

           (a) The Texas agricultural timd shall be used only to prow&
          financial assistance to ahlop, increase, improve, w expand the
          production, processing, marketing, w export of crq or praiucts
          grown orprohcedphtariity      in this skzte Sy agrictdtura~ businesses
           domic&d in this state. . . .
           . .

          (c) Income from the invesbnent of money in the jim~!~that is not
          immediately committed to the payment of the principal of and
          interest on the bonds or the provision of tinancial assistance shall be
          used to create new emplqvment and business opporhnittes in the
          state through diversification and expansion of agricultural or rural
          small businesses, as provided by the legislature.

Tex. Const. art. III 5 49-i(a), (c) (emphasis added). The specitk grant of power in article
49-i(a) carries with it by necessary implication the grant of such additional powers as may
be necessaq to effectuate its purpose. See First Nat? Bank of Port Arthur v. City of Port
Arthur, 35 S.W.2d. 258 (Tex. Civ. App.-Port Arthur 1931, no writ) (bond proceeds may
be used in a manner necessarily implied to carry out purpose and intent of constitutional
provision).

       Furthermore, we are cognizant of the fact that the fund and more speci6cally, the
bond proceeds may be used for reimbursemem of administrative costs.
               Eligible agricultural businesses or lenders participating in the
          authority’s programs shall pay the costs of applying for, participating
          in, and administering and servicing the program, in amounts the
          board considers reasonable and necessary. Any costs not paid by the
          ehgible agrkultural businesses or lenders shall be paid from the

                                         p. 1324
MaMarywebb-Pagc3                            (DM-255)

          fimak of the author@, in&ding those@nds establishedfrom bond
          proceeds. (Emphasis added.)
                   . .

               Proceeds of the bonds issued under Subsection (c) of this section
          shall be deposited in the Texas agricuhural Smd and applied in
          accordance with the resolution authorizing the bonds:
              (1) to pruviak hncial           assistance to cligiile    agricultural
          bUSill=;
              (2) to pay costs of issuance of those bonds and the
          administration of any financial assistance program established with
          the money in the Texas agriadtural fund, and
                   (3) together with any other available timds, to pay the principal
              of or inter& on or to discharge or raiean, in whole or in part, any
              outstanding bonds isaued by the authority.
Agric. Code 8 58.03 l(c),(d) (emphasis added). It is clear that to the extent allowed by the
resolution authorizing the bonds, the bond proceeds may be used to pay for the
     . .
admuwtdve      expemes of the authority in the administration of authorized purposes as
enunciated in article III, section 49-i of the Texas Constitution. Hence we conclude that
such proceeds may also be used to reimburse the department for like expenses on behalf of
theauthority.

       We now turn to the repayments of financial assistance and the investment income
which is also contained in the fund. Section 58.032(c) of the Agriadturc Code provides in
part:
              Repayments of tinancial as&stance under any program funded in
              whole or in part with the proceeds of any series of general obligation
              bonds shah be deposited first in the interest and sinking account as
              prescrii    by the board’s resolutions authorizing such series of
              general obligation bonds, and second in the reserve account in
              respect of such series resolutions authorizing such series of general
              obligation bonds until that account is tUy timded as prescribed by
              the board’s resohttions. . . .

In addition

                   To the extent the board determines that any money credited to
              the Texas agricuhural tknd from repayments of tinancial assistance is
              not required by Subsection (c) of this section . . that money may be
              wed by the authori@ to pny the principal of and interest on revenue
              bonds issued by the authority or for any other authorizedpu~       of

                                             p. 1325
Ms.MaryW&b        - Page 4               (DM-255)

           theauthwity,in-               with this chqter and the authri~‘s
           nrsolutians au~gensral         ob&atim bomk

Id. 5 58.032(d) (emphasis added). Furthermore., article III, section 49-i(c) mandates that
the investment income contained in the iimd which is not obligated to the payment of the
principalofandintaestonthebondsortheprovisionoffiwrcialassistanceshallbeused
to provide for speci!ic agricukural purposes, as provided by the legislature. In section
58.023(c) of the Agriculture Code, the legislature provides that the fund, including
mvestnainwn&nUlybcusedtopay~expeMesofthefinancialassistanw
program. Hence, we wnclude that repayments of Glacial assistance and income on
investmend money wntained in the fhd may be used to pay for the expemzs of
     . .   .
admmmmgthefund.

                                    SUMMARY
               The Texas Agricultmnl Furance Authority may use bond
           proceeds Tom the Texas Agriadtural Fund to reimburse the
           Department of Agriculture for administrative Qcpenses incurred on
           behalf of the authority.

                                                    DAN      MORALES
                                                    Attorney Oeneral of Texas

WILL PRYOR
Ftik+sistantAttomeyoeneral

MARYELLER
Deputy Attorney Oeneral for Litigation

RENEAHICKS
State Solicitor

MADELEINE B. JOHNSON
Chair, Opiion Committee

Prepared by Toya C. Cook
AssistantAttO~General

                                         p. 1326