Court Opinion

ID: 4134313
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:48:39.751021+00
Date Added: 2024-06-11T14:36:49.290530
License: Public Domain

THE     ATMWIZNEY             GENERAL
                         OFmXAS

Honorable Jesse James                Opinion No.,M-354
State Treasurer
State Capitol Building            Re: Whether preliminary loan
Austin, Texas IS711                   notes issued by the Urban
                                      Renewal Agency of the City
                                      of Austin, guaranteed by
                                      the Federal Government, and
                                      conforming to the copy of
                                      one of said notes which is
                                      submitted with your opinion
                                      request, are authorized
                                      collateral to secure the
                                      deposit of State funds.
Dear Mr. James:

     In connection with your request for an opinion on the
above captioned subject, you have submitted a copy of a pre-
liminary loan note of the Urban Renewal Agency of the City of
Austin. The copy of the note submitted is a copy of one note
in a series and other notes in the series are identical to
the copy save and except for serial numbers. The notes conform-
ing to the copy show on their face that they are secured by an
agreement between the Urban Renewal Agency of the City of Austin
and the Federal Government and that under the agreement, the
Urban Renewal Agency of the City of Austin has agreed to borrow
from the Federal Government and the Federal Government has
agreed to lend to the Urban Renewal Agency of the City of Austin,
prior to the maturity of such notes, moneys in an amount
which (together with any other moneys irrevocably committed
to the payment of interest on such notes) will suffice to pay
the principal of such notes with interest to maturity which
moneys under the terms of said agreement are required to be
used for the ~purpose of paying the principal of and the interest
on such notes at their maturity. A "payment agreement" bearing
the duly authorized facsimile signature of the secretary of

                            -1748-
Honorable Jesse James, page 2 (M-354 )

Housing and Urban Development appears on the back of said notes,
said "payment agreement" being identical to the "payment
agreement" which we approved as a guarantee for the deposit of
State funds in Attorney General's Opinion No. M-197 (1968) and
reading as follows:

                          "PAYMENT AGREEMENT

         "Pursuant to section 102(c) of the Housing
         Act of 1949, as amended (42 U.S.C. 1452(c)),
         the United States hereby unconditionally
         agrees that on the Maturity Date of the within
         Preliminary Loan Note it will pay or cause to
         be paid to the bearer thereof the principal
         of and interest thereon, upon the presentation
         and surrender of such Note to the Paying Agent
         designated therein, and the full faith and credit
         of the United States is pledged to such payment.
         Under section 102(c) of the Act, this Agree-
         ment shall be construed separate and apart from
         the loan contract referred to in the within
         Note and shall be incontestable in the hands of
         a bearer.

          "IN WITNESS WHEREOF, this Agreement has been
          executed on behalf of the United States by
          the duly authorized facsimile signature of
          the Secretary of Housing and Urban Develop-
          ment, as of the Date of Issue of the within
          Note."

     Section 15(e) of Article 1269 L-3, Vernon's Civil Statutes,
(the Urban Renewal Law) provides, in part, that certain regulated
investors:
              8, ...may
                      legally invest any sinking funds,
          moneys, or other funds belonging to them or
          within their control in any bonds or other
          obligations issued by an urban renewal agency
          pursuant to this Act; provided that such bonds

                          -   1749-
Honorable Jesse James, page 3 (M-354 )

         and other obligations shall be secured by an
         agreement between the issuer and the Federal
         Government in which the issuer agrees to borrow
         from the Federal Government and the Federal
         Government agrees to lend to the issuer, prior to
         the maturity of such bonds or .other obligations,
         moneys in an amount which (together with any
         other moneys irrevocably committed to the payment
         of interest on such bonds or other obligations)
         will suffice to pay the principal of such bonds or
         other obligations with interest to maturity thereon,
         which moneys under the terms  of said agreement are
         required to be used for the purpose of paying the
         principal of and the interest on such bonds or other
         obligations at their maturity.   Such bonds and other
         obligations shall be authorized security for all
         public deposits..."   (Emphasis added.)

     We answer your question in the affirmative pursuant to the
express legislative authorization above quoted.  Preliminary
loan notes issued by the Urban Renewal Agency of the City of
Austin, guaranteed by the Federal Government, and conforming
to the copy of one of said notes which has been submitted with
your opinion request, are authorized collateral to secure the
deposit of State funds.

                              SUMMARY

              Preliminary loan notes issued by the Urban
              Renewal Agency of the City of Austin, guaran-
              teed by the Federal Government, and conform-
              ing to the copy of one of said notes which
              has been submitted with your opinion request,
              are authorized collateral to secure the deposit
              of State funds.

                                            very truly,

                                                 zL&$a
                                            ORD C. MARTIN
                                        A

                          -1750-
Honorable Jesse James, page 4 (M-354)

PREPARED BY:

Larry Craddock
Assistant Attorney General

APPROVED:
Opinion Committee

Kerns Taylor, Chairman
George Kelton, Vice Chairman
Roy W. Mouer
Ralph Rash
Malcolm Quick
Bill Allen

W. V. GEPPERT
Staff Legal Assistant

                               - 1751-