Court Opinion

ID: 4129157
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:48:09.726349+00
Date Added: 2024-06-11T14:33:08.899236
License: Public Domain

= OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS

   JOHN CORNYN

                                               July 9,2002

Mr. Bernie Francis                                    Opinion No. JC-0523
Chair, Texas State Technical College System
3801 Campus Drive                                     Re: Whether the Texas Public Finance Authority
Waco, Texas 76705                                     is authorized to issue bonds on behalf of the Texas
                                                      State Technical College System (RQ-0493-JC)

Dear Mr. Francis:

       You ask whether section 1232.101 of the Government Code authorizes the Texas Public
Finance Authority (the “TPFA”) to issue bonds on behalf of the Texas State Technical College
System (the “College System”).’ We conclude in the negative.

        To provide    a legal context for your question, we begin by reviewing the bond-issuing
authority of the College System. The College System is a two-year institution of higher education
offering technical-vocational   courses. TEX. EDUC.CODEANN. 8 135.01(a) (Vernon Supp. 2002). It
is governed by a board of nine regents appointed by the governor with the advice and consent of the
senate. See id. 89 135.21-.22 (Vernon 1991). The College System is a “public technical institute,”
and, thus, an “institution of higher education” as defined by section 61.003(8) of the Education
Code. See id. 9 61.003(7) (defining “public technical institute”), (8) (defining “institution of higher
education”) (Vernon Supp. 2002). The College System is authorized to issue “general obligation”
bonds payable from state general revenues appropriated and allocated to the College System under
article VII, section 17 of the Texas Constitution. See TEX. CONST.art. VII, 0 17; see also TEX. EDUC.
CODE ANN. 8 62.021 (Vernon Supp. 2002). Additionally, the College System is authorized to issue
“special obligation” bonds, payable from fees, charges, and other revenues of the system pursuant
to chapters 55 and 135 of the Education Code. See TEX. EDUC.CODEANN. $9 55.13, 55.17392,
135.56 (Vernon Supp. 2002).

         Also relevant to your query is the bond-issuing authority of the TPFA. The TPFA, “a public
authority and a body politic and corporate,” is established and governed by the Texas Public Finance
Authority Act, TEX. GOV’T CODEANN. 55 1232.001-.206 (Vernon 2000 & Supp. 2002) (the “Act”).
It is authorized to issue and sell bonds on its own behalf and on behalf of certain state entities to
finance the cost of authorized projects. See id. $5 1232.101-.104, .1115; see also id. 8 1232.066(a)

         ‘See Letter from Ray Rushing, General Counsel, Texas State Technical College, to Honorable JohnComyn,
Texas Attorney General (Jan. 11, 2002) (on file with Opinion Committee) [hereinafter Request Letter].
Mr. Bernie Francis   - Page 2               (JC-0523)

(board’s authority under Act limited to financing     buildings,   equipment,   and stranded   costs of
municipal power agency).

         Your request specifically concerns the effect of recent amendments to section 1232.101 of
the Act granting the TPFA the “exclusive” authority to issue bonds on behalf of, among other
entities, certain named institutions of higher education. As amended, section 1232.101 provides:

                        With respect to all bonds authorized to be issued by the Texas
               Military Facilities Commission, Texas National Research Laboratory
               Commission,      Parks and Wildlife Department, Texas Low-Level
               Radioactive Waste Disposal Authority, Stephen F. Austin State
               University, Midwestern       State University, and Texas Southern
               University, the authority has the exclusive authority to act on behalf
               of those entities in issuing bonds on their behalJ: In connection with
               those issuances and with the issuance of refunding bonds on behalf
               of those entities, the authority is subject to all rights, duties, and
               conditions surrounding issuance previously applicable to the issuing
               entity under the statute authorizing the issuance. A reference in an
               authorizing statute to the entity on whose behalf the bonds are being
               issued applies equally to the authority in its capacity as issuer on
               behalf of the entity.

Id. 5 1232.101 (Vernon Supp. 2002) (emphasis added).

         Prior to its 2001 amendment, section 1232.10 1 provided that “[wlith respect to all bonds
authorized to be issued by the Texas Military Facilities Commission, . . . and each institution of
higher education authorized to issue bonds under Chapter 55, Education Code, the [TPFA] has the
exclusive authority to act on behalf of those entities in issuing bonds on their behalf.” Act of May
10, 1999, 76th Leg., R.S., ch. 227, 8 1, 1999 Tex. Gen. Laws 721, 762. However, the statute
specifically excluded from this bond-issuing authority certain institutions of higher education,
including the College System:

               w   Subsection (a) [granting TPFA exclusive au.thority to issue
               on behalf of named entities] does not apply to:

                        (1) The University of Texas System, The Texas A & M
               University System, or a component of those systems;

                      (2) an institution of higher education authorized to issue
               bonds under Section 17, Article VII Texas Constitution; or

                         (3) bonds authorized to be issued by a system, comp.onent, or
               institution described by Subdivision (1) or (2).
Mr. Bernie Francis              - Page 3                    (JC-0523)

                      (c) Notwithstanding any other provision of this section, with respect
                      to all bonds authorized to be issued by Midwestern State University,
                      Stephen F. Austin State University, or Texas Southern University, the
                      authority has the exclusive authority to act on behalf of those
                      institutions in issuing bonds on their behalf. . . .

Id. (emphasis added). Because the College System is “an institution of higher education authorized
to issue bonds under Section 17, Article VII, Texas Constitution,” former section 1232.101(a) did
not authorize the TPFA to issue bonds on behalf of the College System. Moreover, no other
provision in the Act authorized the TPFA to issue bonds for institutions of higher education
generally or specifically for the College System. See id.

         The statute was amended in the 2001 legislative session merely to clarify the existing law
that the “only institution of higher education the TPFA has the authority to issue bonds for are the
three institutions specifically named.” Texas Public Finance Authority Act: Hearing on Tex. H.B.
21.53 Before the Senate Comm. on Finance, 77th Leg., R.S. (May 10, 2001) (tape available from
Senate Staff Services Office) (statements of Judith Porras, General Counsel to TPFA).2

         2House Bill 2 153 amended         section 1232.10 1 as follows:
        Sec. 1232.101.          ISSUANCE    OF BONDS FOR CERTAIN           STATE AGENCIES.
 2-2   [(a+] With respect to all bonds authorized to be issued by the
 2-3   Texas Military Facilities Commission, Texas National Research
 2-4   Laboratory Commission, Parks and Wildlife Department, Texas
 2-5   Low-Level Radioactive Waste Disposal Authority, Stephen F. Austin
 2-6   State Universitv, Midwestern State Universitv, and Texas Southern
 2-7   Universitu_ [a
 2-8                                     -1,               the authority has
 2-9                                      behalf of those entities in
2-10    issuing bonds on their behalf. . . .
2-18         [(t) -           (u) -1
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2-20   Sl
2-21             KG .-                                                  . .
2-22   31                                  ,            9
2-23             [f         .     . .                           ..    7
2-24   91                                              ..
2-25        [L                                                                ,
2-26
2-27
 3-l
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 3-3   l?)ehK...]

Tex. H.B. 2153,77thLeg.,          R.S. (2001).
Mr. Bernie Francis   - Page 4                 (JC-0523)

          We gather that you believe the 2001 amendment creates more ambiguity. You ask whether
section 1232.101 “make[s] it impermissible for TPFA to issue bonds on behalf of [the College
System] .” Request Letter, supra note 1, at 2. You suggest that “[tlhe deletion of ‘and each
institution of higher education authorized to issue bonds under Chapter 55, Education Code’ . . . has
the potential meaning that TPFA may no longer issue bonds for” the College System. Id. But, you
assert, the statutory language following the named institutions of higher education, “the authority
has the exclusive authority to act on behalf of those entities in issuing bonds,” could mean that
“institutions of higher education authorized to issue bonds under Chapter 55 of the Texas Education
Code are merely not limited to having TPFA as the exclusive body that may issue bonds on their
behalf,” but may choose to have the TPFA issue their bonds. Id. We disagree.

          Neither you nor the TPFA provide any legal arguments or advocate a particular interpretation
of the Act. See Osterberg v. Peca, 12 S.W.3d 3 1,5 1 (Tex. 2000) (courts will generally defer to the
construction of a statute by administrative agency charged with its enforcement).       We conclude,
based on our review of the Act as a whole and other provisions authorizing issuance of bonds by
institutions of higher education, that section 1232.101 of the Act does not authorize the TPFA to
issue bonds on behalf of the College System.

         It is well-established that the authority to issue bonds or other negotiable securities must be
expressly granted. See San Antonio Union Jr. Cull. Dist. v. Daniel, 206 S.W.2d 995, 999 (Tex.
1947); Keel v. Pulte, 10 S.W.2d 694,697 (Tex. Comm’n App. 1928); Foster v. City of Waco, 255
S.W. 1104, 1105 (Tex. 1923); Lasater v. Lopez, 217 SW. 373, 376 (Tex. 1919). Furthermore,
“where [this] power is granted, and the method of its exercise prescribed, the prescribed method
excludes all others, and must be followed.” Foster, 255 S.W. at 1105; see also Cobra Oil & Gas
Corp. v. Sadler, 447 S.W.2d 887, 892 (Tex. 1968). Thus, the TPFA may not, pursuant to section
1232.101 of the Act, issue bonds “authorized to be issued” by the College System unless expressly
authorized to do so by another provision.

         The Act as amended does not expressly authorize the TPFA to issue bonds on behalf of the
College System. Section 1232.101 is the only provision in the Act that expressly directs the TPFA
to issue bonds “authorized to be issued by” the named institutions of higher education. See generally
TEX. GOV’TCODEANN. 55 1232.001-.206 (Vernon 2000 & Supp. 2002). The College System is not
included in that list. See id. 8 1232.101. While the “exclusive authority” language could be read to
imply that the TPFA possesses non-exclusive authority to issue bonds on behalf of other institutions
of higher education, nothing else in the Act supports such a reading. See Jones v. Fowler, 969
S.W.2d 429,432 (Tex. 1998) (legislative intent to be determined from entire act not simply from
isolated portions of act); Sayre v. Mullins, 68 1 S.W.2d 25,27 (Tex. 1984) (in determining meaning
of statutory language, statute to be read as whole giving consideration to entire act, its nature and
object, and consequences that would follow from particular construction). No other provision in the
Act grants the TPFA power to issue bonds on behalf of other institutions of higher education.

        Nor do other provisions authorizing the College System to issue bonds authorize the TPFA
to exercise the College System’s bond-issuing authority. Again, the College System is authorized
Mr. Bernie Francis   - Page 5                 (JC-0523)

to issue “general obligation” bonds under article VII, section 17 of the Texas Constitution, see TEX.
CONST.art. VII, 8 17, and “special obligations” pursuant to chapters 55 and 135 of the Education
Code, see TEX. EDUC.CODEANN. $5 55.13,55.17392,135.56            (Vernon Supp. 2002). We consider
each provision.

         Article VII, section 17 appropriates “out of the first money coming into the state treasury not
otherwise appropriated by the constitution $100 million” and directs its allocation for the use of
named institutions of higher education, including the College System. See TEX. CONST.art. VII, 5
17(a)-(c); see also TEX. EDUC. CODEANN. 5 62.021 (Vernon Supp. 2002) (specific allocations).
Article VII, section 17 authorizes the governing board of the “institutions authorized to participate
in the distribution of money under this section” to issue bonds “for the purposes of refunding bonds
or notes issued under this section or prior law, acquiring land either with or without permanent
improvements, constructing and equipping buildings or other permanent improvements, acquiring
capital equipment, library books.” TEX. CONST.art. VII, 5 17(e) (emphasis added); see also TEX.
EDUC. CODEANN. 6 62.021(c) (Vernon Supp. 2002) (authorizing issuance of bonds for purposes
authorized by article VII, 9 17). This constitutional provision is “self-enacting,” and prevails over
any other conflicting constitutional provision.       See TEX. CONST. art. VII, 5 17(Z). No other
constitutional provision purports to transfer to the TPFA the bond-issuing authority granted to the
governing boards of the eligible institutions of higher education. And no statute, including the Act,
may do so. See Cookv. State, 902 S.W.2d 471,478-79 (Tex. Crim. App. 1995, no pet.) (and cases
cited) (“It is fundamental to constitutional and statutory construction that the Legislature lacks the
authority to enact a statute which conflicts with a provision of the Constitution.“). Accordingly, the
TPFA may not issue the general obligation bonds that the College System’s board is specifically
authorized to issue under article VII, section 17.

         The TPFA may not issue special revenue bonds that the College System is authorized to issue
under chapter 55 of the Education Code. Section 55.17392 specifically authorizes the College
System’s board of regents to issue bonds secured by system-wide revenues for the system’s
component institutions. TEX. EDUC.CODEANN. 4 55.17392 (Vernon Supp. 2002). Section 55.13(a)
generally authorizes the governing boards of institutions of higher education to issue revenue bonds
for the acquisition, improvement, or equipping of facilities. See id. 8 55.13(a). “Institutions of
higher education,” for the purposes of chapter 55, has the meaning ascribed to it by section 61.003
of the Education Code. See id. 5 55.01( 1); see also supra p. 1. Subsections (b) and (c) of section
55.13 provide that the revenue bonds authorized under subsection (a) must be issued by the TPFA,
but with significant exceptions:

               (b) With respect to all institutions the Texas Public Finance
               Authority shall exercise the authority of a board to issue revenue
               bonds on behalf of such institution or institutions, or any branch or
               branches thereof, in the manner provided by this subchapter,
               including the authority to issue refunding bonds under Section 5 5.19
               of this code. In connection with the issuance of bonds under this
               chapter, the Texas Public Finance Authority has all of the rights and
Mr. Bernie Francis   - Page 6                 (JC-0523)

                duties granted or assigned to and is subject to the same conditions as
                a board under this chapter. This subsection does not apply to The
                University of Texas System, The Texas A & i’kf University System, or
                a component of those systems [or] to an institution authorized to
                issue bonds under Article VII, Section I7, of the Texas Constitution,
                or to bonds authorized to be issued by any of those systems,
                components, or institutions.

                (c) Notwithstanding any other provision of this section, with respect
                to all bonds authorized to be issued by Midwestern State University,
                Stephen F. Austin State University, or Texas Southern University, the
                Texas Public Finance Authority shall exercise the authority of a
                board to issue bonds on behalf of those institutions, in the manner
                provided by this subchapter, including the authority to issue
                refunding bonds under Section 55.19. In connection with the
                issuance of bonds under this chapter, the Texas Public Finance
                Authority has all the rights and duties granted or assigned to and is
                subject to the same conditions as a board under this chapter.

TEX. EDUC.CODEANN. 8 55.13 (Vernon Supp. 2002) (emphasis added). Under subsections              (b) and
(c), the TPFA’s authority to issue revenue bonds specifically excludes the authority to issue bonds
for institutions of higher education that are authorized to issue bonds under article VII, section 17,
such as the College System. See id. Compare id., with id. 5 5 1.927(h) (Master Equipment Lease
Purchase Program operated by TPFA may be utilized by institution of higher education to fund
contract for energy or water conservation measures). Significantly, the exclusion is not limited to
the non-transferable     “general obligation” bond authority of these institutions         under that
constitutional provision.    See id. § 55.13; see also supra p. 5. We note that prior to its 2001
amendment, section 1232.101 of the Act contained language virtually identical to that of subsections
(b) and (c). See Tex. H. B. 2153, supra note 2.

         Finally, the TPFA may not exercise the College System’s bond issuing authority under
chapter 135 of the Education Code. Section 135.56(d) provides that the College System’s “board,
in addition to the authority already provided, may issue revenue bonds for the purposes authorized
and in the manner prescribed and under the terms and conditions set forth in Chapter 55 of this
code.” TEX. EDUC.CODEANN. 8 135.56 (Vernon Supp. 2002) (emphasis added). Similarly, section
135.56(e) authorizes the College System “board” to “issue additional revenue bonds for the purposes
authorized and in the manner prescribed by 26 U.S.C. Section 142, relating to airport development,
water and sewage treatment . . . .” Id. 5 135.56(e). Under these provisions, the authority to issue
bonds is vested in the College System’s board and not transferable to the TPFA.
Mr. Bernie Francis   - Page 7               (JC-0523)

                                       SUMMARY

                       Section 1232.101 of the Texas Public Finance Authority Act,
               TEX. GOV’T CODE ANN. $5 1232.001-.206 (Vernon 2000 & Supp.
               2002), does not authorize the Texas Public Finance Authority to issue
               bonds on behalf of the Texas State Technical College System.

                                              Attorney General of Texas

HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee