@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.
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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
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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