The Attorney General of Texas
August 30, 1982
MARK WHITE
Attorney General
Mr. Hal H. Hood, Cormnissioner Opinion No. MN-506
Supreme Court Building
Firemen's Pension Commissioner
P. 0. Box 12546
Austin. TX. 76711. 2546
503-F. Sam Houston Building Re: Authority of trustees of
512/475-2501 Austin, Texas 78701 a Firemen's Pension and
Telex 910/674-1367 Retirement Fund to make certain
Telecopier 5121475~0266 investments
1607 Main St., Suite 1400
Dear Mr. Hood:
Dallas, TX. 75201-4709
2141742-6944 You have requested our opinion regarding the authority of the
trustees of a Firemen's Relief and Retirement Fund to make certain
investments.
4624 Alberta Ave.. Suite 160
El Paso. TX. 799052793
915/533-3464 You state that the trustees of the Firemen's Relief and
Retirement Fund of a city have invested a portion of its surplus funds
in two local ventures. In the first instance, the trustees invested
1220 Dallas Ave., Suite 202
$1.2 million as a loan at 12 percent interest to a limited partnership
HOUSTON, TX. 77002-6966
7131650-0666
venture created for the purpose of converting an apartment complex
into condominiums. One of the trustees of the fund owns an interest
in this limited partnership. In the second instance, the trustees
606 Broadway, Suite 312 invested a" unspecified sum in a locally owned corporation created for
Lubbock. TX. 79401.3479
the purpose of land development. This corporation is not listed with
6061747.5236
an exchange registered with the Securities and Exchange Commission and
one of the trustees of the fund owns stock in the corporation.
4309 N. Tenth, Suite S
McAllen, TX. 76501-1665 Section 23A of article 6243e, V.T.C.S., provides:
5121662-4547
(a) This section applies to the Firemen's
200 Main Plaza. Suite 400 Relief and Retirement Fund in any city having a
San Antonio. TX. 76205-2797 population of less than two hundred forty thousand
51212254191 (240,000), according to the last preceding Federal
Census.
An Equal OppOrtunitYI
Affirmative Action Employer (b) Whenever, in the opinion of the Board of
Trustees, there is on hand in the Firemen's Relief
and Retirement Fund a surplus over and above a
reasonably safe amount to take care of current
demands upon such fund, such surplus, or so much
thereof as in the judgment of the Board is deemed
proper, may be invested in bonds or other
interest-bearing obligations and securities of the
United States, the State of Texas, or any county,
p. 1822
Mr. Hal Il.Hood - Page 2 (M&506)
city or other political subdivision of the State
of Texas; in shares or share accounts of savings
and loan associations, where such shares or share
accounts are insured under and by virtue of the
Federal Savings and Loan Insurance Corporation; in
first lien real estate mortgage securities insured
by the Federal Housing Administration under the
National .Housing Act of the United States, as
amended from time to time; and in such corporation
bonds, preferred stocks and common stocks as the
Board may deem to be proper investments for the
fund.
(c) In making each and all of such investments
the Board shall exercise the judgment and care
under the circumstances then prevailing which men
of ordinary prudence, discretion, and intelligence
exercise in the management of their own affairs
not in regard to speculation but in regard to the
permanent disposition of their funds, considering
the probable income therefrom as well as the
probable safety of their capital.
(d) No more than fifty percent (50%) of the
fund shall be invested at any given time in
corporate stocks, nor shall more than five percent
(5%) of the fund be invested in corporate bonds
and stocks issued by any one corporation, nor
shall more than five percent (5%) of the voting
stock of any one corporation be owned.
(e) Stocks eligible for purchase shall be
restricted to stocks of companies incorporated
within the United States which have paid dividends
for ten (10) consecutive years or longer
immediately prior to the date of purchase and
which, except for bank stocks and insurance
stocks, are listed upon an exchange registered
with the Securities and Exchange Commission or its
successors.
Section 23A does not permit either of the investments you
describe. A limited partnership is not within the restricted category
of permissible investments under subsection (b). As to the
corporation, you state that it is not "listed upon an exchange
registered with the SEC," nor has it "paid dividends for the ten (10)
consecutive years or longer immediately prior to the date of
purchase." Thus, neither company. on the basis of the facts you have
described, constitutes a permissible repository for surplus monies of
the fund.
p. 1823
. .
Mr. Hal H. Hood - Page 3 (MW-506)
You also ask whether meetings of the fund's board of trustees are
subject to the Texas Open Meetings Act, article 6252-17, V.T.C.S., and
whether the board must keep minutes of its meetings. The Open
Meetings Act is applicable to every deliberation among a quorum of
members of a "governmental body," defined, inter alla, as:
every deliberative body having rule-making or
quasi-judicial power and classified as a
department, agency, or political subdivision of a
county or city.
V.T.C.S. art. 6252-17, §l(c).
The board of trustees is composed of city officials serving ex
officio and members of the fire department elected by the membership.
V.T.C.S. art. 6243e, §§3. 3A, 3B. The city treasurer, serving as
treasurer of the Board of Trustees, is custodian of the Firemen's
Relief and Retirement Fund for the city. Id. 53. The board of
trustees has the power to receive, handle andcontrol, manage and
disburse the Firemen's Relief and Retirement Fund. Id. It also has
power to hear and determine applications for benefits. Id. In our
opi"io", the board is a deliberative body with quasi-judicial powers
and classified as an agency of a city. It is a "governmental body"
subject to the Open Meetings Act. See Attorney General Opinion H-467
(1974). Furthermore, section 3 of article 6243e requires the board of
trustees to "hold regular monthly meetings" and to "keep accurate
minutes of its meetings and records of its proceedings." We conclude
that the board of trustees is required to keep minutes of its
meetings.
SUMMARY
On the basis of the descriptions you have
provided, a city Firemen's Relief and Retirement
Fund subject to section 23A of article 6243e,
V.T.C.S., Mayo not invest its surplus funds in a
local partnership and a local corporation. The
board of trustees of the Firemen's Relief and
Retirement Fund is subject to the Open Meetings
Act, article 6252-17, V.T.C.S., and is required by
article 6243e, V.T.C.S., to keep minutes of its
meetings.
-MARK WHITE
Attorney General of Texas
p. 1824
Mr. Hal H. Hood - Page 4 (MW-506)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY 111
Executive Assistant Attorney General
Prepared by Rick Gilpin
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Bill Campbell
Rick Gilpin
Patricia Hinojosa
Jim Moellinger
Bruce Youngblood
p. 1825