Opinion Number ( 1997 )

Dear Mr. Walters:

You have requested the opinion of this office concerning whether the East Jena Water Systems, Inc., a private non-profit corporation, which supplies water in the rural area of the East Jena community of LaSalle Parish, is required to obtain State Bond Commission approval prior to incurring indebtedness for a period of time to exceed ninety days.

As you noted in your opinion request, R.S. 39:1410.60 requires State Bond Commission approval prior to the incurrence of debt by any "parish, municipality, public board, political or public corporation, subdivision, or taxing district, [and no] road or subroad district, school district, sewerage district, drainage or subdrainage district, levee district, waterworks or subwaterworks district, irrigation district, road lighting district, harbor and terminal district, or any other political subdivision,taxing district, political or public corporation, created underor by the constitution and laws of the state . . ." (Emphasis added)

It is the opinion of this office that a private non-profit corporation created pursuant to Title 12 of the Louisiana Revised Statutes is not "any other political subdivision, taxing district, political or public corporation, created under or by the constitution and laws of the state" such that its taxable debt would require the approval of the State Bond Commission.

However, we would note that pursuant to the provisions of R.S.39:1405(B), State Bond Commission approval may be required for certain indebtedness of non-profit corporations, that provision being:

"No person or entity, public or private, shall incur debt or issue evidences of indebtedness for the purpose of financing any project in the state of Louisiana, the interest upon which indebtedness or evidence thereof is exempt from federal income taxation under Section 103 of the Internal Revenue Code of 1954, without the consent and approval of the State Bond Commission. Any evidence of indebtedness incurred or issued in violation of this Section shall be null and void and no court of this state shall have jurisdiction to enforce the payment thereof pursuant to the provisions of R.S. 47:1806."

If the non-profit corporation was formed by a public entity, we would suggest that you review the provisions of R.S. 12:202.1 which may apply to the issuance of any debt by the non-profit corporation.

Trusting this adequately responds to your request, we remain

Yours very truly,

RICHARD P. IEYOUB Attorney General

BY: ___________________________ MARTHA S. HESS Assistant Attorney General

RPI/MSH/

Date Received: Date Released:

Martha S. Hess, Assistant Attorney General