Untitled Texas Attorney General Opinion ( 1950 )

De&ember 14, 1950
Hon. Claude Isbell
Executive Secretary
Board of Regents
Texas State TeachersColleges
Austin, Texas Oplnlon~No.V-1133.
Re: Issyance of Revenue
Bonds under Article
2654c-1, V.C.S.
Dear Sir:
In your recent letter you state that the Board
of Regents of the Texas State Teachers Colleges desires
to Issue certain bonds in behalf of one of the colleges
for the purpose of constructinga classroom building and
a boys' dormitory on the campus of the college, these
bonds to be issued under the provisions of Article 2654c-1,
V.C.S. (Acts 47th Leg., R.S., 1941, ch. 560, p. 908) and
secured by a pledge of the building use fee authorized by
such statute and a pledge of the net revenues to be de-
rived from the operation of the boys' dormitory.
Section 7 of the statute provides that govern-
ing boards of the colleges "shall not be permitted to con-
tract bonded Indebtednessunderthe terms of this Act In
excess of eighty (80) per cent of the amount which can be
amortized wlEh ihi rknues from -7L--
said bulldln use fee
estimated at the time of thexhorlza Ion of such rev-
enue bonds." (Emphasis added.)
You state that the contemplatedbonds could not
be amortized by eighty (80) per cent of the building use
fee, but that such bonds can easily be financed by such
fee and pledged net revenues of the~dormltory,If the llm-
ltatlon Imposed by Section 7 would not prevent the issuance
thereof. Therefore, you wish to know whether the llmlta-
tlon contained In Section 7 Is applicablewhere net rev-
enues from the operation of the dormitory are pledged In
addition to a pledge of the building use fee.
. -.
Hon. Claude Isbell - Page 2 (v-1133)
Article 2654c-1 authorizesthe Issuance of reve-
nue bonds by the State Institutionsof higher learning
named therein for the purpose of constructingand equlp-
.plngbulldings and power plants, the,pavlrigot'streets,
the purchase of land, and for'such..othercapital lmprove-
ments as may be needed from'tlme"tot'lme;.:In~:qrderto
pay the Interest on and principal of.s.uch'bondgj.~the
gov-
.ernlngboards of the Institutionsareauthorized to charge
students a building use fee of not less than Five Dollars
($5.00) per semester.
i+
Moreover, In Section 6 of the statute it Is pro-
.vlded: .',
”
. To assure the prompt payment of
the pr&lpal and Interest of sald‘bdnds .iuch
Board Is authorized to pledge aII or anyrpor-
tlon of the proceeds of the bulldlng ,usefee
: authorized In Section 1 of,thls'Act,',anpsaid
bonds may be addltlonaIly'secured~.bya,pIedge
‘_’
.
of the net revenues from-bulldlngs~and',facl~,l-
ties to be constructed; acqulred,".or1,mproved
with the proceeds of such bonds and from other
buildings or facilities heretoforeor her,iafter
constructed or acquired."
Therefore, under the statute'cleariy'thegovern-
'lng board ~hasthe authority to pledge not only,the building
use fee but also the net revenues of the buildings to be
constructed.
Section 7 of the statute~provldekln part as fol-
.lows:
"The governing Boards of the aforesaid lnstl-.
tutlons shall not be permitted to contract.
bonded Indebtedness under the terms of this
Act In excess of eighty (80) per cent of t,he
amount which can be amortlzed.wlththe reve-
:
nu'esfrom said building use fee:estlmatedat
the time of the authorizationof such revenue.
bonds. - . .'I
The quoted language of Section 7, standing alone,
Is clear and unambiguous, and would appear to prohibit the
Issuance of any bonds "under the terms of this Act" unless
-thebonds could be paid with not more than 8% of the bulld-
lng use fee estimated at the time that the bonds are issued,
regardless of whether net revenues of.the Improvementsare
Hon. Claude Isbell - Page 3 (V-1133)
pledged also. Standing alone, the provlslons of Section 7
would be "so expllclt that lt ~111 admlt of no construc-
tion." City of Houston v. Allred, 123 Tex. 334, 350, 71
S.W.2d 251, 259 (1934)D
However, It 1s a fundamentalrule of statutory
construction that the entfre statute must be considered In
arriving at the Intent of the Legislature. It Is our opln-
lon that the Legislature Intended no such construction to
be placed on the provlslons of Section 7.
Sectl~cn6 of the statute provldes that, when the
revenue bonds are secured solely by the bulldlng use fee,
the overnlzigbod shall flx the amount of the fee (within
the f5.00 maximum5 sufflclent to meet the bond requirements
and set up a reasonable reserve In the Interest and sinking
fund. Section 6 also provides:
I(D 0 . When such bonds are secured In
whole or In part by a pledge of the net Gve-
zfrorn bulldlngs or facllltles,lt shall
be the duty of such governing body to fix
rentals and charges for the buildings and fa-
cllltles whose net revenues are thus pledged,
at rates sufficient to pay the maintenance
and operatlon expense of such buildings and
facllltles and to pro&ace net revenues which,
to ether wlth the bulldln use fee authorized
kofloi??hdwm besufflclent
to pay the interest and irlnclpal of such bonds
as they accrue and mature." (Emphasisadded.)
The statute in Sectlon 6 speaks of lssulng bonds
secured ln whole by the net revenues pledged therefor. If
Section 'ET;oere
glven a literal lnterpretatlon,this pro-
vlslon would be meaningless. In other words, If,bonds were
payable solely from net revenues, as Is provided In Set-,
tlon 6, then they could never be issued because of the 8%
building use fee provlslon of Section 7.
It 1s our oplnlon that, construfng the act as a
whole, the Legislature intended that Section 7 should be
literally followed only when the revenue bonds are secured
solely by the bulldlng use fee. It 1s also our opinion that
the Leglslature establishedan 8% safety rule ln an effort
to preclude the posslbllity of lnssfflclentfunds to meet
the bond requlrementa,
Hon. Claude Isbell - Page 4 (V-1133)
You are advised that It Is the opinion of this
office that, if the requirements of the bonds can be met
with not more than 80$ of the revenues of the building
use fee and pledged net revenues estimated at the time
of the authorizationof the bonds, the provisions of Sec-
tion 7 will be satisfied.
SUMMARY
Revenue bonds secured by a bulldlng use
fee and net revenues from building faclli-
ties may pe Issued on behalf of the State ln-
stltutlons of higher learning under Article
2654``1, V.C.S., If the requirements of the
bonds can be met with not more than 80$ of
the revenues of the building use fee and
pledged net revenues estimated at the time
of the authorizationof the bonds, provided
the proceedings are otherwise proper.
Yours very truly,
APPROVED: PRICE DANIEL
Attorney General
Everett Hutchlnson
Executive Assistant
BY``*)~&-~L/
Charles D. Mathews Georg W. Sp ks
First Asilstant Assistant
GWS:em