Untitled Texas Attorney General Opinion ( 1969 )

THE ATMWIZNEY GENERAL OFmXAS Honorable Jesse James Opinion No.,M-354 State Treasurer State Capitol Building Re: Whether preliminary loan Austin, Texas IS711 notes issued by the Urban Renewal Agency of the City of Austin, guaranteed by the Federal Government, and conforming to the copy of one of said notes which is submitted with your opinion request, are authorized collateral to secure the deposit of State funds. Dear Mr. James: In connection with your request for an opinion on the above captioned subject, you have submitted a copy of a pre- liminary loan note of the Urban Renewal Agency of the City of Austin. The copy of the note submitted is a copy of one note in a series and other notes in the series are identical to the copy save and except for serial numbers. The notes conform- ing to the copy show on their face that they are secured by an agreement between the Urban Renewal Agency of the City of Austin and the Federal Government and that under the agreement, the Urban Renewal Agency of the City of Austin has agreed to borrow from the Federal Government and the Federal Government has agreed to lend to the Urban Renewal Agency of the City of Austin, prior to the maturity of such notes, moneys in an amount which (together with any other moneys irrevocably committed to the payment of interest on such notes) will suffice to pay the principal of such notes with interest to maturity which moneys under the terms of said agreement are required to be used for the ~purpose of paying the principal of and the interest on such notes at their maturity. A "payment agreement" bearing the duly authorized facsimile signature of the secretary of -1748- Honorable Jesse James, page 2 (M-354 ) Housing and Urban Development appears on the back of said notes, said "payment agreement" being identical to the "payment agreement" which we approved as a guarantee for the deposit of State funds in Attorney General's Opinion No. M-197 (1968) and reading as follows: "PAYMENT AGREEMENT "Pursuant to section 102(c) of the Housing Act of 1949, as amended (42 U.S.C. 1452(c)), the United States hereby unconditionally agrees that on the Maturity Date of the within Preliminary Loan Note it will pay or cause to be paid to the bearer thereof the principal of and interest thereon, upon the presentation and surrender of such Note to the Paying Agent designated therein, and the full faith and credit of the United States is pledged to such payment. Under section 102(c) of the Act, this Agree- ment shall be construed separate and apart from the loan contract referred to in the within Note and shall be incontestable in the hands of a bearer. "IN WITNESS WHEREOF, this Agreement has been executed on behalf of the United States by the duly authorized facsimile signature of the Secretary of Housing and Urban Develop- ment, as of the Date of Issue of the within Note." Section 15(e) of Article 1269 L-3, Vernon's Civil Statutes, (the Urban Renewal Law) provides, in part, that certain regulated investors: 8, ...may legally invest any sinking funds, moneys, or other funds belonging to them or within their control in any bonds or other obligations issued by an urban renewal agency pursuant to this Act; provided that such bonds - 1749- Honorable Jesse James, page 3 (M-354 ) and other obligations shall be secured by an agreement between the issuer and the Federal Government in which the issuer agrees to borrow from the Federal Government and the Federal Government agrees to lend to the issuer, prior to the maturity of such bonds or .other obligations, moneys in an amount which (together with any other moneys irrevocably committed to the payment of interest on such bonds or other obligations) will suffice to pay the principal of such bonds or other obligations with interest to maturity thereon, which moneys under the terms of said agreement are required to be used for the purpose of paying the principal of and the interest on such bonds or other obligations at their maturity. Such bonds and other obligations shall be authorized security for all public deposits..." (Emphasis added.) We answer your question in the affirmative pursuant to the express legislative authorization above quoted. Preliminary loan notes issued by the Urban Renewal Agency of the City of Austin, guaranteed by the Federal Government, and conforming to the copy of one of said notes which has been submitted with your opinion request, are authorized collateral to secure the deposit of State funds. SUMMARY Preliminary loan notes issued by the Urban Renewal Agency of the City of Austin, guaran- teed by the Federal Government, and conform- ing to the copy of one of said notes which has been submitted with your opinion request, are authorized collateral to secure the deposit of State funds. very truly, zL&$a ORD C. MARTIN A -1750- Honorable Jesse James, page 4 (M-354) PREPARED BY: Larry Craddock Assistant Attorney General APPROVED: Opinion Committee Kerns Taylor, Chairman George Kelton, Vice Chairman Roy W. Mouer Ralph Rash Malcolm Quick Bill Allen W. V. GEPPERT Staff Legal Assistant - 1751-