Untitled Texas Attorney General Opinion

ORNEY~GENERAL
OF TEXAS
June 1, 1959
Honorable J. W. Edgar Opinion Number WW-637
Commissioner :of Education
Texas Education Agency .Re: Whether bonds to be
Austin, Texas issued under Section
18, Article VII, Con-
stitution of Texas,
could be construed
Dear Dr. Edgar: .as revenue bonds.
You have asked the opinion of this office as to
whether the bonds which the Board of Regents of The Uni-
versity of Texas plans to s,ell in July might be construed
as revenue bonds. You state that if they are construed as
revenue bonds the Btate ,Board of Education may automati-
cally waive its statutory ,option to purchase bonds is,sued
by The University of Texas,, by virtue of the TBoard's adopted
policy not to purchas~e revenue bonds. If these bonds are
not construed as revenue bonds, you ask whether a procedure
of the Board in granting an advance waiver on this proposed
issue would be legal.
It is the opinion of this office that bonds to be
issued under the provisions of the 1956 Amendment to Section
18, Article VII, Constitution of Texas, will be revenue bonds.
This amendment reads, in part:
"Any bonds or notes issued hereunder shall
be payable solely out of the income from
the Permanent University Fund.' (Rmphasis
supplied).
Thus, there is no provis,ion,,orauthority for the use
of funds derived from taxation to service these proposed bonds.
The distinguishing feature of revenue bonds is that the holders
of such bonds have no claim upon funds raised or to be raised
by taxation in order to secure payment of their obligations.
Honorable J. W. Edgar, page 2 (WW-637)
City of El Campo v. South Texas Nat. Bank of San Antonio
et al., 200 S.W.2d 252 (Te~.Civ.App. 1946, error ref'd).
Article 2673, V.C.S., gives the State Board of Edu-
cation an option to purchase any bonds issued by The Uni-
versity of Texas. However, according to your letter, the
Board has adopted a policy of not purchasing revenue bonds.
SO long as this policy is adhered to, it will have the ef-
fect of automatically waiving the option given the Board by
Article 2673, V.C.S., as concerns bonds to be issued pur-
suant to Section 18, Article VII, Constitution of Texas.
Since this office is of the opinion that bonds to be
issued under the provisions of the Amendment to Section 18,
Article VII, Constitution of Texas, will be revenue bonds, it
is not necessary to answer the second question which you asked.
Bonds to be issued by the Board of Regents
of The University of Texas pursuant to the
amendment to Section 18, Article VII, Con-
stitution of Texas, will be revenue bonds.
Very truly yours,
WILL WILSON
RTL-s Assistant
APPROVRU:
OPINION COMMITTEE
Geo . P. Blackburn, Chairman
L. P. Lollar REVIEWWED FOR THE ATTORNEY GBNBRAL
Larry Jones By: W. V. Geppert
Paul W. Floyd, Jr.