Judges: DAN MORALES, Attorney General of Texas
Filed Date: 8/11/1994
Status: Precedential
Modified Date: 7/6/2016
Honorable Edwin E. Powell, Jr. Coryell County Attorney P.O. Box 796 Gatesville, Texas 76528
Re: Whether section 4A(q) of the Development Act of 1979, V.T.C.S. art. 5190.6, would violate article
Dear Mr. Powell:
On behalf of the Copperas Cove Economic Development Corporation (the "development corporation"), you ask about the effect of section 4A(q) of the Development Act of 1979 (the "act"), V.T.C.S. art. 5190.6 (as amended by Acts 1993, 73d Leg., ch. 1022, § 2), which provides as follows:
A corporation under this section may not assume a debt or make any expenditure to pay principal or interest on a debt if the debt existed before the date the city created the corporation.
A letter submitted with your request from the development corporation's attorney states that the development corporation is subject to section 4A. The attorney also provides the following background information:
On May 16, 1989, the City of Copperas Cove deeded four tracts to the Copperas Cove Industrial Foundation. In the Participation Agreement which was executed simultaneously, the City of Copperas Cove became the payor of last resort for a $505,870.36 note secured by a Deed of Trust on the property. On December 3, 1991, the Copperas Cove Economic Development Corporation (EDC) was assigned the City of Copperas Cove's interest in the Participation Agreement, and the EDC assumed its financial obligation. [Footnote added.]
The development corporation's attorney contends that if section 4A(q) is construed to prohibit the development corporation from making payments on the note, it would run afoul of article
We agree that if section 4A(q) is construed to prohibit the development corporation from making payments on the note, it would run afoul of article
We further note that nothing in the legislative history suggests that the legislature intended section 4A(q) to invalidate existing contracts. The amendment that became section 4A(q) was offered by Representative Holzheauser during a House Committee on Economic Development hearing. In offering the amendment, Representative Holzheauser explained:
It addresses a problem that I brought up the other night about communities being coerced into or feeling that they would have to . . . or could get some benefit from taking on a project that may have failed in the community. Well this just says you can't do that. You can't take on that debt that's already there. It's got to be a [new project].
Hearings on H.B. 2297 Before the House Comm. on Economic Development, 73d Leg. (March 17, 1993) (tape available through House Video/Audio Services Office). We believe it is clear from this testimony that section 4A(q) is intended to prohibit development corporations from assuming existing debts in the future, not to impair any existing obligations.
Yours very truly,
DAN MORALES Attorney General of Texas
JORGE VEGA First Assistant Attorney General
DREW DURHAM Deputy Attorney General for Criminal Justice
JAVIER AGUILAR Special Assistant Attorney General
RENEA HICKS State Solicitor
SARAH J. SHIRLEY Chair, Opinion Committee
Prepared by Mary R. Crouter Assistant Attorney General
[1] We infer from the letter that the development corporation was created after May 16, 1989. We do not examine the validity of the underlying transactions you describe. See Tex. Const. art.