Untitled Texas Attorney General Opinion

July 2, 1974
The Honorable Leroy Jeffers Opinion No. H- 348
President, State Bar of Texas
P. 0. Box 12487 Re: Proposal for financing
Austin, Texas 78711 and constructing State
Bar Center
Dear Mr. Jeffers:
You have requested our opinion on the legality of a plan for
financing and constructing a new State Bar Center. Since your
original request was submitted you have altered your financing
plans and have submitted a revised question reflecting those
changes. Your question is:
Can the State Bar bf Texas under the applicable
law enter into a contract for the construction of
a new ‘building on the site of its present building
and enter into a contract or contracts for the
financing or partial financing of the costs of such
construction so long as such contract or contracts
does not obligate or encumber the dues revenues
of the State Bar of Texas beyond revenue for the
current year at the time of entering such contract
or contracts and so long as the sums that become
due and payable under such contract or contracts
are payable only from (1) monies contributed or
pledged to be contributed to a fund for the express
purpose of aiding in the payment of the costs of
construction of such new State Law Center; (2) reve-
nues derived or which may become due and payable
for the rental of space to others in the new building
cashwdd by the State Bar of Texas; and (3) ,such
funds as may be contributed or pledged to be
contributed to the costs of such construction by
the Texas Bar Foundation, a private corporation,
which is not an agency of the State of Texas?
p. 1586
The Honorable Leroy Jeffers, page 2
The State Bar of Texas was created by the State Bar Act,
Article 320a-1, V. T. C. S. Subdivision (a) of Sec. 2 of that Act
provides:
There is hereby created the State Bar, which
is hereby constituted an administrative agency
of the Judicial Department of the state, with
power to contract with relation to its own affairs
and which may sue and be sued and have such
other powers as are reasonably necessary to
carry out the purposes of this Act.
Pursuant to the clear language of the statute this office has
consistently held that the State Bar of Texas is a state agency.
Attorney General Opinions WW-202 (1957); MS-83 (1953); V-1299
(1951); V-480 (1948); O-2784 (1940). The same subdivision creating
the Bar as an instrumentality of the State gives it broad power to
conduct its own affairs. Surely it is necessary .for the Bar to
acquire adequate office space if it is~ to carry out its responsibilities
under the Act, and construction of a new building is a reasonable
means of obtaining that space. .
The plan for construction of the proposed State Bar Center is
similar to the method used for financing and constructing the existing
building. Given the failure of the Legislature over 20 years to
object to this procedure on the part of the State Bar coupled with
the Legislature’s failure to include this type building program in the
general purview of the State Building Construction Administration
Act, Article 678f, V. T. C.S., we are unable to say that the suggested
procedure is illegal.
The Bar is, of course, subject to the requirements of the State
Bar rules. Your revised question does not seek an interpretation of
those rules, and for the purposes of this opinion we assume that the
construction and financing of the building will be authorized in con-
formity with the State Bar rules.
..
Any financing plan used by the B.ar is limited by Article 3, Sec. 49
of the Texas Constitution which provides:
p. 1587
The Honorable Leroy Jeffers, page 3
No debt shall be created by or on behalf of
the State, except to supply casual deficiencies
of revenue, repel invasion, suppress insurrection,
defend the State in war, or pay existing debt; and
the debt created to supply deficiencies in the reve-
nue, shall never exceed in the aggregate at any one
time, two hundred thousand dollars.
However, the definition of debt, as used in this portion of the Constitution,
has been given a narrow meaning. Debt does not include obligations
payable solely from revenues generated by renting or operation of the
project. Texas National Guard Armory Board v. McGraw, 126 S.W.2d
627 (Tex. 1939); Attorney General Opinion O-1694 (1939). Furthermore,
no debt is created when payment is to be made from current ~revenues
only. Charles Scribner’s Sons v. Marts. 262 S.W. 722 (Tex. 1924);
Attorney General Opinion M-656 (1970).
Under the proposal you submitted a lender could look only to rental
revenues and voluntary contributions for payment in future years. You
have not proposed a mortgage of state property. Under these facts we
do not believe the Constitution- or statutes would prevent the Bar from
constructing and financing a new State Bar Center. As we have been
given no proposed contract we pass solely on the general outline you have
presented. The l,egality of any particular contract would depend on its
therms and provisions, and this opinion is necessarily limited to the query
posed.
SUMMARY
The Constitution and statutes do not preclude the
State Bar of Texas from constructing and financing
a new State Bar Center where a pledge of voluntary
contributions and revenues generated by the building
is the only source to which the lender can look for
+Lment in future years.
p. 1588
The Honorable Leroy Jeffers. page 4
DAVID M. KENDALL, Chairman
Opinion CornnGttee
p. 1589