Opinion No. ( 2004 )

The Honorable Paul Miller State Senator P.O. Box 488 Melbourne, AR 72556-9511

Dear Senator Wooldridge:

I am writing in response to your request for my official opinion on the following questions:

1. In light of future annexation in compliance with Act 60 of 2003, can the Evening Shade School District use bond proceeds originally dedicated to "erecting and equipping a new cafeteria and refurbishing, remodeling, and equipping existing school facilities" to renovate buildings as planned and also use the money to refurbish the existing cafeteria instead of constructing a new one?

2. Does the district need to refund the bonds completely? If so, would the district be required to pay any kind of penalty?

RESPONSE

I regret to say I cannot answer these questions, which raise issues of fact that I am neither authorized nor equipped to address. Determining the permissible uses to which a school district might put bond proceeds will turn on reviewing in detail the provisions of the bond instruments. In my opinion, the district's bond counsel is the appropriate individual to undertake this task, as well as the related inquiry into whether some frustration of purpose might arise in the event of annexation that might warrant rededicating bond proceeds to some closely related purpose consistent with the terms of the bonds.

I regret I could not be of more assistance in this matter.

Assistant Attorney General Jack Druff prepared the foregoing opinion, which I hereby approve.

Sincerely,

MIKE BEEBE Attorney General

MB:JD/cyh