Untitled Texas Attorney General Opinion ( 2006 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
September 14,2006
The Honorable Robert Duncan Opinion No. GA-0455
Chair, Committee on State Affairs
Texas State Senate Re: Whether Government Code section 2306.6710,
Post Office Box 12068 which requires the Texas Department of Housing and
Austin, Texas 7871 l-2068 Community Affairs to score and rank low-income
housing tax-credit applications according to statutorily
specified criteria, violates Texas Constitution article II,
section 1, the Separation-of-Powers Doctrine
(RQ-0457-GA)
Dear Senator Duncan:
You ask if Government Code section 2306.6710, which requires the Texas Department of
Housing and Community Affairs to score and rank low-income housing tax-credit applications
according to statutorily specified criteria, violates Texas Constitution article II, section 1, the
Separation-of-Powers Doctrine.’
The federal government offers tax credits to private developers to stimulate investment in
and.construction of low-income housing. See generally 26 U.S.C.A. 5 42 (West 2002 & Supp.
2006). These federal tax credits are allocated among the states and awarded at the state level by a
designated housing credit agency. See id. 5 42(h), (m). InTexas, the legislature, under Government
Code chapter 2306, subchapter DD, has designated the Texas Department of Housing and
Community Affairs (“TDHCA”) to administer the state’s low-income housing tax-credit program.
See TEX. GOV’TCODEANN. 5s 2306.6701-.6734 (Vernon Supp. 2006); see also id. § 2306.053(10)
(Vernon 2000) (authorizing TDHCA to “administer federal housing, community affairs, or
community development programs, including the low income housing tax credit program”).
The Internal Revenue Code requires TDHCA, as administrator of this tax-credit program,
to allocate tax credits according to selection criteria laid out in a “qualified allocation plan.” See 26
U.S.C.A. $42(m)(l)(B)-(C) (West 2002 & Supp. 2006). Texas law implements the federal law by
requiring the TDHCA board to annually adopt a qualified allocation plan, see TEX. GOV’T CODE
‘See Letter from Honorable Robert Duncan, Chair, Committee on State Affairs, Texas State Senate, to
Honorable Greg Abbott, Attorney General of Texas (Feb. 21,2006) (on file with the Opinion Committee, also mailable
af hrtp://www.oag.state.tx.us) [hereinafter Request Letter].
The Honorable Robert Duncan - Page 2 (GA-0455)
ANN. 5 2306.67022 (Vernon Supp. 2006), which, among other things, provides the threshold scoring
and underwriting criteria and procedures for applicants seeking low-income housing tax credits. See
id. § 2306,6702(a)(lO). While TDHCA has discretion to determine the number ofpoints to assign
the underwriting criteria and to score and rank the applications for tax credits, numerous provisions
in the Government Code require TDHCA to consider specific funding priorities, information, and
preferences in doing so.* And it is these prescriptive provisions that give rise to your question. See
Request Letter, supra note 1, at l-2.
Specifically, you ask about Government Code section 2306,6710(b), see id., which requires
TDHCA to score and rank tax-credit applications using a point system that
(1) prioritizes in descending order criteria regarding:
(A) frnanciai feasibility of the development .;
(B) quantifiable community participation with respect to the
development .;
(C) the income levels of tenants of the development;
(D) the size and quality of the units;
(E) the commitment of development funding by local
political subdivisions;
(F) the level of community support for the application,
evaluated on the basis of written statements j?om state elected
officials;
(G) the rent levels of the units;
(H) the cost of the development by square foot; and
(I) the services to be provided to tenants of the
development[.]
TEX. Gov’TCODEANN. 3 2306,6710(b)(l) (V emon Supp. 2006) (emphasis added). This office has
determined that this section is a mandatory provision that requires TDHCA to rank applications
using a point system that gives the greatest number of points, in descending order, to the nine factors
%X TEX. GOV’TCODEANN. 5 2306.6725(a) (Vernon Supp. 2006); Tex. Att’y Gen. Op. No. GA-0208 (2004)
at 9 11.13 (discussing the discretion Government Code section 2306.6725(a) permits TDHCA in assigning points to
undenvritingcriteria); see&o, e.g., TEX. GOV’TCODEANN. @2306.11 l(d),(g), .6704(b), .6710(b), .6718@)(Vemon
Supp. 2006).
The Honorable Robert Duncan - Page 3 (GA-0455)
listed. See Tex. Att’y Gen. Op. No. GA-0208 (2004) at 10. You question whether the sixth factor,
subsection (F), requiring TDHCA to assign points to written statements from state legislators,
violates the Separation-of-Powers Doctrine in the Texas Constitution. See Request Letter, supra
note 1, at 1-2; see also TEX. GOV’T CODE ANN. $5 2306.6710(f) (Vernon Supp. 2006) (requiring
a system of positive to negative points for statements of support or objection from state legislators);
id. 5 2306.6718(a)(l) (requiring TDHCA to “provide written notice of the tiling of an application
to members of the legislature who represent the community containing the development
described in the application”).
You question this subsection’s constitutionality because Texas Constitution article II, section
~1,the Separation-of-Powers Doctrine, requires the Texas government to be divided into three distinct
departments-the legislative, the executive, and the judicial. See TEX. CONST. art. II, 5 1. The
constitution elaborates that “no person, or collection of persons, being of one of these departments,
shall exercise any power properly attached to either of the others, except in the instances herein
expressly permitted.” Id. You note that many times TDHCA awards or refuses tax credits to
applicants on a narrow margin of points where the determinative factor will be the points assigned
to the application because of the presence or absence of a legislator’s written statement about the
application.3 Thus, you suggest that section 2306,6710(b)(l)(F) retains an executive function for
individual members ofthe legislative branch, which is inconsistent with the constitution’s language.
See Supplemental Letter, supra note 3, at 1.
While article II, section 1 appears on its face to require absolute division among the various
branches, it has long been understood that a rigid application of this principle is impossible because
not every governmental power tits logically and clearly into any particular department. See Gov ‘t
Servs. Ins. Underwriters v. Jones, 368 S.W.2d 560,562 (Tex. 1963) (“[T]heproblemofdetermining
that which is judicial and that which is legislative is often difficult of statement under varying factual
circumstances.“); Coatesv. Windham, 613 S.W.2d 572,576 (Tex. Civ. App.-Austin 1981,no writ)
(“The proper interpretation of Article R, section 1 is . dictated by its context.“). It is more accurate
to state that the Separation-of-Powers Doctrine “prohibits a transfer of a whole mass of powers from
one department to another and it prohibits a person of one branch from exercising a power
historically or inherently belonging to another department;” Coates, 613 S.W.2d at 576. But it does
not prevent cooperation or coordination between two or more branches of government because that
would otherwise hinder effective governmental action. State Bd. ofh. v. Betts, 308 S.W.2d 846,
852 (Tex. 1958). Thus, in application article II, section 1 will prohibit the legislature from, for
example, authorizing a legislative oversight committee to approve or veto an executive agency’s
administrative rules-which rule-approval power is reserved to the executive branch-but it will not
preclude the commentary or expressions of approval or disapproval by a legislative committeeto an
administrative body. See Tex. Att’y Gen. Op. No. MW-0460 (1982) at 2 (observing that no law
precludes a legislative committee from providing input to an agency, provided the committee is not
the decision-maker); see also TEX. CONST. art. III, 5 1.
‘See Letter and attachment from Honorable Robert Duncan, Chair, Committee on State Affairs, Texas State
Senate, to Honorable Greg Abbott, Attorney General of Texas (Mar. 3 1,2006) (on file with the Opinion Committee)
[hereinafter Supplemental Letter].
The Honorable Robert Duncan - Page 4 (GA-0455)
Here, section 2306,6710(b)(l) requires only that TDHCA give priority in descending order
to the nine enumerated factors listed there; the section, however, does not require TDHCA to assign
specific values to those factors. See TEX. GOV’T CODE ANN. § 2306,6710(b)(l) (Vernon Supp.
2006); id. ?j2306.6725(a); see also Tex. Att’y Gen. Op. No. GA-0208 (2004) at 10 n.15 (referring
to TDHCA’s authority to assign values to factors the agency must consider in ranking and scoring
tax-credit applications). And as you note, it is only “possible that the mandatory points awarded or
deducted because of a state elected official’s letter could be the deciding factor as to which
applications are awarded the tax credits by [TDHCA].” Request Letter, supva note 1, at 2. That
possibility applies equally to any of the criteria that TDHCA must consider and score. Given
TDHCA’s broad discretion in this arena, any determinative quality in scoring a tax-credit application
associated with a legislator’s written statement is not an executive power retained by the legislature;
rather, that determinative quality is created by agency rule in its qualified allocation plan. Thus, we
cannot say that the legislature, by requiring that its individual members’ input be assigned a score
in a tax-credit application to an executive agency, is interfering, with a core power or the mass of
powers reserved to TDHCA as a department in the executive branch. Section 2306,6710(b)(l),
therefore, does not on its face violate Texas Constitution article II, section 1.
The Honorable Robert Duncan - Page 5 (GA-0455)
SUMMARY
Government Code section 23066710@)(l), which requires
the Texas Department of Housing and Community Affairs to score
and rank applications for low-income-housing tax credits in part
based on written statements from state elected officials, does not
violate the Separation-of-Powers Doctrine in Texas Constitution
article II. section 1.
KENT C. SULLIVAN
First Assistant Attorney General
ELLEN L. WITT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
Daniel C. Bradford
Assistant Attorney General, Opinion Committee