Untitled Texas Attorney General Opinion ( 1980 )

The Attorney General of Texas
October 9, 1980
MARK WHITE
Attorney General
Honorable Wilhelmina Delco Opinion No. I+~253
Chairman
Committee on Higher Education Re: Whether a nonprofit corpora-
P. 0. Box 2910 tion acting as ‘a higher education
Austin, Texas 78769 authority under section 53.47(e) of
the Education Code Is governed by
other parts of chapter 53
Dear Representative Delco:
You request our interpretation of one provision of chapter 53 of the
Education Code, relating to the establishment and operation of Higher
Education Authorities. A Higher Education Authority may be created by a
city. It has the power to issue revenue bonds to obtain funds to purchase
student lcen notes guaranteed under the provisions of the Higher Education
Act of 1965. Educ. Code § 53.47. You inquire about the following provision:
(e) In lieu of establishing an authority under the
provisions of this chapter, the governing body of a
home-rule city or cities may request a nonprofit
corporation heretofore organized to exercise the
powers enumerated and provided in this section for
and on its behalf. If the corporation agrees to
exercise such powers, the directors of such corpora-
tion shall thereafter be appointed by and be subject
to removal by the governing body of the home-rule
city or cities, and except as herein provided, Sections
53.14, 53.15, 53.31, 53.32, 53.38, and 53.41 through
53.43 of the Texas Education Code shall apply to and
govern such corporation, its procedures, and bonds.
Educ. Code § 53.47(e). You wish to know whether an authority operating
under this provision ls exempt from the sections of chapter 53 not cited in
section 53.47(e).
Subsection (e) of section 53.47 provides that a nonprofit corporation
heretofore organized may exercise the powers enumerated in this section.
Subsection (a) of this section provides that an authority heretofore created
may issue revenue bonds to obtain funds to purchase student loan notes. It
states as follows:
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Honorable Wilhelmina Delco - Page Two (I@?-253)
Revenue bonds issued for such purpose shall be issued in accordance
with and with the effect provided in this chapter, except Section
53.36 shall not apply, as said chapter has been modified by Chapter
3, Acts of the 61st Legislature, Regular Session, 1969, as amended
(Article 717k-2, Vernon’s Texas Civil Statutes), and by Chapter 784,
Acts of the 61st Legislature, Regular Session, 1969 (Article 717k-3,
Vernon’s Texas Civil Statutes). Such bonds shall be payable from
and secured by a pledge of revenues derived from or by reason of
the ownership of student loan notes and investment income after
deduction of such expenses or operating the loan program as may
be specified by the bond resolution or trust indenture.
Educ. Code §53.47(a). In our opinion, section 53.47(a) subjects the nonprofit corporation
to all provisions in chapter 53 relating to the issuance of revenue bonds except for section
53.36. Thus, sections 53.34, 53.35, 53.37, 53.39, and 53.40, would apply to the nonprofit
corporation operating pursuant to section 53.47(e) of the Education Code.
In our opinion, the remaining substantive provisions of chapter 53 are not applicable
to a nonprofit corporation operating under section 53.47(e) of the Education Code. Some
of the remaining provisions give a coherent body of powers and attributes to Higher
Education Authorities, which are not applicable to the nonprofit corporation operating
under section 53.47(e) of the Education Code. For example, the Higher Education
Authority organized under chapter 53 may acquire educational facilities. Certain other
provisions of the chapter are related to this power. Public hearings in the House
Committee on Higher Education on the bill which became section 53.47(e) indicate that
the legislature was solely concerned with permitting certain existing nonprofit corpora-
tions to issue bonds in order to purchase student loan notes. Public hearings on Senate Bill
No. 454, House Committee on Higher Education, May 6, 1975, tape filed with Hearing
Reporter, John H. Reagan Building. There was no reference to the power to acquire
educational facilities.
Various provisions appear to s&serve the power to acquire educational facilities.
These are not, in our opinion, made applicable to nonprofit corporations by section 53.47.
For example, Higher Education Authorities lack the power to tax and the power of
eminent &main. Educ. Code §§ 53.31, .32. Of course, these powers do not exist without a
legislative grant, s Lasater v. Lopez, 217 S.W. 373 (Tex. 1919); Hall v. Wilbarger County,
37 S.W.2d 1041 (Tex. Civ. App. - Amarillo 1931), aff’d, 55 S.W.2d 797 (Tex. Comm’n App.
1932), but in the case of a nonprofit corporation, there is less need to rule out the grant of
power by implication. See Attorney General Opinion H-1067 (1977). A Higher Education
Authority may issue revenue bonds secured by the revenue from its facilities, and may
operate its facilities on certain terms. Educ. Code §§ 53.33, .44. Finally, the property
owned by the authority is exempt from taxation because it is held for educational purposes
only. Educ. Code 5 53.46. Again, these provisions are not relevant to a nonprofit
corporation which does not hold educational facilities. Nor is section 53.11, relating to the
creation of a Higher Education Authority, relevant to a hitherto existing nonprofit
corporation operating under section 53.47(e).
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Honorable Wilhelmina Delco - Page Three (M+253)
Section 53.12 of the Education Code states that an authority comprises only the
territory included within the boundaries of the city or cities creating it. Although this
provision is not expressly applicable to a nonprofit corporation operating under section
53.47(e), the city using the corporation is still subject to the general rule that a municipal
corporation’s powers cease at its boundaries and cannot be exercised beyond them without
the plain manifestation of legislative intent. City of Arlington v. Lillard, 294 S.W. 829
(Tex. 1927); Ex parte Ernest, 136 S.W.2d 595 (Tex. Crim. App. 19391; Dallas Power & Light
Co. v. Carrington, 245 S.W. 1046 (Tex. Civ. App. - Dallas 1922, writ dism’d). The
nonprofit corporation may, but is not required to, limit the purchase of notes to notes
executed by students attending school in a certain geographical area or by students who
are residents of the area. See Educ. Code § 53.47(d).
Two final provisions are not expressly made applicable to a nonprofit corporation
organized under section 53.47(e). Section 53.45 provides that an authority may borrow
money and accept grants from and enter into contracts with the United States, Texas, any
municipal corporation, and any public or private person or corporation. The nonpiufit
corporation certainly has implied power to enter into contracts necessary to issue revenue
bonds and purchase student loan notes and does not need the broader contractual powers
referred to in section 53.45. Section 53.13 provides that an authority is a body politic and
corporate having the power to perpetual succession, that it may sue and be sued, and that
it may make, amend, and repeal its bylaws. In our opinion, a nonprofit corporation
organized under the Texas Non-Profit Corporation Act, articles 1396-1.01 to 1396-lLO1,
V.T.C.S., has at least the power of perpetual succession, the power to sue and be sued, and
the power to make, amend and repeal its bylaws consistent with chapter 53 of the
Education Code, which powers are necessary to its performance of its duties under section
53.47(e).
SUMMARY
A nonprofit corporation operating under section 53.47(e) of the
Education Code is subject to the sections of chapter 53 referred to
in that section as well as those sections relating to the issuance of
bonds. Although it is not subject to the other provisions of chapter
53, other laws having similar effect may be applicable in some
cases.
Aw
MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY Hl
Executive Assistant Attorney General
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Honorable Wilhelmina Delco - Page Four (MK-253)
Prepared by Susan Garrison
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan Garrison, Acting Chairman
Ride Gilpin
Eva Loutzenhiser
Bruce Youngblood
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