   OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS

   JOHN     CORNYN




                                               February 22,200l



The Honorable Edwin E. Powell, Jr.                        Opinion No. JC-0349
Coryell County Attorney
113 South 7th Street                                      Re: Whether members of the board of directors of
P.O. Box 796                                              the Copperas Cove Economic       Development
Gatesville, Texas 76528                                   Corporation may be reappointed to a subsequent
                                                          term (RQ-0301-JC)


Dear Mr. Powell:

         You ask whether directors of the Copperas Cove Economic Development Corporation (the
“corporation”), established under section 4A of article 5 190.6, TEX. REV. CIV. STAT. ANN. (Vernon
Supp. ZOOl), may be reappointed to a subsequent term of service. Absent any restriction in the
articles of incorporation or bylaws of the Copperas Cove Economic Development Corporation, or
in the charter or ordinances of the City of Copperas Cove, the governing body of the City of
Copperas Cove may reappoint a director of the corporation to a subsequent ten-n as director.
Whether or not it reappoints a particular individual is a matter for the governing body of the city, in
the exercise of its reasonable discretion.

        You state that the City of Copperas Cove has established the Copperas Cove Economic
Development Corporation in accordance with the provisions of section 4A of article 5 190.6, the
Development Co,rporation Act of 1979 (the “Act”)! TEX. REV. CIV. STAT. ANN. art. 5 190.6 (Vernon
1987 & Supp. 2001). This statute authorizes various political subdivisions to create an industrial
development corporation to act on the subdivision’s behalf in promoting economic development.
See id. 8 4(a) (Vernon Supp. 2001); see also id. $9 2(8), (13) (V emon 1987) (definitions), 3 (Vernon
Supp. 2001) (findings); see generally Ray1 v. Borger Econ. Dev. Corp. 963 S.W.2d 109,111 (Tex.
App.-Amarillo     1998, no pet.). The articles of incorporation must set forth a number of statements,
including the following:

                           (2) a statement that the corporation is anonprofit       corporation;

                           ....




         ‘Letter from Honorable Edwin E. Powell, Jr., Coryell County Attorney, to Opinion Division, Attorney General
of Texas (Oct. 25,200O) (on file with Opinion Committee).
The Honorable Edwin E. Powell, Jr. - Page 2 (Jc-034g)




                        (6) any provision not inconsistent with law, including any
               provision which under this Act [article 5 190.6, TEX. REV. CIV. STAT.
               ANN.] is required or permitted to be set forth in the bylaws, for the
               regulation of the internal affairs of the corporation.

TEX. REV. CIV. STAT.ANN art. 5 190.6,s      6 (Vernon 1987).

         The powers of a corporation established under the Act are vested in a board of directors of
“any number of directors, not less than three,” each of whom shall be appointed by the unit of
government that created the corporation “for a term of no more than six years, and each of
whom shall be removable by the unit for cause or at will.” Id. 8 11. The corporation has “all of
the rights, powers, privileges, authority, and functions given by the general laws of this state to
nonprofit corporations incorporated under the Texas Non-Profit Corporation Act, as amended
(Article 1396-1.01 et seq., Vernon’s Texas Civil Statutes),” but to the extent the general law is
inconsistent with the Act, the Act prevails. Id. 9 23(a) (Vernon Supp. 2001). A corporation may
“make and alter bylaws not inconsistent with its articles of incorporation or with the laws of this
state . . . for the administration and regulation of the affairs of the corporation,” subject to the
approval of the unit of government that authorized its creation. Id. 8 23(a)( 10). It “is not intended
to be and shall not be a political subdivision or a political corporation within the meaning
of the constitution and the laws of the state.” Id. 8 22 (Vernon 1987); see Tex. Att’y Gen. Op. Nos.
JC-0109 (1999) at 2, JC-0032 (1999) at 2 (development corporations established under article
5 190.6, TEX. REV. CIV. STAT.ANN., are not political subdivisions for purposes of the statute on sales
of real property or the prevailing wage law). The unit of government that creates an industrial
development corporation “shall never delegate to a corporation any of such unit’s attributes of
sovereignty, including the power to tax, the power of eminent domain, and the police power.” TEX.
REV. CIV. STAT.ANN. art. 5 190.6, 9 22 (Vernon 1987).


         Section 4A of article 5 190.6 authorizes cities within specified population categories to
establish a development corporation with the power to expend the proceeds of an economic
development sales tax levied by the city. Id. $4A(a), (b) (V emon Supp. 2001). The proceeds of the
tax are used by the corporation to carry out its authorized purposes. Id. 8 4A(d); see also id. 5 4(a).
A corporation created under section 4A “has the powers and is subject to the limitations of a
corporation created under other provisions of this Act [article 5 190.6 ofthe Revised Civil Statutes].”
Id. 8 4A(h)(l).   To the extent of a conflict between section 4A and another provision of article
5 190.6, section 4A prevails. Id.

         Section 4A provides that “[t]he board of directors of a corporation under this section consists
of five directors who are appointed by the governing body of the city and who serve at the pleasure
of the governing body.” Id. 8 4A(c). Section 4A thus fixes the number of directors at five,
prevailing over the conflicting language of section 11, that allows for “any number of directors, not
less than three.” See id. 9 4A(b)( 1). Neither section 4A nor section 11 of article 5 190.6 establishes
a term of office for directors of a corporation, although section 11 does place a six-year limit on any
term that may be established. The statute does not expressly bar the reappointment of a director to
The Honorable     Edwin E. Powell, Jr. - Page 3          (Jc-034%




a corporation established under section 4A or limit the length of time a person may serve in that
position. In contrast, a director of a corporation authorized by a county alliance under section 4D2
of article 5 190.6, Revised Civil Statutes, “may not serve more than six years.” Id. 9 4D(b), added
by Act of May 20, 1999, 76th Leg., R.S., ch. 973, 5 2, 1999 Tex. Gen. Laws 3722, 3723-24. See
generally H. B. Chermside, Jr., Annotation, Construction and Effect of Constitutional or Statutory
Provisions Disquallfiing One for Public Office Because of Previous Tenure of Office, 59 ALR2d
716 (1958) (disqualifications    for public office based on prior service are expressly provided by
constitution or statutes).

         The articles of incorporation or the bylaws of the Copperas Cove Economic Development
Corporation may, however, establish a term of service not to exceed six years, subject to the city
governing body’s statutory authority to remove a director at any time. See TEX. REV. CIV. STAT.
ANN. art. 1396-2.15(B) (Vernon 1997) (directors shall be appointed for the terms provided in the
articles of incorporation or the bylaws). If the articles of incorporation or the bylaws do not establish
a lesser term of service, directors of the Copperas Cove Economic Development Corporation will
serve a six year term pursuant to section 11 of article 5 190.6, subject to removal at the pleasure of
the city governing body.

          Article 5 190.6 of the Revised Civil Statutes, as we have already noted, does not expressly
disqualify any person who has previously served as director of a section 4A corporation
from reappointment to that position. Nor does the Texas Non-Profit Corporation Act disqualify
a director of a corporation from reappointment            to that position.  However, the articles of
incorporation or the bylaws of a nonprofit corporation may prescribe qualifications for directors.
See id. art. 1396-2.14(A). If the articles of incorporation or bylaws of the Copperas Cove Economic
Development Corporation disqualify persons who have served as director from being reappointed
to that position, the city governing body must comply with that restriction in making appointments.
Moreover, if the city charter, an ordinance, or a resolution includes a provision that would bar the
reappointment of a director to the corporation, the city governing body must comply with that
restriction. We do not know whether the articles of incorporation or bylaws of the Copperas Cove
Economic Development Corporation or the charter or an ordinance or resolution of the City of
Copperas Cove includes any provision disqualifying an individual with prior service from
reappointment as a director, but we assume that the city governing body would be aware of and
comply with any such disqualification that exists.

         Absent any restriction in the articles of incorporation or bylaws of the Copperas Cove
Economic Development Corporation, or in the charter, an ordinance, or a resolution of the City of
Copperas Cove, the governing body of the City of Copperas Cove may reappoint a director of the
4A corporation to subsequent service as director. Whether or not it reappoints a particular individual
is a matter for the governing body of the city, in the exercise of its reasonable discretion.



        2The 76th Legislature adopted two provisions as section 4D of article 5190.6, TEX. REV. Crv. STAT. ANN.
(Vernon Supp. 2001). The section 4D relating to the creation of a corporation by a county alliance was adopted by
House Bill 2614. See Act of May 20, 1999,76th Leg., R.S., ch. 973, 0 2, 1999 Tex. Gen. Laws 3722,3723-24.
The Honorable   Edwin E. Powell, Jr. - Page 4         (JC-0349)




                                        SUMMARY

                         Directors of a corporation created under section 4A of article
                5 190.6, Revised Civil Statutes, serve a six-year term pursuant to
                section 11 of article 5 190.6, subject to removal at any time by the
                governing body of the city that created the corporation, unless the
                articles of incorporation or bylaws of the corporation establish a
                shorter term of service. Neither article 5 190.6 nor the Texas Non-
                Profit Corporation Act, article 1396 of the Revised Civil Statutes,
                bars a director of a corporation created under article 5190.6, section
                4A from being reappointed as director. The governing body of the
                City of Copperas Cove may reappoint a director of the corporation to
                subsequent service as director, absent any contrary provision in the
                articles of incorporation or bylaws of the Copper-as Cove Economic
                Development Corporation, or in the city charter, an ordinance, or a
                resolution of the City of Copperas Cove. Whether or not the city
                reappoints a particular individual as director is a matter for the
                governing body of the city, in the exercise of its reasonable
                discretion.

                                              Yo   sve    truly



                                            4Jki!
                                              JOHN     CORNYN
                                              Attorney General of Texas



ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

SUSAN D. GUSKY
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General - Opinion Committee
