Texas Attorney General Opinion: JC-338 Page: 1 of 5
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OFFICE OF THE ATTORNEY GENERAL STATE OF TEXAS
February 12, 2001
The Honorable Jim Solis Opinion No. JC-0338
Chair, Committee on Economic Development
Texas House of Representatives Re: Whether an Economic Development Board
P.O. Box 2910 may vote to approve funding for a business owned
Austin, Texas 78768-2910 by a member of the board (RQ-0279-JC)
Dear Representative Solis:
You ask whether the board of the San Benito Economic Development Corporation, created
under section 4B of article 5190.6, Revised Civil Statutes, the Development Corporation Act of 1979
(the "Act"), may vote to approve funding for a business owned by a member of that board. We do
not know the nature of the proposed transaction, whether the funding is a loan, a grant subject to
contractual restrictions, or some other transaction. Nor do we know the nature of the board
member's ownership interest in the business or what kind of business it is. Accordingly, we will
address the conflict of interest standards generally applicable to transactions between an economic
development corporation and a member of the board. We conclude that the board of an economic
development corporation may not approve a loan to a director of the corporation. See TEX. REV. CIV.
STAT. ANN. art. 1396-2.25 (Vernon 1997). Otherwise, the corporation is not prohibited from
entering into a contract or other transaction with a member of the board if it complies with the
provisions of the Non-Profit Corporation Act governing transactions with directors. See id. art.
The purpose of the Development Corporation Act is to provide "means and measures...
especially with respect to financing," to promote the economic welfare of the state by "the securing
and retaining of business enterprises." Id. art. 5190.6, 3(a)(4) (Vernon Supp. 2000). It authorizes
a city, county, or conservation and reclamation district established under article XVI, section 59 of
the Texas Constitution to create an industrial development corporation to act on its behalf in
promoting economic development. See id. 4(a); see also id. 2(8), (13) (definitions), 3
'SAN BENITO INDUSTRIAL DEVELOPMENT AUTHORITY INC., IDA POLICIES, available at
http://www.sbida.com/IDA (last visited Nov. 29, 2000). See also Tex. Att'y Gen. Op. No. JC-0118 (1999) at 1
(requesting on behalf of San Benito and McAllen advice about section 4B of article 5190.6, Revised Civil Statutes).
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JC-338, text, 2001; (texashistory.unt.edu/ark:/67531/metapth274647/m1/1/: accessed November 17, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.