Must Louisiana's LaSalle Economic Development District use a fiscal agent and secure its bank deposits?

Plain-English summary

The LaSalle Economic Development District asked whether it was a public entity and whether its bank deposits had to be secured. It also asked about the tax treatment of interest a bank would earn on a possible loan to buy acreage for the district's industrial park.

The attorney general said the district was a political subdivision and public entity created by a 1988 legislative act. Its funds had to be held with a fiscal agent. A bank serving as fiscal agent had to give security for deposits through one of the instruments listed in La. R.S. 39:1221(A). The opinion did not say that a pledge of securities was the only acceptable form of security.

The office declined to opine on the bank's tax treatment. It said it could not give an opinion on the tax treatment of a private entity's funds and referred the fiscal agent or bank to its own tax attorney.

What this means for you

LaSalle district officials

The opinion classified the district as a local depositing authority and concluded it must hold funds with a fiscal agent. Although it described a statutory exception applying to depositing authorities in parishes with fewer than 100,000 residents, it said the district still had to meet deposit-security requirements.

Banks serving as fiscal agents

The opinion said a selected fiscal agent must give security for the district's deposits. It pointed to La. R.S. 39:1221(A)'s list of acceptable instruments rather than limiting the answer to a securities pledge.

Districts considering a bank loan

The opinion did not decide how interest earned by a private bank on the proposed land-purchase loan would be taxed. Its public-entity and deposit-security conclusions did not resolve that separate tax question.

Common questions

Q: Is the LaSalle Economic Development District a public entity?
A: Yes. The attorney general said a 1988 legislative act created it as a political subdivision and public entity to promote industrial development in LaSalle Parish.

Q: Does the district have to use a fiscal agent for its funds?
A: Yes. The opinion said the district must hold its funds with a fiscal agent and discussed the rule that local depositing authorities deposit funds daily when practicable.

Q: Must the fiscal-agent bank secure those deposits by pledging securities?
A: The opinion required security but did not limit it to that one method. It said the fiscal agent must use an instrument listed in La. R.S. 39:1221(A).

Q: Did the attorney general decide whether the bank's loan interest would be taxable?
A: No. The office declined to opine on a private entity's tax treatment and said the fiscal agent or bank should consult its own tax attorney.

Background and statutory framework

The district was created to encourage industry and jobs in LaSalle Parish. The opinion treated it as a local depositing authority under La. R.S. 39:1211. It noted that LaSalle Parish had fewer than 100,000 residents in the 2020 census and discussed an exception from some depositing-authority provisions, while stating that applicable security requirements remained.

The opinion said local depositing authorities must place funds with a fiscal agent daily when practicable. A bank selected as fiscal agent must secure deposits, with acceptable instruments listed in La. R.S. 39:1221(A). The office ended its legal analysis there and declined the question about a private bank's loan-interest tax treatment.

Citations and references

• La. R.S. 33:130.201 (district's public status and purpose)
• La. R.S. 39:1211 (local depositing authority)
• La. R.S. 39:1213 (fiscal agents)
• La. R.S. 39:1217.1 (small-parish exception discussed)
• La. R.S. 39:1221(A) (acceptable deposit-security instruments)

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/23-0100

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

STATE OF LouIsIANA
01 JUSTIUE
Ovviui: OF THE ATFORNE\ G1sERI,
P0. Box 91005
B.Tox Roucl:, L
70804-9005

Liz i\1LRRILL
t.T’rOHNEY GiNKRsi.

February 22, 2024
OPINION 23-0100
84 PARISHES
Mr. Walter E. Dorroh, Jr.
LaSalle Economic Development District La. R.S. 6:949 La. R.S. 33:130.201 La. R.S. 39:1211
La. R.S. 39:1212 La. R.S. 39:1213 La. R.S. 39:1217.1
P.O. Box 1889
La, R.S. 39:1218 La. R.S. 39:1221
Jena LA 71342
The LaSalle Economic Development District is a public entity that is required to hold its funds with a fiscal agent. Each fiscal agent must provide security in the form of an instrument set out in La. R.S. 39:1221(A).
Dear Mr. Dorroh:

You have requested an opinion from our office on behalf of LaSalle Economic Development District (the “LEDD”) regarding whether LEDD is a public entity, and, if so, is it required to have its deposits secured by the pledge of securities of a bank where its deposits are located. Additionally, you seek an opinion regarding tax treatment of interest earned by a bank if LEDD entered into a loan with a bank for the purchase of acreage to be included within LEDD’s Industrial Park. Your request has been assigned to me for research and reply.

Is LEDD a public entity?

The LEDD is a public entity. Act 634 of the 1988 Louisiana Legislative Session created the LEDD as political subdivision and public entity of the state.1 Its primary purpose is promoting and encouraging industrial development within LaSalle Parish in order to stimulate the economy through commerce, industry, and research and for the utilization and development of natural and human resources of the area by providing job opportunities.2

Is the LEDD required to have its deposits secured by the pledge of securities of a bank where its deposits are located?

LEDD is considered a “local depositing authority” under La. R.S. 39:1211. Its boundaries consist of the entirety of LaSalle Parish.3 As of the 2020 Census, LaSalIe Parish has a population of less than one hundred thousand. Generally, a depositing authority located in a parish or municipality with a population of less than one hundred thousand is exempt from the provisions of La. R.S. 39:1214 through 1242. However, such a depositing authority must satisfy the security requirements of those Sections and of any other

1
See also La. R.S. 33:130.201.
2
La. R.S. 33:130.201(B).
La. R.S. 33:130.201(c).

Page 2

OPINION 23-0100
Walter E. Dorroh, Jr.
Page 2

applicable state or federal laws or regulations.4 Additionally, all funds except demand deposits under the control of such depositing authorities shall be placed in interest- bearing accounts at an interest rate not less than twenty-five percent below the discount treasury bill rate with regard to treasury bills of comparable maturity on deposit within the parish or municipality, in state banks, national banks, or investments in obligations guaranteed by the federal government.5

All funds of local depositing authorities must be deposited daily with a fiscal agent whenever practicable.6 This fiscal agency may be a stock-owned federally insured depository institution organized under the laws of this or any other state or the United States,7 a capital stock savings and loan association, or capital stock savings bank.8 Any bank selected as the fiscal agent of any depositing authority, or any bank with whom a private contract is entered into must give security for these deposits.9 An exclusive list of acceptable instruments that may be used as securities for a local depositing authority’s funds is contained in La. R.S. 39:1221(A).

How is the interest earned by the fiscal agent treated when it is related to LEDD’s purchase of acreage for its industrial park?

This office cannot opine on the tax treatment of funds of private entities. It would be prudent for the fiscal agent or bank to consult its own tax attorney for guidance.

In consideration of the above, it is the opinion of this office that the LaSalle Economic Development District is a public entity that is required to hold its funds with a fiscal agent. Each fiscal agent must provide security in the form of an instrument set out in La. R.S. 39:1221(A).

We trust that this adequately responds to your request and the issue that you have raised. If our office can be of any further assistance, please do not hesitate to contact us.

With best regards,
LIZ MURRILL
ATTORNEY GENERAL

BY
Br’etf A. Robinson
Assistant Attorney General
LM/BAR

La. R.S. 39:1217.1.
La. R.S. 39:121 7.1.
6 La. R.S. 39:121 2.
La. R.S. 39:1213.
8 La. R.S. 6:949.
La. R.S. 39:121 8.