Can a Maryland community college's board of trustees borrow money to buy land and buildings, or does the county have to do it?

Plain-English summary

Montgomery County's County Attorney asked the Attorney General in 1990 whether the Board of Trustees of Montgomery Community College could itself borrow money, in its own name, to finance buying land and a building for the college. The board planned to take out a loan and give the lender a mortgage on the property, and it believed its statutory power to acquire property, plus a general "inherent authority" to do what was necessary to carry out its duties, let it do this.

The Attorney General concluded it did not. The community college statutes gave the college board the power to buy, lease, condemn, or otherwise acquire property, but they said nothing about the board borrowing money. Meanwhile, a separate provision expressly gave the power to borrow for a community college's land and capital improvements to the county governing body, subject to local public-debt rules. Reading those two facts together, and applying the settled principle that a state-created board holds only the powers the legislature grants it expressly or by necessary implication, the opinion held that the power to borrow could not be implied from the mere power to acquire property. So the borrowing had to be done by the Montgomery County Council, not the college board. The opinion's own editor's note records that the General Assembly changed this two years later.

Currency note

This opinion was issued in 1990. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

This one was overtaken by statute quickly, and the opinion tells you so. Its editor's note records that in Chapter 282 (House Bill 51) of the Laws of Maryland 1992, codified at §16-401.1 of the Education Article, the General Assembly authorized the boards of trustees of several community colleges, including Montgomery College, to borrow money for certain purposes. Section numbers and the current rules on community college borrowing have changed since 1990; confirm the present Education Article provisions before relying on anything specific here.

Common questions

Could a Maryland community college board borrow money on its own to buy land or a building?
Under this 1990 opinion, no. The Attorney General concluded that the borrowing power for a community college's land and capital improvements belonged to the county governing body, not the college's board of trustees. In Montgomery County, that meant the County Council had to do the borrowing.

Where did the county's borrowing power come from?
From Education Article §16-402(d), which said each county governing body "may borrow money to purchase land and construct capital improvements for a community college," on terms the county considered proper and subject to local public-debt requirements. The statute contained no matching provision for borrowing by the college board.

Why didn't the board's power to acquire property include the power to borrow to pay for it?
Because Maryland law treats those as different powers. The opinion relied on Rushe v. Hyattsville, where the Court of Appeals held that the power to borrow money and issue notes could not be implied from a mere authority to buy property and erect buildings, and that any fair and reasonable doubt about an asserted power must be resolved against the entity claiming it. A state-created board can exercise only powers granted expressly or by necessary implication, and borrowing was not necessarily implied here.

Did this rule ever change?
Yes. The opinion's editor's note reports that two years later, in Chapter 282 (House Bill 51) of the Laws of Maryland 1992, codified at Education Article §16-401.1, the General Assembly authorized the boards of trustees of several community colleges, including Montgomery College, to borrow money for certain purposes. Anyone dealing with this today should check the current statute rather than rely on the 1990 answer.

Background and statutory framework

Maryland's community colleges are governed under Title 16 of the Education Article. A board of community college trustees is created in each county that has one or more community colleges (ED §16-201), and while the composition and selection of Montgomery's board are set by a county-specific section (ED §16-510), the board's substantive powers come from ED §16-203, which applies to nearly all community college boards. That section lets each board purchase, lease, condemn, or otherwise acquire any property it considers necessary to operate the college, and dispose of college assets. It does not mention borrowing money.

The fiscal side of the statute puts the county in control. A college's budget must be prepared under county fiscal procedures and approved by the county governing body, which may reduce it (ED §16-401); most counties, including Montgomery, must contribute at least 28 percent of the college's current expenses (ED §16-403(d)); and the college draws additional state aid and may join a state-administered capital construction program (ED §16-104(f)(3)). Within that framework, borrowing is addressed head-on: ED §16-402(d) authorized the county governing body to borrow money to buy land and build capital improvements for the college. A companion section specific to Montgomery even gave the County Council the right to approve in advance the site of any real property the board sought to acquire (ED §16-511).

The opinion then applied a general rule of administrative and local-government law: an entity created by the State can exercise only the powers the legislature has delegated to it, expressly or by necessary implication. The Court of Appeals had said as much about state boards and agencies in Huffman v. State Roads Commission, and the same idea governs political subdivisions and municipal corporations (Montgomery Citizens League v. Greenhalgh; Bowie Inn v. City of Bowie). Interpreting whether a power had been granted meant reading both the statutory language and its context (Morris v. Prince George's County). The decisive precedent was Rushe v. Hyattsville, 116 Md. 122 (1911), where the Court of Appeals held that a town's power to buy property and erect suitable buildings did not carry an implied power to borrow money and issue notes, and that doubt about a claimed power is resolved against the corporation. The opinion found Rushe persuasive that a college board's power to acquire real property did not imply a power to borrow, and that any lingering doubt was removed by the separate provision lodging borrowing authority in the county.

The legislative history pointed the same way. The community college subtitle began as Chapter 134 of the Laws of Maryland 1961, which gave the boards power to acquire property (Former Article 77, §300(d)) while reserving to each county government the power to borrow funds for land and capital improvements (Former Article 77, §303). Those provisions had stayed substantively the same since 1961, showing, in the opinion's view, that the General Assembly decided from the outset to commit capital borrowing and debt accountability to county government. Recognizing an implied borrowing power in the college board would have undercut that design. The opinion's editor's note then records the sequel: the General Assembly authorized community college board borrowing for certain purposes in 1992 (Chapter 282, codified at ED §16-401.1).

Citations and references

Statutes and session laws:

• ED §16-201, creating a board of community college trustees in each county with a community college
• ED §16-203, the board's powers, including to purchase, lease, condemn, or otherwise acquire property (but not to borrow money)
• ED §16-510 and §16-511, Montgomery-specific provisions on board composition and county advance approval of acquisition sites
• ED §16-401, requiring the college budget to follow county fiscal procedures and county approval
• ED §16-402(d), authorizing the county governing body to borrow money for the college's land and capital improvements
• ED §16-403(d), the county's minimum contribution to current expenses, and ED §16-104(f)(3), the state capital construction program
• Chapter 134 of the Laws of Maryland 1961, the original community college law, with Former Article 77, §300(d) (board acquisition power) and §303 (county borrowing power)
• Chapter 454 of the Laws of Maryland 1968 and Chapter 220 of the Laws of Maryland 1990, later changes to community college governance
• Chapter 282 (House Bill 51) of the Laws of Maryland 1992, codified at §16-401.1 of the Education Article, later authorizing certain community college board borrowing

Cases:

• Rushe v. Hyattsville, 116 Md. 122, 81 A. 278 (1911), holding a power to borrow cannot be implied from a mere power to buy property and erect buildings
• Huffman v. State Roads Commission, 152 Md. 566, 584, 137 A. 358 (1927), on the limited, delegated powers of state boards and agencies
• Morris v. Prince George's County, 319 Md. 597, 604, 573 A.2d 1346 (1990), on reading statutory language in context
• Montgomery Citizens League v. Greenhalgh, 253 Md. 151, 158, 252 A.2d 242 (1969), and Bowie Inn v. City of Bowie, 274 Md. 230, 247, 335 A.2d 679 (1979), on the powers of political subdivisions and municipal corporations
• University of Medicine and Dentistry v. American Association of University Professors, 223 N.J. Super. 323, 538 A.2d 840, 844 (1988), a New Jersey decision on public higher-education institutions as creatures of the state

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1990/Volume75_1990.pdf (this opinion appears at printed pages 96-102 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

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

COLLEGES AND UNIVERSITIES

Community Colleges — Counties — County, Rather Than Community College Board, Has Power to Borrow Money for Acquisition of Land and Buildings

October 25, 1990

Clyde H. Sorrell, Esquire
County Attorney for Montgomery County

 You have asked whether the Board of Trustees of Montgomery Community College may itself borrow money to finance the acquisition of land and buildings for the College.

 For the reasons stated below, we conclude that the power to borrow money for this purpose is granted to the Montgomery County Council, not the Board of Trustees.

I

Background

 Your inquiry arises out of a proposed acquisition by Montgomery Community College of land and a building in Montgomery County for the use of the college. The proposed purchase would include the use of county funds. To finance the acquisition, the college's board of trustees intends to borrow money and give the lender a mortgage on the property to be acquired. The board is willing to include in the loan agreement terms and conditions acceptable to the county government.

 The board believes that it possesses the power to borrow the funds under its statutory authority, discussed in Part II below, to purchase or otherwise acquire property, and as part of the board's "inherent authority to take action necessary and proper to carry out its powers and duties." Letter from Hamid R. Setyedin, Chairman of the Board of Trustees, to Montgomery County Executive Sidney Kramer (April 17, 1990).

 Your office expressed concern to the board and the county executive about the board's asserted authority to obtain financing in its name. In light of your concern, both the county executive and the board concur in your request for our opinion as to "whether the Board's inherent authority to take action necessary and proper to carry out its powers and duties, including the acquisition of real property, can reasonably be construed to permit the Board to borrow money on terms and conditions acceptable to the County."

II

Statutory Provisions

 Maryland's community colleges are the subject of Title 16 of the Education Article ("ED" Article). The Board of Trustees of Montgomery Community College was established pursuant to ED §16-201, which creates a board of community college trustees in each county that has one or more community colleges. While the composition and selection of the college's board of trustees are the subject of a statutory section specific to Montgomery County, ED §16-510, the powers of the board are derived from ED §16-203, which applies to all but one of Maryland's community college boards.1 Among the powers conferred by ED §16-203 on each board are the following:

           (e) Each board of trustees may purchase, lease, condemn, or otherwise acquire any property it considers necessary for the operation of the community college.

           (f) (1) Each b[...] otherwise dispose of community college assets or property.

              (2) The president of the community college and the chairman of the board of trustees may execute a conveyance or other legal document under an appropriate resolution of the board.

 By statute, a college's budget must be prepared in accordance with county fiscal procedures and approved by the county governing body. ED §16-401(d) and (e). Most counties, including Montgomery, are required to contribute at least 28 percent of the college's current expenses. ED §16-403(d). Community colleges also receive aid from the State according to statutory formulas. See ED §§16-403 through 16-405. A community college also may participate in the capital construction program administered by the State Board for Community Colleges. ED §16-104(f)(3).

 The subtitle concerning the fiscal affairs of community colleges sets forth the powers of county government in relation to the community colleges. Among the powers of each county is the power to borrow money, set out in ED §16-402(d):

          Each county governing body may borrow money to purchase land and construct capital improvements for a community college. Money may be borrowed on terms and conditions the county governing body considers proper, subject to any requirements of local law applicable to the creation of public debt.2

There is no reference in the code to borrowing by the board, as distinct from the county.

III

Authority to Borrow Money

 Like other State agencies, "[p]ublic institutions of higher education are creatures of the State and can exercise only those powers granted to them by legislation, either expressly or by necessary implication." University of Medicine and Dentistry v. American Association of University Professors, 223 N.J. Super. 323, 538 A.2d 840, 844 (1988). See Huffman v. State Roads Commission, 152 Md. 566, 584, 137 A. 358 (1927) (powers of State agencies, boards and commissions). Cf. Montgomery Citizens League v. Greenhalgh, 253 Md. 151, 158, 252 A.2d 242 (1969) (powers of political subdivisions); Bowie Inn v. City of Bowie, 274 Md. 230, 247, 335 A.2d 679 (1979) (powers of municipal corporations).

 The Court of Appeals, describing the status and powers of modern boards and agencies, observed that "while such agencies are governmental, they have no powers but such as are expressly delegated to them by the organic or statutory law of the government of which they are a part, or such as are by implication essential to the full and adequate exercise of such express powers." Huffman, 152 Md. at 584. In interpreting an agency's enabling statute to determine whether an asserted power has been granted, we are to look at both the language of the statute and "the context within which statutory language appears." Morris v. Prince George's County, 319 Md. 597, 604, 573 A.2d 1346 (1990).

A. Board's Power

 We begin with the language of the statute granting powers to the board of trustees. ED §16-203 does not expressly grant a community college board the power to borrow money. Nor is such power necessarily implicit in the power to "purchase ... or otherwise acquire any property ...."

 This issue was addressed in Rushe v. Hyattsville, 116 Md. 122, 81 A. 278 (1911). In that case, residents of the town of Hyattsville sought to enjoin as ultra vires the enforcement of ordinances permitting the town's borrowing of money and incurring of indebtedness to acquire a certain piece of land and construct a building upon it. The town charter did not authorize borrowing except in certain emergencies, but it did authorize the town to purchase, hold, and dispose of real property and to erect "suitable buildings." 116 Md. at 128-29. Based on these provisions, the trial court "implied the power in the [town] to pass the ordinances" and denied the injunction. 116 Md. at 129 (emphasis in original).

 In reversing that decision, the Court of Appeals restated the principle "that municipal corporations have only such powers as are granted to them by the constitution or statutes, either expressly, or by fair and reasonable construction." 116 Md. at 126. The Court held that the power to borrow money and issue notes "cannot be implied from the mere authority to purchase property and erect public buildings." 116 Md. at 129 (emphasis in original). The Court found it "well settled that any fair and reasonable doubt as to the existence of the power attempted to be exercised must be resolved against the [municipal] corporation, and in such case the power must be denied." 116 Md. at 126.

 We find Rushe persuasive authority for the proposition that the board's power to acquire real property does not imply any power to borrow money for land acquisition and construction. Moreover, if there were any doubt about whether the General Assembly intended the power to borrow funds for real property acquisitions to reside in the board, that doubt is resolved by the separate statutory provision that places responsibility and authority for such borrowings in the county government and subject to the debt restrictions of local law.

B. County's Powers

 ED §§16-401 and 16-402, part of the community college title of the Education Article, describe the powers and responsibilities of a county governing body in relation to a college and its board. ED §16-402(a) and (b) authorize a county governing body to appropriate money by prescribed categories to pay the cost of establishing and operating a community college. ED §16-402(c) prohibits a college from spending more in any category than the amount appropriated by the county for that category. Under ED §16-401, a college's capital and operating budgets must be prepared and considered in accordance with county fiscal procedures and must be approved by the county governing body, which is expressly authorized to reduce those budgets.

 Borrowing money to acquire and improve land is expressly addressed by the statute. ED §16-402(d) authorizes a county governing body to borrow such funds "on terms and conditions the county governing body considers proper, subject to any requirements of local law applicable to the creation of public debt." A similar delegation to each county has always been part of the community college statutory scheme.

 Chapter 134 of the Laws of Maryland 1961 enacted the predecessor of the subtitle on community colleges now codified as ED Title 16.3 The original provision, like the present one, authorized the boards of trustees of the colleges to "purchase, lease, condemn, or in any other manner acquire real and personal property deemed necessary by the board of trustees for the operation of the community college." Former Article 77, §300(d). At the same time, the General Assembly reserved to each county government the power "to borrow funds for the purchase of land and the construction of capital improvements for said purposes upon such terms and conditions as they deem right and proper, subject to the general requirements of local laws applicable to the creation of public debt." Former Article 77, §303.

 These provisions, which have remained substantively unchanged since their enactment in 1961, show that the General Assembly considered at the outset the issue of where authority and responsibility for capital borrowing would reside and decided that it should be committed to the governing body of each county. While the statute does not by its terms forbid borrowing by a college board, as distinct from a county, we see nothing in the structure or content of the statute to suggest that this particular power and responsibility was to be shared by those authorities.

 We believe that these provisions evince a legislative design to create a process of debt accountability and control by the county. That process would be undermined by the recognition of an implied power of a college board to borrow capital improvement monies without restriction.4

IV

Conclusion

 In summary, it is our opinion that the Board of Trustees of Montgomery Community College does not possess authority to borrow funds for the acquisition of real estate and improvements. Such borrowing must be accomplished by the Montgomery County Council.

                                       J. Joseph Curran, Jr.
                                       Attorney General

                                       Gerard J. Gaeng
                                       Assistant Attorney General

                                       Jack Schwartz
                                       Chief Counsel
                                         Opinions and Advice

Editor's Note:

 In Chapter 282 (House Bill 51) of the Laws of Maryland 1992, codified at §16-401.1 of the Education Article, the General Assembly authorized the boards of trustees of several community colleges, including Montgomery College, to borrow money for certain purposes.

1
In Chapter 220 of the Laws of Maryland 1990, the General Assembly created the New Community College of Baltimore, which is governed pursuant to the provisions of a new Subtitle 6 of ED Title 16.

2
In a separate section applicable only to Montgomery County, the General Assembly has also granted the Montgomery County Council the right to approve in advance the site of any real property sought to be acquired by the board. ED §16-511.

3
In Chapter 134, the General Assembly established the board of education of each county having a community college as the "board of trustees and governmental corporation" of the community college. In Chapter 454 of the Laws of Maryland 1968, the General Assembly authorized boards of education to divest themselves of responsibility for community colleges and to request that the Governor appoint a separate board of trustees for community colleges. Under the current statute, the community colleges of each county and Baltimore City are governed by an independent community college board of trustees appointed for that county. ED §§16-201, 16-501 through 16-512, and 16-604.

4
While your letter indicates that the board intends to engage in the transaction on terms and conditions acceptable to the county, you suggest that the transaction, if effected in the name of the county, might not comply with all local laws concerning the creation of public debt. Indeed, it seems to us that the issue you pose as to the authority of the board, as distinct from the county, to borrow funds is one that would only arise as a practical matter in a situation where the borrowing could not be accomplished for the college by the county according to statutory requirements.