Did political subdivision investment limits displace a South Carolina nonprofit water company’s investment powers?

Plain-English summary

Little River Water & Sewerage Company asked whether South Carolina's investment rules for political subdivisions constrained the investment power it held as a nonprofit corporation. In 1996, the AG accepted for purposes of the opinion that the company was a political subdivision, while expressly declining to make an independent factual determination of that status. On that assumption, he concluded that both statutory investment provisions applied.

The AG compared the two statutes and found them analogous: each addressed investments and shared some permitted categories, while each also listed items the other did not. Because the nonprofit authority predated the political subdivision provision, and §6-5-40 made the later chapter supplementary to existing analogous investment authorizations, the later provision did not replace the earlier one. The opinion did not evaluate a particular proposed investment.

Currency note

This opinion was issued in 1996. 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.

Common questions

Did the political subdivision statute wipe out the company's nonprofit investment powers?

The AG said no under the assumed facts. He read the political subdivision provision as additional to the company's existing analogous investment authority.

Did the AG independently decide that Little River was a political subdivision?

No. The company described prior treatment as a special purpose district, and the AG accepted political subdivision status as an assumption for the opinion because his office did not make factual findings.

Did the opinion approve every investment a company might make?

No. It addressed how the two sources of authority fit together; it did not review any specific transaction.

Background and legal framework

The opinion compared §33-35-80(12), the nonprofit corporation provision, with §6-5-10, the political subdivision investment provision. It used §6-5-40 to determine their relationship and concluded that the later chapter supplemented the earlier analogous authority. The letter was an informal view of the signing senior assistant attorney general.

Citations

• §6-5-10; §33-35-80(12); §6-5-40.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/march-18-1996/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/12/96mar18adams.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
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March 18, 1996

George B. Adams, Executive Manager
Little River Water & Sewerage Company, Inc.
Post Office Box 68
Little River, South Carolina 29566-0068
RE: Informal Opinion
Dear Mr. Adams:
By your letter of February 20, 1996, to Deputy Attorney General Zeb Williams, you have sought an opinion as to whether S.C. Code Ann. §6-5-10 (1976 & 1995 Cum. Supp.), pertaining to authorized investments of political subdivisions of this State, would constrain the Little River Water & Sewerage Company, Inc., in exercising the provisions of S.C. Code Ann. §33-35-80(12). Little River Water & Sewerage Company, Inc., is a nonprofit corporation organized pursuant to S.C. Code Ann. §33-35-10 et seq. Your company has sought and obtained authority to participate in several programs applicable to political subdivisions, in particular the authorization to purchase under state contracts awarded by the Budget and Control Board Division of General Services; the provision of insurance coverage by the Insurance Reserve Fund; the issuance of permanent "RG" license plates for companyowned vehicles; and, pursuant to §9-1-470, the participation of company employees in the South Carolina Retirement System. You have further advised that the company files with the Secretary of State the biennial report required of special purpose districts by S.C. Code Ann. 6-11-1610 ( 1995 Cum. Supp.). The Local Government Debt Report compiled by the State Treasurer for the fiscal year ended June 30, 1992, lists the Little River Water & Sewerage Company as a special purpose district in Horry County. The Office of the Attorney General, in the issuance of opinions, is not authorized to make findings of fact, Op. Att'y Gen. dated December 12, 1983, and thus accepts as ('

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George B. Adams, Executive Manager
Page 2
March 18, 1996
true the facts as presented to this Office for the basis of preparing an opinion. It appears that on several occasions and by several different entities, the Little River Water & Sewerage Company has been determined to be a special purpose district. As a special purpose district, the company would also be considered a political subdivision of the State. Cf., Ops. Att'y Gen. Nos. 85-36 and 84-132. Thus, for purposes of this opinion, it is assumed that the company is a political subdivision of this State. Powers of nonprofit corporations such as the Little River Water & Sewerage Company are found in, inter alia, S.C. Code Ann. §33-35-80. Of particular interest here is subsection 12 of that statute, which authorizes the company to: Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge or otherwise dispose of and otherwise use and deal with, shares and other interests in, or obligations of, other domestic or foreign corporations, whether for profit or not for profit, associations, partnerships or individuals, or direct or indirect obligations of the United States, or of any other government, state, territory, governmental district, municipality, or of any instrumentality thereof. The company's auditor has raised the question as to whether the statutes of South Carolina regarding allowable investments may also apply to the company, since the company
·qualifies for various state benefits and programs as a special purpose district. The statute governing authorized investments by political subdivisions is S.C. Code Ann. §6-5-10: (a) The governing body of any municipality, county, school district, or other local government unit or political subdivision and county treasurers may invest money subject to their control and jurisdiction: (I) Obligations of the United States and agencies thereof; (2) General obligations of the State of South Carolina or any of its political units; (3) Savings and Loan Associations to the extent that the same are insured by an agency of the federal government; (4) Certificates of deposit where the certificates are collaterally secured by securities of the type described in (I) and (2) above held by a third party as escrow agent or custodian, of a market value not less than the amount of the certificates of deposit so secured, including interest; provided, however, such collateral shall not be required to the extent the same are insured by an agency of the federal government.

George B. Adams, Executive Manager
Page 3
March 18, 1996
( 5) Repurchase agreements when collateralized by
securities as set forth in this section.
(6) No load open-end or closed-end management type
investment companies or investment trusts registered under the Investment Company Act of 1940, as amended, where the investment is made by a bank or trust company or savings and loan association or other financial institution when acting as trustee or agent for a bond or other debt issue of that local government unit, political subdivision, or county treasurer if the particular portfolio of the investment company or investment trust in which the investment is made (i) is limited to obligations described in items (1 ), (2), and (5) of this subsection, and (ii) has among its objectives the attempt to maintain a constant net asset value of one do liar a share and to that end, value its assets by the amortized cost method. (b) The provisions of this chapter shall not impair the power of a municipality, county, school district or other local governmental unit or political subdivision or county treasurer to hold funds in deposit accounts with banking institutions as otherwise authorized by law. (c) Such investments shall have maturities consistent with the time or times when the invested moneys will be needed in cash. Also to be considered is another statute relative to investment of funds by political subdivisions, §6-5-40, which provides as follows: The provisions of this chapter are not in lieu of, but are supplementary to, existing analogous statutory authorizations relating to investments, all of which shall remain in full force and effect. It is observed that §33-35-80(12) was adopted as a part of Act No. 1030of1964; hence,
§33-35-80( 12), relative to investments, was in existence when §6-5-10, a part of Act No. 438 of 1967, was adopted. Thus, it must be determined whether the provisions of the two statutes are analogous; if so, then the provisions of §6-5-IO would be supplementary to the provisions of §33-35-80(!2) relative to investments. To be analogous, the things being compared must bear some resemblance to each other. Irving v. Kerlow Steel Flooring Co., 25 F.Supp. 901 (D.N.J. 1938). The elements and purposes of each must be similar to be analogous. Allied Wheel Products, Inc. v. Rude, 206 F.2d 752 (6th Cir. 1953); Aerotec Industries of California v. Pacific Scientific Co., 381 F.2d 795 (9th Cir. 1967). Items that are analogous are susceptible of comparison

George B. Adams, Executive Manager
Page 4
March 18, 1996
either in a general sense or in some specific detail. In Re Behm's Estate, 35 Misc.2d 630, 231 N.Y.S.2d 164 (1962). Comparing the two statutes under consideration, both would allow investments in obligations of the United States and its agencies, obligations of the State of South Carolina, and obligations of political subdivisions of the State of South Carolina. Additionally, §33-35-80(12) would permit dealing with interests in or obligations of various corporations and associations, whereas §6-5-10(3) would permit investments in savings and loan associations to the extent that the same are insured by an agency of the federal government. Each statute contains other investments which are not found in the other statute, as well. Both statutes pertain to investments generally and are alike in some of the specific details; hence, I am of the opinion that the statutes could be said to be analogous. Because the two statutes appear to be analogous, and further because §33-35-80(12) was in existence when §6-5-10 was adopted, then §6-5-10 would be supplementary to
§33-35-80(12), pursuant to §6-5-40. To be "supplementary" means to be "[a]dded as a supplement; additional; being, or serving as, a supplement"; or that something supplementary "extends that which is already in existence, without changing or modifying the original." Swanson v. State, 132 Neb. 82, 271 N.W. 264, 268. Webster's Third New International Dictionary (1976) at page 2297 defines "supplementary" as "that is or is added as a supplement." That dictionary defines "supplement" as "something that ... makes an addition." Because the provisions of §6-5-40 specifically declare the provisions of Chapter 5 of Title 6 to be supplementary to, and not in lieu of, existing analogous statutory authorizations and further that all such statutory authorizations are to "remain in full force and effect," I am therefore of the opinion that the provisions of both statutes would be applicable to Little River Water & Sewerage Company, Inc. This letter is an informal opinion only. It has been written by a designated Senior Assistant Attorney General and represents the position of the undersigned attorney as to the specific questions asked. It has not, however, been personally scrutinized by the Attorney General nor officially published in the manner of a formal opinion. With kindest regards, I am Sincerely,

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Patricia D. Petway
Senior Assistant Attorney General