Is it constitutional for Texas to let state legislators' letters affect who gets low-income housing tax credits?

TX AG Opinion GA-0455: Can legislators' letters factor into housing tax-credit scoring?

Plain-English summary

State Senator Robert Duncan, chairing the Senate Committee on State Affairs, asked the Attorney General a constitutional question about how Texas hands out low-income housing tax credits. The federal government gives tax credits to private developers to encourage low-income housing, and each state runs its own program to allocate them. In Texas, the Department of Housing and Community Affairs (TDHCA) administers the program. Government Code section 2306.6710 makes TDHCA score and rank applications using a point system that prioritizes nine factors in descending order. The sixth factor is the level of community support shown by written statements from state elected officials, and a related subsection awards positive or negative points for legislators' statements of support or objection.

Senator Duncan's concern was that, in close cases, the points tied to a legislator's letter could be the deciding factor in whether a development wins or loses credits. If a member of the legislative branch can effectively tip an executive agency's funding decision, does that hand the legislature an executive power it is not supposed to wield? Texas Constitution article II, section 1 divides government into legislative, executive, and judicial departments and bars one department from exercising a power belonging to another.

The Attorney General said the statute does not violate that rule on its face. Courts have long recognized that a rigid separation is impossible and that the doctrine bars transferring "a whole mass of powers" from one branch to another or letting one branch exercise a power inherently belonging to another. It does not bar cooperation, coordination, or a legislative body simply giving input to an agency, as long as the legislature is not the decision-maker. Here, section 2306.6710(b)(1) only requires TDHCA to prioritize the nine factors in a set order; it does not tell the agency how many points to assign. TDHCA, exercising broad discretion, sets the actual point values in its qualified allocation plan. So if a legislator's letter ends up determinative, that deciding weight comes from the agency's own rule, not from the legislature retaining an executive function. The provision therefore does not, on its face, violate article II, section 1.

Currency note

This opinion was issued in 2006. 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.

The Government Code provisions governing TDHCA's low-income housing tax-credit program (chapter 2306, subchapter DD, including sections 2306.6710 and the surrounding scoring statutes) have been amended repeatedly since 2006, and the role of legislators' statements in the scoring process in particular has been a recurring subject of legislative change. Anyone relying on how applications are scored today, or on the exact section numbers, should check current law.

Who this opinion affected (as of 2006)

The Texas Department of Housing and Community Affairs (TDHCA): The opinion confirmed that the statute directing TDHCA to score legislators' written statements among the nine ranking factors was constitutional on its face, and emphasized that the agency, through its qualified allocation plan, sets the actual point values for each factor.

State legislators: The opinion characterized a legislator's written statement as input to the agency, not an exercise of executive decision-making power. The legislature's role was supplying information to be scored, with the agency remaining the decision-maker.

Low-income housing developers: The opinion addressed the constitutional footing of a scoring system in which a legislator's letter could, in a close case, affect whether an application won credits. It left that scoring structure standing.

The requesting senator and the Legislature: The opinion answered the facial constitutional question, while noting it was addressing the statute on its face rather than any particular application of it.

Common questions

Did legislators' letters really count in the scoring?
Yes. The opinion explained that section 2306.6710 listed written statements from state elected officials among the nine factors TDHCA had to prioritize, and that a related subsection assigned positive or negative points for legislators' statements of support or objection.

Why wasn't that a separation-of-powers problem?
The opinion reasoned that the statute set only the order of priority among the nine factors and did not fix the point values. TDHCA assigned those values by rule, so any deciding weight a legislator's letter carried came from the agency's discretion, not from the legislature exercising executive power.

Can a legislative body give input to a state agency at all?
According to the opinion, yes. It cited the principle that the separation-of-powers doctrine does not stop legislative cooperation or commentary to an agency, as long as the legislative body is not the actual decision-maker.

Did the opinion say the statute could never be challenged?
No. The opinion addressed whether the provision was unconstitutional on its face and concluded it was not. It did not purport to resolve every possible as-applied challenge.

Background and statutory framework

The federal low-income housing tax credit comes from 26 U.S.C.A. § 42 (West 2002 & Supp. 2006), with credits allocated among the states and awarded by a designated state housing credit agency (§ 42(h), (m)) according to a "qualified allocation plan" (§ 42(m)(1)(B)-(C)). Texas designated TDHCA to run the program under Government Code chapter 2306, subchapter DD (Tex. Gov't Code Ann. §§ 2306.6701-.6734 (Vernon Supp. 2006); see also § 2306.053(10) (Vernon 2000)). TDHCA's board adopts a qualified allocation plan annually (§ 2306.6702; § 2306.6702(a)(10)), and while the agency has discretion over how many points to assign, several Government Code provisions require it to weigh specific priorities (§ 2306.6725(a); §§ 2306.111(d), (g), .6704(b), .6710(b), .6718(a)). Section 2306.6710(b)(1) requires a point system prioritizing nine factors in descending order, including community support shown through written statements from state elected officials, with positive-to-negative points for legislators' statements (§ 2306.6710(f)) and notice to legislators representing the community (§ 2306.6718(a)(1)). A prior opinion read section 2306.6710 as mandatory (Tex. Att'y Gen. Op. No. GA-0208 (2004) at 10).

The separation-of-powers analysis rests on Texas Constitution article II, section 1 (and article III, section 1). Courts treat the doctrine flexibly: it bars transferring a whole mass of powers or having one branch exercise a power inherently belonging to another (Coates v. Windham, 613 S.W.2d 572, 576 (Tex. Civ. App.-Austin 1981, no writ); Gov't Servs. Ins. Underwriters v. Jones, 368 S.W.2d 560, 562 (Tex. 1963)), but it does not prevent cooperation or coordination between branches (State Bd. of Ins. v. Betts, 308 S.W.2d 846, 852 (Tex. 1958)), nor a legislative committee's input to an agency so long as the committee is not the decision-maker (Tex. Att'y Gen. Op. No. MW-0460 (1982) at 2). Because section 2306.6710(b)(1) sets only the order of priority and TDHCA assigns the point values by rule (§ 2306.6725(a); Tex. Att'y Gen. Op. No. GA-0208 (2004) at 10 n.15), the opinion concluded the provision does not on its face violate article II, section 1.

Citations

Statutes:

• Tex. Gov't Code Ann. §§ 2306.6701-.6734; 2306.6702, 2306.6702(a)(10); 2306.6710(b), (b)(1), (f); 2306.6718(a)(1); 2306.6725(a); 2306.111(d), (g), .6704(b) (Vernon Supp. 2006); § 2306.053(10) (Vernon 2000)
• 26 U.S.C.A. § 42, § 42(h), (m), § 42(m)(1)(B)-(C) (West 2002 & Supp. 2006)
• Tex. Const. art. II, § 1; art. III, § 1

Cases and prior opinions:

• Gov't Servs. Ins. Underwriters v. Jones, 368 S.W.2d 560, 562 (Tex. 1963)
• Coates v. Windham, 613 S.W.2d 572, 576 (Tex. Civ. App.-Austin 1981, no writ)
• State Bd. of Ins. v. Betts, 308 S.W.2d 846, 852 (Tex. 1958)
• Tex. Att'y Gen. Op. Nos. GA-0208 (2004), MW-0460 (1982)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0455
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2006/ga0455.pdf

Original opinion text

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

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

September 14, 2006

The Honorable Robert Duncan
Chair, Committee on State Affairs
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Opinion No. GA-0455

Re: Whether Government Code section 2306.6710, which requires the Texas Department of Housing and Community Affairs to score and rank low-income housing tax-credit applications according to statutorily specified criteria, violates Texas Constitution article II, section 1, the Separation-of-Powers Doctrine (RQ-0457-GA)

Dear Senator Duncan:

You ask if Government Code section 2306.6710, which requires the Texas Department of Housing and Community Affairs to score and rank low-income housing tax-credit applications according to statutorily specified criteria, violates Texas Constitution article II, section 1, the Separation-of-Powers Doctrine.

The federal government offers tax credits to private developers to stimulate investment in and construction of low-income housing. See generally 26 U.S.C.A. § 42 (West 2002 & Supp. 2006). These federal tax credits are allocated among the states and awarded at the state level by a designated housing credit agency. See id. § 42(h), (m). In Texas, the legislature, under Government Code chapter 2306, subchapter DD, has designated the Texas Department of Housing and Community Affairs ("TDHCA") to administer the state's low-income housing tax-credit program. See TEX. GOV'T CODE ANN. §§ 2306.6701-.6734 (Vernon Supp. 2006); see also id. § 2306.053(10) (Vernon 2000) (authorizing TDHCA to "administer federal housing, community affairs, or community development programs, including the low income housing tax credit program").

The Internal Revenue Code requires TDHCA, as administrator of this tax-credit program, to allocate tax credits according to selection criteria laid out in a "qualified allocation plan." See 26 U.S.C.A. § 42(m)(1)(B)-(C) (West 2002 & Supp. 2006). Texas law implements the federal law by requiring the TDHCA board to annually adopt a qualified allocation plan, see TEX. GOV'T CODE ANN. § 2306.6702 (Vernon Supp. 2006), which, among other things, provides the threshold scoring and underwriting criteria and procedures for applicants seeking low-income housing tax credits. See id. § 2306.6702(a)(10). While TDHCA has discretion to determine the number of points to assign the underwriting criteria and to score and rank the applications for tax credits, numerous provisions in the Government Code require TDHCA to consider specific funding priorities, information, and preferences in doing so. And it is these prescriptive provisions that give rise to your question. See Request Letter, supra note 1, at 1-2.

Specifically, you ask about Government Code section 2306.6710(b), see id., which requires TDHCA to score and rank tax-credit applications using a point system that

(1) prioritizes in descending order criteria regarding:

(A) financial feasibility of the development . . .;
(B) quantifiable community participation with respect to the development . . .;
(C) the income levels of tenants of the development;
(D) the size and quality of the units;
(E) the commitment of development funding by local political subdivisions;
(F) the level of community support for the application, evaluated on the basis of written statements from state elected officials;
(G) the rent levels of the units;
(H) the cost of the development by square foot; and
(I) the services to be provided to tenants of the development[.]

TEX. GOV'T CODE ANN. § 2306.6710(b)(1) (Vernon Supp. 2006) (emphasis added). This office has determined that this section is a mandatory provision that requires TDHCA to rank applications using a point system that gives the greatest number of points, in descending order, to the nine factors listed. See Tex. Att'y Gen. Op. No. GA-0208 (2004) at 10. You question whether the sixth factor, subsection (F), requiring TDHCA to assign points to written statements from state legislators, violates the Separation-of-Powers Doctrine in the Texas Constitution. See Request Letter, supra note 1, at 1-2; see also TEX. GOV'T CODE ANN. § 2306.6710(f) (Vernon Supp. 2006) (requiring a system of positive to negative points for statements of support or objection from state legislators); id. § 2306.6718(a)(1) (requiring TDHCA to "provide written notice of the filing of an application to . . . members of the legislature who represent the community containing the development described in the application").

You question this subsection's constitutionality because Texas Constitution article II, section 1, the Separation-of-Powers Doctrine, requires the Texas government to be divided into three distinct departments-the legislative, the executive, and the judicial. See TEX. CONST. art. II, § 1. The constitution elaborates that "no person, or collection of persons, being of one of these departments, shall exercise any power properly attached to either of the others, except in the instances herein expressly permitted." Id. You note that many times TDHCA awards or refuses tax credits to applicants on a narrow margin of points where the determinative factor will be the points assigned to the application because of the presence or absence of a legislator's written statement about the application. Thus, you suggest that section 2306.6710(b)(1)(F) retains an executive function for individual members of the legislative branch, which is inconsistent with the constitution's language. See Supplemental Letter, supra note 3, at 1.

While article II, section 1 appears on its face to require absolute division among the various branches, it has long been understood that a rigid application of this principle is impossible because not every governmental power fits logically and clearly into any particular department. See Gov't Servs. Ins. Underwriters v. Jones, 368 S.W.2d 560, 562 (Tex. 1963) ("[T]he problem of determining that which is judicial and that which is legislative is often difficult of statement under varying factual circumstances."); Coates v. Windham, 613 S.W.2d 572, 576 (Tex. Civ. App.-Austin 1981, no writ) ("The proper interpretation of Article II, section 1 is . . . dictated by its context."). It is more accurate to state that the Separation-of-Powers Doctrine "prohibits a transfer of a whole mass of powers from one department to another and it prohibits a person of one branch from exercising a power historically or inherently belonging to another department." Coates, 613 S.W.2d at 576. But it does not prevent cooperation or coordination between two or more branches of government because that would otherwise hinder effective governmental action. State Bd. of Ins. v. Betts, 308 S.W.2d 846, 852 (Tex. 1958). Thus, in application article II, section 1 will prohibit the legislature from, for example, authorizing a legislative oversight committee to approve or veto an executive agency's administrative rules-which rule-approval power is reserved to the executive branch-but it will not preclude the commentary or expressions of approval or disapproval by a legislative committee to an administrative body. See Tex. Att'y Gen. Op. No. MW-0460 (1982) at 2 (observing that no law precludes a legislative committee from providing input to an agency, provided the committee is not the decision-maker); see also TEX. CONST. art. III, § 1.

Here, section 2306.6710(b)(1) requires only that TDHCA give priority in descending order to the nine enumerated factors listed there; the section, however, does not require TDHCA to assign specific values to those factors. See TEX. GOV'T CODE ANN. § 2306.6710(b)(1) (Vernon Supp. 2006); id. § 2306.6725(a); see also Tex. Att'y Gen. Op. No. GA-0208 (2004) at 10 n.15 (referring to TDHCA's authority to assign values to factors the agency must consider in ranking and scoring tax-credit applications). And as you note, it is only "possible that the mandatory points awarded or deducted because of a state elected official's letter could be the deciding factor as to which applications are awarded the tax credits by [TDHCA]." Request Letter, supra note 1, at 2. That possibility applies equally to any of the criteria that TDHCA must consider and score. Given TDHCA's broad discretion in this arena, any determinative quality in scoring a tax-credit application associated with a legislator's written statement is not an executive power retained by the legislature; rather, that determinative quality is created by agency rule in its qualified allocation plan. Thus, we cannot say that the legislature, by requiring that its individual members' input be assigned a score in a tax-credit application to an executive agency, is interfering with a core power or the mass of powers reserved to TDHCA as a department in the executive branch. Section 2306.6710(b)(1), therefore, does not on its face violate Texas Constitution article II, section 1.

SUMMARY

Government Code section 2306.6710(b)(1), which requires the Texas Department of Housing and Community Affairs to score and rank applications for low-income-housing tax credits in part based on written statements from state elected officials, does not violate the Separation-of-Powers Doctrine in Texas Constitution article II, section 1.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Daniel C. Bradford
Assistant Attorney General, Opinion Committee

Footnotes

1. See Letter from Honorable Robert Duncan, Chair, Committee on State Affairs, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas (Feb. 21, 2006) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].

2. See TEX. GOV'T CODE ANN. § 2306.6725(a) (Vernon Supp. 2006); Tex. Att'y Gen. Op. No. GA-0208 (2004) at 9 n.13 (discussing the discretion Government Code section 2306.6725(a) permits TDHCA in assigning points to underwriting criteria); see also, e.g., TEX. GOV'T CODE ANN. §§ 2306.111(d), (g), .6704(b), .6710(b), .6718(a) (Vernon Supp. 2006).

3. See Letter and attachment from Honorable Robert Duncan, Chair, Committee on State Affairs, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas (Mar. 31, 2006) (on file with the Opinion Committee) [hereinafter Supplemental Letter].