November 2, 1984

Mr. Roger A. Schiager 
Office of City Attorney 
610 Security Building 
Sioux Falls, South Dakota 57102

OFFICIAL OPINION NO. 84-44

Issuance of bonds by Local Housing and Redevelopment Commission for loans to private developer

Dear Mr. Schiager:

You have requested an official opinion based upon the following factual situation:

FACTS: 

Recently, the City of Sioux Falls and its Housing and Redevelopment Commission have considered the sale of bonds pursuant to authority in SDCL Ch. 11-7 for loaning to a private developer or developers to finance privately owned and operated multi-family housing projects within the city.

Based upon the above facts, you ask the following questions:

QUESTIONS: 

1.  May the proceeds derived from the sale of bonds issued by a local housing and redevelopment commission, which commission has been authorized by SDCL 11-7-7, be loaned to a private developer to finance a privately owned and operated multi-family housing project? 

2.  If the answer to question number 1 is yes, may the commission loan the proceeds of bonds issued pursuant to SDCL 11-7-92 to a private developer for the use on a project in which only 20 percent of the units are required to be persons of low income? 

3.  Do all the tenants of a project financed directly or indirectly through bonds issued by a local housing and redevelopment commission have to meet the  eligibility requirements set forth in SDCL 11-7-59? 

4.  If the proceeds derived from the sale of the bonds are loaned to a private developer and the commission and the developer enter into a lease- purchase agreement for the development of the project, do the provisions of SDCL 11-7-44 through 11-7-48 regarding public bidding apply?

IN RE QUESTION NO. 1:

My predecessor in A.G.R. 75-12 held under the then existing law that a local housing and redevelopment commission does not have the authority to loan money.  Subsequent to that Attorney General's Opinion, the South Dakota Legislature amended SDCL 11‑7‑28 from: 

A commission shall have further power to borrow money or other property and accept contributions, grants, gifts, services or other assistance from the federal government, state public bodies, and from other public and private sources. 

to the following: 

A commission shall have further power to borrow and loan money and other property and accept contributions, grants, gifts, services, or other assistance from the federal government, state public bodies, or from other public or private sources.  A commission shall not have the power to loan  money when available from private sources.

Given the above legislative change it is my opinion that a local housing and redevelopment commission now has the authority to loan money to private developers for the specific purposes listed in SDCL Ch. 11-7, subject to all requirements and restrictions listed in that chapter.  Also, consistent with SDCL 11-7-90 to 11-7-105, inclusive, a local housing and redevelopment commission can issue bonds as a means to raise the monies to be loaned.

The specific conditions under which a local housing and redevelopment commission can issue bonds for the purpose of raising monies to loan to a private developer, depends specifically upon the particular facts raised before a particular local housing and redevelopment commission.

A comprehensive opinion on this area is therefore impossible. In my opinion these determinations can only be made at the local level upon full disclosure of all facts.  Therefore, I decline at this time to issue an opinion as to what circumstance or conditions must be present in order for a local housing and redevelopment commission to legally issue bonds to raise monies to loan to private developers under SDCL Ch. 11-7.

Due to my answer to Question No. 1, I decline to answer your remaining questions for the reason that my answer to your first question makes them moot.

Respectfully submitted,

Mark V. Meierhenry
Attorney General