February 13, 1975

Mr. David Volk
State Treasurer
State Capitol
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 75-27

Are funds of South Dakota Housing Development Authority public funds?

Dear Mr. Volk:

You have requested an official opinion as to whether or not the funds of the South Dakota Housing Development Authority are public funds and if they are public funds whether or not SDCL 4-6A covers their deposit.

You have also asked: "If the S.D.H.D.A. funds are held to be private funds, would SDCL 51-10-15 (now 51-22-12) prohibit the S.D.H.D.A. from requiring 100% pledging on deposit of such funds?"

Although the funds of the S.D.H.D.A. may be loosely termed public funds or deposits under SDCL 4-4-2 and 4-6A-1 (1), chapter 28-19 indicates that the Legislature intended to exempt the S.D.H.D.A. from the requirements set forth for public funds and deposits. SDCL 28-19-161 provides:

In so far as the provisions of this chapter are inconsistent with the provisions of any other law, general, special or local, the provisions of this chapter shall be controlling.

Any application of 4-6A or 51-22-12 is clearly overridden by the specific provisions of SDCL 28-19. SDCL 28-19-84 provides that the state agrees not to limit or alter the rights and remedies of the holders of the bonds of the South Dakota Housing Development Authority. SDCL 28-19-36 pro­vides the S.D.H.D.A. shall have the power to do all things necessary or con­venient to carry out the powers granted in the chapter. SDCL 28-19-33 gives the S.D.H.D.A. the power to execute contracts and all other instruments necessary or convenient to exercise the powers granted under the chapter. SDCL 28-19-55 specifically provides:

-Any resolution or resolutions authorizing any notes or bonds or any issue thereof may contain provisions, which shall be a part of the contract or contracts with the holders thereof, as to any other matters, of like or different character, which in any way affect the security or protection of the holders of the notes or bonds.

These statutes indicate that the Legislature intended to give the S.D.H.D.A. the authority to make the necessary agreements to carry out the purposes and powers granted in the act. The power to require 100% pledging on deposit of authority funds is, in my view, such a necessary power. It is no secret that buyers of bonds from the authority are not going to get involved if they do not have sufficient security for their investment. Consequently, if the authority is to operate they must provide security for the bonds holder. In my opinion, the Legislature did give the authority the power to do this and to require 100% pledging to meet the security obligation in the bond resolution. Therefore, neither SDCL 4-6A nor 51-22-12 apply.

Respectfully submitted,

WILLIAM J. JANKLOW
ATTORNEY GENERAL

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