Texas Attorney General Opinion on Governance of Non-Profits in Housing

The Texas Attorney General will be answering these questions about the governance of non-profits created for housing authorities in Texas:

1. If the Board of Commissioners of the Housing Authority took no action to approve any amendments to the non-profit’s Articles, are the purported amendments void and of no effect? [Article IX of the non-profit’s Articles of Incorporation provides that amendments to the Articles are subject to the approval of the Housing Authority.]

2. May a non-profit created by a governmental body, and stated to be an instrumentality of such governmental body, act on its own to cease serving as an instrumentality of the governmental body?

3. May a governmental body that created a non-profit as an instrumentality of such governmental body approve that the non-profit cease serving as an instrumentality in order to become a private non-profit?

4. Are the assets of a non-profit, created by a governmental body to be an instrumentality of such governmental body, public or governmental assets?

5. If so, can the either the governmental body or instrumentality non-profit convert such public or governmental assets to private assets without complying with gifting prohibitions of the Texas Constitution?

 6. Do the provisions of the PFC Act apply to a non-profit corporation created by a governmental agency as the governmental agency’s instrumentality pursuant to the Texas Non-Profit Corporation Act prior to the effective date of the PFC Act?

7. If so, do the provisions of the PFC Act invalidate the purported amendments to the non- profit’s Articles of Incorporation, filed after the date of enactment of the PFC Act, in the absence of formal Housing Authority approval by its Board of Commissioners? [Section 303.027(a) requires a sponsor resolution be submitted with the amendment. Section 303.027(b) requires the signature of the secretary or clerk of the sponsor to sign the amendment. Section 303.027(c)(5) of the PFC Act states that amendments to a PFC’s Articles of incorporation must contain “a statement that the amendment was authorized by the sponsor’s governing body.” Section 303.027(c)(6) provides that the amendment must also state “the date of the meeting at which the governing body approved the amendment.”]

8. If the amendments to the non-profit’s Articles are invalid, do the original Articles filed in 1994 remain and govern operation of this non-profit? [Those original Articles provide that members of the Housing Authority Board of Commissioners serve as members of the Board of Directors of the non-profit.]

9. If the amendments to the non-profit’s Articles are considered invalid, would the Housing Authority Commissioners automatically constitute the non-profit’s Board of Directors, once again, with full authority to govern the affairs of the non-profit?

10. Pursuant to Section 303.035(d), may the Housing Authority remove the non-Commissioner Directors of the non-profit?

11. Pursuant to Section 303.045, may the Housing Authority alter the non-profit’s structure and organization?

RQ-0366-KP