Opinion Number

Dear Senator Boasso:

This office is in receipt of your request for an Attorney General's opinion regarding the legality of a one-year loan of $5,000, at an interest rate of 2%, which the Lake Catherine Civic Organization, a presumably private organization, is considering providing to the Lake Catherine Sewage and Water District in order to provide the District with start-up funds. The District is a political subdivision of the state, created pursuant to the provisions of LSA-R.S. 33:4065.1, et seq.

State Bond Commission approval is required whenever a political subdivision incurs debt. La. Const. Art. VII, Sec. 8; LSA-R.S.39:1410.60; Schwab v. City of Kenner, 709 So.2d 320 (La.App. 5th Cir. 1998). Specific to the Lake Catherine Sewage and Water District, we note the provisions of LSA-R.S. 33:4065.4C, which pertinently provide: "Subject to the approval of the State Bond Commission, the district shall have the authority to incur debt and issue bonds for the purpose of constructing, acquiring, extending, or improving sewerage and water systems." Assuming the District first obtains State Bond Commission approval of the proposed debt, it is the opinion of this office that such a loan to the District from the Civic Organization is legal.

We trust the foregoing to be of assistance. Should you have any questions or comments, please do not hesitate to contact this office.

Yours very truly,

CHARLES C. FOTI, JR. Attorney General

BY: ________________________________

JEANNE-MARIE ZERINGUE BARHAM Assistant Attorney General

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