THE 

## A~TO~P~EY GENE&AL OF TEXAS

**May 14,**  1987

Honorable **Kent** A. Caperton Chairman JurisprudenceCommittee Texas State.Senate P. 0. Box 12068 Austin,Texas **78711**

Dear SenatorCaperton: OpinionNo. m-697

Re: Whether a countymay enter intoa lease-purchaseagreement for thepurpose of constructing
orpurchasinga county jail

You ask whether Texas counties may enter into lease-purchase agreements to purchase or build county jail's. You also ask whether special legislative.authorizationis necessary to vest this power in countygovernment.

A county-has authority to purchase a jail from **current** revenues of the year, if relevant statutory requirements are followed. See DancyV. Davidson, 183 S.W.2d 195 (Tex.Civ.App. - SanAutonio 1944, **writ** sef'd). A lease-purchase agreement enables the purchaser to spread the purchase price over a number of years. while receiving immediate use of the property being purchased. A typical leasepurchase contract might require the county to make stated payments over a **term** of years and then transfer ownership of the property to the county upon payment in full or upon payment of an additional stated sum. See. e.g., SumetlfnV. Fowlor, 229 S.W.2d 75 (Tex.Civ. APP. - Amarillo 1950, 110 writ);Attorney General OpinionNos. O-1680, O-1627 (1940') (describing lease-purchase contra&). Thus, your question involves the authority of a county commissioners court to comic revenues of futureyears to the acquisitionof a jail, thereby preventing future courts from allocating those funds to other county purposes. See generally Gulf Bitulithic Co. V. Nueces County, 11 S.U.2d 305, judgmtadopted (Tex.Conm'nApp. 1928).

A commissionerscourthas only thosepowers that the constitution and statutes have specificallv co;ferredwon it. but the court has broad discretion inmexercising expressly 'giantedpowers. Canales v. Laughlin. 214 S.W.2d 451 (Tex. 1948); Anderson v. Wood, 152 S.W.2d **1084** (Tex. 1941).
Counties have the .exptesspower and duty to provide jails. Article XI, section 2. of the Texas Constitution states that "[tlhe construction of jails

. . .shall be provided for by general laws." Cf. Tax. Const. art. laws). III. $56 (prohibitionagainst local and special

Article 2351,V.T.C.S., statesthat:

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Each commissioners **court** shall:

. . . .
7. Provide and keep in repair court houses, jails and all necessarypublicbuildings.

V.T.C.S. art. 2351, 57; see also V.T.C.S. arts. 1603 (county commissioners court shall provide a jail); 2370b (commissionerscourt may purchase, construct,or otherwiseacquirenew jailbuilding); 5115 (cornmissioners

court shall provide safe and suitable jails). Article VIII. section 9, of the Texas Constitution fixes a limit on county taxes for various purposes, including roads, bridges, **and** ocher permanent improvements.

We have found no statutewhich expressly authorizes the comuissioners court to acquire a jail under a lease-purchase contract. It has been suggested that article 2368a.2.V.T.C.S., the Public Property Finance Act, authorizes this methbd of acquiring a jail. Rowever, article 2368a.2,V.T.C.S.. applies to personal property and not real property. V.T.C.S. art. 2368a.2, 53(11) (definition of "property"). Moreover, theAct also states:

Notwithstanding any contrary provision, this Act does not apply to a contract solely for the constructionof improvementsto realproperty.

V.T.C.S. **art. 23688.2.**  **59.**
Counties have express authority to finance the acquisition of a jail by issuing bonds. & V.T.C.S. arts. 718; 23720; see also Lasater V. Lopez. 217 S.W. 373 (Tex. 1919) (countymay issue bonds only if it has express legislative authority). Cf. Attorney General Opinion a-642 (1987) (authority of a joint city-county hospital is inapplicablebecause that opinion relied on thepower of thehome rule city in question to'borrow funds). Article 2368a.l. V.T.C.S., authorizescounties to issue certificatesof obligation topay for the constructionof publicworks, including jails. V.T.C.S. art. 2368a.l. **SS3, 7A.** 

**Counties also**  have **implied** power to issue interest bearing warrants payable over aperiod of years to finance jails, courthouses, roads, and otherpublic improvements. Adams v.McGill, 146 S.W.2d 332 (Tax. Civ. App. **-** El Paso 1940, writ **raf ’** **d);** see Lasater v. Lopez. 217 S.W. 373 (Tax. 1919); Stratton V. Comissio~'s Court of Kinney $y$' **137 S.W.**  1170 (Tex. Civ. App. - San Antonio 1911. writ

. The power to issue warrants has been implied from the statutory authority to make such improvements. Adam v. McGill, supra. In Lasater V. Lopez. supra, theTexas Supreme Court discussed the reasons for implying the power to issue warrants in payment of publicworks.

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.

In Lasater. the supreme court considered whether a county had authority to pay for road construction by issuing interest bearing warrantsmaturing over 16 l/2 years without an election. The Act of April 28, 1903, authorized the commissionerscourt to issuebonds for public road consrructionupon prior authorizationby vote of property tax paying residents. Acts 1903, 28th Leg., 1st C.S., ch. II, at 9 (now codified as V.T.C.S. art. 718). A taxpayer argued that the commissionerscourtwas attempting to issuebonds without holding the elecrionrequiredby statute.

The supreme court rejected the argument. It pointed out that bondswere negotiable 'instruments and thereforediffered significanrly from warrants, which could sot be negotiated. It also noted that a county had express statutory authority to build roads and other permanent improvements,and to levy a tax to pay for thoseprojects. V.T.C.S. arts. 2351, $3; 2352 (formerly codified as T.ex.Rev. Civ. Stat. arts. 2241 and 2242 (1911)). The courtheld that counties had implied authority to issuewarrants in payment **for** public works as a necessary means of implementing the express statutory authority to build them and tax for thatpurpose. The authority to pay for roads by issuing warrants p.redatedthe 1903 act and was not ImpLiedly repealedby thatact. The court statedas follows:

[T]heuse of bonds for the constructionof county public improvementswas unknowo in the laws of the State under the present Constitution until 1881. and in respect to county roads was not authorized until 1903. **At** the

### timeof thepassage of the

### Act of April 28, 1903. granting authority for their
use for county road purposes, Commissioner's Courtsbad the &doubted power, within **the** limits of lawful taxation and by observance of the constitutional requirement relative to the creation of county indebtedness, to provide for the building of such roads by the issuance of interest bearing county warrants. They had possessed it since the original Act of 1876 providing for theirorganization. This authority, where it was necessary for the county to use its credit for the purpose, was but a part of the power reposed in those courts to lay out and establish the roads, and proceeded, as well, from their duty to establish themby:constructing them
as durably as poSsible within the county's resources or limits of taxation. It was a means for executingthegeneralpower expresslygranted.
a lawful means because appropriate to that end. (Emphasisadded).

217 S.W. at 376.

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.

Thus, in Lasater v. Lopez, the supreme court found that counties

had implied authdrity to use their credit to finance public works. There was a compelling case in favorof such impliedauthoritybecause the county would otherwise have no means of allocating the cost of essentialpublicworks beyond the currentbudgetyear. Prior to 1903, the commissionerscourts

were empowered to establish the roads

. . . they could create a lawful interest bearing debt for thepurpose; theyhad no power to issuenegotiable securities in the name of the county; therefore, thiywere remitted to the issuance of instruments such as warrants, of nonnegotiable character, as proper evidence of the debt.

217 S.W. at 376. The supreme court also characterized the county's power to issue warrants as "an important public power of long existenceand continued legislative sanction.

. . ." Id. In summary. it was not merely useful, but essential for countiesto have this implied power, and there was strong evidence that the legislature intended counties to have it. The court's dicta, however, indicated that the county's implied power to contract on its credit was not limited io the issuanceofwarrants.

In San Antonio River Authority v. Sheppard. 299 S.W.2d 920 (Tex. 1957) the supreme court again discussed a county's implied authority to contract OKIits general credit, this time for flood control. Article VIII, section l-a, of the Texas Constitution authorizes the counties to levy ad valorem taxes for flood control. Article 7048a. V.T.C.S., now section 4.103 of article 6702-1, V.T.C.S., was enacted in 1949 as an &abling act under article VIII, section l-a, of the constitution. Section 7 of the act stated that before the coastitutionally authorized tax could be levied, it must be "submitted to a vote of the qualifiedproperty taxpayingvoters of such county." See V.T.C.S. art. 6702-l. 54.103(h). The maximum rate of the tax G subject to approval by the voters, and the tax rate could be changed by future elections. except that it could not be reduced to aa extent that would impair any bonds or warrants issued by the commissioners court. 299 S.W.Zd at 922 (discussing sections 7 and 10 of former article 7048a.V.T.C.S.). Bexar County approved a tax of 15~ on each $100 valuation. The commissioners court of Bexar County contracted with the San Antonio River Authority to carry out flood control work OIIthe San Antonio River in Bexar County. As consideration. the county agreed to pay over to the river authority the proceeds of its fifteen cent flood control tax for the next 30 years. The river authority sought to issue bonds secured by the Bexar County tax but theAttorney General declined to approve them. 299 S.W.2d at 923.

TheAttorney General argued **that** Bexar County's contractwith the river authority attempted to deprive the voters of their statutory right to change theamount of the taxby future elections. Onlybonds

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and warrants issued by the county were expressly protected from impairmentcausedby reducing the tax. 299 S.W.Zdat 924.

The court determined that the county had implied authority to incur the future obligationsembodied in the contract. 299 S.W.2d at 925. It construed the express authority to issue bonds and warrants as "an additional power and not the exclusivemethod of creating an obligation." citing Lasater v. Lopez for this construction. 299 S.W.2dat 925. The opinion in SanAntonio RiverAuthorityv. Sheppard quotes the followinglanguagefromLasaterv. Lopez:

[I]nthe absenceof expressdeclarationtheLegislature is uot to be credited with the purpose of forcing a bond issue upon the people of a county every time it is necessary for the county to create an interest bearing debt of deferred maturity,however small., forroad improvement.

299 S.W.2d at.925, 1919). The court stated **as** follows: quoting Lasater v. Lopes, 217 S.W. 373. 377 (Tex. in San Antonio River Authority v. Shepperd also

Prom the powers thus expressly given to engage in flood control programs and to expend mosey therefor, the law Implies the power to use the general credit of the county to accomplish the desiredend.

. . . 299 S.W.Zd at 925. It distinguished between borrowing money and obtainingproperty or laborou credit, in thatborrowedmoney couldbe diverted from its legitimate purpose, but there was no such danger where authorized services or improvemeats were obtained on credit. Id. (citingAdams v. McGill, 146 S.W.2d at 332). The court concluded that the commissionerscourt could contract ou the general credit of the county to carry out flood control, and that such contractmight legally involve the county's credit for a number of years. Since the commissioners court had legal authority to make the contract at the time of the tax election, the voters’ right to change the rate could be limitedby the contract.

The court in San Antonio River Authority v. Shepperd did uot base the couuty's implied authority to obligate its tax revenues on necessity or on St&g evidence -of legislative approval of this authority. It refers to au impliedpower touse the general credit of the county to carry out its express power to engage in flood control programs. See also Statev. Texas Municipal Power Agency. 565 S.W.2d 258 (Tex. Civ. App. - Houston [lstDist.] 1978, uo writ). Nonetheless,we believe it is siguificautthat SanAntonioRiverAuthorityv. Shepperd, like Lasater v. Lopes, involved a constitutional authority to tax for a particular kind of public improvement. We need not

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detenaiue the scope of the county's authority to use its credit co carry out authorized functions.

Based on Lasater v. Lopez and San Antonio River Authority v. Shepperd,we believe that the countyhas implied authority to use its credit to finance the'purchase or construction of a jail, a public work which the constitution regards as essential. See Tex. Const. art.XI, 52; see also Tex. Const. art.VIII, 99. Thexgislacure has
moreover enacted statutory requirements for the condition of jails, andhas established theCoamissioaon Jail Standardswith authority to promulgate and enforce minimum standards for the construction and maintenance of county jails. V.T.C.S. arts. 5115; 5115.1. 59. Counties have also been sued in federal court to compel them to operate jails in accord with constitutional requirements. See, e.g., Vest v. Lubbock County Comeissioaers Court, 444 F. Supp. 824 (N.D. Tax. 1977). Given the totality of circumstances.we believe a Texas court would hold that a,county has implied authority to finance jail acquisition or coastruccionby methods in addition to chose expressly authorized by statute and sanctioned by supreme court opinion. In particular,we believe a coUutyhas implied authority to enter into a lease-purchase contract co build or acquire a jail, aesuming compliance with all applicable coastitutional and provisions. : statutory

In concluding that a county has implied authority to acquire a jail through a lease-purchase contract erteuding beyond the preseat budget year, we do not approve or coammnt ou the term of any particular proposed contract. The review of contracts is not an appropriate function for the opinionprocess. Nor will we set out the provisioas that such a contractmust ormay include. The adoption of detailed guidelines and limitations ou a county's power to acquire a jailby lease-purchasecontract is amatterfor the legislature,if it wishes to act. See V.T.C.S. art. 2368a.2. We are merely expressing the opinioa thatacounty could enter into a lease-purchase contract for a county jail that would pass muster with the Texas courts, assmaiug compliance with all relevant constitutional and statutory provisions. See, e.g.. Tax. Consc. art. III, 552; **Attorney** General OpinionNos. JM-274. JM-220 (1984) (countyfunds and county creditmay be used only to accomplish authorized county purpose): Tax. Const. art. XI, 57 (if county creates debt, it must establish a sinking fund).

As previouslynoted, the legislaturehas enactedarticle 2368a.2. V.T.C.S., which expressly authorizes counties to acquire personal property by lease-purchase. We do not believe the enactment of this statute negates a county’s implied authority to acquire a jail by lease-purchasecontract.Article 2360a.2.V.T.C.S., authorizesvarious political subdivisions,not only counties, to lease or lease-purchase personalproperty. It establishesa procedurewhereby thevalidity of
a contract may become "incontestable for any cause," and provides that contracts entered into pursuant to the statute are legal and

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authorized investments for certain enumerated financial institutions and sinking funds of governmentalbodies. See V.T.C.S. art. 2368a.2. 516. 7. The legislature may have excludedreal property and the improvementof real property from article 2368a.2because it did not want all of theseprovisions to apply to contractsfor theacquisition
or improvementof realproperty. Itmay uot hayewished to accord all political subdivisions the power to lease-purchase real property. Article 2368a.2,V.T.C.S., isbroad in scope, and the fact chat it is inapplicableto contractsfor realpropertydoesnot negate a county's implied authority topurchase or constructa jail on a lease-purchase contract. See Dancy V. Davidson. 183 S.W.2d 195. 200 (Tax. **Civ.** APP. - San ~onio 1944. writ ref'd) (legislaturedid not intend to restrict the grant of power under article 2351, section 7, by the subsequently enacted article 1605a. which then authorized a county with a city other than the county seatwith a population of 20,000 to provide au officebuilding ina cityother than the county seat).

SUMMARY

A Texas countyhas impliedauthoritytobuild
or purchase a.jail by lease-purchase contract. All applicable constitutional and statutory provisions must be complied with. The review .of contracts is uot au appropriate function for the opinionprocess.

AttorneyGeneral ofTexas

JACRHIGETOWER FirstAssistant**Attorney** General

MARY KELLER ExecutiveAssistant**Attorney** General

JDDGE ZOLLIE STEARLRT SpecialAssistantAttorneyGeneral

RICR GILPIN Ch&mau, OpiuionCommittee
Preparedby SusanL. Garrisou Assistant **Attorney** General

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