April 16, 1990

Honorable William P.Hobby Lieutenant Governor The State ofTexas Office of the Lieutenant Governor P. 0. BOX 12068 Austin, Texas 78711-2068

Dear Governor Hobby: Opinion NO. JM-1156

Re: Child care facilities in building owned or leased by the State of Texas (RQ-1905)

You ask several questions about Senate Bill 1480. Acts 1989, 71st Leg., ch. 1207, at 4904. That bill established the Child Care Development Board, which is charged with developing and administering aprogram toprovide child care services for state employees who work in state-owned buildings. V.T.C.S. art. 6252-3e. The bill also made several amendments to theprovisions of the State Purchasing andGeneral Services Act, article 601b,V.T.C.S., that deal with the lease of space in state-owned buildings to private tenants.

Your first question iswhether the sitemust be located ina state-owned building.1 The language of Senate Bill 1480 and the legislative history make clear that the legislature contemplated that the site fora child care facility would be ina state-owned building. The caption to Senate Bill 1480 states that the act relates "to the creation of aChild Care Development Board and aChild Care Advisory Committee and tousing state-owned buildings for child care facilities." Abill analysis prepared for Senate Bill 1480 states that the purpose of the bill is to "implement aprogram touse state-owned buildings for child
care facilities." Bill Analysis, S.B. 1480, 71st Leg. (1989). Also, section 7 ofarticle 6252-3e provides that

1. We do not consider what particular financing arrangements may qualify a building as a *'state-owned building."

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the Purchasing andGeneral Services Commission shall lease a state child care facility site at a reasonable rate. A requirement that the State Services andGeneral Purchasing Commission lease the space forthe facility at a reasonable ratemakes sense only if the facility site isowned by the state. m V.T.C.S. art. 601b, S4.15 (dealingwith lease of space in state-owned buildings toprivate tenants). think that the caption to Senate Bill 1480 and t:: provisions discussed above make clear that child care facilities developed under article 6252-3e were 'intended,to be in state-owned buildings.

your second question is:

Under SB 1480 and Article 5, State Purchasing and General Services Act, may a child care facility sitebe located in a building of appropriate size thatwould be newly constructed specifically forthe board by the commission, or is theboard limited respecting newly constructed state buildings tobuildings that contain at least 100,000 square feet of net usable space, under section 5.01(b), State Purchasing andGeneral Services Act?

Most of the provisions of Senate Bill 1480 dealwith the development of achild care facility inexisting state-owned space. Nothing in thebill suggests that the legislature intended that a building **be** built solely for child care. Our conclusion that Senate Bill 1480does not authorize the construction of a building solely for the purpose of providing achild care facility is supported by section 5.01 ofarticle 601b,which provides:

(a)Under such terms and conditions asmay be provided by law, the commission may acquire necessary real andpersonal property, modernize, remodel, build, and buildings for state purposes, and em?:E contracts necessary to carry out and effectuate the purposes herein mentioned in keeping with appropriations authorized by the legislature. The commission shall not sell
ordispose ofany real property of the state except by specific authority from the legislature.

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(b)The Child Care Development Board shall determine if achild care facility may be included in a state-owned office building constructed after September 1, 1989, that contains at least 100,000 square feet of net usable space and shallnotify the commission of that determination. The commission shall notify the Child Care Development Board of a project to rehabilitate or renovate substantially an existing state-owned office building containing at least 100,000 square feet of net usable space before developing the rehabilitation or renovation plan. Not later than the 30th day after the date on which the Child Care Development Board receives the notice, the board shall determine if achild care facility may be included inthe rehabilitation or renovation project and shall notify the commission of that determination. The commission shall include a child care facility in a construction, rehabilitation, or renovation project ifthe Child Care Development Board determines that the child care facility should be included.

The language that isnow subsection (a)has been in article 601b 'sinceitwas adopted in 1979. Acts 1979, 66th Leg., ch. 773, at 1908. Subsection (a)addresses the authority of the State Purchasing andGeneral Services Commission to construct new state buildings. Senate Bill 1480 added subsection (b),which deals with inclusion of space for a child care facility in anewly-constructed state building. The fact that subsection (b)refers to the "inclusionl'of a child care facility in a newly constructed building indicates that the legislature did not intend that new state buildings be constructed solely for the purpose of housing achild care facility.

Your third question is:

Once a site isobtained, may itbe leased to a child care provider atareasonable rate that is less than fairmarket value under Section 4.15(b), State Purchasing andGeneral Services Act: Section 7(a),Article 6252-3e, Revised Statutes: Article III, Section 51, of

p. 6100,

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the Texas Constitution; and other relevant law?

Section 7(a) of article 6252-3e provides inpart:

The [State Purchasing and General Services] commission shall lease a state child care facility site ata reasonable rate to a child care provider selected by the board.

Section 4.15 ofarticle 601b dealswith the lease of space in state-owned buildings toprivate tenants. Senate Bill 1480 amended subsection (f)of section 4.15 to provide as follows:

The commission **may** lease space in a

building after the lease isnegotiated with the tenant or after the tenant is selected through a competitive bidding process. In either case, the commission shall follow procedures that promote competition and protect the interests **of** the state: except that, ifthe space is leased forthe purpose ofproviding child **[day]** care services for &&R employees **[e+hhe-bai%di?g],** the w Care Devel nment board. m 1t sole discretion, yeemmissien] may select t:e child Eare nrovidec [tenant] through procedures other than competitive bidding. (Language added by S.B. 1480 emphasized: language deleted by S.B. 1480overstricken.)

Read together, those provisions indicate that space for a child care facility is to be leased at arate that is reasonable to charge for a child care facility, not necessarily at the rate that couldbe charged for the same space if itcould be leased forother purposes. Therefore,
we conclude that space tobe used as achild care facility isnot required tobe leased at fairmarket value.

You askwhether leasing space forchild care facilities at arate lower than fair market value would be a donation ofpublic property and therefore in violation of article III, section 51, of the constitution. Article III, section 51,would not prohibit lease ofpublic property for less

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than fair market value if it served a public purpose.2 Attorney General Opinions JW-1091 (1989); WW-373 (1981). The bill analysis to Senate Bill 1480 sets out the public purpose to be achieved by leasing space for child care facilities at a rental rate thatmay be less than fair market rates:

Various studies have shown that absenteeism, tardiness and employee turnover can **be** reduced substantially when employees with young children have convenient, economical, quality child-care services available. Such studies have also shown positive effects on employee morale, job satisfaction, and productivity.

BillAnalysis, S.B. 1480, 71st Leg. (1989). We think the courts would agreewith the legislature that leasing space forchild care facilities atarate less than fair market value inorder to improve employee performance isa public purpose.

Your fourth question is:

Under Section 7(a), Article 6252-3e, Revised Statutes, may theboard determine and setwhat constitutes a **reasonable rate**  for the lease aspart of the board's power to prescribe by rule provisions that must be included ina lease toachild care provider?

Section 7(a) ofarticle 6252-3e provides:

The [State Purchasing and General Services] commission shall lease a state child care facility site atareasonable rate to a child care--prwider selected by the board. The [ChildCare Development] board by rulemay prescribe provisions thatmust be included ina lease andprovisions that may notbe included ina lease.

2. There must also be adequate controls to assure that thepublic purpose isachieved.

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We think the plain meaning of that provision isthat the determination of awreasonablew rental rate was to be a matter for the State Purchasing and General Services Commission, not the Child Care Development Board.

SUMMARY

Senate Bill 1480,Acts 1989, 71st Deg., ch: 1207, authorizes thedevelopment of child
care facilities in state-owned buildings. It does not authorize the state to lease space forchild care facilities inprivately owned buildings. The bill does not authorize the construction of a new state building solely for the purpose of housing a child care facility. The bill authorizes the State Services andGeneral Purchasing Commission to rent space fora child care facility at a rate that isnreasonable*' to charge for a child care facility; that rate may be less than fairmarket value. It is for the State Services andGeneral Services Commission, not the Child Care Development Board, to determine what constitutes a "reasonable" rental rate.

JIM MATTOX Attorney General of Texas

WARYKELLER FirstAssistant Attorney General

JUDGE ZOLLIE STEAXLEY Special Assistant Attorney General

RENXA HICKS Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared by Sarah Woelk Assistant Attorney General

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