E ~RNEY GENERAL OF EXAS

Mr. Joe D. Carter Ex~ecutive

Secretary Opinion No. WW-618
Texas Water Development Board Re: Authority of Texas Austin 1, Texas Water Development Board to loanmoney to the Lower Nueces River Water Supply Dear Mr. Carter: District.

You have requested an opinion of tbe Attorney General relative the authority of the Texas Water Development Board to loan $3,000,000.00 to the Lower Nueces River Water Supply District,hereinafter called "District".

Presently the District is constructing the Seale Dam and Reservoir on the Nueces River, some 36miles Northwest of Corpus Christi, for the purpose of supplying that city and the surrounding areawith water formunicipal, industrialand irrigation use. The initial cost estimate on this projectwas $15,500,000,00.

The estimated cost to completion is now $21,219,173.03. The difference represents increased construction cost occasioned by delay and increased land costs due to the discovery of four oil fields in the proposed reservoirbasin.

Your question follows:
"Inview of the fact that approximately $18,000,000had been expendedprior to the filing of the Notice of Intentionwithout any participationby the Texas Water Development Board in the financing thereof, can the Texas Water Development Board now lawfully lend all of the fundsnecessary to completion of the project so long as--.

Mr. Joe D. Carter, page 2 (WW-618)

such sum does not exceed one-third of the overall total project cost or $S,OOO,OOO, whichever is the lesser?"
We believe so, foryou advise that the District seeks the loan to acquire land in the reservoirbasin, and that -

"Thesereservoir lands are an integralpart of the project and absolutelynecessary for the storage of water and the consequentoperation of the entirc project. Without such lands, the project can not properly function and could not be considered complete." The Districtwas createdby Acts 1949, 51st Legislature, Ch. 159, p. 326 (Art.8280-134)V.C.S., under and pursuant to the provisionsof Section 59, ArticleXVI, Constitution of Texas. Ithas been judicially determined that the District is a legally constituted political subdivisionwith the power to acquire lands for dam and reservoirpurposesby condemnationor otherwise. Lower Wueces River Supply District v. Cartwright, 274 S.W.Zd 199 (Civ.App.1954 ref. n.r.e.).

Section 49-c, of Article III, Constitutionof Texas, created the Texas Water Development Board and sets up the Texas Water Development Fund and declares that the Fund shallbe used for furtheranceof the conservationand developmentof the State'swater resources by, among others,

"the acquisition&g- reservoirsand other storage projects
. . .n and directs that -

*Such fund shallbe used only for the purpose of aiding or **making** funds available upon such terms and conditions as the Legislaturemay prescribe, to the various political subdivisionsor bodies politic and corporate . . .*Mr. Joe D. Carter, page 3 (WW-618)

In Article 8280-9,V.C.S., the Legislaturehas prescribed the terms and conditions for access to the Fund. Section 11 thereof reads, in part:

11

. . . the Texas Water Development Fund shallbe used by the Boardhereof for the purpose of providing financial assistance and aid to the various political subdivisions
. . D in the conservation and development of thewater resources of the State of Texasby the construction,acquisition or improvementof projects, as defined in Section 2 hereof." Section 2, sub-section (f):
" "Project'means any engineeringundertaking or work for the purpose of tbe conservation and development of the surface water resources of the State of Texas, including the control, storing and preservation of its storm and floodwaters and the waters of its rivers and streams for all useful and lawful purposesby the acquisition, improvement,extension or construction of dams, reservoirs and other water storageprojects
. . On It is apparent that the Seale Dam and Reservoir is a projectwithin the legislativedefinition, and, further, that the acquisition of reservoir lands is a basic, fundamental and inseparablepart of tbat certain undertaking, and, consequently, could not be deemed a separatework containingwithin itself all the necessary elements of a water conservationproject. The constitutionaland statutoryprovisions do not expressly specify that in order to qualify thereunder for financial assistance a projectmust eitherbe or not be in a particular state of initiation,progression or completion,nor is any implied therein applicable to this fact situation.Hr. Joe D. Carter, page 4 (WW-618)

Section 15 of Article 8280-9,V.C.S., imposesa restrictionupon the Board and the Fund:

"TheBoard shall never.purchasebonds or other securitiesof a political subdivision in excess of one-third (l/3)of the total costs of a project for which assistance from the Fund is sought nor in excess of Five Million Dollars ($5,000,000), whichever is the lesser for any one (1) project." Consequently,you are advised that it is the opinion of the Attorney General that the Texas Water Development Board may lend all the funds necessary to the completion of the Seale Dam and Reservoirby the acquisitionof reservoir lands provided the total of such aid does not exceed the limits announced in Section 15 of Article 8280-9,V.C.S., and the Board and the District complywith all other conditionsprecedent to the grant and the receipt of such financialassistance.

SDMMARY The Texas Water Development Board may lend all the funds necessary to the completion of the Seale Dam and Reservoirby the acquisition of reservoir lands provided the total of such aid does not exceed the limits announced in Section 15 of Article 8280-9, V.C.S., and the Board and the District comply with all other conditionsprecedent to the grant and the receipt of such financial assistance.
Very trulyyours, WILL WILSON /

GW-S Ass s ant fl. . -

Mr. Joe D. Carter, page 5 (WW-618)

APPROVBD: OPINION COMMITTEE Geo. P. Blackburn,Chairman

Kenneth H. Burns Ralph Rash Jot Hodges, Jr. John Reeves REVImD F'ORTHEATTORNJSYGENERAL By: W. V. Geppert