The Honorable Lynn Nabers

Chairman Health andWelfare Committee House of Representatives P. 0. Box 2910 Austin, Texas 78767 Opinion No. H-868
Re: Constitutionality of theTexas Community Development Act of 1975, article 12691-4, V.T.C.S.
Dear Representative Nabers:
You have requested our opinion regarding the constitutionality of aportion of article 12691-4,V.T.C.S., the Texas Community Development Act of 1973. That statute authorizes amunicipality to establish "community development programs," which may include

interim assistance and financing the rehabilitation of privately owned properties when incidental to other activities. Sections 4(b), (4). Article 12691-4 isdesigned to implement the federal Housing and Community Development Act of 1974, 42U.S.C. 99 5301, et seq. i&t, Funding isprimarily provided by the federal governand section 4(c) of the Texas statute, while authorizing amunicipality to "provide for and implement programs to provide financing for the rehabilitation ofprivately owned buildings through the use of loans and grants from [the]Act," prohibits amunicipality "from providing municipal property or funds forprivate purposes." You askwhether these provisions contravene article 3, section 52of the Texas Constitution, which declares, inpertinent part:

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[TlheLegislature shall have nopower to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in such corporation, association, or company. Article 12691-4 specifically prohibits theuse ofmunicipal funds or property forprivate purposes. The purpose of the statute isdescribed in section 2:

[Tlhedevelopment of viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities for eligible persons as defined by the federal Housing and Community Development Act of 1974
. . . a The statute then declares that

the objectives of such activities are matters of public interest and legitimate public purposes formunicipalities within this state. It iswell established that "the constitutionality of a statute must be sustained unless its invalidity is apparent beyond a reasonable doubt.“ S.W.Zd 737, 747 (Tex.Sup. State v. City ofAustin, 331 1960). me Legizature's determination of what constitutes apublic use or apublic purpose is entitled togreat weight, as the Supreme Court of Texas has recognized inupholding thevalidity of the Texas Urban Renewal Act, article 12691-3, V.T.C.S., and the Texas Housing Authorities Act, article 1269k,V.T.C.S., over objections that they contravened article 3, section 52. Davis v. City of Lubbock, 326 S.W.2d 699, 709-10 (Tex.Sup. 1959);Tousing EII;=;~Y~;;~C~;;;~P: D;&aiz ~Q~~$$~~~~~~r~4~os.~;I:d 79, (1975). --

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The Honorable Lynn Nabers -page 3 (H-868)

Ithas been observed that Texas courts generally will uphold transactions inwhich amunicipality uses aprivate agency to accomplish aproper public purpose if: (1) accomplishment of thepublic purpose is thepredominant purpose of the transaction; (2)there is sufficient assurance through statutory or contractual requirements or through continuing supervision by themunicipality that the public purpose will be accomplished; (3)there is sufficient protection of the handling of public money; and (4)there is adequate consideration passing to themunicipality. Willatt, Constitutional Restrictions on Use of Public Money and Public Credit, 38Tex. B.J. 413, 421 (1975).
Ithas also been noted that apublic benefit, if adequate, may serve as consideration. Attorney General Opinion H-416 (1974). Also, see Texas Cent. Ry. v. Bowman, 79 S.W. 295, 297 (Tex.Sup. 1904),where, anotE& context, it is said:

The power of the Legislature todevote the general property of the state topublic purposes without other compensation than such as arises from the advantages resulting from such use of it is
. . .expressly recognized
. . . . We believe the transactions contemplated by article 12691-4 canmeet article 3, section 52 standards, although inp;irticularinstances the statute could be applied in an unconstitutional manner. Whether a specific application is constitutional isa question which must be resolved on the facts of theparticular case. While we cannot and do not pass on every conceivable application of the statute, it is our opinion that the Texas Community Development Act of 1975 would be held to be constitutional on its face. SUMMARY The Community Development Act of 1975, article 12691-4, V.T.C.S., is not

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The Honorable Lynn Nabers -page 4 (H-868)

violative of article 3, section 52 of theTexas Constitution.

APPROVED: Very truly yours,

ttorney General of Texas

jwb

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