## GENERAL

AUSTIN. TREXAS 787ll

May 20, 1974 The Honorable Joe Resweber CountyAttorney Harris County Courthouse Houston, Texas 77002 Opinion No. H- 310 Re: May Harris County Commissioner 8court constitutionally issue revenue bonds under Clean Atr Financing Act? Dear Mr. Resweber: You have requested our opinion as towhether the Harris County Commissioner’s Court, acting as the “governing body” of an “issuer” (as those terms are used by the Texas Clean Air Financing Act), may authorize issuance of “revenue” bonds tofinance ,theacquisition or construction of anair control facility. The Texas Clean Air Financing Act, newly enacted in 1973, is codified as Article 4477-Sa, V. T. C. S. Generally, it cbnplements the Texas Clean Air Act. Art. 4477-5, V. T. C.S., andprovides a means by which local governmental units may finance the construction of air pollution control facilities by issuing tax-exempt bonds tobe repaid or retired out ofthe revenues of the newfacilities, or of certain public systems, andnotout of tax revenues. See $5 (h). Section 4 (a) ofthe Clean Air Financing Act reads:

“Sec. 4 (a). Each issuer is authorized to acquire, construct, and improve, or cause tobe acquired, constructed, and improved, control facilities. The issuer’ is also authorized to acquire real property as deemed appropriate by the issuer for the control facilities. Suchcontrol facilities may be located uponproperty oked by the issuer or uponproperty. of another person or persons. The issuer is authorized to enter into leases

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or other contracts with persons whereby such persons shall use or acquire control facilities ofthe issuer. The issuer is authorized to sell such facilities to any person or persons including a person or persons using such facilities, such sale to be by installment payments or otherwise andupon such conditions as the issuer deems desirable. ” The definition of “governing body, ‘Iwith reference to an issuer, expressly includes a commissioners court [§ 3(6)]. The term “issuer” expressly includes a county [53(7)]. Ifa county is tobe the issuer, the control facilities must be located wholly or partially within its boundaries t§4(d)]. Your request.. letter to us states:

“The peril uponwhich.the Commissioners Court hesitates relates towhether or notthis Act would violate Texar Constitutional Law inasmuch as it **may be**  viewed as authorizing the granting of. public credit in aid OT an individual, association or corporation. ‘I

. Article 11, 53, of the Constitution, whtch har been apart **of** the Constitution of Texas since itwas adopted in 1076 readr:

“No county, city, or other municipal corporation shall hereafter become a subscriber to the capital’ of any private corporation or association, or make any appropriation or donation to the same, or in anywise loan its credit; but this shall notaffect any obligation heretofore undertaken pursuant to law. ” Article 3, $52, of the Constitution presently reads:

“(a) Except as otherwise provided by this section, the Legislature shall have nopower to authorize any

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county. city, town or other political corporation or subdivision ofthe State to lend its credit or **to-grant** public money or thing ofvaluesin aid of; or to any individual, aseociation **or** corporatton whatsoever; or to become a stockholder in such corporation, ar#ociation orecompany. ” This section, lastamended in 1970, contains no express authorization to issue bonds for the construction, maintenance or operation **of** air pollution control facilities, but the absence of such a constitutional authorization for tax bonds is held not determinative ofthe power of a political subdivision to issue revenue bonds.. Atkinson v. City of.Dallas, 353 S.W. 2d 275 (Tex. Civ. App. --Dallae 1961, error ref’d, ntr. e.~). Cf. Lower Colorado River Author.ityv. McGraw, 83S.W. 2d 629 (Tex 1935). The reason is that revenue bonds donot pledge to bondholders the full resources of government (the public~.credit) for their repayment. Only certain revenues, excluding taxes, arc pledged to repay them, and the governmental issuer ofthe bonds has no liability ifthe pledged revenues prove inzufficient. Section 5 (h) of the Clean Air Financing Act specifies: “All such bonds or notes shall be special obligations payable solely from the revenues pledged to their payment and shall notbe considered general obligations of the governing body, an issuer, or theState of Texas. The holder of the bonds shall never have the right to demand payment from moneys derived by taxation or any other revenues ofthe issuer except those revenues pledged to the payment of the bonds or notes. ” You have not provided us particulars, so we cannot specifically answer in response to the Harris County plans as towhether those plans amend or would **not** constitute an improper lending of credit or an improper grant. Generally it can be said thatwhen apublic bodyproperly issues revenue bonds to construct a revenue producing facility to be ownedby it,

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the operation ofwhich io reasonably necessary or desirable for the health andwelfare of its general constituency, the **courtr** will ordinarily conchidthat the public body’s expenditure is for **a proper**  public purpose and notan improper grant or an improper loan of credit to the **unerl** of thefacility from which the revenue is derived, and this, even if some private corporation is incidentally benefited. See Braaos River Authority v. Carr, 405 S.W. 2d 689 (Tex. 1966); Atkinson v. City of Dallas, 353 S.W. 2d 275 (Tex. Civ.App. Dallas, 1961, error ref’d, n.r. e.). We can advise, therefore, thanan improper grant ofpublic funds does notnecessarily **occur** just because 

### a public body accomplishes its purpose through theagency ofa private person or organization. See Barrington v. Cokinos, 338 S.W. 2d 133 (Tex. 1960); State v. City ofAustin, **331** S.W. 2d 737 (Tex. 1960). These cases hold that the State, where it exercises its police powero, has discretion to share the expenses where the public purpose is served and there is no net gain to theindividual. And 

### see, Brazes River Authority v. Carr, 405 S.W. 2d 689 (Tex. 1966). Inthis area, the constitutional rertri ctionr on **“ grants** **”** ofpublic money or thingr ofvalue to individual or corporations and **those** restrictions on “lending the public credit” 

### are analyzed by Texas **courts** in the same way. A “public benefit” is presumed toflow from theutilization of public funds or credit for a proper “public purpose. ” The existence of **a** proper **public** purpose in any given 

### case must be measured by the specific plans andarrangement called for in such 

### care. Ineach instance it is a mixed question oflaw andfact which can be ultimately andfinally determined only by thecourts, though much deference will be given to,legislative expressions on the matter. See Davis v. City of Lubbock, 326 S.W. 2d 699 (Tex. 1959). Compare State ex rel Hammermill Paper CO. v. La Plante, 205 N.W. 2d 784 (Win. 1973) with State v. City ofYork, 82 N.W. 2d 269 (Neb. 1957) andwith Cosentino v. City ofOmaha, 183 N. W. 2d 475 (Neb. 1971). The courts would undoubtedly give considerable weight to the fict that the Legislature has specifically provided that “the 

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holder of the bonds shall never have the right to demand payment from moneys derived by taxation or any other revenues of the issuer except those revenues pledged to,thepayment of the bonds or notes. ” We are of~the,opinion that, generally, a commissioners court may issue revenue bonds under the Clean Air Financing Act, Art< 4477-5a, V. T. C. S. However, it is possible that the facts,of a particular case will cause the issuing of such bonds tobe unconstitutional. Travelers’ Ins. Co. v. Marshall, **76** S.W. 2d 1007, lOlO,(Tex. 1934). Inanswer to your inquiry, therefore, we can only reply that, generally the Harris County Commissioners Court may legally and constitutionally authorize the issuance of revenue bonds to finance the acquisition or construction ofanair control facility. However,~ not every arrangement made purportedly for thatpurpose would be legal. or constitutional. The details of thewritten arrangement would control. SUMMARY Generally a commissioners court may issue revenue bonds under the Clean Air Financing Act, butwhether a specific issue is valid will depend on the specific arrangements of each case. Much reliance will be placed onthe legislative mandate that the bonds provide that their repayment be made solely from revenues of the issuers and not from monies derived from taxes. Very truly yours,

JOHN L. HILL Attorney General of Texas

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