4

.



### THIEA?L~TT~RNEY GENERAL

OFTEXAS

Honorable J. W.Edgar Opinion No. 

### WW-147. Commissioner of Education Texas Education Agency Re: Austin, Texas Authority of Vidor Independent School District to enter into arental-purchase contract for acquisition of Dear Dr. Edgar: additional school facilities.

Wequote from your request for an opinion, dated May 1, 

### 1957,as follows:

“The Vidor Independent School District, Orange County, is in need of additional school facilities. &reliable firm, Structo School Corporation, Boston, Massachusetts, has indicated aninterest in designing, constructing andequipping the needed ‘modular plan’ school building on a suitable site to be designated bythe Board of Education. It is contemplated after construction is complete to lease the building to the Board of Education for alength of time not exceeding 40years. Uponpayment of the agreed upon rentals and expiration of the agreed time, title to the building and site would rest in the Board of Education.

. . .

“In view of the ever increasing need for additional school buildings andfacilities in this State, the possibilities for the acquisition of sameunder acontemplated modular plan construction-leasing plan wherein private companies or corporations would construct or have constructed the sameunder lease plan agreements entered into between local school districts and corporations or companies, andthe importance that the question herein submitted be thoroughly considered andfirm conclusions reached, we would appreciate anopinion from your office therein.” Following receipt of your request andas aresult of a conference between arepresentative of this office andMr.Honorable J. W.Edgar, page 2 (W-147)

Chester Ollison of the Texas Education Agency it was mutually agreed that your request could be satisfactor ly handled by i our consideration of the following questions: lo Is anindependent school district authorized to contract with reference to the rental of school buildings? 2. What, if any, are the limitations with respect to the term or duration of such acontract? 3. Mayanindependent school district by such a contract pledge the available school funds of the district thereby guaranteeing the annual payment of rentals? In consideration of your first question, werefer to Section 2of Article 2827 of Vernon’s Civil Statutes, which reads in part as follows:

“Local school funds from district taxes, tuition fees of pupils not entitled to free tuition andother local sources maybe used for

. . . buying, building and repairing andrenting school houses.

. . .I’ The authorization to expend local funds for “buying, building, repairing, andrenting school houses” necessarily bestows upon local school boards the right to contract with reference thereto. Tohold otherwise would be contrary to the evident purposes of Article 2827 and so restrict said boards in the execution of their official duties as to be detrimental to the proper administration of our public school system. Theprovision of the proposed contract which provides that after the payment of stfpulated rentals for aperiod of forty years, the building shall become the property of the school district, does not materially alter the nature of the contract.

Your second question involves the authority of the school board to so contract aswill bebinding on succeeding school boards. The statutes contain no express limitation upon the:duration or term of the type of contract here involved, and Texas Case Lawupon the precise point is surprisingly limited. It has been held that the contracts of aCommissioners’ Court maynot ordinarily be repudiated merely because the personnel of the body has subsequently changed. It is only where the employment by aCommissionerss Court is personal and confidential, as in the case of ,anattorney, that it is held that one Commissioners’ Court has no power to bind its successors. For example,. _

Honorable J. W.Edgar, page 3 

### (W-147)

the rule is not applicable to contracts essential to the performance of public works. (Comm.App.~, Gulf Bitulithic Co. v. Nueces County,

11 S.W.2d 

### 305,34Tex.Jur., 45 The case of (Civ.App.) 

### 65S.W.2d 417,3ie1d that achange in the membershi; of aschool board, prior to approval by the county superintendent of valid teachers’ contracts previously made, did not authorize the newboard andthe superintendent arbitrarily to revoke such contracts, without any charge of fraud, imposition or mistake.

Wesee noreason whythe foregoing general rules would not have application to the proposed contract here under consideration. Wedonot say, however, andneither dothe foregoing authorities, that a school board mayarbitrarily and designedly unde,rtake to tie the hands of future boards in the orderly and economical administration of the school by entering into contracts of long duration contrary to the public interest. In the exercise of discretion conferred upon them in such matters, school boards must be guided in their decisions only bymatters affecting the public interest andact in reasonable accordance with the necessities of the circumstances confronting them. The case of Board of Com’rs of Edwards Countv Simmor~ 

### 151P.2d 

### 960,sets forth the general rule in the following term;:

“The test generally applied is whether the contract is anattempt to bind successors in matters incidental to such successor’s administration and responsibility, or whether it is a commitment of a sort reasonably necessary for protection of public property, interest, or affairs being administered, andin the former case the contract is generally held to be invalid and in the latter case valid.” Theterm or duration of the contract in question is unusually long. It goes without saying that the organization and needs of our school districts are undergoing constant change. To reasonably project the needs of aparticular school district for someforty years, andto commit it to adefinite course of action in light of such projection, would require considerable vision andforesignt. Inview of these considerations, wehave no doubt that the courts would subject such acontract to the closest scrutiny. Astowhether the courts would uphold it must depend in each instance upon the existence of such facts and circumstances as to render sameamenable to the peculiar needs of the school district e Only the Board of Trustees, in the exercise of sound andreasonable discretion, can initially determine the existence or non-existence of such supporting factors. In any event, the authority of aschool board to so contract is necessarily limited. _

Honorable J. W,Edgar, page 4 

### (WW-147)

by our answer to your third question which follows0 ’

The school district cannot, however, bymeans of such acontract, pledge the future revenues of the school district for the payment of rentals as sameaccrue. School trustees have no legal authority to create any indebtedness which cannot be liquidated by application of available school funds of the district for the scholastic year in which the debt arises. 

### 37Tex. Jur. 972. Article 2749 of Vernon’s Civil Statutes prohibits a commonschool district from creating adeficiency debt in making contracts with teachers. The courts have expanded the rule to include debts generally. Teag,ue Independent School District et al. v. Mason. t al er v. Y 1025 233 B.W2dl’/b Clli jFirst Nationa;‘Bank of ithens 5. iur eacockgmeWWe chison Independent School District, 114 S.W.2d 

### 382;Trustees of Crosbv Indenesdent School District v. West Disinfecting CQ., 121 S.W.2d 661.

Section 

### 3of Article VII, Constitution of Texas, provides in part that the “Legislature mayauthorize 

### anadditional advalorem tax to be levied andcollected within all school districts. a *for the further maintenance of public free schools, andfor the erection andequipment of school buildings therein.” Articles 2784e, 2785, 2786 and2?87 are the enabling bond and tax statutes pursuant to the Constitutional provision. Article 2784e authorizes the voting of bonds andthe levy of abond tax

“for the purchase. construction. eo.ir auioment of public free school buildings within the &tts Eszuch district and the purchase of the necessa.ry sites therefor.

. *‘I added)

. &nphasis

Article 2787 requires that the proceeds of such bonds issued and sold “shall be disbursed only for the purpose for which the said bonds were issued.” It is noted that ,there is no statutory or constitutional provision authorizing the voting or issuance of bonds for leasing or renting of school buildings.

The conventional method for financing long-term obligations in connection with school construction projects is through the issuance of bonds andthe levy of atax for the retirement of sameas provided by Articles 27&e, 

### 2785,2786 and 

### 2787. This method offers reasonable guarantees of protection to all parties which the proposed lease-purchase method does not and cannot fully offer e

In view of the foregoing andwith respect to the third question propounded, weconclude: 1. Annual rentals accruing under the proposed lease-purchase contract could be paid solely from local surplus maintenance funds of the district*Honorable J. W.Edgar, page 5’ 

### tww-147)

2. Bonds cannot be voted for the purpose of renting or leasing a school building and It necessarily follows that bond proceeds could not ordinarily be used for paying such rentals.


### 3. The ability of the school district to pay the required rentals would be contingent upon the availability of surplus maintenance funds which could be used for such purposes for the particular year in which the rental became due. The rental accruing in one year but not paid, due to alack of available funds, could not become acontractual liability against the funds of a subsequent year even though there should be surplus funds available for such purposes in said year.
negative. Your third question is accordingly answered in the

SUMMARY TheVidor Independent School District is authorized by law to contract with reference to the rental of school buildings. The term or duration of such acontract rests within the sound discretion of the Board of Trustees in light of the needs andcircumstances of the district. The school cannot, however, by means of such acontract pledge the future revenues of the school district thereby guaranteeing to the builder-owner the payment of rentals as sameactrue, since school trustees have no legal authority to create any indebtedness or obligation which cannot be liquidated by application of available school funds of the district for the scholastic year in which the debt arises. Yours very truly, WILLWILSON Attorney General of Texas

LP:wam:wb Leonard Passmore Assistant--

Honorable J. W.Edgar, page 

### 6 (Wd-147)

APPROVED: OPINIONCOMMITTEE H. Grady Chandler, Chairman Wallace Finfrock Lonny Zwiener Houghton Brownlee, Jr. REVIEWEDFORTHEATTORNEY GENERAL BY: George P. Blackburn