Honorable Hugh C. Yantis, Jr. 

Executive Director 

Opinion No. M-1070 

Texas Water Quality Board ,. Re: Whether a non-profit 

Lowich Build,ing privates corporation 

Austin, Texas 78701 created under Article 

1434a, V.C.S., can be 

granted State of Texas 

assistance for the erection of a~ sewage plant 

pursuant to Subchapter I, 

Dear Mr. Yantis: of the Texas Water Code. 

You have requested,our opinion as to whether Northwest 

Houston Water Supply Corporatiqn, which was organized under 

Article 1434a, Vernon's Civil Statutes, constitutes a "political 

subdivision".for the purpose of,receiving State of Texas assistance or 'loans under Subchapter I, Texas Water Code (Sections 

21.601 through 21.612, inclusive). 

Your request,further states: 

"Northwest Houston Water Supply Corporation 

is a nonprofit corporation created by special request of the City of Houston. Its directors are 

appointed by the Mayor of Houston: all stock in 

the corporation is held by'the Mayor: the city 

guarantees payment of interest and sinking fund 

on all revenue bonds issued by the corporation; 

all improvements become the property of the city 

as soon as constructed. The Internal Revenue 

Service has ruled that the interest'on the bonds 

as well as any income received by the corporation 

is income tax free. 

" . . . 

"The City,of Houston contracted with the Northwest Houston Water Supply Corporation for that 

corporation to act as the city's agent in all 

matters connec~ted with the providing of adequate 

water and public sanitation facilities for the 

'un.incorporated Acres Homes Area, which consists 

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Honorable Hugh CL. Yantis, Jr. page 2 (M-1070) 

of approximately five thousand acres and a population of forty to fifty thousand individuals. 

"With this fact situation in mind, your 

opinion is requested with reference to the following question: 

Does the corporation, by the nature 

of its relationship with the city, 

qualify as the recipient of the financial assistance as provided by 

Subchapter I of the Texas Water Code?" 

We answer.the question in the negative.. 

This private non-profit water supply corporation known 

as Northwest Houston Water Supply Corporation is not 9 "political 

subdivision" under the Texas Water Code. Section 21.602(5) of 

the Water Code defines a political subdivision as follows: 

?,'Political subdivision' means a county, 

city, or other'body politic or corporate of the 

state, including any district or authority 

created under Article III, Section 52, or 

Article XVI, Section 59, of the Texas Constitution, 

and including any interstate compact commission to 

which the state is a party." 

Article III, Section 49-d-1, Constitution of Texas, 

authorizes the Legislature to provide grants and loans for water 

quality enhancement purposes only "to political subdivisions or 

bodies politic and corporate of the State of Texas . . . ." 

Political subdivisions are similarly defined in the Texas Water 

Code, Section 11.001. This is further emphasized by holdings 

that such corporations as here involved are "private" but cuasipublic in nature, but tnev do not constitute "political suhdivisions" of the state. - Tarrant County W.S.Cl v. Hurst-Euless 

Bedforil I.S.D., 391 S.W.2d 192, (Tex.Civ.App. 1965, error ref. 

n.r.e.) ; Cedar Park W.S.C. v. Leander I.S.D., 469 S.W.2d 19 

(Tex.Civ.App. 1971, error granted on other grounds and under 

submission since December 8, 1971). See also Attorney General 

Opinion No. ~0-3433 (1941). 

We have heretofore held that an incorporated city, 

as a political subdivision, may contract with a profit or nonprofit corporation to perform waste disposal services, but 

this~ does not contemplate that the City in so doing delegates 

any of its sovereign powers. See Attorney General Opinion No. 

M-693 (1970). 

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Honorable Hugh C. Yantis, Jr., page 3 (M-1070) 

SUMMARY 

A private nonprofit water supply corporation 

created under Article 1434a, Vernon's Civil Statutes 

of Texas, is not a "political subdivision" under 

Section 11.001 or 21.602(S) of the Texas Water Code. 

and cannot qualify as the recipient of 

assistance provided by Subchapter I of 

Water Code. 

s very truly, 

n 

the financial 

the Texas 

~Prepared by Roger Tyler 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

Austin Bray 

Glenn .&own 

John Reeves 

Joseph Sharpley 

SAWUEL 'Do MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NQLA WRITE 

First Assistant 

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