Honorable Hugh C.Yantis, Jr.

Executive Director Opinion No. M-1070
Texas Water Quality Board ,. Re: Whether anon-profit Lowich Build,ing privatescorporation 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 theTexas Water Code.

You have requested,our opinion as towhether Northwest Houston Water Supply Corporatiqn, which was organized under Article 1434a,Vernon's Civil Statutes, constitutes a "political subdivision".for thepurpose of,receiving State of Texas assistance or 'loansunder Subchapter I,Texas Water Code (Sections 21.601 through 21.612, inclusive).

Your request,further states: "Northwest Houston Water Supply Corporation is anonprofit corporation created by special request of the City of Houston. Its directors are appointed by the **Mayor** of Houston: all stock in the corporation isheld 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 aswell as any income received by the corporation is income tax free. "

. . . "TheCity,of Houston contracted with the Northwest Houston Water Supply Corporation for that corporation to act as the city's agent in all matters connec~tedwith theproviding of adequate water andpublic sanitation facilities for the 'un.incorporated

Acres Homes Area, which consists -5247-Honorable Hugh CL.Yantis, Jr. page 2 (M-1070)

of approximately five thousand acres and apopulation of forty to fifty thousand individuals. "With this fact situation inmind, your opinion is requested with reference to the followingquestion:
Does the corporation, by the nature of its relationship with the city, qualify as the recipient of the financial assistance asprovided by Subchapter Iof theTexas Water Code?"
We answer.the question in the negative.. This private non-profit water supply corporation known asNorthwest Houston Water Supply Corporation isnot 9 "political subdivision" under the Texas Water Code. Section 21.602(5) of theWater Code defines apolitical subdivision as follows:

?,'Politicalsubdivision' means a county, city, or other'body politic or corporate of the state, including anydistrict or authority created under Article III, Section 52, or Article XVI, Section 59,of theTexas Constitution, and including any interstate compact commission to which the state is aparty." Article III, Section 49-d-1, Constitution of Texas, authorizes the Legislature toprovide grants and loans forwater quality enhancement purposes only "topolitical 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 CountyW.S.Cl v. Hurst-Euless BedforilI.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 apolitical subdivision, may contract with aprofit or nonprofit corporation toperform waste disposal services, but this~does not contemplate that the City in sodoing delegates any of its sovereign powers. SeeAttorney General Opinion No. M-693 (1970). -5248-Honorable Hugh C. Yantis, Jr., page 3 **(M-1070)**

**SUMMARY**
Aprivate nonprofit water supply corporation created under Article 1434a,Vernon's Civil Statutes ofTexas, isnot a "political subdivision" under Section 11.001 or 21.602(S) of theTexas Water Code. and cannot qualify as therecipient of assistance provided by Subchapter I of Water Code.

svery truly, n the financial

the Texas

~Prepared by RogerTyler Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman W. E. Allen, Co-Chairman Austin Bray **Glenn** .&own John Reeves Joseph Sharpley SAWUEL 'DoMCDANIEL Staff Legal Assistant
ALFRED WALKER Executive Assistant NQLA WRITE First Assistant

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