OPP,CE OF THE ATTORNEV GENERAL. STATE OF TEXAS 

JOHN CORNYN 

April 12,200O 

The Honorable Michael P. Fleming 

Harris County Attorney 

1019 Congress, 15th Floor 

Houston, Texas 77002-1700 

Opinion No. JC-0206 

Re: Whether the County Purchasing Act, TEX. Lot. 

Gov’TCODEANN. @j 262.021-,035 (Vernon 1999 & 

Supp. 2000), applies to the purchases of a local 

government corporation created by a county under 

subchapter D, chapter 431 of the Transportation 

Code (RQ-0139-JC) 

Dear Mr. Fleming: 

You ask whether the County Purchasing Act, TEX. Lot. GOV’T CODE ANN. $9 262.021-,035 

(Vernon 1999 & Supp. 2000), applies to the purchases of a local government corporation created by 

Harris County (the “County”) under subchapter D, chapter 431 of the Transportation Code. We 

conclude that because 1999 amendments to subchapter D exempt the contracts of a local government 

corporation from competitive bidding requirements applicable to the local government that created 

it, the County Purchasing Act does not apply to the contracts of a local government corporation 

created by a county. 

Your question pertains to the Harris County Sports and Convention Corporation (the 

“Corporation”), a local government corporation created by the County under subchapter D, chapter 

431 of the Transportation Code. You state that the Corporation is organized to aid and act on 

behalf of the County in managing, operating, and developing the Astrodomain Complex, which 

consists of the Astrodome, Astrohall, Astroarena, and related infrastructure. See Letter from 

Michael P. Fleming, Harris County Attorney, to Honorable John Comyn, Texas Attorney General 

at 1,4 (Nov. 12, 1999) (on file with Opinion Committee) [hereinafter “Request Letter”]. Harris 

County has leased the Astrodomain Complex to the Corporation for $1.00 a year. See Second 

Amended and Restated Lease Agreement between Harris County, Texas and Harris County Sports 

& Convention Corporation (Apr. 7, 1999), art. 2, para. 2.01 [hereinafter “Contract”]. The 

Corporation will operate and manage the facilities for the County. See Contract, art. 4, para. 4.01, 

at 7 (Purpose). Under the lease, “Harris County reserves the right to approve the Corporation’s 

annual budget and agrees to fund any operating deficit and the cost of capital repairs and 

replacements.” Request Letter, supra, at 4. 

The County will expend a considerable sum to improve the facilities: “The County plans to 

fund or budget over $200,000,000 for improvements to the Astrodomain Complex within the next 

two to three years. Funding will be provided from the general fund, commercial paper, certificates 

of obligation, tax anticipation notes or other debt.” Id. We understand that these improvements will 
The Honorable Michael P. Fleming - Page 2 (X-0206) 

be made by the Corporation and that the County will not be party to the contracts. Telephone 

Conversation with John R. Barnhill, Assistant County Attorney, Harris County, Texas 

(Mar. 3,200O). The lease agreement between the County and the Corporation dated April 7,1999 

provides that all purchases made by the Corporation with funds provided by the County will be made 

in accordance with the County Purchasing Act. See Contract, art. 6, para. 6.10, at 13-14 (County 

Purchasing Act). You ask whether the County Purchasing Act applies to expenditures of funds by 

the Corporation “irrespective of any requirement in the Lease to comply with such Act.” Request 

Letter, supua, at 1. An attorney in your office explains that when the parties entered into the lease, 

there was some question regarding whether the County Purchasing Act would apply to the 

Corporation. Telephone Conversation with John R. Barnhill, Assistant County Attorney, Harris 

County, Texas (Mar. 3, 2000). The Corporation believes that this question has been resolved by 

1999 legislation and would like to ask the County to amend the lease if the Corporation is not 

required by law to comply with the Act. Id. 

We note that the legal memorandum submitted with your request raises issues other than 

whether the Corporation is subject to the County Purchasing Act. For example, the memorandum 

observes that subchapter D of chapter 43 1 of the Transportation Code does not expressly authorize 

the local government that creates a local government corporation to fund the operation of the 

corporation and suggests that this authority may be implied. See Request Letter, supra, at 4-5. 

However, you have not asked us to address this issue or any other issue regarding the County’s 

authority to contract with a local government corporation or to lease property to a local government 

corporation. See, e.g., TEX.LOC. GOV’TCODE ANN. $5 263.001, ,007 (Vernon 1999 & Supp. 2000) 

(competitive procedures for leasing county property). Accordingly, we limit our analysis to the 

question asked, which you state as follows: “Our specific question is whether the County Purchasing 

Act, irrespective of any requirement in the Lease to comply with such Act, applies to expenditures 

of funds by the Corporation.” Request Letter, supra, at 1. 

The County Purchasing Act generally applies to county purchases. Section 262.023 of the 

Local Government Code provides that “[blefore a county may purchase one or more items under a 

contract that will require an expenditure exceeding $25,000, the commissioners court of the county 

must comply with the competitive bidding or competitive sealed proposal procedures prescribed by 

this subchapter.” TEX. Lot. GOV’T CODE ANN. 5 262.023(a) (Vernon Supp. 2000). These 

requirements apply “only to contracts for which payment will be made from current funds or bond 

funds or through time warrants.” Id. 3 262.023(b); see also id. 4 262.022(l) (“‘Bond funds’ means 

money in the county treasury received Tom the sale ofbonds, and proceeds of bonds that have been 

voted but that have not been issued and delivered.“), (3) (“‘Current funds’ means funds in the county 

treasury that are available in the current tax year, revenue that may be anticipated with reasonable 

certainty to come into the county treasury during the current tax year, and emergency funds.“), (9) 

(“‘Time warrant’ means any warrant issued by a county that is not payable out of current funds.“). 

As the Texas Supreme Court has recognized, however, the requirements of the County Purchasing 

Act may also extend to the purchases of entities separate from but under the supervision of a county: 

Public policy strongly favors protecting taxpayers with strict 

oversight of governmental financial transactions. . It would be 
The Honorable Michael P. Fleming - Page 3 (X-0206) 

entirely contrary to public policy to allow these boards [that handle 

millions of dollars in public funds] to operate with total autonomy 

and to avoid the public posting, bidding, purchasing and auditing 

procedures imposed on counties unless explicitly excluded. 

Lohec v. Galveston County Comm’rs Court, 841 S.W.2d 361, 365 (Tex. 1992) (concluding that 

purchases of county beach park board were subject to county control). We gather you are concerned 

that the County Purchasing Act may apply to the Corporation because it operates on behalf of Harris 

County for a county purpose and is funded with county funds. We conclude, however, that the 1999 

amendments to section 43 1.101 ofthe Transportation Code exempt the Corporation from the County 

Purchasing Act. 

While most of chapter 43 1 provides for transportation corporations authorized by the Texas 

Transportation Commission and created to promote and develop public transportation facilities, 

subchapter D authorizes the creation of local government corporations. The term “local 

government”meansamunicipalityoracounty. S~~TEX.TRANSP.CODEANN. §431.003(3)(Vemon 

1999). Section 43 1.101 provides that a local government corporation “may be created to aid and act 

on behalf of one or more local governments to accomplish any governmental purpose of those local 

governments.” Id. 5 431.101(a) (V emon Supp. 2000). A local government corporation has the 

powers of a transportation corporation authorized for creation by the Texas Transportation 

Commission under chapter 43 1, which include the powers of a nonprofit corporation incorporated 

under the Texas Non-Profit Corporation Act. See id. $5 431.062 (Vernon 1999), .101(b), (c) 

(Vernon Supp. 2000). 

In 1999, the legislature amended subchapter D to provide in section 431.101(e) that 

Section 394.904(a), Local Government Code, applies to 

property and improvements owned by a local government 

corporation. Section 394.904(b) of that code applies to each contract 

awarded by the local government corporation. 

Id. 5 43 1.101(e) (Vernon Supp. 2000) (emphasis added) ( as added by Act of May 29, 1999,76th 

Leg., R.S., ch. 983,s 12, 1999 Tex. Gen. Laws 3763,376s). 

The statute to which this amendment refers, section 394.904 of the Local Government Code, 

pertains to a housing finance corporation created under the auspices of a “local government,” i.e., 

a municipality or county, to finance residential ownership and development. See TEX. LoC. GOV’T 

CODE ANN. $3 394.002 (purpose); 394.003(10) (defining “local government”); 394.011 

(incorporation) (Vernon 1999 & Supp. 2000). Section 394.904 provides as follows: 

(a) The acquisition, construction, or rehabilitation of a private 

residential development or a home is not subject to requirements 

relating to public buildings, structures, grounds, works, or 
The Honorable Michael P. Fleming - Page 4 (X-0206) 

improvements imposed by the laws of this state, or to any other 

similar requirements. 

(b) Any competitive bidding requirement or restriction imposed 

on the procedure regarding the award of contracts for that 

acquisition, construction, or rehabilitation or regarding the lease, 

sale, or other disposition of property of the local government is not 

applicable to any action taken under this chapter. 

Id. 5 394.904 (Vernon 1999) (emphasis added). Subsection (b) of section 394.904, the relevant 

provision for our purposes, exempts from competitive bidding a housing finance corporation’s 

contracts for “that acquisition, construction, or rehabilitation,” referencing contracts relating to a 

private residential development or home in subsection (a), and contracts for “the lease, sale, or other 

disposition of property.” Id. This exemption appears to distinguish between contracts relating to 

private and public projects. 

Given the differences between housing finance corporations and local government 

corporations, particularly the great difference in their breadth ofpurpose, and the distinction section 

394.904(b) appears to make between private and public projects, the reference to section 394.904(b) 

in section 43 1.101(e) ofthe Transportation Code is perplexing. We conclude, however, that section 

431.101(e) exempts all contracts of a local government corporation from competitive bidding 

requirements applicable to the contracts of the local government that created it. In citing section 

394.904(b) of the Local Government Code, the legislature referenced an exemption to competitive 

bidding that exempts certain contracts from municipal and county competitive bidding requirements 

that might otherwise apply. Furthermore, the legislature provided that this exemption “applies to 

each contract awarded by the local government corporation,” TEX. TRANSP. CODE ANN. 9 43 I. 101 (e) 

(Vernon Supp. 2000) (emphasis added), and thus clearly intended this exemption to apply to all 

contracts awarded by a local government corporation. Therefore, although it might have been 

preferable for the legislature to have provided this competitive bidding exemption in a 

straightforward fashion, we have no choice but to conclude that the purpose of section 431.101(e) 

is to exempt all contracts of a local government corporation from competitive bidding requirements 

applicable to the contracts of the local government that created it. 

Given that section 43 1.101 (e) exempts the contracts of a local government corporation from 

competitive bidding requirements applicable to the contracts of the local government that created 

it, the contracts of a local government corporation created by a county are not subject to the 

competitive bidding requirements of the County Purchasing Act. We note, however, that any 

contracts the county enters into for a local government corporation payable from current funds, bond 

funds, or through time warrants will be subject to the County Purchasing Act. See TEX. LOC. GOV’T 

CODE ANN. § 262.023(a), (b) (Vernon Supp. 2000). 

Accordingly, we conclude that by virtue of section 431.101(e) of the Transportation Code 

the Harris County Sports and Convention Corporation’s contracts are not subject to the competitive 

bidding requirements of the County Purchasing Act. Therefore, the Harris County Commissioners 
The Honorable Michael P. Fleming - Page 5 (X-0206) 

Court may decide whether to renegotiate its lease with the Corporation to amend the term requiring 

the Corporation to comply with the County Purchasing Act, keeping in mind the beneficial purposes 

of competitive bidding and the best interests of the County. See generally Texas Highway Comm ‘n 

v. Texas Ass ‘n ofSteeZZmporters,Znc., 372 S.W.2d 525 (Tex. 1963) (“‘[The] purpose [ofcompetitive 

bidding] is to stimulate competition, prevent favoritism and secure the best work and materials at 

the lowest practicable price, for the best interests and benefit of the taxpayers and property 

owners.“‘) (citing Sterrett v. Bell, 240 S.W.2d 516,520 (Tex. Civ. App.-Dallas 1951, no writ)); see 

also Lohec, 841 S. W.2d at 365; TEX. TRANSP. CODE ANN. 5 43 1.104(b) (Vernon 1999) (“A local 

government that assumes the powers and duties of a local government corporation assumes the assets 

and liabilities of the corporation.“) (emphasis added). Of course, any contracts for improvements 

to the Astrodomain to which the County is a party will be subject to the County Purchasing Act. 
The Honorable Michael P. Fleming - Page 6 (~~-0206) 

SUMMARY 

Because section 431.101 of the Transportation Code as 

amended by the Seventy-sixth Legislature exempts the contracts of 

a local government corporation from competitive bidding 

requirements applicable to the contracts of the local government that 

created it, the contracts of a local government corporation created by 

a county are not subject to the competitive bidding requirements of 

the County Purchasing Act. See TEX. TRANSP. CODE ANN. 

§ 43 l.lOl(e)(VemonSupp. 2000)(as addcdbyActofMay29,1999, 

76th Leg., R.S., ch. 983, 5 12, 1999 Tex. Gen. Laws 3763,376s). 

Y rsve truly. 4J4ii 

JOHN CORNYN 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK RENT ERVJN 

Deputy Attorney General - General Counsel 

ELIZABETH ROBINSON 

Chair, Opinion Committee 

Mary R. Crouter 

Assistant Attorney General - Opinion Committee