Court Opinion

ID: 4131383
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:15:09.596907+00
Date Added: 2024-06-11T14:33:26.497851
License: Public Domain

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                                                     The Attorney           General of Texas
                                                                      November 2, 1983
 JIM MATTOX
 Attorney General

 Supreme   Court Building                          Mr. Robert C. Lanier                    Opinion No. JM-84
 P. 0. Box 12546                                   Chairman
 Austin. TX. 76711. 2646                           State Deuartment of Hiehwavs            Re: Use by countv of combina-
                                                                        I     _

 5121475-2501
                                                      and Public Transportation            tion tax and revenue bonds to
 Telex    9101674.1367
 Telecopier     5121475-0266
                                                   Dewitt C. Greer State Highway Bldg.     construct toll roads
                                                   11th and Brazos Streets
                                                   Austin, Texas   78701
 714 Jackson.    Suite 700
 Dallas.   TX. 75202.4506
                                                   Dear Mr. Lanier:
 2141742.6944

                                                        You have requested our opinion regarding the authority of a
 4824 Alberta         Ave.. Suite            160   county to use the proceeds of combination tax and revenue bonds to
 El Paso, TX.         79905.2793                   construct toll roads.
 9151533.3464

                                                        Article 6795b-1, V.T.C.S., authorizes Gulf Coast counties with a
 1001   Texas,       Suite     700                 population of 50,000 or more to issue bonds to pay for the
-*ston,        TX.        77002-3111               construction, operation and maintenance of causeways, bridges,
     .1223-5666                                    tunnels, highways and turnpikes, including toll roads. You ask:

                                                            Does the use of the proceeds of combination tax
 606 Broadway,             Suite 312
 Lubbock,     TX.         79401-3479
                                                            and revenue bonds to construct toll roads,
 6061747.5236                                               turnpikes, causeways, or bridges constitute an
                                                            unconstitutional lending of credit or grant of
                                                            public money when a user is charged a toll for the
 4309 N. Tenth,     Suite B
 McAllen,     TX. 76501-1665
                                                            use of the facility?
 5121662-4547
                                                   Article III, section 52 of the Texas Constitution provides:
 200 Main        Plaza,      Suite     400
                                                               (a) Except as otherwise provided by this
 San Antonio,         TX.      76205.2797
 5121225-4191
                                                            section, the Legislature shall have no power to
                                                            authorize any county, city3 town or other
                                                            political corporation or subdivision of the State
 An Equal        Opportunity/                               to lend its credit or to grant public money or
 Affirmative       Action     Employer                      thing of value in aid of, or to any individual,
                                                            association or corporation whatsoever, or to
                                                            become   a   stockholder in    such  corporation,
                                                            association or company.

                                                               (b) Under Legislative provision, any county,
                                                            any political subdivision of a county, any number
                                                            of   adjoining   counties,   or   any   political
                                                            subdivision of the State, or any defined district
                                                            now or hereafter to be described and defined

                                                                                  p. 354
Mr. Robert C. Lanier - Page 2   (JM-84)

         within the State of Texas, and which may or may
         not   include, towns, villages      or   municipal
         corporations, upon  a vote of  two-thirds majority
         of the resident property taxpayers voting thereon
         who are qualified electors of such district or
         territory to be affected thereby, in addition to
         all other debts, may issue bonds or otherwise lend
         its credit in any amount not to exceed one-fourth
         of the assessed valuation of the real property of
         such district or territory, except that the total
         bonded indebtedness of any city or town shall
         never   exceed the limits imposed by         other
         provisions of this Constitution, and levy and
         collect taxes to pay the interest thereon and
         provide a sinking fund for the redemption thereof,
         as the Legislature may authorize, and in such
         manner as it may authorize the same, for the
         following purposes to wit:

             (1) The improvement of rivers, creeks, and
             streams to prevent overflows, and to permit of
             navigation thereof, or irrigation thereof, or
             in aid of such purposes.

             (2) The construction and maintenance of pools,
             lakes, reservoirs, dams, canals, and waterways
             for the purposes of irrigation, drainage or
             navigation, or in aid thereof.

             (3) The     construction,    maintenance and
             operation of macadamized, graveled or paved
             roads and turnpikes, or in aid thereof.

             (c) Notwithstanding     the    provisions    of
          Subsection (b) of this Section, bonds may be
          issued by any county in an amount not to exceed
          one-fourth of the assessed valuation of the real
          property in the county, for the construction,
          maintenance,   and   operation   of   macadamized,
          graveled, or paved roads and turnpikes, or in aid
          thereof, upon a vote of a majority of the resident
          property   taxpayers voting    thereon who     are
          qualified electors of the county, and without the
          necessity of further or amendatory legislation.
          The county may levy and collect taxes to pay the
          interest on the bonds as it becomes due and to
          provide a sinking fund for redemption of the
          bonds.

     Article III, section 52 clearly authorizes a county, pursuant to
statute, to issue bonds for the construction, operation and

                                p. 355
      .

          Mr. Robert C. Lanier - Page 3   (JM-84)

/--
          maintenance of turnpikes. In our opinion, that the county will charge
          a toll for the use of a turnpike pursuant to legislative authority is
          not in itself a constitutional impediment to the construction of the
          road. We must also determine, however, whether the use of combination
          tax and revenue bonds to finance the projects raises any
          constitutional objection.

               Article III, section 52 clearly contemplates the use of the
          proceeds of tax bonds to finance the building of turnpikes. The use
          of public funds is constitutionally permissible so long as the
          expenditure serves "the direct accomplishment of a legitimate
          public . . . purpose." Barrington v. Cokinos, 338 S.W.2d 133, 140
          (Tex. 1960); see Letter Advisory No. 9 (1973). We believe there can
          be no doubt that the construction of a county toll road can serve a
          legitimate public purpose. We conclude, therefore, that the use of
          bond proceeds to finance toll roads does not necessarily constitute an
          unconstitutional lending of credit under article III, section 52 of
          the Texas Constitution. -Cf. Tex. Const. art. III, 552-b.

               However, revenue bonds and tax bonds are not the same thing.
          When public bodies sell revenue bonds, they borrow against the future
          revenues they expect to receive rather than the future taxes they
          expect to collect. Texsan Service Co. v. City of Nixon, 158 S.W.2d 88
          (Tex. Civ. App. - San Antonio 1941, writ ref'd). Unlike tax bonds,
          revenue bonds are said not to create public debt in the constitutional
          sense because they do not legally obligate the tax base when they are
          to be paid solely from revenues.        Texas Turnpike Authority v.
          Shepperd, 279 S.W.2d 302 (Tex. 1955). Bonds not secured solely by
          revenues have a different effect.

               When bondholders are entitled not only to be paid from income
          generated by a facility, but also to insist that tax money, the
          proceeds from tax bonds, or other public property be used to generate
          that income, then the bonds are not payable "solely from revenues" in
          the sense in which courts have declared them to be not debt-producing.
          See City of Dayton v. Allred, 68 S.W.2d 172 (Tex. Comm'n App. 1934,
          jgmt   adopted). Where a governmental unit agrees to pledge both ad
          valorem taxes and the revenues of a facility to the payment of bonds
          issued to construct such facility and to maintain and operate the
          facility with tax monies for as long as it takes to retire such bonds
          out of revenues of the facilities and the ad valorem taxes pledged
          thereto, then the tax base has been additionally obligated to the
          extent of the bond amount to be retired. See City of Wichita Falls v.
          Kemp Public Library Board of Trustees, 593xW.2d    834 (Tex. Civ. App.
          - Fort Worth 1980, writ ref'd n.r.e.); Attorney General Opinion MW-337
          (1981).

               You advise that the voters of Harris County, pursuant to article
          6795b-1, V.T.C.S., recently authorized the issuance of bonds to
          construct and operate a toll road -- bonds not yet submitted to this
          office for approval. (Under section 2 of article 6745b-1 submission

                                          p. 356
Mr. Robert C. Lanier - Page 4      (~~-84)

of bonds is permissive). In such circumstances we cannot pass upon
the validity of the particular bonds, but assuming full compliance
with constitutional and statutory requirements respecting the issuance
of debt-creating securities for tax and "revenue" bonds wholly or
partially secured by guarantees impacting the tag base or other public
assets, we do not believe the use :by counties of proceeds from
combination tax and revenue bonds for the construction of toll roads
is violative of article III, section 52 of the Texas Constitution.

                                SUMMARY

            Assuming full compliance with constitutional
         and statutory requirements respecting the issuance
         of debt-creating securities for tax and "revenue"
         bonds wholly or partially secured by guarantees
         impacting the tax base or other public assets, the
         use by counties of proceeds from combination tax
         and revenue bonds for the construction of toll
         roads is not violative of article III, section 52
         of the Texas Constitution. izpti

                                          JIM     MATTOX
                                          Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney General

Prepared by Rick Gilpin
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
David Brooks
Colin Carl
Susan Garrison
Jim Moellinger
Nancy Sutton

                                    p. 357