Court Opinion

ID: 4131140
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:12:25.516536+00
Date Added: 2024-06-11T14:33:21.923995
License: Public Domain

The Attorney General of Texas
                                                                  June 13, 1985
JIM MATTOX
Attorney General

supreme        Court     Suildlng          Honorable Gary Thonpson                        Opinion No.    JM-327
P. 0. BOX 12546                            chairman
Austin,    TX. 7671% 2546                  County Affairs Coamittee                       Re: Whether a commissioners
5121475.2501                               Texas House of Representatives                 court   may expend funds for
Telex    9101874-1367
                                           P. 0. Box 2910                                 operation and maintenance of a
Telecopier     512/475-0266
                                           Austin, Texas   78769                          county hospital   under article
                                                                                          4437e-2, V.T.C.S.
714 Jackson.    Suite 700
Dallas,   TX. 75202.4506                   Dear Representative      Thompson:
2141742-6944

                                                 You ask whether section      4 of article   4437e-2.    V.T.C.S.,   which
4624 Alberta           Ave.. SUite   160   also is cited as the Rospital Project Financing Act, precludes the use
EI Paso, TX.           799052793           of county funds by .a commissioners court either to pay the principal
915l533-3464                               of or interest    on bonds issued under article   4437e-2 or to support the
                                           operation and maintenance of a general care hospital         constructed with
1001 TWBS. Suite 700
                                           the proceeds from the sale of bonds issued pursuant to the authority
Houston,  TX. 77002-3111                   of article    4437e-2.    It is our opinion that, when a hospital       project
713/223-5666                               is financed by bonds issued under article       4437e-2,   the issuer of the
                                           bonds may use only revenue derived from the operation of the hospital
                                           project,   the proceeds of the bonds themselves, or revenues provided by
806 Broadway,            Suite 312
                                           a nonprofit    corporation   to pay the principal   of or interest      on such
Lubbock,  TX.           79401.3479
 606/747-5236
                                           bonds or to pay any cost of operation of the hospital project.

                                                  The language of the Hospital Project Financing Act and the bill
 430Q N. Tenth, Suiie B                    analysis prepared during its enactment indicates           that a major purpose
 McAllen, TX. 76501-1665
 5121682-4547
                                           of the act is the provision    of less costly financing to aid nonprofit
                                           hospital   corporaticns  in the construction      or improvement of hospital
                                           facilities    and thereby   the promotion     of the health,        safety,    and
 200 Main Plaza. Suite 400                 general welfare of .ehe people.       See V.T.C.S.     art. 4437e-2.     52; Bill
 San Antonio,  TX. 76205-2797
                                           Analysis   to Senate Bill No. 243,xts         1975, 64th Leg., prepared by
 512/225-4191
                                           Rouse Committee on ‘Intergovernmental      Affairs,     filed   in Bill File to
                                           Senate Bill      No. 243, Legislative     Reference      Library.    Within the
 An Equal        OpportunitYi              meaning of that act, an issuer is a city,        county, hospital      authority,
 Affirmative       Actlon       EmplOYer   or hospital    district, and a hospital   project    includes any combination
                                           of one or more of th,e following:

                                                           (1)   ar$ land, buildings,  equipment, machinery,
                                                       furniture,   facilities,  and improvements;

                                                          (2)     ally structure    suitable     for    use as a
                                                      hospital,      ‘clinic, health facility,      extended care

                                                                       p. 1494
Souorable   Gary Thompson - Page 2        (JM-327)

            facility,  out-patient    facility,      rehabilitation   or
            recreation  facility,   pharmacy, medical laboratory,
            dental laboratory,    pL.ysiciaus'    office   building,  or
            laundry or admioistmtive           facility     or building
            related to a health f'acility       or system;

                (3)  any structure suitable for use as a multi-
            unit housing facility       for medical staff,   nurses,
            interns,  other employees of a health facility         or
            system, patients    of a health facility,      or rela-
            tives of patients      aiindtted for treatment or care
            in a health facility;,

                 (4)  any structure       suitable     for   use as a
            support facility      reL.sted to a hospital        project
            such as an office          building,      parking   lot    or
            building,    or maintenance,         safety,    or utility
            facility,   and related equipment;

                (5)  any StNCtUCe suitable         for use as a
            medical or dental research     facility,   medical or
            dental training  fac:t:Lity, or any other facility
            used in the education or training of health care
            personnel;

                (6)  any propert:?     or material   used in the
            landscaping,     equippj.ng,  or   furnishing   of   a
            hospital  project and other similar items necessary
            or convenient     for the operation    of a hospital
            project;  and

                (7)  any other sxucture,        facility,   or equip-
            ment related to, or essential       to, the operation of
            any health     facility      or system except     that a
            hospital   project     shall   not include    any nursing
            home licensed as such, or which would be required
            to be licensed as suc~h, under the authority of the
            State of Texas. . . .

See V.T.C.S.  art. 4437e-2, 93. Hence, a county may be an issuer,     and
the land, buildings,    equipment, furnishings,     and landscaping of a
general acute care hospital   are a hospital project.

     Section   4 of article    4437e-2,   provides   that

                [blonds or notes :.ssued in accordance with the
            provisions     of this Act shall      not be deemed to
            constitute     general   obligations   of the State of
            Texas,     the   issuer,     or    any other  political

                                      p. 1495
Ronorable   Gary Thompson - Pa$r 3            (~~-327)

            subdivision     or agency of this state or a pledge of
            the faith and credit of any of them but such bonds
            or notes shall be Eayable solely from revenues of
            the hospital        project     for which they are issued
            and/or from such ocher revenues as may be provided-
            by a nonprofit       coreoration.        No money of the State
            of Texas or any political            subdivision      or agency of
            this state,       whether raised from taxation                 or any-
            other source, exc,$t           for revenue of the hospital
            project    being finr.nced with the bonds, shall ever
            be used to pay -the               principal      of,     redemption
            premium, if any, or      - interest       on any revenue bonds
            or notes or refunding bonds or notes issued under
            this Act.       All su?h revenue bonds or notes shall
            contain     on the face thereof             statements        to the
            effect    (a) that neither the State of Texas, the
            issuer, nor any political            subdivision      or agency of
            the State of Texas shall be obligated                   to pay the
            same or the intt?rest              thereon     except      from the
            revenues pledged t.h.ereto and (b) that neither the
            faith,    credit,     no!: the taxing power of the State
            of Texas, the issuer,          or any political        subdivision
            or agency thereof is pledged to the payment of the
            principal      of,     redemption       premium, if         any, or
            interest     on such bonds or notes.            The issuer shall
            not be authorized          to incur financial          obligations
            under this Act o%.ich cannot be paid from the
            proceeds of the bonds or notes, revenues derived
            from operating         a &ospital      project,      or any other
            revenues      as may-be          provided       by a nonprofit
            corporation,       in atz.ordance with the provisions              of
            this Act.      In no tgrent shall any appropriation                be
            made by the Legi&.ture             of Texas or any issuer to
            pay all or any part of any cost of a hospital
            project     or any oz?rating
                                     -             cost of such hospital
            project    in accordzace with the provisions                 of this
            Act.    The issuer &all be paid, out of money from
            the proceeds         of the sale and delivery                 of its
            revenue bonds or notes issued in accordance with
             the provisions        of this Act, an amount of money
            equal     to    all     of    the     issuer's       out-of-pocket
            expenses and costs in connection with the issu-
            ance, sale, and delivery             of such bonds or notes,
            including,       without      limitation,        all     financing,
             legal,    printing,       and other       expenses and costs
             incurred in issuing; such bonds or notes, plus an
            amount of money equal to the compensation paid any
            of such issuer's            employees for         the time such
            employees      spent on activities              related       to the

                                         p. 1496
honorable   Gary Thompson - Pago 4        (JM-327)

            issuance,   sale,   and delivery  of such bonds or
            notes.    All   such costs   and expenses   shall be
            deemed to be a 'cwt'       of a hospital  project as
            defined in Section     3(c) of this Act.    (Emphasis
            added).

       Your first   question     asks whether county funds may be used to
retire    an existing     indebtedwss    created for the construction      of a
hospital    under article    4437e--2.  The language of section 4 expressly
provides that no money of the county , whether raised from taxation or
any other source,      except for revenue of the hospital       project   being
financed with the bonds, may ever be used to pay the principal               of,
redemption premium, if any, cr interest         on any revenue bonds or notes
or refunding      bonds or note3       issued   under the Hospital      Project
Financing Act.

      Your second question asc:a whether section  4 of article  4437e-2
precludes   the use of county funds to support the operation         and
maintenance of a hospital  cor.atructed with the proceeds from the sale
of revenue bonds issued pursuant to the authority       of the Hospital
Project Financing Act.

      The commissioners courts, have only the powers that are conferred
on them by the constitution            and statutes,     either   expressly     or by
necessary implication.       See
                             -     l:anales
                                  .-          v.  Laughlin,   214 S.W.2d 451,   453
(Tex. 1948); Childress      County v. State,        92 S.W.2d 1011, 1016 (Tex.
1936).    Article   4478, V.T.C.S.,      confers on a commissioners court of
any county the power to establish         and maintain a hospital.        The powers
granted a commissioners court by article              4478 include,     among other
things,    (1) the power to issw county bonds approved by the voters to
provide funds for establishing,         enlarging,   or equipping a hospital       and
(2)   the power to assess,       levy,    and collect     the tares on real and
personal property     in the county that the commissioners              court deems
necessary to provide the funds for maintenance and for all necessary
expenditures     of a county hospital        established     and maintained under
that statute.       The power granted a commissioners               court    for   the
operation     and maintenance       3.E a hospital      under that act is not
applicable    to the operation and maintenance of a hospital           financed and
constructed under article      4437e-2.

       Section 4 of the Hospiial Project   Financing Act expressly       pro-
vides that the issuer is not authorized to incur financial      obligations
under that act that cannot be paid from the proceeds of the bonds or
notes,    revenues derived  from operating     the hospital    project,     or
revenues provided by a nonprofit  corporation.     That provision    has the
affect   of excluding the use of county funds that are derived from a
source other than those name< sources.

                                      p. 1497
r   .

        Honorable Gary Thompson - Page 5           (JM-327)

              Senate Bill No. 243 of the Sixty-fourth          Legislature   was amended
        in the Senate to delete         a provision    in section    6 which originally
        prohibited    an issuer under that act from managing or operating               a
        hospital   project   except as the lessor,       vendor, or mortgagee of the
        hospital   project.    See Senate Amendment No. 2(4).         Subsequent to that
        amendment, the Housemendei.         Senate  Bill No. 243 to add to section 4
        the prohibition     which provides that in no event may any appropriation
        made by the legislature       or an issuer pay any part of any operating
        cost of a hospital      project.     See House Amendment No. 4.        Hence, we
        conclude that the legislature        Gcted     the Hospital Project Financing
        Act intending section 4 of the act to preclude the use of county funds
        to support the operation        and maintenance of a hospital       project  con-
        structed   or acquired under the provisions          of that act, unless the
        funds are generated from the? issuance and sale of bonds or from the
        operation    of the hospital       .project  or as revenues provided        by a
        nonprofit corporation.

                                           SUMMARY

                       The Hospital      I'roject     Financing    Act, article
                   4437e-2. V.T.C.S.,        precludes    the issuer of bonds
                   under that act from using county funds to pay the
                   principal     of or krterest         on such bonds or to
                   support    the     operation      and maintenance      of    a
                   hospital    project     constructed      with the proceeds
                   from the sale of such bonds, unless the funds are
                   revenues     derived     from    the sale      of the bonds
                   themselves or from the operation             of the hospital
                   project    or revenues         provided    by a nonprofit
                   corporation.

                                                     L-J-/a
                                                        Very truly

                                                        JIM
                                                                .
                                                                     yours

                                                                MATTOX
                                                        Attorney General of Texas

        TOMGREEN
        First Assistant     Attorney   General

        DAVIDR. RICHARDS
        Executive Assistant Attorney       General

        ROBERTGRAY
        Special Assistant     Attorney   Goneral

                                             p. 1498
Honorable Gary Thompson - Page 6     (JM-327)

RICK GILPIN
Chairman, Opinion Committee

Prepared by Nancy Sutton
Assistant Attorney General

APPROVED:
OPINIONCONMITTIZE

Rick Gilpin, Chairman
Colin Carl
Susan Garrison
Tony Guillory
Jim Moellinger
Jennifer Riggs
Nancy Sutton

                                   p. 1499