Untitled Texas Attorney General Opinion ( 1975 )


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  •                                   March    26,    1975
    The Honorable Hugh C. Yantis,        Jr.             Opinion No.   H-   567
    Executive Director
    Texas Water Quality Board                            Re: Ability of special districts
    P. 0. Box 13246                                      to use bond proceeds to purchase
    A us tin, Texas                                      a portion of the capacity in a re-
    gional waste disposal system.
    Dear Mr.    Yantis:
    In 1965 the&voters of the Inverness Forest Improvement        District
    approved a .-ballot proposition authorizing the issuance of construction
    bonds to finance the erection of a waterworks       and sanitary sewer system
    to be owned and operated by the District.        None of the bonds have yet
    been issued.     The Gulf Coast Waste Disposal Authority has proposed
    that the District participate   in a regional plant owned and operated by
    the Authority.    As proposed,    the plan calls for connection of the District’s
    sewage system to a regional sewage treatment plant to be constructed
    and operated by the Authority which would secure the necessary           permits
    from regulatory agencies.       The water district would pay the Authority
    a monthly charge based upon gallons of sewage treated and would also
    pay a lump sum for a guaranteed percentage         share of capacity in the
    plant.   This lump sum payment for capacity in the plant would be paid
    from money derived from the sale of the previously         authorized   bonds.
    The District would not own any specific part of the sewage treatment
    plant or have any specific interest in the facilities    themselves.     The
    *Bond Order issued by the District shortly after the election and pursuant
    to the authorization   of the electorate   contains certain stipulations and
    representations    concerning the methods and purposes of the bond
    authorization   and the retirement    of any bonds issued.
    You have explained that unless capital contributions from member
    governments to regional sewage systems in return for contractual  guarantees
    p.   2542
    ,
    The Honorable     Hugh C.   Yantis    page 2 (H-567)
    for a percentage   of the regional system can be financed by the sale of
    bonds, the purpose of Chapter 21 of the Texas Water Code (which
    encourages   regional systems)    cannot be accomplished, and you ask:
    May the money obtained from the sale of bonds
    containing the above covenants be used to purchase
    a contract for capacity in a regional sewage treat-
    ment plant owned and operated by the Gulf Coast
    Waste Disposal Authority?
    =It’is.-elementary-that the       proceeds of bonds voted by the people
    .must be expended~for~ the purposes for which they were~voted.                It is
    also elementary        that in instances where the law visits upon a govern-
    ing body the duty to exercise         its sound judgment and discretion,       courts
    have no right to interfere         so long as such body acts lawfully.       Barrington
    v. Cokinos,       
    338 S. W. 2d 133
     (Tex. Sup. 1960); Lewis v. City of Fort Worth,
    
    89 S. W. 2d 975
     (Tex. Sup., 1936); 47 Tex. Jur. 2d, Public Securities and
    Obligations,      section 31. But where, as here, the ballot proposal and
    Bond Order issued by the governing body particularly              describe the
    purposes for which the bond proceeds will be used, and among them is
    a provision that certain municipal facilities          will be purchased and
    constructed for the governmental            body involved,  the use of such proceeds
    to acquire contractual’ rights that do not result in the ownership or opera-
    tion of’the facilities     by the governmental      body is not authorized.     City of
    Beaumont v. Priddie,          
    65 S. W. 2d 434
     (Tex. Civ.’ App. --Austin       1933),
    judgment reversed and cause dismissed              for mootness,   
    95 S. W. 2d 1290
    (1936).
    Though the Priddie  case was ultimately adjudged a moot exercise,
    the opinion of the Court of Civil Appeals was later approved by the Supreme
    Court in State v. City of Austin,  
    331 S. W. 2d 737
     (Tex. Sup. 1960), and
    carefully distinguished  by the Supreme Court in Barrington,   when it held a
    much broader ballot proposal not to prohibit the arrangement    considered
    there.
    In our opinion, a contractual arrangement by the District with the
    Authority in. which the Authority would agree to build and operate a regional
    p.   2543
    The Honorable   Hugh C. Yantis          page 3     (H-567)
    sewage treatment plant and provide for a fee sewage treatment services
    of a guaranteed capacity to the District,  but in which the District would
    neither own nor operate any part of the facilities,  was not within the
    contemplation  of the electorate when it authorized the District to issue
    bonds
    . .   . for
    the purpose of purchasing and constructing
    a water and sanitary sewer system and a sewage
    disposal plant for the District,  and for the further
    purpose of purchasing and constructing     for the District
    a drainage system for the drain&e     of lands within the
    District.  . . . u Inverness  Forest Improvement     District,
    Bond Order.
    Nor do we believe     such a project    is within the scope      of the Bond Order     which
    states,
    The term ‘system!   as used in this order shall ~include
    and mean the waterworks    and sanitary sewer system
    owned and operated by the District,   and all extensions
    and replacements   thereof and improvements    thereto
    whensoever   made.
    The conclusion we have reached above makes it unnecessary        for
    us to decide whether the Inverness Forest Improvement      District could,
    in other circumstances,  legally finance its participation in a regional
    waste disposal system by the sale of public securities.
    SUMMARY
    Proceeds   from the sale of bonds authorized
    in 1965 by the electorate of the Inverness Forest
    Improvement    District may not be used to contract
    for sewage treatment services    from the Gulf Coast
    Waste Disposal Authority where the District would
    neither own nor operate the sewage system facilities.
    Attorney    General   of Texas
    p.   2544
    ,
    The Honorable   Hugh C. Yantis       page 4       (H-567)
    APPROVED:
    DAVID   M.   KENDALL,    First   Assistant
    C. ROBERT HEATH,        Chairtnan
    Opinion Committee
    p.   2545