Untitled Texas Attorney General Opinion ( 1987 )

THE A~TO~P~EY GENE&AL
OF TEXAS
May 14, 1987
Honorable Kent A. Caperton Opinion No. m-697
Chairman
Jurisprudence Committee Re: Whether a county may enter
Texas State .Senate into a lease-purchase agreement
P. 0. Box 12068 for the purpose of constructing
Austin, Texas 78711 or purchasing a county jail
Dear Senator Caperton:
You ask whether Texas counties may enter into lease-purchase
agreements to purchase or build county jail's. You also ask whether
special legislative .authorization is necessary to vest this power in
county government.
A county-has authority to purchase a jail from current revenues
of the year, if relevant statutory requirements are followed. See
Dancy V. Davidson, 183 S.W.2d 195 (Tex. Civ. App. - San Autonio 1944,
writ sef'd). A lease-purchase agreement enables the purchaser to
spread the purchase price over a number of years. while receiving
immediate use of the property being purchased. A typical lease-
purchase contract might require the county to make stated payments
over a term of years and then transfer ownership of the property to
the county upon payment in full or upon payment of an additional
stated sum. See. e.g., Sumetlfn V. Fowlor, 229 S.W.2d 75 (Tex. Civ.
APP. - Amarillo 1950, 110writ); Attorney General Opinion Nos. O-1680,
O-1627 (1940') (describing lease-purchase contra&). Thus, your
question involves the authority of a county commissioners court to
comic revenues of future years to the acquisition of a jail, thereby
preventing future courts from allocating those funds to other county
purposes. See generally Gulf Bitulithic Co. V. Nueces County, 11
S.U.2d 305, judgmt adopted (Tex. Conm'n App. 1928).
A commissioners court has only those powers that the constitution
and statutes have specificallv co;ferred won it. but the court has
broad discretion inmexercising expressly 'giantedpowers. Canales v.
Laughlin. 214 S.W.2d 451 (Tex. 1948); Anderson v. Wood, 152 S.W.2d
1084 (Tex. 1941).
Counties have the .exptess power and duty to provide jails.
Article XI, section 2. of the Texas Constitution states that "[tlhe
construction of jails . . . shall be provided for by general laws."
Cf. Tax. Const. art. III. $56 (prohibition against local and special
laws). Article 2351, V.T.C.S., states that:
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Honorable Kent A. Caperton - Page 2 UN-697)-
Each commissioners court shall:
. . . .
7. Provide and keep in repair court houses,
jails and all necessary public buildings.
V.T.C.S. art. 2351, 57; see also V.T.C.S. arts. 1603 (county
commissioners court shall provide a jail); 2370b (commissioners court
may purchase, construct, or otherwise acquire new jail building); 5115
(cornmissionerscourt shall provide safe and suitable jails). Article
VIII. section 9, of the Texas Constitution fixes a limit on county
taxes for various purposes, including roads, bridges, and ocher
permanent improvements.
We have found no statute which expressly authorizes the comuis-
sioners court to acquire a jail under a lease-purchase contract. It
has been suggested that article 2368a.2. V.T.C.S., the Public Property
Finance Act, authorizes this methbd of acquiring a jail. Rowever,
article 2368a.2, V.T.C.S.. applies to personal property and not real
property. V.T.C.S. art. 2368a.2, 53(11) (definition of "property").
Moreover, the Act also states:
Notwithstanding any contrary provision, this
Act does not apply to a contract solely for the
construction of improvements to real property.
V.T.C.S. art. 23688.2. 59.
Counties have express authority to finance the acquisition of a
jail by issuing bonds. & V.T.C.S. arts. 718; 23720; see also
Lasater V. Lopez. 217 S.W. 373 (Tex. 1919) (county may issue bonds
only if it has express legislative authority). Cf. Attorney General
Opinion a-642 (1987) (authority of a joint city-county hospital is
inapplicable because that opinion relied on the power of the home rule
city in question to' borrow funds). Article 2368a.l. V.T.C.S.,
authorizes counties to issue certificates of obligation to pay for the
construction of public works, including jails. V.T.C.S. art. 2368a.l.
SS3, 7A.
Counties also have implied power to issue interest bearing
warrants payable over a period of years to finance jails, courthouses,
roads, and other public improvements. Adams v. McGill, 146 S.W.2d 332
(Tax. Civ. App. - El Paso 1940, writ raf’d); see Lasater v. Lopez.
217 S.W. 373 (Tax. 1919); Stratton V. Comissio~'s Court of Kinney
137 S.W. 1170 (Tex. Civ. App. - San Antonio 1911. writ
$y$' . The power to issue warrants has been implied from the
statutory authority to make such improvements. Adam v. McGill,
supra. In Lasater V. Lopez. supra, the Texas Supreme Court discussed
the reasons for implying the power to issue warrants in payment of
public works.
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Honorable Kent A. Caperton - Page 3 (JM-697)
.
In Lasater. the supreme court considered whether a county had
authority to pay for road construction by issuing interest bearing
warrants maturing over 16 l/2 years without an election. The Act of
April 28, 1903, authorized the commissioners court to issue bonds for
public road consrruction upon prior authorization by vote of property
tax paying residents. Acts 1903, 28th Leg., 1st C.S., ch. II, at 9
(now codified as V.T.C.S. art. 718). A taxpayer argued that the
commissioners court was attempting to issue bonds without holding the
elecrion required by statute.
The supreme court rejected the argument. It pointed out that
bonds were negotiable 'instrumentsand therefore differed significanrly
from warrants, which could sot be negotiated. It also noted that a
county had express statutory authority to build roads and other
permanent improvements, and to levy a tax to pay for those projects.
V.T.C.S. arts. 2351, $3; 2352 (formerly codified as T.ex. Rev. Civ.
Stat. arts. 2241 and 2242 (1911)). The court held that counties had
implied authority to issue warrants in payment for public works as a
necessary means of implementing the express statutory authority to
build them and tax for that purpose. The authority to pay for roads
by issuing warrants p.redated the 1903 act and was not ImpLiedly
repealed by that act. The court stated as follows:
[T]he use of bonds for the construction of county
public improvements was unknowo in the laws of the
State under the present Constitution until 1881.
and in respect to county roads was not authorized
until 1903. At the time of the passage of the Act
of April 28, 1903. granting authority for their
use for county road purposes, Commissioner's
Courts bad the &doubted power, within the limits
of lawful taxation and by observance of the
constitutional requirement relative to the
creation of county indebtedness, to provide for
the building of such roads by the issuance of
interest bearing county warrants. They had
possessed it since the original Act of 1876
providing for their organization. This authority,
where it was necessary for the county to use its
credit for the purpose, was but a part of the
power reposed in those courts to lay out and
establish the roads, and proceeded, as well, from
their duty to establish them by:constructing them
as durably as poSsible within the county's
resources or limits of taxation. It was a means
for executing the general power expressly granted.
a lawful means because appropriate to that end.
(Emphasis added).
217 S.W. at 376.
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Honorable Kent A. Caperton - Page 4 (JM-697)
.
Thus, in Lasater v. Lopez, the supreme court found that counties
had implied authdrity to use their credit to finance public works.
There was a compelling case in favor of such implied authority because
the county would otherwise have no means of allocating the cost of
essential public works beyond the current budget year. Prior to 1903,
the commissioners courts
were empowered to establish the roads . . . they
could create a lawful interest bearing debt for
the purpose; they had no power to issue negotiable
securities in the name of the county; therefore,
thiy were remitted to the issuance of instruments
such as warrants, of nonnegotiable character, as
proper evidence of the debt.
217 S.W. at 376. The supreme court also characterized the county's
power to issue warrants as "an important public power of long
existence and continued legislative sanction. . . ." Id. In summary.
it was not merely useful, but essential for countiesto have this
implied power, and there was strong evidence that the legislature
intended counties to have it. The court's dicta, however, indicated
that the county's implied power to contract on its credit was not
limited io the issuance of warrants.
In San Antonio River Authority v. Sheppard. 299 S.W.2d 920 (Tex.
1957) the supreme court again discussed a county's implied authority
to contract OKI its general credit, this time for flood control.
Article VIII, section l-a, of the Texas Constitution authorizes the
counties to levy ad valorem taxes for flood control. Article 7048a.
V.T.C.S., now section 4.103 of article 6702-1, V.T.C.S., was enacted
in 1949 as an &abling act under article VIII, section l-a, of the
constitution. Section 7 of the act stated that before the coastitu-
tionally authorized tax could be levied, it must be "submitted to a
vote of the qualified property taxpaying voters of such county." See
V.T.C.S. art. 6702-l. 54.103(h). The maximum rate of the tax G
subject to approval by the voters, and the tax rate could be changed
by future elections. except that it could not be reduced to aa extent
that would impair any bonds or warrants issued by the commissioners
court. 299 S.W.Zd at 922 (discussing sections 7 and 10 of former
article 7048a. V.T.C.S.). Bexar County approved a tax of 15~ on each
$100 valuation. The commissioners court of Bexar County contracted
with the San Antonio River Authority to carry out flood control work
OII the San Antonio River in Bexar County. As consideration. the
county agreed to pay over to the river authority the proceeds of its
fifteen cent flood control tax for the next 30 years. The river
authority sought to issue bonds secured by the Bexar County tax but
the Attorney General declined to approve them. 299 S.W.2d at 923.
The Attorney General argued that Bexar County's contract with the
river authority attempted to deprive the voters of their statutory
right to change the amount of the tax by future elections. Only bonds
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Honorable Kent A.-Caperton - Page 5 (JM-697)
and warrants issued by the county were expressly protected from
impairment caused by reducing the tax. 299 S.W.Zd at 924.
The court determined that the county had implied authority to
incur the future obligations embodied in the contract. 299 S.W.2d at
925. It construed the express authority to issue bonds and warrants
as "an additional power and not the exclusive method of creating an
obligation." citing Lasater v. Lopez for this construction. 299
S.W.2d at 925. The opinion in San Antonio River Authority v. Sheppard
quotes the following language from Lasater v. Lopez:
[I]n the absence of express declaration the Legis-
lature is uot to be credited with the purpose of
forcing a bond issue upon the people of a county
every time it is necessary for the county to
create an interest bearing debt of deferred
maturity, however small.,for road improvement.
299 S.W.2d at.925, quoting Lasater v. Lopes, 217 S.W. 373. 377 (Tex.
1919). The court in San Antonio River Authority v. Shepperd also
stated as follows:
Prom the powers thus expressly given to engage
in flood control programs and to expend mosey
therefor, the law Implies the power to use the
general credit of the county to accomplish the
desired end. . . .
299 S.W.Zd at 925. It distinguished between borrowing money and
obtaining property or labor ou credit, in that borrowed money could be
diverted from its legitimate purpose, but there was no such danger
where authorized services or improvemeats were obtained on credit.
Id. (citing Adams v. McGill, 146 S.W.2d at 332). The court concluded
that the commissioners court could contract ou the general credit of
the county to carry out flood control, and that such contract might
legally involve the county's credit for a number of years. Since the
commissioners court had legal authority to make the contract at the
time of the tax election, the voters’ right to change the rate could
be limited by the contract.
The court in San Antonio River Authority v. Shepperd did uot
base the couuty's implied authority to obligate its tax revenues on
necessity or on St&g evidence -of legislative approval of this
authority. It refers to au implied power to use the general credit of
the county to carry out its express power to engage in flood control
programs. See also State v. Texas Municipal Power Agency. 565 S.W.2d
258 (Tex. Civ. App. - Houston [lst Dist.] 1978, uo writ). Nonethe-
less, we believe it is siguificaut that San Antonio River Authority v.
Shepperd, like Lasater v. Lopes, involved a constitutional authority
to tax for a particular kind of public improvement. We need not
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Honorable Kent A. Caperton - Page 6 (JM-697)
detenaiue the scope of the county's authority to use its credit co
carry out authorized functions.
Based on Lasater v. Lopez and San Antonio River Authority v.
Shepperd, we believe that the county has implied authority to use its
credit to finance the'purchase or construction of a jail, a public
work which the constitution regards as essential. See Tex. Const.
art. XI, 52; see also Tex. Const. art. VIII, 99. Thexgislacure has
moreover enacted statutory requirements for the condition of jails,
and has established the Coamissioa on Jail Standards with authority to
promulgate and enforce minimum standards for the construction and
maintenance of county jails. V.T.C.S. arts. 5115; 5115.1. 59.
Counties have also been sued in federal court to compel them to
operate jails in accord with constitutional requirements. See, e.g.,
Vest v. Lubbock County Comeissioaers Court, 444 F. Supp. 824 (N. D.
Tax. 1977). Given the totality of circumstances. we believe a Texas
court would hold that a, county has implied authority to finance jail
acquisition or coastruccion by methods in addition to chose expressly
authorized by statute and sanctioned by supreme court opinion. In
particular, we believe a coUuty has implied authority to enter into a
lease-purchase contract co build or acquire a jail, aesuming
compliance with all applicable coastitutional and statutory
provisions. :
In concluding that a county has implied authority to acquire a
jail through a lease-purchase contract erteuding beyond the preseat
budget year, we do not approve or coammnt ou the term of any
particular proposed contract. The review of contracts is not an
appropriate function for the opinion process. Nor will we set out the
provisioas that such a contract must or may include. The adoption of
detailed guidelines and limitations ou a county's power to acquire a
jail by lease-purchase contract is a matterfor the legislature, if it
wishes to act. See V.T.C.S. art. 2368a.2. We are merely expressing
the opinioa thatacounty could enter into a lease-purchase contract
for a county jail that would pass muster with the Texas courts,
assmaiug compliance with all relevant constitutional and statutory
provisions. See, e.g.. Tax. Consc. art. III, 552; Attorney General
Opinion Nos. JM-274. JM-220 (1984) (county funds and county credit may
be used only to accomplish authorized county purpose): Tax. Const.
art. XI, 57 (if county creates debt, it must establish a sinking
fund).
As previously noted, the legislature has enacted article 2368a.2.
V.T.C.S., which expressly authorizes counties to acquire personal
property by lease-purchase. We do not believe the enactment of this
statute negates a county’s implied authority to acquire a jail by
lease-purchase contract. Article 2360a.2. V.T.C.S., authorizes various
political subdivisions, not only counties, to lease or lease-purchase
personal property. It establishes a procedure whereby the validity of
a contract may become "incontestable for any cause," and provides
that contracts entered into pursuant to the statute are legal and
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Eouorable Kent A. Caperton - Page 7 (JM-697)
authorized investments for certain enumerated financial institutions
and sinking funds of governmental bodies. See V.T.C.S. art. 2368a.2.
516. 7. The legislature may have excludedreal property and the
improvement of real property from article 2368a.2 because it did not
want all of these provisions to apply to contracts for the acquisition
or improvement of real property. It may uot haye wished to accord all
political subdivisions the power to lease-purchase real property.
Article 2368a.2, V.T.C.S., is broad in scope, and the fact chat it is
inapplicable to contracts for real property does not negate a county's
implied authority to purchase or construct a jail on a lease-purchase
contract. See Dancy V. Davidson. 183 S.W.2d 195. 200 (Tax. Civ.
APP. - San ~onio 1944. writ ref'd) (legislature did not intend to
restrict the grant of power under article 2351, section 7, by the
subsequently enacted article 1605a. which then authorized a county
with a city other than the county seat with a population of 20,000 to
provide au office building in a city other than the county seat).
SUMMARY
A Texas county has implied authority to build
or purchase a. jail by lease-purchase contract.
All applicable constitutional and statutory pro-
visions must be complied with. The review .of
contracts is uot au appropriate function for the
opinion process.
Attorney General of Texas
JACRHIGETOWER
First Assistant Attorney General
MARY KELLER
Executive Assistant Attorney General
JDDGE ZOLLIE STEARLRT
Special Assistant Attorney General
RICR GILPIN
Ch&mau, Opiuion Committee
Prepared by Susan L. Garrisou
Assistant Attorney General
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