Untitled Texas Attorney General Opinion ( 1963 )

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THEATTORNEY GENERAL
OF TEXAS
Honorable Edna Cisneros Opinion No. C-186
County and District Attorney
Willacy County Re: (I) Authority of Willacy
Raymondville, Texas County to contract with
a private firm to make a
feasibility study of and
to recommend a financing
plan for a proposed cause-
way: (2) liability of coun-
ty for payment of princi-
pal and interest on County
Dear Miss Cisneros: Causeway Revenue Bonds.
In your letter requesting an opinion of this office,
you state that Willacy County is exploring the feasibility of
building a causeway from Port Mansfield to Padre Island, the
cost of the causeway to be financed with a proposed revenue
bond issue. In connection with the financing problems, you
advise that the Commissioners' Court has entered into an
agreement with a firm specializing in municipal finance to
act as fiscal agents to explore the ways and means of finan-
cing the proposed causeway and to evolve, if feasible, a firm
plan of financing for the consideration of the Commissioners'
Court.
You have asked the following questions:
1. "Does a county have the statutory authority
to enter into an exclusive contract with a
bonding firm granting to them the right to
make a feasibility study and to recommend a
financing program for the construction of
a causeway to be financed by a revenue bond
issue?"
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Honorable Edna Cisceros, page 2 (C-186)
2. "Can the bond or financial structure of
a county be adversely affected in any
way if said county should consummate
an agreement with a private bonding
firm to make a feasibility study to
determine the feasibility of building
a causeway from the mainland of said
county to Padre Island to be financed
by County Revenue Bonds if such feasi-
bility is established and if the reve-
nue of such causeway would be insuffi-
cient to meet such bond requirements?"
3. "IS it legally possible for the county
to be obligated for defaulting interest
payments or principal payments in any
way if the causeway built upon a purely
revenue bond basis fails to sustain suf-
ficient traffic to pay the interest on
the indebtedness for four consecutive
years or any period?"
In answer to question number 1, supra, we find no
specific statutory authority for an agreement such as is
described in your request. However, Willacy County, by the
provisions of Article 679523, Vernon's Civil Statutes, is
authorized to construct, acquire, improve, operate, and
maintain a causeway from one point in the county to Padre
Island and to issue its revenue bonds payable solely from
the revenues to be derived from the operation thereof to pay
the cost of such construction, acquisition, or improvement.
We think it is manifest that in order to soundly exercise
this authority granted by the Legislature, the advice and
counsel of experts in the field of finance is necessary.
This is a highly technical field and one calling for advice
from persons highly trained in such matters. This being the
case, we think that authority to enter into such an agreement
as is outlined in your request is implied from the powers
that have been expressly granted to the Commissioners' Court.
Pritchard & Abbott v. Patrick H. McKenna, 162 Tex.617, 350
S.W.2d 333 (1961).
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.I --
Honorable Edna Cisneros, page 3 (C-186)
To answer questions 2 and 3, supra, let us assume
that county revenue bonds have been authorized, sold, and
the proceeds used to finance construction of the causeway,
and that the revenues derived, from the operation of the cause-
way are insuff2cient to meet the principal and interest re-
quirements of the bonds as such interest and principal become
due. Article 6795b. Vernon's Civil Statutes, specifically
provides in Section 1 that the bonds shall be ". . . payable
solely from the revenues . . .". Section 2 of said article
provides that "NO bonds authorized hereunder shall ever be a
debt of the county issuing them, but shall be solely a charge
upon the revenues of the project and shall never be reokoned
in determining the power of the county to issue any bonds for
any purpose authorized by law. Each such bond shall contain
this clause: 'The holder hereof shall never have the right to
demand payment of this obligation out of any funds raised or
to be raised by taxation.' . . .". Therefore, at this point,
it is clear that the financial structure of the county can
not be adversely affected and the county can not legally be
obligated for the defaulted payments insofar as tax moneys
are concerned. &Xwse v. Wils~a, 203 S.W.2d 791 (Tex.Civ.App.
1947). As to what effect sueh defaults would have on the
"credit rating" of the county, we can not say, as that is not
a legal question. At the present time, there is only one way
by which the county could become legally obligated to pay the
principal and interest on outstanding causeway revenue bonds
from tax funds. Article 795a, Vernon's Civil Statutes, au-
thorizes the issuance of county tax bonds for the purpose of
refunding such outstanding revenue bonds. Said article pro-
vides that the Commissioners' Court shall not authorize the
issuance of such refunding bonds unless authorized at an
election at which only the qualified voters who reside in the
county and who own taxable property therein and who have duly
rendered the same for taxation shall be allowed to vote, and
unless the majority of the votes cast thereat are in favor of
issuing the bonds. Article 795a further provides "That the
aggregate principal amount of bonds issued from time to time
pursuant to this Act and at any time outstanding, shall not
exceed a principal amount which will permit the interest on
and the principal of such bonds to be paid from a tax levied
within the eighty cent (800) limitation provided by Article
8, Section 9 of the Texas Constitution . . ."
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Honorable Edna Cisneros, page 4 (C- 186) "
SUMMARY
Willacy County has implied authority to
contract with a private firm to make a
feasibility study of and to recommend a
financing plan for a proposed causeway.
A county can not become obligated to pay
the principal of and interest on cause-
way revenue bonds from tax funds unless
refunding bonds are authorized as pro-
vided by Article 795a. Vernon's Civil
Statutes.
Very truly yours,
WAGGONER CARR
.~ .;ynY?&99+
APPROVED: Assistant
OPINION COMMITTEE
W. V. Geppert, Chairman
Howard W. Nays
Dudley McCalla
Malcolm Quick
APPROVED FOR THE ATTORNEY GENERAL
By: Stanton Stone
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