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