                         The Attorney                General ,of Texas
                                            August    17,   1979
MARKWHITE
Attorney General


                     Honorable Tim Von Dohlen                   Opinion No.    MI+ 4 5
                     Chairman, Committee on Regions,
                       Compacts & Districts                     Re: Whether a city may dispose
                     House of Representatives                   of public land at fair market value
                     Austin, Texas                              under article 54211~~12,section 2(e),
                                                                V.T.C.S., to a private, nonprofit,
                                                                neighborhood-oriented    corporation
                                                                so that low cost housing may be
                                                                constructed    for resale     to ‘low
                                                                income citizens.

                     Dear Representative   Von Dohlen:

723Main.suae 610            You have, requested our opinion as to the circumstances under which a
Hannn.TX.no02        city may dispose of land pursuant to section 2(e) of article 5421~12, V.T.C.S.
713228.0701          Article 5421-12 establishes certain bidding and publication procedures with
                     which a political subdivision must comply before it may sell or exchange
so6emdway.suit*312   land, unless the transaction falls tqithin one .of the exceptions set forth in
Lumoch.
      TX.7wo1        section 2. Section 2(e) excepts:
WW-l.7~CO238
                                Illand owned by a political subdivision         which it
                                desires to have developed by contract           with an
                                independent foundation.

                            You state that a city wkhes to seU land at fair market value “to a
                     private, nonprofit, neighborhood-oriented    corporation  so that low cost
                     housing may be constructed thereon’through this corporation for resale, at
                     cosf, to low income citixens.n    No actual development of the land for a
                     particular purposes would be required by the contract of sale.      You ask
                     whether, in such circumstances., the sale is within the exception of section
                     2(e).

                            Neither article 5421c-12 nor any other Texas statute or judicial
                     decision defines the term “independent foundation.” A “foundation” in thii
                     context k

                                2b. an organization     or institution     established  by
                                endowment     . . . or otherwise established        with a
                                provision for future maintenance..     . .
    .




        Honorable Tim Von Dohlen       -   Page Two      (Ml+46)



        Webster’s New International     Dictionary (3d ed.), at 898. One court has said that a
        “foundation” is a “corporation with funds for contributing to the endowment of institutions
        as for educational or-charitable work.” In re National Foundation for Diarrheal Diseases,
        164 N.Y.S.2d 177. 178 (SUD. Ct. 1957). Althoueh it is not clearlv embraced within the
        traditional concept of “foundation,” we cannot Say as a matter of law that the legislature
        intended to exclude from the section 2(e) exception the kind of nonprofit corporation you
        have described. -See 26 U.S.C. 5509 (definition of “private foundation”).

               Section 2(e) Is operative, however, only in those instances ln which the political
        subdivision %ie&es to have [the landI developed by contract ,with an independent
        foundation.” An exception to the bidding statutes should be strictly construed. See ci_ty
        of Corpus Christi v. McClaugherty, 284 S.W.2d 927, 929 (Tex. Civ. App. - San%tonio
        1955, writ refkl); Town of Port Acres v. City of Port Arthur, 340 S.W.2d 325, 331 (Tex. Civ.
              - Beaumont 1960 writ ref’d n.r.e.1. See also Attorney General Opinion Ii-1188
                 In our opinion tI& terms of the exception require that, as part of the contract of
        sale, the foundation &ree to develop the land ln accordance with the city% specifications.
        We conclude therefore that, although a particular nonprofit corporation may qualify as a
        foundation under the section 2(e) exception to article 5421el2, the exception operates
        only so long as the foundation agrees, under the contract of sale, to develop the land as
        the city may determine.

                                                 SUMMARY

                   A particular nonprofit    corporation may qualify as a nfoundationn
                   under the section 2(e)   exception to article 5421&2, V.T.C.S., but
                   the exception operates   only if the foundation agrees, as part of the
                   contract of sale, to     develop the land according to the city’s
                   specifications.




                                                        MARK       WHITE
                                                        Attorney   General of Texas
        JOHN W. FAINTER, JR.
        First Assistant Attorney General

        TED L. HARTLEY
        Executive Assistant Attorney   General
.
        Prepared by Rick Gilpin
        Assistant Attorney General




                                                   P-     139
-/   :




         Honorable Tim Von Dohlen    -   Page Three        (m-46)



         APPROVED:
         OPINION COMMITTEE

         C. Robert Heath, Chairman
         Jim Allison
         David B. Brooks
         Walter Davis
         Susan Garrison
         Rick Giiin
         Willlam G Reid
         Bruce Youngblood




.




                                                      P.     140
