               E            ~RNEY          GENERAL
                          OF        EXAS




Mr. Joe D. Carter                      Opinion No. WW-618
Ex~ecutiveSecretary
Texas Water Development   Board        Re: Authority of Texas
Austin 1, Texas                            Water Development
                                           Board to loan money
                                           to the Lower Nueces
                                           River Water Supply
Dear Mr. Carter:                           District.

         You have requested an opinion of tbe Attorney General
relative the authority of the Texas Water Development Board to
loan $3,000,000.00 to the Lower Nueces River Water Supply Dis-
trict, hereinafter called "District".

         Presently the District is constructing the Seale Dam
and Reservoir on the Nueces River, some 36 miles Northwest of
Corpus Christi, for the purpose of supplying that city and the
surrounding area with water for municipal, industrial and irri-
gation use. The initial cost estimate on this project was
$15,500,000,00.

         The estimated cost to completion is now $21,219,173.03.
The difference represents increased construction cost occasioned
by delay and increased land costs due to the discovery of four
oil fields in the proposed reservoir basin.

         Your question follows:

         "In view of the fact that approximately
         $18,000,000 had been expended prior to the
         filing of the Notice of Intention without
         any participation by the Texas Water De-
         velopment Board in the financing thereof,
         can the Texas Water Development Board now
         lawfully lend all of the funds necessary
         to completion of the project so long as
                                          --.




Mr. Joe D. Carter, page 2 (WW-618)



        such sum does not exceed one-third of the
        overall total project cost or $S,OOO,OOO,
        whichever is the lesser?"

         We believe so, for you advise that the District seeks
the loan to acquire land in the reservoir basin, and that -

         "These reservoir lands are an integral part
         of the project and absolutely necessary for
         the storage of water and the consequent oper-
         ation of the entirc project. Without such
         lands, the project can not properly function
         and could not be considered complete."

         The District was created by Acts 1949, 51st Legisla-
ture, Ch. 159, p. 326 (Art. 8280-134) V.C.S., under and pur-
suant to the provisions of Section 59, Article XVI, Constitu-
tion of Texas. It has been judicially determined that the
District is a legally constituted political  subdivision with
the power to acquire lands for dam and reservoir purposes by
condemnation or otherwise. Lower Wueces River Supply District
v. Cartwright, 274 S.W.Zd 199 (Civ.App. 1954 ref. n.r.e.).

         Section 49-c, of Article III, Constitution of Texas,
created the Texas Water Development Board and sets up the Texas
Water Development Fund and declares that the Fund shall be used
for furtherance of the conservation and development of the
State's water resources by, among others,

         "the acquisition &g- reservoirs and other
         storage projects . . .n

and directs that -

         *Such fund shall be used only for the pur-
         pose of aiding or making funds available
         upon such terms and conditions as the Leg-
         islature may prescribe, to the various
         political subdivisions or bodies politic
         and corporate . . .*
Mr. Joe D. Carter, page 3 (WW-618)




         In Article 8280-9, V.C.S., the Legislature has pre-
scribed the terms and conditions for access to the Fund. Sec-
tion 11 thereof reads, in part:
         11
              . the Texas Water Development Fund
                  .   .


        shall be used by the Board hereof for the
        purpose of providing financial assistance
        and aid to the various political subdivi-
        sions . . D in the conservation and de-
        velopment of the water resources of the
        State of Texas by the construction, ac-
        quisition or improvement of projects, as
        defined in Section 2 hereof."

         Section 2, sub-section (f):

        " "Project' means any engineering under-
        taking or work for the purpose of tbe con-
        servation and development of the surface
        water resources of the State of Texas,
        including the control, storing and preser-
        vation of its storm and flood waters and
        the waters of its rivers and streams for
        all useful and lawful purposes by the ac-
        quisition, improvement, extension or con-
        struction of dams, reservoirs and other
        water storage projects . . On

         It is apparent that the Seale Dam and Reservoir is a
project within the legislative definition, and, further, that
the acquisition of reservoir lands is a basic, fundamental
and inseparable part of tbat certain undertaking, and, conse-
quently, could not be deemed a separate work containing within
itself all the necessary elements of a water conservation pro-
ject.

         The constitutional and statutory provisions do not
expressly specify that in order to qualify thereunder for
financial assistance a project must either be or not be in a
particular state of initiation, progression or completion, nor
is any implied therein applicable to this fact situation.
Hr. Joe D. Carter, page 4 (WW-618)



         Section 15 of Article 8280-9, V.C.S., imposes a
restriction upon the Board and the Fund:

        "The Board shall never.purchase bonds or
        other securities of a political subdivi-
        sion in excess of one-third (l/3) of the
        total costs of a project for which assis-
        tance from the Fund is sought nor in ex-
        cess of Five Million Dollars ($5,000,000),
        whichever is the lesser for any one (1)
        project."

         Consequently, you are advised that it is the opinion
of the Attorney General that the Texas Water Development Board
may lend all the funds necessary to the completion of the Seale
Dam and Reservoir by the acquisition of reservoir lands pro-
vided the total of such aid does not exceed the limits announced
in Section 15 of Article 8280-9, V.C.S., and the Board and the
District comply with all other conditions precedent to the grant
and the receipt of such financial assistance.


                             SDMMARY

        The Texas Water Development Board may lend
        all the funds necessary to the completion of
        the Seale Dam and Reservoir by the acquisi-
        tion of reservoir lands provided the total
        of such aid does not exceed the limits an-
        nounced in Section 15 of Article 8280-9,
        V.C.S., and the Board and the District com-
        ply with all other conditions precedent to
        the grant and the receipt of such financial
        assistance.


                                 Very truly yours,

                                 WILL WILSON           /




         GW-S                          Ass s ant
                                         fl
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Mr. Joe D. Carter, page 5 (WW-618)




APPROVBD:

OPINION COMMITTEE
Geo. P. Blackburn, Chairman


Kenneth H. Burns
Ralph Rash
Jot Hodges, Jr.
John Reeves

REVImD   F'ORTHEATTORNJSY GENERAL
By:  W. V. Geppert
