                               ATTORNEY GENERAL                    OF   TEXAS
                                            GREG       ABBOTT




                                                May 12,2003



The Honorable Michael J. Guarino                             Opinion No. GA-0070
Criminal District Attorney
Galveston County                                             Re: Whether, under chapter 271 of the Texas
722 Moody, Suite 300                                         Local Government Code, Galveston County
Galveston, Texas 775 5 0                                     may use design-build contracts and lease-
                                                             purchase agreements to construct thermal
                                                             energy plants for building complexes
                                                             (RQ-0630-JC)

Dear Mr. Guarino:

        Your questions stem from Galveston County’s plans to construct two thermal energy plants.
You ask whether, under chapter 271 of the Local Government Code, Galveston County (the
“County”) may use design-build     contracts and lease-purchase     agreements to pursue these
construction projects.

         You state that one of the proposed plants would chill and heat water for the current
courthouse and jail complex, requiring the renovation of the existing buildings’ heating and air
conditioning systems.    The other proposed plant would serve the new Justice Administration
Building and Jail Complex, still in the planning stages. The County “owns fee simple title to the
land” where each thermal plant will be built.’

I.      DesiEn-Build     Contracts

         You first ask whether, under the statutes, the County may opt for the design-build method
of construction, whereby the County would employ a single firm to design and build the plants.
Traditional construction methods, by contrast, call for separate contracts for design and construction.
See generally Tex. Att’y Gen. Op. No. JM-1189 (1990) (distinguishing design-build contracts from
the traditional arrangement).   Following the traditional method, a county engages an architect or
engineer to design the project and, in a separate agreement, retains a contractor to construct it. Id.
at 2. Design and construction contracts are each awarded according to its own applicable criteria.
A county must select a design professional based on competence and qualifications, and must not



       ‘Letter from Honorable Michael J. Guarino, Criminal District Attorney, Galveston County, to Honorable John
Comyn, Texas Attorney General at 1 (Nov. 15, 2002) (on file with Opinion Committee) [hereinafter Request Letter].
The Honorable Michael J. Guarino       - Page 2          (GA-0070)




use competitive bidding. See TEX. GOV’T CODE ANN. 8 2254.003 (Vernon             2000); Tex. Att’y Gen.
Op. No. JC-0374 (2001) at 1, 4. Competitive bidding, however, is the             traditional method for
selecting a contractor, with the contract going to the responsible bidder who    submits the lowest and
best bid. See TEX. Lot. GOV’T CODE ANN. 5 262.027(a)(l) (Vernon Supp.             2003).

         In 2001, the legislature added subchapter H to the Local Government Code, entitled
“Alternative Project Delivery Methods for Certain Projects.” Act of May 27,2001,77th Leg., R.S.,
ch. 1409,s 5,200l Tex. Gen. Laws 3619,362 l-29. Subchapter H allows counties and other entities
to opt for the construction method that will provide them the “best value,” which may include a
design-build contract. See TEX. LOC. GOV’T CODEANN. 5 271.113(a)(3) (Vernon Supp. 2003). To
qualify, a project must be a “facility,” as that term is defined:

                         (7) “Facility” means buildings the design and construction of
                which are governed by accepted building codes. The term does not
                include:

                            (A) highways, roads, streets, bridges, utilities, water
                supply projects, water plants, wastewater plants, water and
                wastewater distribution or conveyance facilities, wharves, docks,
                airport runways and taxiways, drainage projects, or related types of
                projects associated with civil engineering construction; or

                             (B) buildings or structures that are incidental to projects
                that are primarily civil engineering construction projects.

Id. 9 271.111(7)(A)-(B).

         You state that the buildings that will house the thermal plants will be subject to state and
local building codes, consistent with the definition of a “facility,” but you query whether the projects
would be excluded from the definition under subsections (7)(A) and (7)(B). Central to the
exclusions in both subsections is the concept of “civil engineering construction.” Because the Local
Government Code does not define the phrase, we may consider it according to common usage and
any technical meaning it may have acquired. TEX. GOV’T CODE ANN. 8 3 11 .Ol 1(a)-(b) (Vernon
 1998). Doing so, however, does little to define the scope of the exclusions.            As the term is
understood in the profession, “civil engineering” would encompass virtually all governmental
construction endeavors, and include the construction of most governmental buildings. One reference
work describes civil engineering as “that field of engineering concerned with planning, design, and
construction for environmental control, natural resource development, transportation facilities,
tunnels, buildings, bridges, and other structures for the needs of people.” FREDERICKS. MERRITT
ET AL., STANDARDHANDBOOKFORCIVILENGINEERS l-l(4th ed. 1996)(emphasis                       added). Also,
by statute, an engineer must be involved in the planning of most buildings constructed for a
governmental entity. TEX. OCC. CODE ANN. 5 1001.407 (Vernon 2003). Consequently, the term
“facility” cannot exclude all projects associated with, or incidental to, all civil engineering projects
The Honorable Michael J. Guarino       - Page 3         (GA-0070)




because that definition would exclude nearly all governmental     buildings.   Under that interpretation,
the exception would swallow the general rule.

          Rather, section 27 1.111(7)(A) must be interpreted to exclude only the types of civil
engineering construction projects specifically enumerated:          “highways, roads, streets, bridges,
utilities, water supply projects, water plants, wastewater plants, water and wastewater distribution
or conveyance facilities, wharves, docks, airport runways and taxiways, [and] drainage projects.”
TEX. Lot. GOV’T CODE ANN. 8 271.111(7)(A) (V emon Supp. 2003). It may not be possible to
formulate a comprehensive test to identify projects excluded under subsection (7)(A), but they share
certain characteristics.     First, the excluded projects would generally not be subject to a
comprehensive      governmental building code assuring minimum, uniform standards. See Steve
Nelson, “Best Value ”Procurementfor Cities and Counties, 65 TEX.B. J. 36,37-38 (2002) (opining
that the legislature, concerned that “best value” procurement may not work as well in the absence
of established building codes, “enabled best value procurement only on ‘vertical’ construction
projects (buildings, structures, office buildings, etc.), which are generally covered by such codes, and
not to ‘horizontal’ structures (roads, bridges, utilities, etc.), which are not”).

         Second, the statute suggests that the distinction should be made according to a project’s
anticipated function. TEX. LOC. GOV’T CODEANN. 5 271.111(7)(A)-(B) (Vernon Supp. 2003). All
of the projects specifically excluded in subsection (7)(A) are components of infi-astructure facilitating
transportation, controlling natural forces, or providing utility, water, and similar essential services,
generally for the public at large. Most buildings included in such projects would be subordinate and
incidental to the project’s principal function. Finally, subsection (7)(B) provides an exception for
buildings incidental to a civil engineering construction project, but as discussed above, it cannot
mean all civil engineering projects. Accordingly, that subsection must be interpreted to mean
buildings incidental to a civil construction project of the type enumerated in subsection (7)(A).

          As we understand the County’s projects, the thermal plant buildings will house equipment
that chill and heat water for the habitability, comfort, and convenience of the associated building
complexes, and will not serve the wider public.           The thermal plants are in the nature of
appurtenances integral to the functions of the building complexes. The thermal plant buildings, and
presumably the building complexes that the plants will serve, are subject to accepted building codes.
The thermal plants, as you describe them, comply with the definition of “buildings the design of
which are governed by accepted building codes,” in section 27 1.11 l(7). Request Letter, supra note
 1, at 2. They are not building projects or incidental to projects of the type excluded in subsections
(7)(A) or m(B)- c onsequently, the thermal heating plants you describe are “facilities” under chapter
271, and may be the subject of a design-build contract.

II.     Sale-Lease-Purchase     Agreements

        You ask next whether the County may procure the plants through a sale-lease-purchase
agreement with the contractor. Under such an agreement, the County would either sell or lease the
land to the contractor. The agreement would obligate the contractor to design and build the plants,
lease them to the County for a twenty-year term and, at the end of the term, convey the plants to the
The Honorable   Michael J. Guarino    - Page 4         (GA-0070)




County for one dollar. The contractor, as owner of the plants, would provide its services for the term
of the lease.

         A commissioners court has only that authority to contract for the county conferred either
expressly or by necessary implication by the constitution and laws of this state. Childress County
v. State, 92 S.W.2d 1011,1016 (Tex. 1936); Tex. Att’y Gen. Op. No. JC-0584 (2002) at 17. Chapter
263 of the Local Government Code governs the procedures for a county’s sale or lease of real
property. TEX. Lot. GOV’T CODEANN. $0 263.001-.204 (Vernon 1999 & Supp. 2003). Counties
with populations over 500,000 are authorized to sell county property and lease it back. Id. 5
263.053(b) (Vernon 1999). There is no comparable authority for counties with populations under
500,000, and, as you acknowledge, the County’s population does not meet that threshold. Request
Letter, supra note 1, at 4.

         You suggest that the County may possess implied authority to enter into a sale-lease-purchase
agreement, based on Attorney General Opinion JM-697. That opinion principally addressed the
objection that a lease-purchase agreement would obligate a county beyond the current budget year,
“thereby preventing future courts from allocating those funds to other county purposes.” Tex. Att’y
Gen. Op. No. JM-697 (1987) at 1. Noting that no statute specifically authorized such an agreement,
the opinion concluded that “a county has implied authority to enter into a lease-purchase contract
to build or acquire a jail, assuming compliance with all applicable constitutional and statutory
provisions.”    Id. at 6. JM-697 determined that the county’s authority was implied from its
constitutional authority to maintain jails. Id. at l-2. However, this office later issued Attorney
General Opinion JM-800, which expressly qualified JM-697. Tex. Att’y Gen. Op. No. JM-800
(1987) at 4. In Opinion JM-800, we determined that a county could not use the predecessor to
section 27 1.005(a)(2) of the Local Government Code to acquire a relocatable jail by lease-purchase
agreement by characterizing the property as personalty in the agreement. Id. at 6. More recently,
this office again limited the decision in Attorney General Opinion JM-697, stating that it
“recognize[d] political entities’ implied authority onZy to acquire public improvements by means
other than the issuance of bonds, derived from the governmental entities’ express powers to acquire
and expend money for those improvements.”       Tex. Att’y Gen. Op. No. JC-0068 (1999).

         Counties with populations under 500,000 do not possess the express authority to sell and
lease back, or lease and lease back property for the purpose of building a thermal plant. Nor is such
authority necessarily implied from a county’s express authority to maintain jails and courthouses.
As a result, the County does not have the authority to contract for thermal energy plants through sale-
leaseback or lease-leaseback agreements.

         Your remaining questions concern how the County could execute such agreements consistent
with the provisions of chapter 263 ofthe Local Government Code regarding the disposition of county
property. Given our conclusion that the County does not have the authority to enter into these
agreements, we do not address those questions.
The Honorable Michael J. Guarino     - Page 5         (GA-0070)




                                       SUMMARY

                         A thermal energy plant built to facilitate a building complex
               is a ‘facility’ under subchapter H, chapter 271 of the Texas Local
               Government Code, so that it may be built using the design-build
               method of construction.      Galveston County does not have implied
               authority to enter into a sale and leaseback or lease and leaseback of
               property to acquire a thermal energy plant in connection with a jail
               facility.

                                              Very truly yours,




BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

William A. Hill
Assistant Attorney General, Opinion Committee
