                THE   ATTORNEY          GENERAL
                         OF TEXAS


                          May 1, 1989



Honorable Carmen Rivera-Worley          Opinion NO.   JM-1043
Val Verde County Attorney
207 Losoya Street                       Re:    Whether a commis-
Del Rio, Texas    78840                 sioner's court may enter
                                        into a lease with      an
                                        option to extend, and re-
                                        lated questions (RQ-1558)

Dear Ms. Rivera-Worley:

     You ask:

           1. Can [a] Commissioners Court enter into
        a lease coupled with an option to extend the
        lease?

           2. May Commissioners Court grant a lease
        where there was no advertisement for competi-
        tive bidding?

     Your request indicates that these questions arose in
connection with the following   factual circumstances.     In
1977, an individual was granted a lease on a certain parcel
of county-owned land in Val Verde County, with an option   to
extend the lease after the initial lease term. The lease
term ran out in 1980, and the option was exercised.        In
1982, the lease extension under the option expired and the
commissioners court authorized the county judge to "adver-
tise for bids" to lease the property.   The same individual
who had previously held the lease was granted the new lease,
for a five year term with an option to extend for an addi-
tional five years.   In 1987, the lessee announced that he
would exercise his option to extend the lease for another
five years. However, you state that instead of the existing
lease being extended under the option at this time, a new
lease was entered into, again for a five year initial term
with an option to extend for another five years.       "There
were no competitive bids announced for this new lease."

     The individual leasing the land has used the land for a
gun range and an owner of nearby property has.complained  to
the commissioners about the hazards posed by the gun range.



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Honorable Carmen Rivera-Worley   - Page 2   (JM-1043)




The commissioners  agreed to approve the lease, on        the
understanding that you would make this opinion request.

     We note at the outset that fact questions cannot be
determined in the opinion process. Our recitation of the
facts you present is in no way an affirmation      of their
veracity, but is only a statement of the basis on which this
opinion is rendered.



     In response to your first question, we conclude that a
commissioners court may lease county-owned property and that
such agreement may include a reasonable option to extend the
lease.

     Section 263.001 of the Local Government Code provides
for the sale or lease of real property owned by the county.
Subsection (a) of section 263.001 states:

           The commissioners court of a county, by an
        order entered in its minutes, may appoint a
        commissioner to sell or lease real property
        owned by the county. The sale or lease must
        be made at a public auction held in accor-
        dance with this section unless this chapter
        provides otherwise.1

     Whether the authorization    to lease county property
includes the authorization   to include in the lease provi-
sions an option to extend the lease at the end of the
initial lease term was addressed in Attorney General Opinion
H-1025 (1977). The issue in that opinion arose with respect
to the leasing of county school land for a five year period
with an option to extend for an additional five year period.
The opinion concluded     that *Ia county may lease    [its]
school lands upon terms similar to those made by citizens
generally, including a reasonable option to extend the lease



     1. Prior to their codification in the Local Government
Code in 1987, these provisions  appeared in article 1577 of
the Civil Statutes. Acts 1987, 70th Leg., ch. 149, at 707,
1035. Until 1973, article 1577 provided only for the    'sale
or disposal' of county-owned real property.   Acts 1973, 63rd
Leg., ch. 499, at 1329. Several opinions of this office had
concluded that the authorization in article    1577 prior to
1973, to sell or dispose of property,   did not include the
authorization to lease such property. S     .   a    Attorney
General Opinions M-799 (1971) and V-1085 7:95gj.*'


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Honorable Carmen Rivera-Worley   - Page 3   (JM-1043)




period."   In support of its conclusion, the opinion  quoted
the following language from E,
                             h '               8 S.W.Zd  666
(Tex. 1928), where the court considered   the granting by a
county of an oil lease on its school land, which agreement
contained a 'renewal' clause authorizing the lessee to defer
commencement of drilling for twelve months upon payment of a
certain sum:

           There is nothing   in the constitutional
        provision here involved which in the remotest
        degree limits the right of the commissioners'
        court to make a sale of its mineral    estate
        upon terms similar to those made by citizens
        generally.2

8 S.W.2d 666, at 671.

     Accordingly, we conclude that a county may lease county
property pursuant to section 263.001 of the Local Government
Code and that such lease may include a reasonable option to
extend.   We do not, however, here pass on the validity   of
any particular lease or option provisions.

     It might be urged that a commissioners court could not
make an agreement of this sort, which would be binding    on
future courts. However, we think such restriction    applies
in Texas at best only to governmental functions of a politi-
cal subdivision such as a county, and that disposition    of
county-owned   real property  is not such a governmental
function.    See. e.a   Attorney   General Opinion    JM-908
(1988); c                      Boa d of Contro   404 S.W.2d
810 (Tex. 1966); Gulf Bitulithic Co. v. Nuece; County     11
S.W.2d 305 (Tex. Comm'n App. 1928, judgm't adopted).  Wh do
caution, that were a court to find that such a lease had
been entered into for an unreasonably long term, or with an
unreasonablv long extension period under an option provi-
sion, or subject to other unreasonable terms, it might well
conclude that the county had thereby exceeded its authority.
&8 Attorney General Opinion H-1025 (1977).




     2. Notably, the provisions   authorizing the county to
dispose of school land under consideration      in Attorney
General Opinion H-1025 and in Ehlinaer did not explicitly
include the authorization   to lease such land: but the
authority to lease had been inferred from those provisions
in eCountv                   11 S.W. 492 (Tex. 1889).    See
Tex. Const. art. VII, 5 6, and the provisions of what is now
section 17.82 of the Education Code.


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Honorable Carmen Rivera-Worley   - Page 4   (JM-1043)




                             II.

     In response to your second question, we conclude that a
commissioners court may not grant a lease of this type
without compliance with the public auction requirements   of
section 263.001 of the Local Government Code.

     We presume that by the reference to "competitive
bidding" in your question you mean the ltpublic auctionl'
requirements of section 263.001, which section provides    in
the second sentence of subsection (a) that "[t]he sale or
lease must be made at a public auction held in accordance
with this section unless this chapter provides   otherwise."
Subsection (b) provides for the publication of notice of the
auction.

     You do not indicate that the property in question     is
subject to an exception to the public auction    requirement
under chapter 263.   (See, e.a., section 263.002, providing
alternatives  to the disposition    by public auction     for
abandoned seawall or highway property.)

     We find ample authority for the rule that a disposition
of county property  not made in compliance with the public
auction requirements of what is now section 263.001, and not
falling within  an exception to these requirements     under
chapter 263, is void.    See, e.a., rHa di
Mills Co., 112 S.W. 822 (Tex. Civ. App. 1908, no writ):
Jack v. State, 694 S.W.2d 391 (Tex. App. - San Antonio 1985,
writ ref'd n.r.e.).

                       SUMMARY

           The authorization  in section 263.001 of
        the Local Government Code for a county to
        lease county property, includes the authority
        to include in the agreement    an option to
        extend the lease on reasonable terms.    Such
        lease must be made in compliance with the
        public auction requirements of that section,
        unless the transaction     is subject to an
        exception under chapter 263 to the public
        auction requirement.




                                     JIM     MATTOX
                                     Attorney General of Texas



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Honorable Carmen Rivera-Worley   - Page 5   (JM-1043)




MARYKELLER
First Assistant Attorney General

MU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLRY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by William Walker
Assistant Attorney General




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