Honorable Hugh C. Yantis, Jr.         Opinion No. M-1070
Executive Director
Texas Water Quality Board        ,. Re:   Whether a non-profit
Lowich Build,ing                          privates corporation
Austin, Texas 78701                       created under Article
                                          1434a, V.C.S., can be
                                          granted State of Texas
                                          assistance for the erec-
                                          tion of a~ sewage plant
                                          pursuant to Subchapter I,
Dear Mr. Yantis:                          of the Texas Water Code.

           You have requested,our opinion as to whether Northwest
Houston Water Supply Corporatiqn, which was organized under
Article 1434a, Vernon's Civil Statutes, constitutes a "political
subdivision".for the purpose of,receiving State of Texas assist-
ance or 'loans under Subchapter I, Texas Water Code (Sections
21.601 through 21.612, inclusive).

          Your request,further states:

               "Northwest Houston Water Supply Corporation
          is a nonprofit corporation created by special re-
          quest of the City of Houston.  Its directors are
          appointed by the Mayor of Houston: all stock in
          the corporation is held by'the Mayor: the city
          guarantees payment of interest and sinking fund
          on all revenue bonds issued by the corporation;
          all improvements become the property of the city
          as soon as constructed.  The Internal Revenue
          Service has ruled that the interest'on the bonds
          as well as any income received by the corporation
          is income tax free.
               ". . .

               "The City,of Houston contracted with the North-
         west Houston Water Supply Corporation for that
          corporation to act as the city's agent in all
         matters connec~ted with the providing of adequate
         water and public sanitation facilities for the
         'un.incorporatedAcres Homes Area, which consists

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Honorable Hugh CL. Yantis, Jr. page 2       (M-1070)



          of approximately five thousand acres and a popu-
          lation of forty to fifty thousand individuals.

               "With this fact situation in mind, your
          opinion is requested with reference to the follow-
          ing question:

                Does the corporation, by the nature
                of its relationship with the city,
                qualify as the recipient of the fi-
                nancial assistance as provided by
                Subchapter I of the Texas Water Code?"

          We answer.the question in the negative..

          This private non-profit water supply corporation known
as Northwest Houston Water Supply Corporation is not 9 "political
subdivision" under the Texas Water Code. Section 21.602(5) of
the Water Code defines a political subdivision as follows:

               ?,'Political subdivision' means a county,
          city, or other'body politic or corporate of the
          state, including any district or authority
          created under Article III, Section 52, or
          Article XVI, Section 59, of the Texas Constitution,
          and including any interstate compact commission to
          which the state is a party."

           Article III, Section 49-d-1, Constitution of Texas,
authorizes the Legislature to provide grants and loans for water
quality enhancement purposes only "to political subdivisions or
bodies politic and corporate of the State of Texas . . . ."
Political subdivisions are similarly defined in the Texas Water
Code, Section 11.001. This is further emphasized by holdings
that such corporations as here involved are "private" but cuasi-
public in nature, but tnev do not constitute "political suh-
divisions" of the state. - Tarrant County W.S.Cl v. Hurst-Euless
Bedforil I.S.D., 391 S.W.2d 192, (Tex.Civ.App. 1965, error ref.
n.r.e.) ; Cedar Park W.S.C. v. Leander I.S.D., 469 S.W.2d 19
(Tex.Civ.App. 1971, error granted on other grounds and under
submission since December 8, 1971). See also Attorney General
Opinion No. ~0-3433 (1941).

           We have heretofore held that an incorporated city,
as a political subdivision, may contract with a profit or non-
profit corporation to perform waste disposal services, but
this~ does not contemplate that the City in so doing delegates
any of its sovereign powers. See Attorney General Opinion No.
M-693 (1970).
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Honorable Hugh C. Yantis, Jr., page 3            (M-1070)



                           SUMMARY

               A private nonprofit water supply corporation
          created under Article 1434a, Vernon's Civil Statutes
          of Texas, is not a "political subdivision" under
          Section 11.001 or 21.602(S) of the Texas Water Code.
          and cannot qualify as the recipient of the financial
          assistance provided by Subchapter I of the Texas
          Water Code.

                                        s very truly,
                                               n




~Prepared by Roger Tyler
 Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
W. E. Allen, Co-Chairman

Austin Bray
Glenn .&own
John Reeves
Joseph Sharpley

SAWUEL 'Do MCDANIEL
Staff Legal Assistant

ALFRED WALKER
Executive Assistant

NQLA WRITE
First Assistant




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