Honorable Melvin Combs
County Attorney
Jefferson County
Beaumont, Texas
Dear Sir:             Opinion NO, 0-3860
                      Re: Authority of fresh water supply
                           distrLct, created undeFArt. XVI;
                           See, 59, Constitution, and Ch. 4,
                           Title 128, R.C.S., to incur ln-
                           debtedness,
       We have your letter of August 7, submitting for our
opinion eight questIons that will be taken up in the order in
which .theyare propounded:
       First   --
       "Can a fresh water supply district, created
    und.erArticles1.6, Sec. 59 of the Constitution
    ant3Chapter 4, Title 128, R,C.S, of Texas, in-
    cu:~"
        indebtedness by first procuring authority to
    do so by propel"election in the district?"
        We refer you to Article 7922, Revised Civil Statutes,
which reads as follows:
         "In the accomplishment of the proposes enumer-
    ated in the fourth p??ecedingarticle, such dls-
    trlcts may or may not issue bonds and may OP may
    not incur indebtedness. No bonds by OP on behalf
    of such distrfcts shall be issued nor shall any
    indebtedness against the same be Incupped unless
    the proposition to issue such bonds or to incur
    such indebtedness shall be first submitted to the
    qualified property taxpayfng voters of such dis-
    trict, and the proposition adopted by a majority
    vote at an election held to determine such ques-
    t ion a"
       We think the foregoing quoted article cleaply authorizes
the district to incur debt upon a vote of the people having the
qualifications there provided.
Honorable Melvin Combs, page #2         O-3860


        Your second question is:
        "If you have answered Question 1 in the
    negative, then state in what manner a fresh
    water,,nupplydistrict can create an indebted-
    ness?
       Inasmuch as Question Number 1 has been answered in the
affirmative, it is unnecessary to answer Question Number 2.
       Question Number 3:
      "Can a fresh water supply district Issue
   revenue bonds to secure an indebtedness?"
       It is well established law that polltical subdivisions
of the State have only such powers as are conferred by law or
such incidental powers as are necessary to carry out the ex-
press powers granted. We find no authority in Title 128 author-
lzing fresh water supply districts to issue bonds to be secured
by revenues obtained from the operation of the improvements con-
structed by such district. You are advised that in the absence
of an c?xpressauthority to issue such bonds the district d,oes
not have the right and, therefore, no revenue bonds can be is-
sued.
      Your Question Number 4 is as follows:
      'Bees such a fresh water supply district have
   authority to create an indebtedness, duly author-
   fzed by proper election, for the purposes set out
   in Article 7918, and issue notes OP warrants evi-
   de,ncingsame?"
      Article 7918 reads as follows:
      "All districts shall have full power and.
   authority to build, construct, complete, carry
   out, maintain, and in case of necessity, add
   to and rebuild all works and improvements with-
   in and without such district necessary to ac-
   complish any plan of conservation, transporta-
   tion and distribution of fresh water adopted for
   or on behalf of such district, and may make all
   necessary and proper contracts and employ all
   persons and means necessary to that end; and such
   districts are authorized, if the governing bodies
   thereof shall deem it necessary, to take over In
   whole or in part by purchase or otherwise any
   water plants or systems within such districts".
Honorable Melvin Combs, page 83        0 -3860



       It will be noted that this article confers both power
and authority upon such district to construct and otherwise
Improve f'acilitiesfor the purpose of accomplishing a plan of
conservation, transportation and distribution of fresh.water,
such as may have been adopted by such district, and states
expressly that it shall have the authority to make all neces-
sary and proper contracts and pursue any means necessary to
attain that end. Therefore, we are of the opinion that fol-
lowing the authorization to Incur an indebtedness, as provided
by Article 7922, that the district would have the authority to
issue notes or warrants for the purpose of evidencing such in-
debtedness.
       Your Question Number 5 reads as follows:
       "Can such a fresh water supply district dis-
    charge its lawful indebtedness from the revenues
    of the district derived from the sale of water,
    after the operating expenses and upkeep of the
    district have first been paid?"
       In answer to this question we refer you to Article 7910
of the Revised Civil Statutes which expressly provides for the
use of excess funds. This article reads as follows:
       "The Board shall prescribe the manner and
    terms upon which water shall be furnished and
    shall be authorized to fix the rate to be charg-
    ed users of water from such district and shall
    promulgate rules and regulations governing the
    distribution and use of water; and shall apply
    th.erevenue from the sale of such water to oper-
    ating expenses and the upkeep of the system of
    improvements installed in said district, and any
    surplus that may be left after paying such ex-
    penses shall be from year to year applied to the
    paying ofinterest on the bonds or other indebt-
    edness that may be incurred by the district and
    if there be more than enough to pay operating and
    upkeep expenses and the interest on the indebt-
    edness of the district, then such surplus shall
    be passed to the sinking fund."
       We not only think that the district has the authority
to use the excess funds for such purpose but under the word-
ing of the above quoted,article, it appears mandatory that
such excess as may accrue shall be used in such manner.
       Your Question Number 6 reads as follows:
Honorable Melvin Combs, page #4


       “Can the net revenues (revenues remaining,  if
    any, after operating expenses and upkeep of the
    district have first been paid) of such type of
    district be pledged io secuzean indebtedness, duly
    authorized and evidenced by a series of notes
    or warrants, each note or warrant to be paid from
    the current net revenues procured during the per-
    iod of time for which said note or warrants was
    given?"
       It will be noted that no express authority has been con-
ferred to pledge such revenues to ,thepayment of indebtedness
that may be authorized under Article 7922, and, further, that
the language of the above quoted article clearly states that
only in the event a surplus exis'tsafter the payment of oper-
ating expenses and upkeep of the imprPovementsthat such funds
shall be used for the retirement of such indebtedness as may
have been incurred. Such pledge as the district might make
toward securing an indebtedness will, of course, be confined
to such funds as would accrue over and above the cost of oper-
ating and maintaining the distrfct; however, we see no inhibi-
tion in the statutes that would prevent the district under-
taking to secure Its indebtedness by a pledge of such surplus
If, as and when accumulated. It appears that the district has
the ge:neralpower necessary to manage its affairs in a manner
designed to accomplish the purposes for which the district was
established, and we think the distric'twould have the power to
arrange for the paying and securing of indebtedness in a man-
ner not Inconsistent with law, by authority of Article 7917,
which reads, in part, as follows:
       "No enumeration of specific powers herein shall
    be held a limitation upon the general powers con-
    ferred by this chapter unless distinctly so expressed."
       Your Question Number 7 reads as follows:
        'Does a fpesh water supply district have author-
    lty to borrow funds from the Federal Government,
    or an agency thereof, fop t'hepurpose of construct-
    lng a fresh water distribution system, and secuI"e
    such loan in some manner other than by the issuance
    of bonds (secured by taxes!?”
       In out opinion the district would have the authority to
borrow funds from the Federal Government or any agency thepe-
of, to be evidenced by the issuance of notes or warrants which
may be secured by the levy of a tax authorized at the time the
proposition for?incurring the indebtedness is submitted to the
qualified property taxpaying voters of such district, pursuant
to the provisions of Article 7922.
- ..-..   .




          Honorable Melvin Combs, page #5            0 -3860



                   Question Number 8 reads as follows:
                 "If you have answered Questlon 7 In the affirm-
              ati,vethen state in detail how such loan can be
              secured?"
                 We think the answer stated to Question Number 7 fully
          answers.this question.
                   Trusting that the foregoing fully answers your Inquiry,
          we are
                                            Yours very truly
                                       ATTORNEY GENERAL OF TEXAS

                                            By s/Clarence E. Crowe
                                                 Clarence E. Crowe
                                                 Assistant
          CEC-s-wc

          APPROVED AUG 21, 1941
          s/Gerald C. Mann
          ATTORNEY GENERAL OF TEXAS
          Approved Opinion Committee By CEC Chairman
