                               OF TEXAS
                          AUSTIN.    TIZXAS    78711



                                October   8, 1974

The Honorable Charlee A. Murphy                  Opinion No. H- 416
Executive Director
Texas Aeronautics  Commission                    Re: Authority of the Texas
P. 0. Box 12607, Capitol Station                 Aeronautics   Commission   to
Austin, Texas 78711                              assist in development of a
                                                 municipal airport the property
                                                 for which in leased to the city.

Dear Mr.   Murphy:

         The Texae Aeronautics   Commission has received a request for
financial aid to make improvements    on a municipal airfield.   The field
is located on land one-half of which is owned by the city in question and
the other one half of which is leased from a county school district holding
it for invertment purposes.    The present lease ie for at least 20 years.

         Articles   46c to 46c-7, V. T. C. S., establish the Aeronautics     Com-
mission.     Article 46c-6, Subdivision 10, authorizes the Commission to
grant or lend funds to, among others, incorporated         cities in the state
“for the establishment,     construction,  reconstruction,     enlargement or
repair of airports. ” Criteria to be coneidered in determining whether
or not a grant or loan is to be made are stated as follows:

                     (1) The need for an airport or facility or improve-
                ment of existing facility in the locality in the light of
                existing airports or facilities  in the area and in light
                of the overall needs’ of the state, and

                     (2) The financial needs of the community     with
                priority given to areas of greatest need.

                     (3) Loans shall be made in lieu of grants whenever
                feasible.   Prior to approving any loan or grant the
                Commission     ohall require that:




                                    p. 1940
The Honorable   Charles   A. AMurphy    page2        (H-416)




                     (1) The airport or faciity remain in the control
                of the political subdivisioaor  political subdivisions
                involved for at least 20 yers, and

                     (2) The political subdiision disclose the source
                of all funds for the projedand its ability to finance
                and operate the project, d

                     (3) All loans shall beas interest at the rate of at
                least three per-cent per illzlum and have a term of not
                longer than 20 years, and

                     (4) At least fifty percst of the total project cost be
                provided from sources o&r than the State of Texas, and

                    (5) The project   be adeyately     planned.

        You have asked our opinion as towhether you may legally make a
grant or loan when a portion of the real rtate upon which improvements
are to be located is leased.

        Almost the identical question waspresented to this office some years
ago and was anewered in Attorney Genewl Opinion C-511 (1965) where it
was held that, under Sections 50, 51 and52 of Article  3 of the Constitution
the grant or loan of public money to impPve leased land would be unconstitu-
tional.

         Very recently we had occasion toreview Opinion C-511 in another
context and concluded that it went too fan Insofar as Opinion C-511 indicates
that a public expenditure for the erectioror    maintenance of a public facility
on leased property is violative of the Cwtitution     for the sole reason that
the land is leased, it has been overruledby Attorney General Opinion H-403
(1974). Article   3,Sections 50, 51 and 52,and Article    &Section 3 of the Texas
Constitution do prohibit loans and grantsof state funds for private purposes,
but an expenditure made for a proper pullic purpose and for an adequate
consideration   or public benefit is valid taen though private persons are
incidentally  benefited.    Barrington v. Gkinos,    338 S. W. Zd 133 (Tex. 1960).




                                   p. 1941
.’




     The Honorable   Charles   A. Murphy,   page 3    (H-416)




         As we said in Opinion H-403,     not every public purpose is a proper
     one upon which to base a public expenditure,      but we think expenditure of
     state funds pursuant to Article 46c-6. V. T. C. S., in order to improve
     municipal airport facilities within the state is prima facie for a proper
     public purpose and not an improper grant to a municipality in violation
     of Article  3, Sections 50 and 51. It serves a state purpose, and not
     merely a local one, The Commiseion         is directed to make its dectsions
     “in the light of the overall needs of the state,” and the municipalities
     may be considered agents of the state to accomplish the purpose.        See.
     State v. City of Austin, 331 S. W. 2d 737 (Tex. 1960); Jones v. Alexander,
     59 S. W. 2d 1080 (Tex. 1933); Jefferson County v. Board of County and
     District Road Indebtedness,    182 S. W. 2d 908 (Tex. 1944).

         Accordingly,  it is our opinion that the Texas Aeronautics Commission
     might legally make a grant or loan pursuant to Article 46~~6 for the
     making of improvements     on a municipal airfield located or partially
     located on land leased for a period of at least twenty yearn if all statu-
     tory raquirements are met and if the grant or loan is made for what is
     determined to be a proper public purpose and for an adequate consideration
     (quid pro quo) or publtc benefit.   Attorney General Opinions H-403 (1974).
     M-512 (1969).

                               SUMMARY

                  The Texas Aeronautics   Commission   is not pro-
             hibited from making grants or loans of funds, for a
             proper public purpoee and for an adequate considera-
             tion or public benefit, to establish, construct, recon-
             struct or enlarge municipal airports located on land
             leased for a period of at least twenty years.

                                                  Very truly yours,




                                                Attorney   General    of Texas




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