                          QWice of tip !ZWocnepQkneral
                                      state of Z!Cexae
DAN MORALES                              June 29,1992
 ATTORNEY
      GENERAL




    Honorable Charles S. Brack                     Opinion No. DM-131
    Chambers County Attorney
    P. 0. Box 1200                                 Re: Whether a hospital district may
    Anahuac, Texas 775 14                          lease part of its facility for the operation
                                                   of a private adolescent drug treatment
                                                   facility (RQ-278)

    Dear Mr. Bra&

           You have requested our opinion as to whether the Chambers County
    Hospital District No. 1 (hereafter “the district”) may lease a part of its facility to a
    group of private physicians to operate as an adolescent drug treatment center. You
    indicate that, following an election in September, 1991, the district was converted
    into a hospital district operating under article IX, section 9 of the Texas
    Constitution and chapter 286 of the Health and Safety Code.

             Generally, a special purpose district, such as a hospital district, may “exercise
    only such powers as have been expressly delegated to it by the Legislature, or which
    exist by clear and unquestioned implication.” Attorney General Opinion DM-66
    (1991) (citing Tri-CityFresh Water Supply Did. No. 2 v. Mann, 142 S.W.Zd 945, 946
    (Tex. 1940)). The district is specifically authorized by statute to lease its facility to
    private physicians. Section 286.077(b) of the Health and Safety Code empowers the
    board of directors of the district to, inter da, “transfer by lease .to physicians,
    individuals, companies, corporations, or other legal entities. . . district hospital
    facilities.” Health & Safety Code 5 286.077(b).

            This does not end our inquiry, however. We must also determine whether
    operation of an adolescent drug treatment facility would satisfy the requirements of
    article IX, section 9 of the Texas Constitution. That constitutional provision
    declares that the legislature may “provide for the creation, establishment,
    maintenance and operation of hospital districts. . . with power to issue bonds . . . for
    hospitalpurposes.” (Emphasis added.) Chapter 286 of the Health and Safety Code



                                              p.     676
Honorable Charles S. Brack - Page 2              (DM-13 1)




does not define “hospital” or “hospital purposes,“’ but chapter 223, the Hospital
Project Financing Act, defines “hospital project” to include, inter alia:

           (B) a structure suitable for use as:

                    (i) a hospital, clinic, health facility, extended care
               facility, outpatient facility, rehabilitation or recreation
               f&&y, pharmacy, medical laboratory, dental laboratory,
               physicians’ offtce building, or laundry or administrative
               facility or building related to a health facility or system. . . .

Health & Safety Code 9 223.002(4)(B)(i) (emphasis added). In Scerbo v. Board of
Adjustment, 297 A.Zd 207 (NJ. Sup. 1972), the court held that a residential narcotic
rehabilitation and treatment facility qualified as a “hospital.” Id. at 209. And in
People ar reL D’Iotio v. Alfa Realty Co., 330 N.Y.S.Zd 403 (N.Y. Misc. 1972), the
court said that a center where drug addicts were examined and given daily doses of
methadone was carrying on a “hospital” purpose. Id at 408. We conclude that an
adolescent drug treatment facility would serve a hospital purpose. In addition, we
note that article IX, section 9 also directs that a hospital district created thereunder
“assume full responsibility for providing medical and hospital care for its needy
inhabitants.” Tex. Const. art. IX, # 9. In accordance with this provision, the district
must insure that the terms of the lease require the proposed drug treatment facility
to treat needy adolescents. See Attorney General Opinion DM-66 at 3-4 (holding
that kidney dialysis clinic would serve a hospital purpose in part because it would
serve needy patients).

        In our opinion, the situation about which you inquire is different from that
considered in Attorney General Opinion JM-258 (1984). In that opinion, this office
held that a hospital district lacked the authority to lease a portion of its facility as
 offices for private physicians. The opinion declared that “[wlhereas laboratory
 testing is a hospital function, offices for the private practice of medicine are not
 ‘hospital purposes’ or the provision of ‘medical or hospital care for the needy.‘” On
 the other hand, a facility which provides drug treatment and rehabilitation services
‘to both private and needy adolescent patients, in our view, titlly complies with the
 requirements of article IX, section 9 of the Texas Constitution.




        ‘In Attorney General Opinion DM-66, we said that qkratioa of P kidney dii     clinic for the
purpose of prohling cost-effective renal services would serve a “hospital purpose.”


                                                p.   677
Honorable Charles S. Brack - Page 3          (DM-131)




        Finally, we must consider whether the proposed arrangement is
constitutional under the terms of article III, section 52 of the Texas Constitution. As
this office noted in Attorney General Opinion H-777 (1976).

          in order to avoid the objection that such leasing of a county-
          owned facility is violative of article 3, section 52 of the Texas
          Constitution, it must be done for a valid public purpose and the
          county must receive “substantial value in return” for its grant of
          the leasing privilege.

Attorney General Opinion H-777 at 5 (quoting Sullivan v. Andrews County, 517
S.W.Zd 410, 413 (Tex. Civ. App.--El Paso 1974. writ refd n.r.e.)); see Attorney
General Opinion H-966 (1977). As was noted in Attorney General Opinion H-966,
the public body negotiating the lease “should be certain that the lease will serve a
public purpose and include sufficient controls so that the public purpose is actually
accomplished.” Attorney General Opinion H-966 at 2. Furthermore, “[t]he rent
should be set so that together with the reversion of the building at the end of the
lease, the Hospital Board receives adequate consideration for the use of its
property.” Id So long as these’constitutional requirements are met, we conclude
that the district may lease part of its hospital facility to a group of private physicians
to operate as an adolescent drug treatment center.

         You also ask whether the district must comply with “public auction
requirements” in order to lease its facility. Section 263.001 of the Local
Government Code, formerly V.T.C.S. article 1577, provides that a commissioners
court may “appoint a commissioner to sell or lease real property owned by the
county.” Such sale or lease “must be made at a public auction.” In Attorney General
Opinion JM-335 (1985), this office noted that prior opinions have “consistently
looked to statutes dealing specifically with the lease of county hospitals, not to
[V.T.C.S.] article 1577. . . .” See alro Attorney General Opinion Nos. H-7n, H-16
(1973). As we have previously indicated, section 286.077(b) of the Health and
Safety Code specifically authorizes the district’s board of directors to lease district
facilities to private entities. Thus, section 263.001 of the Local Government Code
has no application to the district’s proposed lease of a part of its facility for an
adolescent drug treatment center.




                                          p. 678
Honorable Charles S. Brack - Page 4       WI-1 31)




                                   SUMMARY

              The Chambers County Hospital District is statutorily
         authorized to lease a part of its hospital facility to a group of
         private physicians for operation as an adolescent drug treatment
         center. Article III, section 52 of the Texas Constitution requires
         that the lease serve a public purpose and provide for payment of
         adequate rentals, and article IX, section 9 requires that any
         hospital facility serve a hospital purpose and provide care for the
         needy inhabitants of the district. Section 263.001 of the Local
         Government Code, requiring sale or lease by public auction, is
         not applicable to the district’s lease of its hospital facility.




                                                 DAN      MORALES
                                                 Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Rick Gilpin
Assistant Attorney General




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