Texas Attorney General Opinion: DM-66 Page: 4 of 6
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Honorable Carmen Rivera-Worley - Page 4
serve a "hospital purpose," we conclude that the hospital district's plan to build and
lease the facility is permissible.4
Next, we consider whether the hospital district may use the excess monies in
its Interest and Sinking Fund Account to finance the construction of the building.
You state that the hospital district's bond indebtedness will be retired in January
2002. You estimate that approximately $638,000.00 will be required to pay the
principal and interest due on the bond indebtedness in 1991 and 1992, and that the
current balance of the Interest and Sinking Fund Account is approximately
$938,800.00. You inform us that the hospital district would like to withdraw a
portion of these excess monies to construct the building. Despite this surplus in the
account, however, we conclude that the hospital district does not have the authority
to finance the construction of the building in this manner.
In Bear County Hosp. Dist. v. Crosby, 327 S.W.2d 445, 448 (Tex. 1959),
addressing a similar sinking fund, the Texas Supreme Court stated that a hospital
district holds "in trust for the bondholders taxes levied specifically to retire certain
bonded indebtedness." The district cannot apply those funds to any purpose "except
the retirement of that bonded indebtedness." Id. (citations omitted). Relying on
Bexar County Hospital District, this office has determined that absent specific
statutory authority to the contrary, monies in an interest and sinking fund may be
used for no other purpose than the one for which it was created. Attorney General
Opinion JM-142 (1984) at 2; see also Attorney General Opinions H-1254 (1978);
M-841 (1971); V-157 (1947).5
Section 8 of the enabling statute authorizes the hospital district to create an
Interest and Sinking Fund Account "to pay the interest on and principal of said
bonds as same mature ... ." Acts 1975, 64th Leg., ch. 658, 8, at 1981. Neither
article IX, section 9, of the Texas Constitution nor other provisions in the enabling
statute confer upon the hospital district the express power to use monies in its
Interest and Sinking Fund Account to finance construction of a building. In
4You do not ask, and we do not address, whether the lease must be obtained through
SAlthough these authorities clearly hold that excess monies may not be diverted from an
interest and sinking fund account prior to the retirement of the bond indebtedness, we note that there
has been some controversy regarding the proper disposition of surplus interest and sinking fund
account monies following the retirement of the bond indebtedness. See Attorney General Opinion JM-
142 (overruling Attorney General Opinion MW-97 (1979)).
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Texas. Attorney-General's Office. Texas Attorney General Opinion: DM-66, text, 1991; (texashistory.unt.edu/ark:/67531/metapth273875/m1/4/: accessed October 15, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.