Can a Texas county lease a building to a private museum for $1 and agree to pay the upkeep and utilities for decades?

Plain-English summary

The Midland County Attorney asked whether a long-running lease between the County and the privately run Museum of the Southwest was valid under the Texas Constitution. The arrangement dated to 1968, when the County took a deed to the former Turner estate so it could lease the property back to the Museum to run an art museum. By 1989 the lease ran fifty years, the Museum paid only a token $1 plus the cost of operating the museum and maintaining the interior, and the County agreed to insure the buildings, maintain the exterior and grounds, and pay the utilities. In fiscal year 2000 the County paid about $64,000 to meet those obligations.

The Attorney General worked through three layers. First, authority: counties have only the powers the constitution and statutes give them, so the opinion checked whether the County could enter the lease at all. It concluded chapter 319 of the Local Government Code lets a commissioners court establish and maintain a museum, lease museum buildings, and contract for their management, and that the competitive-bidding rules of chapter 263 do not apply to a section 319.004 lease. Second, public-purpose: article III, section 52 bars gifts of public money to private entities, but a county avoids violating it by finding in good faith that an expenditure serves a public purpose and placing adequate controls on it. The opinion concluded the commissioners court could reasonably have found the museum lease served a public purpose, and that a below-market or token rent does not automatically violate section 52 when the lease serves a public purpose and the public entity gets adequate consideration (here, operation of the museum).

Third, and the part that failed: article XI, section 7 forbids a county from creating "debt" unless it simultaneously levies a tax to pay the interest and build a sinking fund. A multi-year contract that obligates a county to keep spending unfixed sums, without a yearly right to terminate or to decline to appropriate, creates such debt. The opinion concluded the County's open-ended, fifty-year obligation to pay utilities and to insure and maintain the buildings and grounds was unconstitutional debt. But because those financial terms were incidental to the lease's main purpose (letting the Museum use the estate as a museum), they were severable. Striking them left the rest of the lease intact, so the Museum could keep operating the property.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

Midland County and its commissioners court (what the opinion held): The opinion concluded the County had authority under chapter 319 to acquire the property and lease it to the Museum, and that the commissioners court could reasonably have found the lease served a public purpose under article III, section 52. But it held the County's open-ended, multi-year obligations to pay utilities and to insure and maintain the buildings and grounds violated article XI, section 7 because the lease gave the County no annual right to terminate or to decline to fund.

The Museum of the Southwest (what the opinion held): The opinion concluded the unconstitutional financial terms were severable and the remainder of the lease was not void. The Museum was still entitled to lease the Turner estate and operate it as a museum.

The County Attorney's competitive-bidding question (what the opinion held): The opinion concluded chapter 263's competitive-procedure requirements do not apply to a lease entered under section 319.004 of the Local Government Code, so the lease was not void or voidable for failing to follow chapter 263.

Both parties, on what the opinion could not do (what the opinion noted): The opinion stated this office is not a court and could not definitively resolve the parties' legal relationship if the County kept insisting the unconstitutional terms were not severable or the parties otherwise refused to accept the analysis.

Common questions

Can a Texas county lease a building to a private museum for almost no rent?
Under this opinion, yes, if the lease serves a public purpose and the county gets adequate consideration. The opinion accepted that the Museum's agreement to operate and maintain the property as a museum could be adequate consideration, citing a case that deferred to a commissioners court's finding that a $1-per-year convention-center lease was valid.

What made part of the Midland lease unconstitutional?
The County's agreement to pay the museum's utilities and to insure and maintain the buildings and grounds over fifty years, with no yearly right to terminate or to decline to appropriate funds. The opinion treated that open-ended, multi-year commitment as "debt" under article XI, section 7, which the County had not backed with a tax levy and sinking fund.

Why didn't the whole lease collapse?
Because the unconstitutional financial terms were severable. The opinion found the lease's essential purpose was letting the Museum use the estate as a museum, and the County's promise to cover certain expenses was incidental, so striking those terms left the rest enforceable. The lease also contained its own severability clause.

Does article XI, section 7 ban every multi-year county contract?
No. The opinion explained that a contract running more than a year is not "debt" if the county can terminate it at the end of each year, because then it commits only current revenues. The problem here was the absence of any such annual escape.

Background and statutory framework

Counties have only the powers the constitution and statutes confer, expressly or by necessary implication. Tex. Att'y Gen. Op. Nos. JC-0439 (2001) at 2; JC-0171 (2000) at 1. A county may acquire real property by deed under Local Government Code section 270.001 and its predecessor, former article 1576 of the Revised Civil Statutes. Tex. Loc. Gov't Code Ann. § 270.001 (Vernon 1999); Tex. Rev. Civ. Stat. Ann. art. 1576 (Vernon 1962 & Supp. 2002). Chapter 319 of the Local Government Code lets a commissioners court provide for exhibits, establish and maintain a museum, contract for its management, and lease museum buildings, with leases evidenced by an order entered in the court's minutes. Tex. Loc. Gov't Code Ann. § 319.001 (Vernon 1999); § 319.002 (Vernon 1999); § 319.004(a); § 319.004(b); § 319.004(c); § 319.004(d) (Vernon 1999 & Supp. 2002). This office had long read chapter 319's predecessor (former article 2372d) broadly to authorize museums apart from agricultural exhibits. The competitive procedures of chapter 263 do not apply to a section 319.004 lease. Tex. Loc. Gov't Code Ann. § 263.001 (Vernon 1999); § 263.007 (Vernon 1999 & Supp. 2002). A related funding scheme appears in Government Code sections 1473.021-.024. Tex. Gov't Code Ann. §§ 1473.021-.024 (Vernon 2000); see Tex. Loc. Gov't Code Ann. § 319.005 (Vernon 1999 & Supp. 2002).

Article III, section 52 forbids a county to grant public money or a thing of value to a private entity. Tex. Const. art. III, § 52; see also id. art. III, § 51 (similar limit on the Legislature). A county avoids violating section 52 if it determines in good faith that an expenditure serves a public purpose and places sufficient controls on the transaction. Tex. Att'y Gen. Op. Nos. JC-0439 (2001) at 1; JC-0113 (1999) at 2; DM-256 (1993) at 2-3; Kordus v. City of Garland, 561 S.W.2d 260, 261 (Tex. Civ. App.-Tyler 1978, writ ref'd n.r.e.). Supporting museums has been found to serve a public purpose. Tex. Att'y Gen. Op. No. MW-423 (1982) at 2. A contract that obligates a nonprofit to perform a public-benefit function can supply adequate control, Key v. Comm'rs Ct. of Marion County, 727 S.W.2d 667, 669 (Tex. App.-Texarkana 1987, no writ), and below-market rent is permissible when the lease serves a public purpose and adequate consideration is paid. Dodson v. Marshall, 118 S.W.2d 621, 624 (Tex. Civ. App.-Waco 1938, writ dism'd); Tex. Att'y Gen. Op. Nos. JC-0179 (2002) at 4; JM-1156 (1990) at 3. Whether consideration is adequate is for the governmental body to decide in the first instance, to which courts defer. City of Fort Worth v. Groves, 746 S.W.2d 907, 916-17 (Tex. App.-Fort Worth 1988, no writ).

Article XI, section 7 bars a county from creating debt unless it simultaneously levies a sufficient tax for interest and a sinking fund. Tex. Const. art. XI, § 7; see also id. art. XI, § 5 (similar limit on cities). "Debt" is a pecuniary obligation imposed by contract that will not be satisfied from current revenues within the parties' reasonable contemplation; a contract terminable at the end of each year commits only current revenue and is not debt. City of Bonham v. S.W. Sanitation, Inc., 871 S.W.2d 765, 768 (Tex. App.-Texarkana 1994, writ denied). A contract need not provide fixed payments to create debt, and obligations to maintain property or operate facilities for unfixed sums have been held to create debt. Brown v. Jefferson County, 406 S.W.2d 185, 188 (Tex. 1966); City of Wichita Falls v. Kemp Pub. Library Bd. of Trs., 593 S.W.2d 834, 837 (Tex. Civ. App.-Fort Worth 1980, writ ref'd n.r.e.); Tex. Att'y Gen. Op. No. DM-467 (1998) at 5. Article XI, section 7 limits, but does not grant, the authority to incur debt or levy taxes. Tex. Att'y Gen. Op. No. JC-0139 (1999) at 2; Mitchell County v. City Nat'l Bank, 43 S.W. 880, 883 (Tex. 1898). When the original consideration is legal but an incidental promise is illegal, the doctrine of severability lets a court strike the invalid term and keep the rest. Montgomery v. Browder, 930 S.W.2d 772, 778 (Tex. App.-Amarillo 1996, writ denied); Williams v. Williams, 569 S.W.2d 867, 871 (Tex. 1978); Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied); Tex. Att'y Gen. Op. No. MW-475 (1982) at 4. The opinion distinguished Harris County v. Jones, 219 S.W.2d 737 (Tex. Civ. App.-Galveston 1949, writ ref'd n.r.e.), as not addressing the interplay of a deed's maintenance promise and article XI, section 7.

Citations

Statutes and constitutional provisions:

• Tex. Loc. Gov't Code Ann. § 270.001 (Vernon 1999)
• Tex. Rev. Civ. Stat. Ann. art. 1576 (Vernon 1962 & Supp. 2002)
• Tex. Loc. Gov't Code Ann. §§ 319.001, 319.002, 319.004(a)-(d), 319.005
• Tex. Gov't Code Ann. §§ 1473.021-.024 (Vernon 2000)
• Tex. Loc. Gov't Code Ann. §§ 263.001, 263.007
• Tex. Const. art. III, §§ 51, 52
• Tex. Const. art. XI, §§ 5, 7

Cases and opinions:

• Kordus v. City of Garland, 561 S.W.2d 260, 261 (Tex. Civ. App.-Tyler 1978, writ ref'd n.r.e.)
• Key v. Comm'rs Ct. of Marion County, 727 S.W.2d 667, 669 (Tex. App.-Texarkana 1987, no writ)
• Dodson v. Marshall, 118 S.W.2d 621, 624 (Tex. Civ. App.-Waco 1938, writ dism'd)
• City of Fort Worth v. Groves, 746 S.W.2d 907, 916-17 (Tex. App.-Fort Worth 1988, no writ)
• City of Bonham v. S.W. Sanitation, Inc., 871 S.W.2d 765, 768 (Tex. App.-Texarkana 1994, writ denied)
• Brown v. Jefferson County, 406 S.W.2d 185, 188 (Tex. 1966)
• City of Wichita Falls v. Kemp Pub. Library Bd. of Trs., 593 S.W.2d 834, 837 (Tex. Civ. App.-Fort Worth 1980, writ ref'd n.r.e.)
• Montgomery v. Browder, 930 S.W.2d 772, 778 (Tex. App.-Amarillo 1996, writ denied)
• Williams v. Williams, 569 S.W.2d 867, 871 (Tex. 1978)
• Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied)
• Harris County v. Jones, 219 S.W.2d 737 (Tex. Civ. App.-Galveston 1949, writ ref'd n.r.e.)
• Mitchell County v. City Nat'l Bank, 43 S.W. 880, 883 (Tex. 1898)
• Tex. Att'y Gen. Op. Nos. JC-0439 (2001); JC-0171 (2000); JC-0113 (1999); JC-0139 (1999); JC-0179 (2002); DM-256 (1993); DM-467 (1998); MW-423 (1982); MW-475 (1982); JM-1156 (1990)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0582
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2002/jc0582.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS
JOHN CORNYN

November 26, 2002

The Honorable Russell W. Malm Opinion No. JC-0582
Midland County Attorney
200 West Wall Street, Suite 104 Re: Whether a lease agreement between
Midland, Texas 79701 Midland County and a museum violates
limitations on the use of public funds in article
III, section 52 and restrictions on public debt in
article XI, section 7 of the Texas Constitution,
and related questions (RQ-0543-JC)

Dear Mr. Malm:

You ask a number of questions about the validity of a lease agreement between Midland County (the "County") and the Museum of the Southwest (the "Museum"). We conclude that the County had the authority to acquire property for the purposes of operating a museum and was authorized to enter into the lease agreement with the Museum under chapter 319 of the Local Government Code and its statutory predecessor, former article 2372d of the Revised Civil Statutes. The commissioners court that entered into the lease agreement could have reasonably determined that the County's and Museum's respective obligations under the lease agreement comported with article III, section 52 of the Texas Constitution, which prohibits the expenditure of public funds for private purposes. On the other hand, the lease agreement violates the restrictions on public debt in article XI, section 7 of the Texas Constitution to the extent the agreement obligates the County to pay for the Museum's utilities and other expenses and to insure and maintain the building and grounds over a multi-year period without giving the County the right to terminate at the end of each year or to elect on a yearly basis whether or not to appropriate funds to satisfy its obligations under the lease. Because the terms of the lease agreement that obligate the County to pay for the Museum's utilities and other expenses and to insure and maintain the building and grounds are severable from the agreement's other terms, however, the remainder of the lease agreement is not void.

You inform us that in 1968 Midland County "accepted a deed of real estate from the Museum . . . for the sole purpose of leasing the property back to the Museum for the operation of an art museum." Request Letter, supra note 1, at 1. The property consisted of the former Turner estate, which included the Turner mansion and grounds. The original lease was for a period of ten years. See Request Letter, supra note 1, at 1. In 1978 the County and the Museum executed a renewal of the lease agreement for a ten-year term. See id. at 2. In 1985 the parties again renewed the lease agreement and provided that the lease would run until 1988 and, if the Museum completed an addition before a date certain in 1987, the lease would extend for fifty years from 1968. See id. In 1989 the parties executed an Amended and Restated Lease Agreement, which provided that the lease would be for a term of fifty years commencing on September 1, 1968. See id. Except where noted otherwise, this opinion will refer to the 1989 lease agreement, which is the lease agreement currently in effect.

The lease agreement obligates the County to insure the buildings and structures located on the premises; to maintain the exterior structural condition of the buildings, including the foundations, walls, roofs, and doors; and to maintain "the grounds and landscaping at the leased premises in accordance with the standards and dignity befitting a museum and local ordinances as they may apply." Amended and Restated Lease Agreement, supra note 1, ¶¶ 3, 5. The County is also required to bear the cost of utilities (except telephone) and to service and maintain the heating, air conditioning, and plumbing systems. See id. ¶ 6. You state that in fiscal year 2000 the County paid approximately $64,000 to meet its obligations under the lease. See Request Letter, supra note 1, at 2. The lease agreement does not require the Museum to make lease payments other than an initial $1.00 payment, but it does require the Museum to operate the leased premises as a museum, to maintain the interior of the buildings, and to pay for the cost of telephone services. See Amended and Restated Lease Agreement, supra note 1, ¶¶ 1, 4.

We understand that the Museum is a private, non-profit corporation governed by a board of trustees. In addition to leasing and managing the property at issue, the Museum has constructed a planetarium on adjacent land owned by the City of Midland and a children's museum on adjacent land owned by the Museum. See Museum Brief, supra note 2, at 3. The principal building on the property at issue, the Juliette and Fred Turner Jr. Memorial Gallery, contains permanent exhibits of American art, with an emphasis on the Southwest, as well as temporary exhibits. See Turner Gallery, supra note 1.

You ask a number of questions about the lease agreement's validity under the Texas Constitution, such as whether the lease agreement is consistent with article III, section 52, which limits the expenditure of public funds, and article XI, section 7, which limits a county's authority to incur debt. Given counties' limited jurisdiction, however, we need not reach these constitutional issues if the County lacked an affirmative grant of express or implied authority to enter into the lease agreement. See Tex. Att'y Gen. Op. Nos. JC-0439 (2001) at 2 ("A county commissioners court may exercise only those powers that the state constitution and statutes confer upon it, either explicitly or implicitly."); JC-0171 (2000) at 1 ("It is well settled that the authority of the commissioners court to contract [o]n behalf of the county is limited to that conferred either expressly or by necessary implication by the constitution and laws of this state."). Therefore, before addressing your constitutional questions, we address your questions regarding the County's statutory authority to enter into the lease agreement.

You ask whether a county "has legal authority to acquire property for the purposes of operating an art museum or contracting with a private organization to do so." Request Letter, supra note 1, at 5. We conclude that a county has the legal authority to do so. A county is generally authorized by section 270.001 of the Local Government Code to acquire real property by deed. See TEX. LOC. GOV'T CODE ANN. § 270.001 (Vernon 1999); TEX. REV. CIV. STAT. ANN. art. 1576 (Vernon 1962 & Supp. 2002) (statutory predecessor to Local Government Code section 270.001) (repealed). As discussed further below, a county is specifically authorized to acquire property for museum purposes by chapter 319 of the Local Government Code.

Chapter 319 of the Local Government Code authorizes a commissioners court to establish and maintain a museum. Section 319.001 authorizes the commissioners court of a county to "provide for annual exhibits of horticultural, agricultural, livestock, mineral, and other products that are of interest to the community." TEX. LOC. GOV'T CODE ANN. § 319.001 (Vernon 1999); see also TEX. GOV'T CODE ANN. §§ 1473.021-.024 (Vernon 2000). Pursuant to section 319.002, "[t]o aid in the exhibition of products listed in Section 319.001," a commissioners court "may establish and maintain a museum, building, or other improvement in the county or at any other location in the United States at which a fair or exposition is being held." TEX. LOC. GOV'T CODE ANN. § 319.002 (Vernon 1999) (emphasis added).

Opinions of this office addressing sections 319.001 and 319.002's statutory predecessor construed the grant of authority in what is now section 319.002 broadly to permit a county to establish and maintain a museum separate and apart from "annual exhibits of horticultural, agricultural, livestock, mineral, and other products" now provided for in section 319.001. Id. § 319.001; see, e.g., Tex. Att'y Gen. Op. Nos. M-1113 (1972) at 2; WW-371 (1958) at 3; see also Tex. Att'y Gen. Op. No. C-656 (1966) at 2. The language of sections 319.001 and 319.002 derives from former article 2372d of the Revised Civil Statutes, which was repealed and codified in chapter 319 in 1987. This broad construction of the former law dates from 1958, and there is no indication that the legislature sought to modify it in adopting the recodification of article 2372d in the Local Government Code. Likewise, section 319.004 authorizes a commissioners court to permit the use of a building or improvement "for any public purpose the court determines to be of benefit to the county and its residents." TEX. LOC. GOV'T CODE ANN. § 319.004(d) (Vernon 1999 & Supp. 2002). Accordingly, we adhere to the longstanding interpretation.

Chapter 319 also authorizes a commissioners court to lease museum buildings and to contract for their management. Section 319.004 authorizes a commissioners court to "contract for the complete management of, and for the conducting, maintenance, use, and operation of, buildings, improvements, and exhibits authorized by this chapter." Id. § 319.004(a). The commissioners court "may lease the buildings, improvements, or exhibits," id. § 319.004(b), and "may permit the use of a building, improvement, or exhibit for any public purpose the court determines to be of benefit to the county and its residents," id. § 319.004(d). A contract or lease made under this section must be evidenced by an order of the commissioners court and entered in the minutes of the court. See id. § 319.004(c).

With regard to the commissioners court's statutory authority to enter into the lease agreement, you also ask whether the lease would "be void or voidable if it was entered into without complying with the requirements of Chapter 263 of the Local Government Code." Request Letter, supra note 1, at 6. Chapter 263 provides competitive procedures that a county generally must follow to sell or lease county property. See, e.g., TEX. LOC. GOV'T CODE ANN. §§ 263.001 (Vernon 1999); 263.007 (Vernon 1999 & Supp. 2002). This office has concluded, however, that the requirements of chapter 263 do not apply to a contract entered into under section 319.004 of the Local Government Code. See Tex. Att'y Gen. LO-98-057, at 2-3. Accordingly, a lease entered into under section 319.004 of the Local Government Code (or its predecessor) is not void or voidable if it was entered into without complying with chapter 263.

Given our conclusion that chapter 319 authorized the County to acquire the property for museum purposes and to enter into the lease agreement, we do not address your question about the County's authority under chapter 331 of the Local Government Code or your question about the effect of the 1968 conveyance of the property to the County if the County did not have authority to acquire the property. We instead turn to your questions about the constitutional limitations on county authority.

You ask whether County expenditures for museum maintenance and other museum expenses pursuant to the lease agreement violate article III, section 52. We conclude that the commissioners court that entered into the lease agreement could have reasonably determined that the County and Museum's respective obligations under the lease agreement comported with article III, section 52.

With respect to the County's payments under the lease agreement, article III, section 52 bars a transfer of county funds to a private entity unless the transfer serves a public purpose of the county and the transfer is subject to adequate controls, contractual or otherwise, to ensure that the public purpose is accomplished. See Tex. Att'y Gen. Op. No. JC-0439 (2001) at 1. Article III, section 52 of the Constitution precludes the use of public funds for private purposes by counties, cities, and other political subdivisions. See TEX. CONST. art. III, § 52. Article III, section 51 contains a similar provision applicable to the legislature. See id. § 51. Article III, section 52 precludes counties from making unconditional gifts or donations to private entities. See, e.g., Kordus v. City of Garland, 561 S.W.2d 260, 261 & n.1 (Tex. Civ. App.-Tyler 1978, writ ref'd n.r.e.); Tex. Att'y Gen. Op. No. JC-0113 (1999) at 2-3. In making an expenditure of county funds that benefits a private person or entity, however, a commissioners court will avoid violating article III, section 52 if it (i) determines in good faith that the expenditure serves a public purpose and (ii) places sufficient controls on the transaction, contractual or otherwise, to ensure that the public purpose is carried out. See, e.g., Tex. Att'y Gen. Op. Nos. JC-0439 (2001) at 1, JC-0113 (1999) at 2, DM-256 (1993) at 2-3.

In 1989 when the County entered into the Amended and Restated Lease Agreement, a prior opinion of this office supported a commissioners court's determination that expending county funds to benefit a museum would serve a public purpose. See Tex. Att'y Gen. Op. No. MW-423 (1982) at 2. Furthermore, although the lease agreement between the County and the Museum could have given the County greater control over the Museum's performance of its contractual obligations, the lease agreement does require the Museum to operate the County's property as a museum. The lease agreement would appear to place sufficient controls on the transaction to ensure that the public purpose—the operation of a museum—is carried out. See Tex. Att'y Gen. Op. JC-0439 (2001) at 2 (citing Key v. Comm'rs Ct. of Marion County, 727 S.W.2d 667, 669 (Tex. App.-Texarkana 1987, no writ) (per curiam)).

You also assert that a lease of public property "for rental or lease payments at less than fair market value . . . would amount to [a] . . . gift or grant of public money" in violation of article III, section 52. Request Letter, supra note 1, at 4. Although courts and this office have concluded that the lease of public property to a private entity does not violate article III, section 52 where the transaction serves a public purpose and where an adequate rental is paid, see Dodson v. Marshall, 118 S.W.2d 621, 624 (Tex. Civ. App.-Waco 1938, writ dism'd); Tex. Att'y Gen. Op. Nos. JC-0179 (2002) at 4, H-445 (1974) at 4, H-109 (1973) at 5, article III, section 52 does not necessarily require a county to lease property for fair market value if the lease serves a public purpose. See Tex. Att'y Gen. Op. No. JM-1156 (1990) at 3.

Whether the consideration a public entity receives for use of its property is "adequate" is a determination for the entity's governmental body to make in the first instance and is a determination to which a court will defer. In City of Fort Worth v. Groves, for example, the court expressly deferred to the commissioners court's factual determination that leasing the county convention center to the City of Fort Worth under the statutory predecessor to section 319.004 of the Local Government Code for $1.00 per year and the city's agreement to operate and maintain the convention center for the benefit of the public provided adequate consideration. See City of Fort Worth v. Groves, 746 S.W.2d 907, 916-17 (Tex. App.-Fort Worth 1988, no writ). Here, while the Museum does not pay the County monetary consideration to use the leased property, the Museum does operate the County's property as a museum and pay for the upkeep of the interior of the buildings. The commissioners court that entered into the 1989 lease agreement could have reasonably determined that the lease agreement required the Museum to provide adequate consideration for use of the County's property. See id. at 916.

Finally, we address whether the lease agreement creates a county debt in violation of article XI, section 7 of the Texas Constitution. Under article XI, section 7, a county may not incur debt for any purpose "in any manner" unless the county simultaneously creates the debt and provides for levying and collecting "a sufficient tax to pay the interest thereon and provide at least two per cent . . . as a sinking fund." TEX. CONST. art. XI, § 7. Article XI, section 5 contains a similar limitation that applies only to cities. See id. art. XI, § 5. For purposes of these constitutional provisions, "debt" is "any pecuniary obligation imposed by contract, except such as will, at the date of the contract, within the lawful and reasonable contemplation of the parties, be satisfied out of current revenues for the year, or out of some fund then within the immediate control of the city [or county]." City of Bonham v. S.W. Sanitation, Inc., 871 S.W.2d 765, 768 (Tex. App.-Texarkana 1994, writ denied). A contract that runs for more than a year but that gives the city or county a right to terminate it at the end of each year is a commitment of current revenues only and is not a debt. See id.

We conclude that the lease agreement violates article XI, section 7 to the extent it obligates the County to pay for the Museum's utilities and other expenses and to insure and maintain the buildings and grounds over a multi-year period. The commissioners court that entered into the lease agreement could not have contemplated that the County could satisfy its unspecified, multi-year obligation out of county revenues on hand in 1989. We gather that the County did not provide for levying and collecting taxes to pay the interest and to create a sinking fund. Furthermore, the lease agreement does not give the county a right to terminate at the end of each year or to elect on a yearly basis whether or not to appropriate funds to satisfy its obligations under the lease.

The Museum asserts that the County's obligations under the lease do not create a debt within the meaning of article XI, section 7 because the County owns the premises and is obligated to operate and maintain its property separate and apart from the lease agreement and because the lease agreement does not provide for fixed or regular payments. We disagree.

First, the Museum asserts that the County's obligation to maintain the Museum buildings and grounds and to pay for its utilities and property insurance is no different than the County's obligation to maintain and provide utilities for other county-owned facilities such as the county courthouse or the county library. The crucial difference, however, is that the County has not contractually obligated itself to another entity to maintain those county buildings or to provide utilities or property insurance for them. The lease agreement transforms the County's general discretionary duty to maintain its property as it sees fit into a "pecuniary obligation imposed by contract." City of Bonham, 871 S.W.2d at 768. In addition, a contract need not provide for fixed or regular payments in order to create debt for purposes of article XI, section 7. See, e.g., Brown v. Jefferson County, 406 S.W.2d 185, 188 (Tex. 1966); Tex. Att'y Gen. Op. No. DM-467 (1998) at 5. Indeed, both a court and this office have specifically concluded that a contract that obligates a city or county to expend unfixed sums to maintain property or operate facilities creates debt in the constitutional sense. See, e.g., City of Wichita Falls v. Kemp Pub. Library Bd. of Trs., 593 S.W.2d 834, 837 (Tex. Civ. App.-Fort Worth 1980, writ ref'd n.r.e.); Tex. Att'y Gen. Op. No. WW-1049 (1961) at 2-3.

In support of its position that these lease terms do not violate article XI, section 7, the Museum also contends that the County is obligated to maintain the Turner mansion and grounds by the warranty deed pursuant to which the Museum conveyed the premises to the County in 1968. In July 1968, the co-executors of the estates of Fred and Juliette Turner conveyed the Turner mansion and grounds to the Museum, which agreed "to maintain and care for said premises consistent with their present dignity and appearance, normal wear and tear excepted." Warranty Deed dated July 9, 1968, supra note 1, at 2. The next day, the Museum conveyed the Turner mansion and grounds to the County, "subject to all the terms, provisions, covenants and conditions set forth" in the first warranty deed. Warranty Deed dated July 10, 1968, supra note 1, at 1. We have not been asked by the County to address the constitutionality of the warranty deed. We do note, however, that the duty to maintain the premises under the warranty deed is much more limited than the obligations the County has undertaken under the lease. Furthermore, the case cited by the Museum, Harris County v. Jones, 219 S.W.2d 737 (Tex. Civ. App.-Galveston 1949, writ ref'd n.r.e.), upheld a county's agreement in a deed conveying 100 acres to the county to reconvey 10 acres to the grantors at a certain price, and concluded that such a reconveyance was not subject to a statute requiring counties to sell real property at public auction. That case does not address the interplay of a county's agreement in a deed to maintain property and article XI, section 7.

Although we conclude that the terms of the lease agreement that obligate the County to pay for maintenance of buildings and grounds and other museum expenses over a fifty-year term violate article XI, section 7 and are not enforceable, this does not necessarily mean that the remainder of the lease agreement is without effect. As a general rule, where part of the consideration for an agreement is illegal, the entire agreement is void if the contract is entire and indivisible. See Montgomery v. Browder, 930 S.W.2d 772, 778 (Tex. App.-Amarillo 1996, writ denied). The doctrine of severability is an exception that applies in circumstances in which the original consideration for the contract is legal, but incidental promises within the contract are found to be illegal. See id. In such a case, the court may sever the invalid provision and uphold the valid portion, provided the invalid provision does not constitute the main or essential purpose of the agreement. See Williams v. Williams, 569 S.W.2d 867, 871 (Tex. 1978); Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied). We have found no authority suggesting that the doctrine of severability may not be applied when a contract term is invalid under article XI, section 7. A 1982 opinion of this office applies the doctrine to a contract term creating a debt in violation of article III, section 49, which prohibits the state from creating a debt. See Tex. Att'y Gen. Op. No. MW-475 (1982) at 4.

We believe that the unconstitutional terms are severable from the lease agreement and that the remainder of the lease agreement is effective. Here, the essential consideration or purpose of the lease agreement is the County's agreement to lease the Turner estate to the Museum to use it as a museum and the Museum's agreement to operate the estate for that purpose. As we have concluded, the County's agreement to lease its property to the Museum for this purpose is legal. See discussion, supra pp. 3-5. In our view, the County's agreement to pay certain limited expenses associated with the Museum is merely a promise incidental to the lease agreement's essential purpose. Furthermore, the lease agreement expressly provides that "[i]f any clause or provision hereof is invalid, unenforceable or illegal under present or future laws effective during the life of this lease, it is the intention of the parties that the remainder of this agreement shall not be affected thereby but shall continue in full force." Amended and Restated Lease Agreement, supra note 1, ¶ 16.

The Museum has submitted a supplemental brief that takes the view that the essential feature of the lease agreement is the Museum's promise to manage, conduct, and maintain a public museum and that the County's financial obligations are merely incidental to the lease agreement. On the other hand, the County asserts in its supplemental brief that "the financial provisions are a large part of the consideration provided by Midland County. They are directly tied to the remainder of the consideration supplied by Midland County, which is allowing the Museum to use the building. The two provisions are inseparable. The financial provisions are not incidental promises, but a material part of the lease." We find the County's position unpersuasive. Under the lease agreement, the Museum has received from the County the right to use the Turner estate for only $1, with no annual lease payments, for fifty years. The County's financial obligations under the lease are minimal when compared to this primary consideration provided by the County.

For these reasons, we conclude that the lease terms that obligate the County to pay for the Museum's utilities and other expenses and to insure and maintain the buildings and grounds are severable from the lease agreement's other terms and that the lease agreement is not void. The Museum is still entitled to lease the Turner estate and to operate it as a museum. This office is not a court, however. We cannot definitively resolve the legal relationship between the parties if the County continues to insist that the unconstitutional terms of the lease agreement are not severable or if the parties are otherwise unwilling to accept our legal analysis.

SUMMARY

Midland County had statutory authority to acquire property for the purposes of operating a museum and was authorized to enter into a lease agreement with the Museum of the Southwest. The commissioners court that entered into the lease agreement could have reasonably determined that the County and Museum's respective obligations under the lease agreement comported with article III, section 52 of the Texas Constitution. To the extent terms of the lease agreement obligate the County to pay for the Museum's utilities and other expenses and to insure and maintain the building and grounds over a multi-year period and do not give the County a right to terminate at the end of each year or to elect on a yearly basis whether or not to appropriate funds to satisfy its obligations under the lease, those terms violate the restrictions on public debt in article XI, section 7 of the Texas Constitution. Because those terms are severable from the lease agreement's other terms, however, the remainder of the agreement is not void. The Museum is still entitled to lease the Turner estate and to operate the estate as a museum.

JOHN CORNYN
Attorney General of Texas

HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Mary R. Crouter
Assistant Attorney General, Opinion Committee

[1] See Letter from Honorable Russell W. Malm, Midland County Attorney, to Honorable John Cornyn, Texas Attorney General (May 7, 2002) (on file with Opinion Committee) [hereinafter Request Letter]; Museum of the Southwest, The Juliette and Fred Turner, Jr. Memorial Gallery information page (attachment to Request Letter) [hereinafter Turner Gallery]; Amended and Restated Lease Agreement (May 8, 1989) (attachment to Request Letter) [hereinafter Amended and Restated Lease Agreement]; Warranty Deed (July 10, 1968) (attachment to Request Letter) [hereinafter Warranty Deed dated July 10, 1968]; Warranty Deed (July 9, 1968) (attachment to Request Letter) [hereinafter Warranty Deed dated July 9, 1968].

[2] See Brief, Museum of the Southwest, from Leonard B. Smith, Attorney at Law, to Susan Denmon Gusky, Chair, Opinion Committee, Office of the Attorney General (July 3, 2002) (on file with Opinion Committee) [hereinafter Museum Brief].

[3] Article XI, section 7 imposes conditions on the creation of debt; it does not authorize creation of debt. See Tex. Att'y Gen. Op. Nos. JC-0139 (1999) at 2; DM-467 (1998) at 7 n.18 ("Article XI, section 7 [of the Texas Constitution] limits the authority of a county to incur debt; it does not affirmatively authorize counties to levy taxes for any purpose. . . . Therefore, before providing for a levy and sinking fund in order to comply with article XI, section 7, a county should first verify that it is authorized to levy the tax.") (citing Mitchell County v. City Nat'l Bank, 43 S.W. 880, 883 (Tex. 1898) (Texas Constitution article XI, section 7 "contains no grant of authority to levy a tax")). It does not appear that a county would be authorized to levy a tax to support its obligations under a lease entered into pursuant to chapter 319 of the Local Government Code. See TEX. LOC. GOV'T CODE ANN. § 319.005 (Vernon 1999 & Supp. 2002) (use of net revenue from use of building or improvement authorized by chapter 319); TEX. GOV'T CODE ANN. §§ 1473.021-.024 (Vernon 2000) (county authority to purchase or construct building to be used for coliseum, auditorium, or annual exhibit of livestock or agricultural, horticultural, or mineral products of the county; to issue bonds to finance such purchase or construction; and to impose a tax to pay the bonds).

[4] See Supplemental Brief, Museum of the Southwest, from Leonard B. Smith, Attorney at Law, to Susan Denmon Gusky, Chair, Opinion Committee, Office of the Attorney General (Nov. 4, 2002) (on file with Opinion Committee) [hereinafter Museum Supplemental Brief].

[5] Supplemental Brief, Midland County, from Honorable Russell W. Malm, Midland County Attorney, to Susan Denmon Gusky, Chair, Opinion Committee, Office of the Attorney General (Nov. 4, 2002).