Untitled Texas Attorney General Opinion

ATTORNEYGENERAL OF TEXAS
GREG ABBOTT

November 4,2004

The Honorable Rodney Ellis Opinion No. GA-0268
Chair, Committee on Government Organization
Texas State Senate Re: Whether municipal management districts
Post Office Box 12068 have eminent domain powers (RQ-0228-GA)
Austin, Texas 78711

Dear Senator Ellis:

You ask whether municipal management districts have eminent domain powers, and if so,
the extent of those powers.’ Although you specifically ask about “management districts” without
limitation, we limit our response to municipal management districts created under chapters 375 and
376 of the Local Government Code because the type of district that prompts your question is a
municipal management district. See Request Letter, supra note 1, at 1; see also TEX. LOC. GOV’T
.-
CODE ANN. chs. 375-76 (Vernon 1999 & Supp. 2004-05). We do not consider any other type of
management district. See, e.g., TEX. REV. CIV. STAT. ANN. art. 4477-7k, 5 2.01 (Vernon Supp. 2004-
05) (creating the Upper Sabine Valley Solid Waste Management District, a conservation and
reclamation district).

I. Factual Backeround

Earlier this year, the Harris County Improvement District No. 3 (the “HCID3”), formerly
known as the “Upper Kirby Management District,‘” a municipal management district created under
chapter 376, subchapter E threatened to condemn a building in Houston that the Girl Scouts of San
Jacinto Council was attempting to acquire from the owner, AAA of Southern Califomia.3 See TEX.
Lot. GOV’TCODE ANN. 5 376.151(a) (Vernon Supp. 2004-05) (creating the HClD3). The HCID3
also wished to acquire the building. See March 9 Letter, supra note 3, at 1. At that time, the

‘Letter from Honorable Rodney Ellis, Chair, Committee on Government Organization, Texas State Senate, to
Honorable Greg Abbott, Texas Attorney General, at 1 (May 12, 2004) (on file with the Opinion Committee, nlso
available af http://www.oag.state.tx.us) [hereinafter Request Letter].

*See Act of June 1,2003,78th Leg., R.S., ch. 766,§ 8(a), 2003 Tex. Gen. Laws 2224,2226

‘See Letter fromHonorable Rodney Ellis, chair, Committee on Government Organization, Texas State Senate,
to Honorable Greg Abbott, Texas Attorney General, at 1 (Mar. 9, 2004) (on file with the Opinion Committee)
[hereinafter March 9 Letter].
The Honorable Rodney Ellis - Page 2

HClD3’s power of eminent domain was questioned in a lawsuit. See id.4 You inform us, however,
that the HClD3 and the Girl Scouts of San Jacinto Council “reached an agreement. and ended all
legal action.” Request Letter, supra note 1, at 1.

Nevertheless, you ask us to “clarify the extent of the power of eminent domain for all
management districts,” not just the HCID3. Id. As you aver, “management districts have been
formed around the state” under a variety of statutes. Id. Some of these statutes, you suggest, “have
conflicting provisions regarding eminent domain.” Id. You therefore ask us to resolve these
perceived conflicts.

II. Chauters 375 and 376 of the Local Government Code

Chapter 375 of the Local Government Code provides generally for municipal management
districts. See TEX. Lot. GOV’T CODE ANN. ch. 375 (Vernon 1999 & Supp. 2004-05). The Texas
Commission on Environmental Qualit (the “TCEQ”) may create a municipal management district
(a “district”) only:
(1) in an area devoted primarily to commercial development
and business activity inside the boundaries of a municipality with a
population of at least 25,000; or

(2) in an area devoted primarily to commercial development
or business activity.

Id. 5 375.021 (Vernon 1999). But see id. 5 375.027 (limiting the creation of a district in a
municipality with a population of more than 1.5 million). Once created by TCEQ order, the district
is governed by a board of “at least nine but not more than 30 directors who serve staggered four-year
terms.” Id. 5 375.061. The TCEQ order lists the initial board members, but the municipal governing
body appoints succeeding board members. See id. 3 375.064(a). A municipal management district
has the general powers of a conservation and reclamation district subject to Water Code chapter 49.
See id. § 375.091 (“General Powers”). The Water Code expressly gives eminent domain powers to
conservation and reclamation districts that are subject to its provisions. See TEX. WATERCODE ANN.
5 49.222(a) (Vernon 2000) (granting a conservation and reclamation district authority to condemn
property “inside or outside the district boundaries necessary for water, sanitary sewer, storm
drainage, or flood drainage or control purposes for any other of its projects or purposes”). By

%ee also Letter from Nancy S. Fuller, Chair, Opinion Committee, Texas Attorney General, to Honorable
Rodney Ellis, Chair, Committee on Government organization, Texas State Senate, at 1 (Apr. 21,2004) (on file with the
Opinion Committee) (stating the policy of this offke “to refrain from issuing an attorney general opinion” on a matter
that is “the subject of pending litigation”).

‘Chapter 375 expressly provides that the “Commission,” which term is defmed as the Texas Natural Resource
Conservation Commission, see TEX. Lot. GOV’T CODE ANN. 5 375.003(3) (Vernon 1999), has sole authority to create
a district. See id. $9 375.022.,041 (referring in num~mus places to the “commission”). The Natural Resource
Conservation Commission is now the Texas Commission on Environmental Quality. See
http:Nwww.tceq.state.tx.uslabout/.
The Honorable Rodney Ellis - Page 3 (GA-0268)

contrast, chapter 375 of the Local Government Code expressly withholds eminent domain powers
from municipal management districts: “A district may notexercise the power of eminent domain.”
TEX. LQC. GOV’T CODE ANN. 5 375.094 (Vernon 1999).

Chapter 376 provides for the creation of 17 specific municipal management districts. In the
following list, the names of the districts from which eminent domain powers are expressly withheld
are underlined?

1. Houston DowntownManagement District, see id. 5 376.001(a);

2. Westchase Area Management District, see id. $ 376.041(a);

3. Greater Greenspoint Management District, see id. 5 376.081(a);

4. First Colony Management District, see id. 5 376.11 l(a);

5. Harris County Improvement District No. 3, see id. 5 376.151(a)
(Vernon Supp. 2004-05);

6. Harris Countvhnurovement District No. 2, see id. 5 376.21 l(a)
(Vernon 1999);

7. Greater East End Management District, see id. $ 376.261(a)
(Vernon Supp. 2004-05);

8. East Downtown Management District, see id. 5 376.301(a);

9. Midtown Management District, see id. $ 376.351(a);

10. Harris County Municipal Management District No. 1, see id. 9
376.401(a);

11. Near Northwest Management District, see id. 9 376.45 l(a);

6With the except&n of subchapter K, (ISadded by Act of May 26,2001,77th Leg., R.S., ch. 1380, 5 1, sec.
376.451, 2001 Tex. Gen. Laws 3542, 3542, creating the Port Bolivar Improvement District, chapter 376 has been
repealed effective April 1,2005. See Act of May 20,2003,78th Leg., R.S., ch. 1277,s 6(6)(B)-(I), 2003 Tex. Gem
Laws 4454,4653-54. Effective April 1,2005, these subchapters (again with the exception of the subchapter creating
the Port Bolivar Improvement District) will be codified in the new Special District Local Laws Code. See id. 5 1,2003
Tex. Gen. Laws at 4489-4591; id. $9,2003 Tex. Gen. Laws at 4654 (“Effective Date”). Subchapter K, as added by Act
of May 26,2001,77th Leg., R.S., ch. 1380, 5 1, 2001 Tex. Gen. Laws 3542,3542-48, expired on January 1,2003,
“unless before that date the district [was] cmfiied at an election.” Act of May 26,2001,77tb Leg., R.S., ch. 1380,s
3,200l Tex. Gen. Laws 3542,3548. We have found no information that such an election was ever conducted.

‘As adopted by Act of May 15,2001,77th Leg., R.S., ch. 418, $1,2001 Tex. Gen. Laws 797,798.
The Honorable Rodney Ellis - Page 4 (GA-0268)

12. Greater Northside Management District, see id. 5 376.451(a);*

13. Old Town Snrine Improvement District, see id. 5 376.451(a);9

14. Harris County tiprovement District No. 4, see id. 5
376.451(a);”

15. Frisco Square Management District, see id. 5 376.451(a);”

16. Aldine CommunitvhnurovementDistrict,see id. 5 376.451(a);”
and

17. Greater Southeast Management District, see,id. § 376.451(a).13

See id. $5 376.052(b), .222, .272, ,312, .462,14 .462,n .463,16 .465,” .474’s (Vernon 1999 & Supp.
,2004-05) (stating, with respect to certain districts, that “[tlhe district may not exercise the power of
eminent domain”).

III. Analvsis and Conizlusions

A. Questions 1 and 2

The legislature must confer the power of eminent domain “either expressly or by
necessary implication.” Burch v. City of San Antonio, 5 18 S.W.2d 540,544 (Tex. 1975); Anderson
v. Teco Pipeline Co., 985 S.W.2d 559,564 (Tex. App.-San Antonio 1998, pet. denied). Because

‘As adopted by Act of May 23,2001,77th Leg., RX, ch. 1356,s 1,200l Tex. Gen. Laws 3349,3349.

9As adopted by Act ofMay 17,2001,77th Leg., R.S., ch. 1371,s 1,200l Tex. Gen. Laws 3460,346O.

“As adopted by Act ofMay 23,2001,77th Leg., R.S., ch. 1376,s 1,200l Tex. Gen. Laws 3528,3528.

“As adopted by Act of May 23,2001,77th Leg., R.S., ch. 1384,s 1,200l Tex. Gen. Laws 3557,3557.

l*Asadopted by Act ofMay 17,2001,77thLeg., R.S., ch. 1433, $ I, 2001 Tex. Gen. Laws 5131,5131

‘?4s adopted by Act of May 25,2001,77th Leg., R.S., ch. 1476,§ 1,200l Tex. Gen. Laws 5245,5246.

14Asadopted by Act of May 23,2001,77th Leg., R.S., ch. 1356,$ 1,200l Tex. Gen. Laws 3349,3352.

“As adopted by Act of May 25,2001,77th Leg., R.S., ch. 1476,§ 1,200l Tex. Gen. Laws 5245,525O.

16Asadopted by Act ofMay 15,2001,77th Leg., R.S., ch. 418,s 1,200l Tex. Gen. Laws 797,798.

“As adopted by Act of May 17,2001,77thLeg., R.S., ch. 1371,s I,2001 Tex. Gen. Laws 3460,3464.

‘*As adopted by Act of May 17,2001,77th Leg., R.S., ch. 1433,§ 1,200l Tex. Gen. Laws 5131,5136.
 The Honorable Rodney Ellis - Page 5 (GA-0268)

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chapter 375 expressly withholds eminent domain authority from municipal management districts
created under that chapter, such a municipal management district does not possess eminent domain
powers. With respect to a particular district created under chapter 376, on the other hand, the special
statute must be analyzed to determine whether the power of eminent domain is conferred expressly
or by necessary implication.

With respect to the nine districts from which the power of eminent domain is expressly
withheld, whose names are underlined in the list supra, we conclude, in answer to your first two
questions, that the legislature did not intend to confer and indeed did not confer the power of eminent
domain. Consequently, these districts have no power of eminent domain.

The enabling statutes of the remaining districts are silent on the issue of eminent domain.
None ofthe districts are expressly authorized to exercise that power. Looking specifically at HCID3,
the subject of your original question, as an example, section 376.160 of the Local Government Code
provides it with the powers of certain other types of districts, including a municipal management
district created under chapter 375:

The district has:

(1) all powers necessary or required to accomplish the
purposes for which the district was created;

(2) the rights, powers, privileges, authority, and functions of
a district created under Chapter 375 [“Municipal Management
Districts in General,” discussed supra at pp. 2-31;

(3) the powers, duties, and contracting authority specified in
Subchapters H and I, Chapter 49, Water Code;

(4) the powers given to a corporation under Section 4B,
Development Corporation Act of 1979 . . and the power to own,
operate, acquire, construct, lease, improve, and maintain projects
described by that section;

(5) the power of a housing finance corporation created under
Chapter 394;

(6) the power to impose, assess, charge, or collect advalorem
taxes, assessments, impact fees, or other fees in accordance with
Chapter 49, Water Code . . . ;

(7) the power to contract with the municipality or county for
the provision on a fee basis of law enforcement and security services
- by the county or municipality; and
 The Honorable Rodney Ellis - Page 6 (GA-0268)

,-
(8) the power to contract with a private entity for the
provision of supplemental security services.

TEX. Lot. GOV’T CODEANN. 5 376.160 (Vernon Supp. 2004-05) (footnote omitted).

Of the types of entities whose powers the HClD3 is given under section 376.160, two have
certain express eminent domain powers. Section 49.222 of the Water Code, part of chapter 49,
subchapter H and incorporated by section 376.160(3), provides a district or water supply corporation
subject to the chapter with authority to acquire certain real property by condemnation, or eminent
domain. See TEX. WATER CODE ANN. $49.222(a) (Vernon 2000). A corporation created under
section 4B of the Development Corporation Act of 1979, whose powers are among those of the
HCID3 by virtue of section 376.160(4), has the power to condemn real property but only if the
eligible city’s governing body approves the action. See TEX. REV. CIV. STAT. ANN. art. 5190.6,
5 4B(i) (Vernon Supp. 2004-05). Because section 376.160(3) of the Local Government Code
provides the HClD3 with powers given a water district or water supply corporation under chapter
49, subchapter H of the Water Code, and the powers given a corporation under section 4B of the
Development Corporation Act of 1979, arguably the HCID3 has the power of eminent domain. On
the other hand, chapter 375 of the Local Government Code, which applies to the HUD3 through
section 376.160(2) and which applies generally to management districts like the HClD3, expressly
forbids a management district to exercise the power of eminent domain. See TEX. LOC.GOV’T CODE
ANN. 5 375.094 (Vernon 1999). Moreover, ifthe HCID3’s powers included that of eminent domain,
,.. we would have to determine whether the district may exercise that power without the approval of
another governmental body, as section 49.222 of the Water Code would allow, or only with the
approval of some governmental body, as section 4B of the Development Corporation Act of 1979
would require.

Given the contradictory nature of the HCID3’s powers, we cannot say that its enabling
statute, chapter 376, subchapter E, implicitly confers the power of eminent domain. In particular
here, given the fact that the eminent domain powers of two of the entities whose powers are
incorporated into the HCJD3’s powers conflict, the legislature’s intent is unclear. We consequently
conclude that the HClD3 does not have the power of eminent domain.

We have not considered whether the remaining seven management districts have the power
of eminent domain, notwithstanding their lack of express eminent domain power. The enabling
statute for each district must be analyzed as we have done here for the HCID3, with possible
consideration of the statute’s legislative history, to determine whether the particular district has
eminent domain power.

B. Question 3

You finally ask whether a municipal management district that has the power of
eminent domain-assuming there are any-may use its power to “interfere with a transaction
between two interested parties solely because the [dlistrict desires to acquire the property for its own
use.” Request Letter, supra note 1, at 1. A governmental body in Texas may exercise the power of
eminent domain for a public purpose only. See TEX. CONST.art. I, $ 17; Maher v. Lasater, 354
The Honorable Rodney Ellis - Page 7 (GA-0268)

S.W,2d923,924 (Tex. 1962). A governmental bodyexceedsits eminent domainpowers“whenand
only when” it condemns property “for a use unconnected with its legitimate purposes.” Atwood v.
Willacy County Navigation Dist., 271 S.W.2d 137, 141 (Tex. Civ. App.San Antonio 1954, writ
ref d n.r.e.); accord Tex. Att’y Gen. Op. No. X-0179 (2000) at 5. Thus, a district with the power
of eminent domain may use the power to acquire property for a use consistent with the district’s
legitimate purposes even if exercise of the eminent domain power may interfere with a transaction
between private parties. Whether property is being condemned, in any particular circumstance, for
alegitimatepurposeofacond~ingmunicipalmanagementdistrictis aquestion offactthatcannot
be resolved in the opinion process. See Tex. Att’y Gen. Op. No. GA-0156 (2004) at 10 (stating that
fact questions cannot be answered in the opinion process).
 The Honorable Rodney Ellis - Page 8 (GA:0268)

SUMMARY

A municipal management district created under chapter 375
of the Local Government Code has no power of eminent domain.
A municipal management district created under chapter 376 has
eminent domain power only if the power is conferred expressly or
implicitly. Those districts whose enabling statutes expressly withhold
eminent domain power do not have such power. The Harris County
Improvement District No. 3 does not have eminent domain power.
The enabling statute of any other municipal management district
must be analyzed to consider whether the statute confers expressly or
implicitly the power of eminent domain. A municipal management
district with the power of eminent domain may use the power to
acquire property for a use consistent with the district’s legitimate
purposes even if exercise of the eminent domain power may interfere
with a transaction between private parties. Whether property is being
condemned, in any particular circumstance, for a legitimate purpose
of the condemning municipal management district is a question of
fact.

Very truly yours,
-

BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee