@ffice of t!je !Zlttornep
Q5eneraI
Btatr of Qexae
DAN MORALES
AlTommGENERRAL Januq 25.1995
Honorable 0. H. “Ike”+rris OpinionNo. DM-319
Chair
Chnmittee on State Affairs Rez Whether eection 395.011(c) of the
Texas State Senate Locdciov ernmalt code authorizes a
P.O. Box 12068 municipality to contmct to provide capital
Austin, Texas 78711 improvements to an ares outside its
caporate boundaria and extmturitorial
jurisdiction if the uea lies within the
boundaries of another municipality end
dated questions (RQ-669)
Dear senator Iiimis:
You asked us several questions invotig the proper interpruetion of chapter 395
of the Local Oovemment Code, which provides a method by which municip&ies end
certain other govemmental entities may linancc capital imp-’ .wwsw to
accommodate new dwelopment. See generuI& Bray, Caudill, & Owen, Once More, rhe
TtiIo~, In Retrospect: An w on the Virtues of Lkvelopmen; Agreementsin Tkas, 32
S. TEX.L. REV. 1. 12-14 (1991). You provided the followingfkctuel background for this
request:
The City of Leon Valley is cumntly in negotietions with the City of
San Antonio in regard to a wastewater contract. The Cii of San
Antonio is the regional collector for eUwasteweter. . . . Negotiations
between the City of San Antonio end several e&urban municipalities
rrecurrentlyatt~imparoeetordiffaarceinintapntrtionof
[chapter 395 of the Local GovernmentCode].
We understand that the suburban municipalitiesbelieve the Cii of San Antonio may
collect impact fees for the wastewater service puraant to ci contract for collection if the
city recognizes them es impact fees belongingto the city ud includes than accordingly in
its apical improvements plan. We undcrstau$ on the other band, that the City of San
Antonio contends that the impect fees belong to the arburben municipalitiesend that the
lmrnicipalitiesthemselves are obligated to pay for the wasteweter collection service.
You first ask whether section 395.011(c) of the Local Government Code confers
upon a municipality the authority to contract to provide capital improvements to en err
p. 1689
Honorable 0. H. “Ike”Harris - Page 2 (DM-319)
outside the municipality’scorporate boundaries and extraterritorialjurisdiction if the area
is within the boundaries of another municipality. Section 395.01l(c) provides as follows:
A municipality may contract to provide capital improve
mcntsl, . . . ..torarrrawtsideitscorporatebounduiesMdaara-
thtoxial jmisdictio19 and may charge an impact fkS under the
LaalGovYcadc~395.001(1). “8enicc8fra,“rrmmtMmtdie(A)abovc,llIaIlsulcuratilhiathe
bmmdecs er 8xb8lalitoridjulisdidm . . ..dIbe p&ic8l8utdivisio8” ul8ttk caplml
z will mrw. If. 0 395.001(9);
see fnqiumtc 2 (IkGniag%nxadcd jllrw&ll”). Bur
Jetf&l pages6-7 (amumlngddllltiond”8clvie 8m”).
‘seaioll395.001(9)dtk Locr Govcmmw cakd8Eaing”mvicc8ru,“rspuirrrrpoliLical
-ante-iuatruan ‘~e@J~~==-= withdmper42oflbcLocr
ClmummtCnde. hunu~1tostion42.021’dtkLocalGoxmmat c&,8 lmmiciJt8nty’r
. .
-jwirdidiosl~tbc~ am6gnaumtbewlidp8li~‘scorponte
bOlUM?SlhUi8bcrtrdti~8~diruace~~~.
‘A85alp8ct~” . l8famdto8s8”c@8lI8covay*“k8bPcilnpaalllpoamv
dcvela9mcotlopryfolpublicfuilit*llluIncw~necadtrtcc. seeHaIinpollH.B. 1011Bdorc
tbc HouseComm.on Nat lks., 701l1Leg. (Apr. 8.1987) (smturmtOfLyle--
Dimor, Tcxa Ass’nof Builders)(oqvyavailablebm &use Commie tkmdhmr); Bray,CmdiU,&
Owm OnceMore, fhe Trffqy, In Rebarpccr:An Ewoy on fhe k7rhres
of hdqment Agreementsfn
T~~~(,~~~.TW.L.REV. 1,13(1991). 8euioa395.001(4)d&m”ia~~6ec-u
p. 1690
Hononable0. H. “Ike”Henis - h&e 3 (DM-319)
~butif~impactfeeischargedinthatma,themuniciprrlity
must comply with this chepter: Footnotes edded.]
The le@uure wdihd chapter 395 in 1989. See Acts 1989, 7lst Leg.. ch. 1.
Q 82(r). The legishture intended the codificationto be nonsubstaotive. .!ke Acts 1989,
716 Lq., ch. I, 0 82(e); see u&o Acts 1989.71st Leg.. ch. 566. 0 l(a). The legislahur
enacted chapter 395’s prod-, V.T.C.S. rrticle 1269j-4.11, io 1987 es Senete Bii
336. See Acts 1987,fOth Leg., ch. 957. Ds l-11; Brey, Cudill, & Owen, SIIPP(I.
at 12.
In 1987, during the second reading of Senate Bii 336 on the House floor,
ReprwentativeMillsap~d~16rectian2oftheb~therentencethat~nowcodifiedrs
ation 395.011(c) of the Lucel Gwmunent Code-the subsection ebout which you
inquire. Debate on S.B. 336 on the Floor of the House, 70th Leg (May 21. 1987)
(statement of Representhe Millsap) (tape available hm House Video/Audio Savices).
Representative hIiUs8pexpl8inedthe addition simply es an amendmentconcerning I c@G
extraterritorid jurisdiction. Id We found no other legislative history iodicating the
lGgiSh&SifitWt.
On its face. section 395.011(c) euthorizes e municipelityto contract to provide
capital improvements to an area outside its corporate boundaries and extratdtorial
jurisdiction and to cherge an impact fee under the contmct. See 13 E. McQuILLIN,
MUNICIPAL c ORFORATIONS $37.11. et 51 (3d ed. 1987) (stating that, io geoerel,
municipalcorporation lacks euthority to provide improvementsbeyond its ckpomte limits
unless legislature has provided otherwise). Nothing in the statute limits e numicipelityto
contracting to provide capital improvements only to areas outside the corporete
boundaries of another monicipelity.5Nor does the stetute limit a “providing”municipality
tochargingimpaa~o~in~oYtddethecorponte~~ofthc”reaiving”
UllUliCipatity.
Section 402.001@)
of the Local Govemmeot Code authorizes a municip8lityto
prch8.w or operate 8 utiUtf8ystem within its boudmies. S8e uhv Loci4 Oov’t Code
5 43.056(a) (rquirhg munitipality that proposes to annex area to provide, “by any of the
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Hononble 0. H “Ike”Hhs - P8ge 4 (DM-319)
methods by which it extends the 8enks to any other IIu of the municipality,”for
extension of municip8l sehces to annexed area). If a municipality drooses to provide
utilityravicetOrllorromtOf~citizaubycontnctwithrprovidingmunicip~~,we
believet@itmay. Furthamorr,iFthenoeiviagmuniciprrlitychoo~topryforthe
capital impmMwnts tbt the providing municipaky quires by permitting the providing
municip8lityto charge imp8ct faq we believe that the receiving municiprlity may. If a
providiasmuniciprrtity~tochargera~fkinthereceivingareqitrrmydoso
only ifthe conhact with the mwiving munic$dity complies with chapter 395 of the Local
Government Code. See Local Oov’t Code 0 395.01l(a). Fmthen0ore, the providing
municipaUtymych8rgemimpactff8eonlyin8ceodam with chapter 395. See id
0 395.01l(c).”
In short, we conclude tbt rection 395.01l(c) authorizes Bmunicipalityto contract
to provide capital improvements to an area inside the corporate bound&es of another
municipality. MditionaUy, section 395.011(c) authorizes the providing municipality to
~e~impaafecwitbinthecorponte~~ofthereEeivingnnuricipality,but
OI@if the path have wntmcted awmdhgly md if the pAding municipality complies
withch8pter395oftheLocalGo vernment Code. C!! 13 E. MCQULLIN,THEIAW OF
MUNlClFAtCORPORATIONS 0 37.11, at 51 (3d ed. 1987) (stating general rule that one
municipality may not tax its own residents for improvananwithinlimitsofulother
municipalwrporation).
You next asked whether, under 8ection 395.0455 of the Local Government Code,
a providing municipfdity that wntmcts to charge an impact fee to 8n area within the
jmisdiction of another municip8litymay indude the 8rea in the providing municipality’s
apitd improvements plan. Section 395.045!(a), which per&s to “Systemwide Land
Use Assumptions,”provides in pertkrt part as follows:
(a) In lieu of adopting hnd use asmmptions7 for each service
ma, a politicd subdkion may, except for storm water, drainage.
flood control, and roadway kcilities, adopt systemwide Land use
rtsumptioas,~cbcova~oftberrerrubjCatothejurisdi*ionof
the politicalsubdivisionfbr rhc pupas8 Of impusingimpucffees
srnukrfhisChqDfer.pmtnote Md anph8sisadded.]
p. 1692
Honomble 0. H. “Ike”Hanis - Pege 5 WM-3 19)
The legislature added section 395.0455(a) to chapter 395 ofthe Local Government
Code in 1989, following the codification. &e Acts 1989. 7lst Leg., c-h. 566, # l(b)
(House Bill 1786). House Bii 1786, which proposed adding section 395.0455 to the
Local Chmnmnt Code, added to chepter 395 other eecdons, all of which the kgisleture
hopedwouldmumliaethcproassrpoliticllrubdivioionmustuteto~oplhnprctf#s.
See House Comm. on State A5irs, Bii Anelysis,H.B. 1786.71st Leg. (1989); Hearings
on HB. 1786 Before the House &mm. on State Affrirs 71st Leg. (Apr. 25,1989) (state-
ment of Rcpnranatiw Laney, au&or of bii) (tape aveileble 6om House Video/Audio
savices); Hearings on H.B. 1786 Before the Senete Comm. on Intergovemmental
RdsUions, 71st Leg. (May 25, 1989) (stetemmt of Senetor Am~brister)(tape available
hm Senate Staff &vices). Sarrtor Armbrister.k&o presented the bii to the Senate
committee on lntKgovKmKltd Relations, explained that the process adopted in 1987.
with the mactmcnt of V.T.C.S. article 126$4.11. wes I burdensome one for cities
beuu8e the statute required a city sepaately to 8dopt two plans, a lend use assumption
plan and a crpitd improMnaas plen. Id.; see uho Hearings on H.B. 1786 Before the
House Comm. on State ASirs, mrpru (statancnt of Fmnk Turner, Planning end
Tmnsportation Director for Cii of Plano). Thus, the municipalitywas required to hold
two eepamte harings end comply with statutory notice requkements for each heering.
liming6 on H.B. 1786 Before the Karate Comm. on IntergovernmentalReletions, supru
(statement of Seator Armbriar). To elleviete the problem, House Bii 1786 proposed,
among other things, allowing municipalities to use m-wide adoption plens for each
serviceuea. Id.; see u&oid. (statement of Cerl Shahady, representing Texes Municipel
League). The municipalitytherefore avoids having to edopt a land use assumption plan
for each individualservice erea. Id.
Initidy~ we note that, in your second question, you cited section 395.0455 of the
Local Government Code, which epplies only to the adoption of systemwide lrmd use
axwmptions, although you asked ebout a capital improvements plen. While both are
newssary to the adoption of an impact fee, the two are distinct. A land use essumption
describes the service area and projects changes, eg., chaoges in lend uses, densities,
intensities, end population, that the municipality believes @ occur in the service erea
within the aLaring ten yea-s. Local Oov’t Code $395.001(S). A capital improvements
~~grmtbeotha~~id~acrpiul~~sar~fioility~o~forwbich8
ommnent may assess unpact fkes. Id. 0 395.001(2); see id. 5 395.014 (presaiii
requhmts for capital improvementsplen).
Prior to the 1989 amendments to chapta 395. e political subdivision considered
and adopted the hod use UswnptioIu and capitel improvements plens seperetely.
Furthermore, the political &division bed wnsidaed the lend use eamptions end capital
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Honor&e 0. H. %e” Hhs - Page 6 (DM-319)
improvments on 8 serviw-m-by-da basis, rather than 8 systennvide basis.9
since the 1989 amendments to chapter 395, a political subdivision, including a
municipality.may abbreviate the procedure descrii above in two ways: iirst, pursuaot
to section 395.0515(a), the politicsl subdiioo may adopt the hod use assumptions. the
capital improvements ph wd the impact fee simultweo* and second, pursuaot to
sectiod 395.0455(a), the political subdivisionmay adopt systemwideland use assumptions,
which cow alI of the m subject to the political &division’s jurisdiction for the pmpose
ofhnposingimpactfkshuterdofonlytbeuuwithinrriaglermriama. Bursreti.
0 395.0515(d) (prohibiting political subdivision &om consolidating harhgs on land use
x;ns 8nd capital improvemeotsplao ifperson timely quests, in writ& sep8rate
Section 395.0455 expressly authorizes a political subdii~ inch&g a
municipality, to adopt land use assumptions th8t wver “all of the area subject to the
jurisdiction of the potid& s&division for the purpose of imposing impact fees under
[ch8pt~ 3951.” We believe thsL in the context of section 395.0455. “ali of the 8rea
subject to the jurisdiction of the political &division” includes all of the area &omwhich a
municipdi~ wkts impact fe+ purswnt to section 395.011. tJnda section 395.011. of
wur8q that area m8y be located withio the corporate boundaries of another municipality.
Section 395.0455 patains only to land use assumptions, M, it does not a&t a
municip8lity’sjurisdictionto prepse 8 ~capitalimprovementsplan wveriog the ma within
the corporate boundaries of another municipality.
We note that, while section 395.001(2) of the Local Oovmmmt Code defines
‘capital improvements plan” without limiting the scope of 8 plan to a service q 0th~
8ections of chapter 395 appear to do so. &e Id. 5 395.014(a). (b); 395.049(c)(4);
395.0515(r). For purposes of chapta 395, 8 “service area” is “the area within the
wmmte boundaries or extratenitorial jurisdiction . . . of the political mhdivkiw” that
the caphI improvements will serve. See id. 0 395.001(9). Coratming “ervicc area”in
the v&OUS pr0~%011S Of ChaptK 395 to bit a Ktpid hprovKmnts @II Ody t0 the Kca
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Honoreble 0. H. “Ike”Henis - Pege 7 (DM-3 19)
within 8 IIUUIiCip&y’S wrpomte bound&s end extraterritorialju&diction is, we believe,
problem&, given the legisku& express stetement in section 395.011(c) that a
municipality may contract to provide upitel impnwements outside those ereds. ZB N.
SINGER,STATUTES ANDSTATIJKRYCu.~s~~ucno~ $53.01. rt 229.30 (5th ed. 1992)
(stUhg th8t comts must construe 8t8tutes lumnoniously lf such wnstruction is
sason8ble); 67 ?BX. JUR. 3D Stdufes 5 133, u 740 (1989) (stuing -on that
legislature intended provisions reking to seme subject to opemte hsrmoniously).
Fudemmc, a providing rmmkipdity will be uneble to determine the true extent of
capital improvrments and the tme cost unless it may include in its cslculations all of the
area for which it is &ho&d to provide such.wprovantis. Accordingly, we wastrue
the definition of “service wr” to in&de ell of thet uea to which e municipelity is
authorized to provide apitel improvements, +ther becsuse the ~a is within the
municipality’s wrporete bound&es or -torial jurisdiction or because the
municipslity hes wntmcted with enother municipal&yto provide capital improvementsto
thu Kea.‘O
You predhted your third question upon a &ding that chapter 395 provides no
mechanism by which a municipalitymey cherge impect fees within witha municipality.
Because we hwe concluded thet e providing municipelitymay collect impact fees under a
contmct with the OtbK municipdii or by the wnsellt of the OthK municipality,we need
not enswer the third question.
‘%wesmtedabw&seeJ4mpage3.I+ .-. MillppFw-Jddiao~-
pfakcaw te 8ectloIl d tbc Local GwmlmK4codce8tbcneoroftbcHou98dmiagtbc
395.011(C)
a~anwl1eadiqd8caatcBiU336. ?btctdioltiond”oavloc~“wblchpmvidcdamarntLUy8si1
do~am~~&,ludbocnad&dpm4ouly. SrrC.8.8.B.336.&ameCtmunmEca~mdcDcvdoplPmS
Aas1987.7olllLeg.
p. 1695
Honotable 0. H. “Ike”Harris - Pege 8 (DM-319)
SUMMARY
Section 395.01l(c) of the Locdl Government Code euthorizes a
munidpalityto wntmct with anoth~ municipdityto provide capital
impmvemenUtomareain&lethewqxxeteboundhaoftbe
8mmd municipality.Section 395.01l(c) authorizes the mnicipdity
thativishes to provide the capital imm toch8rgemimpact
fee within the caporate boundaries of the municipalitythet wishes to
IWcive the Cqital bnprovementsifthe municip8litieshave wntracted
WXdill&’ Md th providillg
muniCi~ WlIljk With chapta
395 of the Local Government Code.
Section 395.01l(c), in wnjunction with the definition of “capital
improvements plen” in section 395.001(2). authorizes e municipality
that wntmcts to provide capital improvements to an lvea outside its
wrponte boundaries end extreterritoriel jhdiction to include the
SKI in the municipality’scapital improvementsphn.
DAN MORALES
Attorney Gend of Texas
JORGE VEGA
Fii Arsistmt Attorney General
SARAH J. SHIRLEY
Chair, Opiion Committee
prepared by KymMy K. Oltrogge
Assistant Attorney General
p. 1696