OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS
JOHN CORNYN
April 152002
The Honorable Rene 0. Oliveira Opinion No. JC-0488
Chair, Committee on Ways and Means
Texas House of Representatives Re: Whether the City of Lake Jackson’s sales and
P.O. Box 2910 use tax election proposition allows expenditure of
Austin, Texas 787682910 the taxes for an access road to service undeveloped
commercially zoned property (RQ-0454-JC)
Dear Representative Oliveira:
Pursuant to section 4B of the Development Corporation Act of 1979 (the “Act”), the voters
of the City of Lake Jackson (the “City”) approved the collection of a one-half cent sales and use tax
to pay for the costs of, among other improvements, “infrastructure improvements for the
development of new or expanded business enterprises.“* On behalf of the City, you ask whether the
language approved by the voters allows the City to use the sales tax proceeds to build a proposed
access road to service undeveloped commercially zoned property that fronts a state highway. See
Request Letter, supra note 1. First, we conclude that under section 4B of the Act, the sales tax is
levied for the benefit of the City’s section 4B development corporation, the Lake Jackson
Development Corporation (the “Corporation”); and the Corporation, rather than the City, is
authorized to expend the tax proceeds for authorized projects. We next conclude, based on the
information provided to us, that the voter-approved election proposition language does not, as a
matter of law, prohibit the Corporation from using the sales tax proceeds to build the access road if
it will promote the development of new and expanded enterprises.
To provide a legal context, we briefly review the Act’s provisions regarding approval and
use of the section 4B sales taxes. The Development Corporation Act of 1979 authorizes a city,
county, or district to create an industrial development corporation to finance the cost of authorized
“projects” that generally promote economic development. See TEX. REV. CIV.STAT. ANN. art. 5 190.6
(Vernon 1987 & Supp. 2002). In particular, section 4B of the Act authorizes an eligible city to
create an industrial development corporation governed by that section, see id. 9 4B(b) (Vernon Supp.
2002), and authorizes the city to levy a sales and use tax for the benefit of the corporation, see id.
8 4B(d), but only if approved by a majority of the voters at an election called for that purpose, see
id. Other than the rate of the tax and descriptions of particular projects, section 4B does not
‘See Letter from Honorable RenC 0. Oliveira, Chair, Committee on Ways and Means, Texas House of
Representatives, to Honorable John Cornyn, Texas Attorney General, at 1 (Oct. 17, 2001) (on file with Opinion
Committee) [hereinafter Request Letter].
The Honorable Rene 0. Oliveira - Page 2 (JC-0488)
generally specify the contents of the tax election proposition or ballot to be submitted to the voters.
See id.; see also id. $8 4B(a-3)(2) (re q uiring voter approval for specific venue projects “clearly
described on the ballot”), (a-5) (requiring ballot proposition at election to adopt tax to clearly
describe project if project involves water supply facilities or water conservation programs), (p)
(requiring ballot to provide for voting for or against use of sales tax for “clean up of contaminated
property”). Upon receipt of the sales tax proceeds from the Comptroller of Public Accounts, who
administers the tax, the city must deliver the tax proceeds to the corporation. See id. 5 4B(g). The
corporation may use the sales tax proceeds to finance costs of authorized “projects.” See id. 8
4B(g)(l), (2). Those “projects” include “facilities and improvements” found by the board of
directors of the corporation to:
(A) be required or suitable for use for professional and
amateur (including children’s) sports, athletic, entertainment, tourist,
convention, and public park purposes and events, including stadiums,
ball parks, auditoriums, amphitheaters, concert halls, learning centers,
parks and park facilities, open space improvements, municipal
buildings, museums, exhibition facilities, and related store, restaurant,
concession, and automobile parking facilities, related area
transportation facilities, and related roads, streets, and water and
sewer facilities, and other related improvements that enhance any of
those items;
(B) promote or develop new or expanded business
enterprises, including a project to provide public safety facilities,
streets and roads, drainage and related improvements, demolition of
existing structures, general municipally owned improvements, as well
as any improvements or facilities that are related to any of those
projects and any other project that the board in its discretion
determines promotes or develops new or expanded business
enterprises.
Id*8w-wxfv~(B)(Vemon Supp. 2002) (emphasis added).
With this statutory background, we turn to your question. You inform us that in May of
1995,2 the voters of the City approved the levy and collection of a one-half cent sales and use tax.
See Request Letter, supra note 1, at 1. The proposition submitted to the voters provided as follows:
The levy and collection of a [one-halfl cent sales and use tax within
the City for the purposes authorized by Section 4B of Article 5 190.6,
Vernon Texas Civil Statutes, as amended (the “Act”), but limited to
*See Lake Jackson, Tex., Election Ordinance 95-1330 (May 6, 1995) (on file with Opinion Committee)
[hereinafter Election Ordinance].
The Honorable Rene 0. Oliveira - Page 3 (JC-0488)
provisions for payment of the costs of land, buildings, equipment,
facilities, improvements and maintenance and operation costs for
public park purposes, recreational facilities to be used for sports and
entertainment, and for infrastructure improvements for development
of new or expanded business enterprises.
Election Ordinance, supra note 2, at 2 (emphasis added).
You inform us that a private landowner owns commercially zoned undeveloped property that
fronts, but is not accessible from, a public road. See Request Letter, supra note 1, at 1. We
understand that this public road is State Highway 288. See id. (attached certified copy of excerpt
from City minutes authorizing attorney general opinion request). The proposed road would provide
access from the state highway to the private property. See id. We understand that the access road
will be a public road. See id. (access road will be on public property). You ask:
Does the ballot language that was approved by the voters authorize
a funding of the proposed frontage access road to provide access to
undeveloped land that is zoned cornrnercial or does the language limit
the use of one-half cent money in a manner that would prohibit use
of the money for the proposed access road?
Id. at 1. While you do not elaborate, we presume that the City’s legal concern is whether the
proposed access road expenditure falls within the scope of the purposes for which the voters
authorized the sales and use tax.3
Before addressing the City’s principal concern, we address its assumption that the City,
rather than its section 4B development corporation, may expend the sales tax proceeds for the
purposes authorized by the voters. This assumption is contrary to the Act. The sales tax is imposed
and collected by an eligible city for the benefit of the city’s development corporation established
under section 4B. See TEX. REV. CIV. STAT. ANN. art. 5 190.6,§ 4B(d) (Vernon Supp. 2002). Upon
receipt of the sales tax proceeds, the city is required to deliver them to the development corporation.
See id. 8 4B(g). And the corporation is authorized to expend the sales tax proceeds for authorized
project costs. See id.; see also id. $0 2( 11) (defining “projects” to include facilities found by
corporation’s board of directors to promote enumerated purposes), 4B(a)(2) (same). The city, of
course, must ultimately “approve all programs and expenditures of the corporation.” See id. fj 2 1;
see also id. 9 23(12) (p owers exercised by corporation subject at all times to control of city’s
governing body). We understand that the City has established the Lake Jackson Development
Corporation under section 4B. Accordingly, the sales tax proceeds must be delivered to the
Corporation; and the Corporation is authorized to expend the tax proceeds for the purposes
authorized by the Act and approved by the voters.
3Neither the City nor the Corporation have provided any information.
The Honorable Rene 0. Oliveira - Page 4 (JC-0488)
We turn now to the City’s concern regarding the scope of the election proposition. Proceeds
of the section 4B sales and use tax may be used only for the purposes expressly represented to and
approved by the voters, i.e., the contract with the voters. See Tex. Att’y Gen. Op. No. JC-0400
(2001) at 4-5 (an d cases cited). The contract with the voters clearly includes the purposes stated in
an election ordinance or order formally adopted by a governing body and the election proposition
submitted to the voters. See id. at 5. It also may include representations made by the governing
body outside the formal election proceedings, for example, such as statements made before the
election by representatives of the governing body to the public regarding specific purposes for which
the proceeds will or will not be used. See id.
Assuming for the purposes of this opinion that neither the governing body of the City nor of
the Corporation made any representations limiting the use of the sales and use tax proceeds beyond
that in the election proposition approved by the City’s voters, we believe the proposed access road
expenditure is not excluded, as a matter of law, from the scope of the purposes for which the voters
approved the sales tax.
The election proposition is sufficiently broad to embrace road and street projects authorized
under section 4B of the Act. The proposition states that the tax proceeds may be used for three
categories of the purposes authorized under section 4B: public park purposes and recreational
facilities authorized by subsection (a)(2)(A) and “infrastructure improvements for development of
new or expanded business enterprises” authorized under subsection (a)(2)(B). See Election
Ordinance, supra note 2, at 2; TEX. REV. CIV. STAT.ANN. art. 5190.6, 0 4B(a)(2)(A), (B) (Vernon
supp. 2002); see supra pp. l-2. “Infrastructure improvements” is a broad phrase. Black’s Law
Dictionary defines “infrastructure” as “[tlhe underlying framework of a system; esp., public services
and facilities (such as highways, schools, bridges, sewers, and water systems) needed to support
commerce as well as economic and residential development.” BLACK’SLAW DICTIONARY 784 (7th
ed. 1999). The term “improvements” is similarly broad: “An addition to real property, whether
permanent or not; esp., one that increases its value or utility or that enhances its appearance.” Id.
at 761. “Infrastructure improvements” may reasonably be used to describe the category of specific
public-service-facilities-type improvements authorized by section 4B(a)(2)(B): projects to “promote
or develop new or expanded business enterprises, including a project to provide public safety
facilities, streets and roads, drainage and related improvements, demolition of existing structures,
[and] general municipally owned improvements.‘, TEX. REV. CIV. STAT. ANN. art. 5 190.6, 5
Wa)W(W w emon Supp. 2002) (emphasis added). This provision, we note, specifically
authorizes, and did so at the time of the City’s election, “streets and roads” among those public-
service-type facilities. See id.; Act of May 22,1993,73d Leg., R. S., ch. 1022,§ 3,1993 Tex. Gen.
Laws 4424,4426 (adding section 4B(a)(2)(B)).
Additionally, section 4B does not require that a road and street project authorized under
subsection (a)(2)(B) be specifically approved. Other than the rate of the tax and descriptions of
particular projects, section 4B does not generally specify the contents of the tax election proposition
or ballot to be submitted to the voters. After reviewing the statutory provisions, Attorney General
The Honorable Rene 0. Oliveira - Page 5 (JC-0488)
Opinion JC-0400, which dealt with whether sales tax proceeds could be expended for a park project
that was not specifically approved by the voters, summarized section 4B’s provisions as follows:
[Slection 4B requires that the sales and use tax be approved by the
voters, but does not generally require that specific projects to be
funded with the tax proceeds be approved by the voters. For most
projects, voter approval is required only if the requisite number of
voters submit a petition requesting such an election and the specific
project or that specific type of project has not been approved
previously. While there are particular types of projects that the
legislature has indicated must always be approved by the voters at an
election before a development corporation may undertake them,
public parks and park facilities are not one of them.
Tex. Att’y Gen. Op. No. JC-0400 (2001) at 3. Similarly, here, a road or street project is not one of
the projects that must be specifically described and approved by the voters. Cf: TEX. REV. CIV. STAT.
ANN. art. 5190.6, §§ 4B(a-3)(2) (re q uiring voter approval for specific venue projects “clearly
described on the ballot”), (a-5) (requiring ballot proposition at election to adopt tax to clearly
describe project if project involves water supply facilities or water conservation programs), (p)
(requiring ballot to provide for voting for or against use of sales tax for “clean up of contaminated
property”). In sum, while the City’s election proposition could have been more precise, we cannot
say, as a matter of law, that “infrastructure improvements” excludes an access road.
That “infrastructure improvements” is broad enough to embrace the access road does not end
our inquiry. The project must also promote the “development of new or expanded enterprises” under
section 4B(a)(2)(B) and the City’s voter-approved proposition. See id. § 4B(a)(2)(B) (providing that
“projects” include facilities, and improvements found by the board of directors to “promote or
develop new or expanded business enterprises, including a project to provide public safety facilities,
streets and roads”); Election Ordinance, supra note 2, at 2 (proposition authorizing levy of sales tax
to pay “for infrastructure improvements for development of new or expanded business enterprises”).
But the determination ofwhether a particular project will promote “development of new or expanded
business enterprises” is, in general, a question of fact within the discretion ofthe Corporation’s board
of directors in the first instance, subject to judicial review for abuse of discretion. See TEX. F&V.
CIV. STAT.ANN. art. 5190.6,§ 4B(a)(2)(B) (V emon Supp. 2002); Tex. Att’y Gen. Op. No. JC-0362
(2001) at 4 (and opinions cited). Thus, in order for the access road to come within the ambit of the
Act and the proposition approved by the City’s voters, the Corporation’s board of directors must find
that the access road will promote the development of new or expanded business enterprises. The
board’s determination must, of course, be reasonably supported by the facts. See Tex. Att’y Gen.
Op. No. JC-0362 (2001) at 5-6. In this instance, it is conceivable that a road providing access to the
undeveloped commercially zoned land is necessary for the commercial development of that land or
will result in its commercial development, for example, by the construction or expansion thereon of
a business enterprise. Cf: Tex. Att’y Gen. LO-95-072, at 2 (stating that it is unlikely that
The Honorable Rene 0. Oliveira - Page 6 (JC-0488)
construction of sewer facilities in residential subdivision would “promote or develop new or
expanded business enterprises”).
We conclude, based on the information provided to us, that the sales tax election proposition
language approved by the City voters does not, as a matter of law, prohibit the Corporation from
using the sales tax proceeds to build the proposed access road to service undeveloped commercially
zoned property if the expenditure will promote the development of new or expanded business
enterprises.
The Honorable Rene 0. Oliveira - Page 7 (JC-0488)
SUMMARY
Under section 4B of the Development Corporation Act of
1979, the sales and use tax is levied for the benefit of the Lake
Jackson Development Corporation established by the City of Lake
Jackson under section 4B; and the Corporation, rather than the City,
is authorized to expend the tax proceeds for authorized projects.
The 1995 sales and use tax election proposition approved by
the voters of the City of Lake Jackson pursuant to section 4B does not
prohibit the Lake Jackson Development Corporation from using the
sales tax proceeds to build an access road to service undeveloped
commercially zoned property that fronts a state highway if the
expenditure will promote development of new or expanded business
enterprises.
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
Sheela Rai
Assistant Attorney General, Opinion Committee