Can a Texas city use public funds or hotel taxes to help build a presidential library?

Plain-English summary

The George Bush Presidential Library was going up on the Texas A&M campus in College Station, and the library committee asked the City of College Station to commit $50,000 a year toward it. The Texas A&M System chancellor, Barry Thompson, asked the Attorney General, on the city's behalf, whether the city could legally spend public money (including hotel-motel occupancy tax money) on the library. The office answered in two parts, and the answer to both was "only under conditions."

On general city funds, the question was article III, section 52 of the Texas Constitution. That provision bars the legislature from authorizing a city to "grant public money or thing of value" to an individual, association, or corporation. But Texas courts have long read it to allow a city to spend its own money to carry out a city purpose even when someone else also benefits (Barrington v. Cokinos). The office set out the standard three-part test from its prior opinions: the city must have a public (city) purpose for the spending, the city must receive adequate consideration in return, and there must be controls (contractual or otherwise) ensuring the public purpose is actually carried out. The governing body normally decides those questions, subject to judicial review. But the office said the proposed deal looked too general. The $50,000 was not tied to any specific program or function of the library, and the only "control" described, that the library stay open in each funded year, did not say how many days of openness the money bought or how the city would enforce it. So the office advised the council to pin down what city purposes the library would serve and limit the funds to those purposes, with real controls.

On hotel-motel occupancy taxes, the limit is statutory. Tax Code chapter 351 lets a city impose the tax, and section 351.101 says the revenue "may be used only to promote tourism and the convention and hotel industry," then lists the exclusive permitted uses: convention center and visitor information facilities, registration of convention delegates, advertising and promotion to attract tourists, the arts, and historical restoration or promoting visits to historic sites and museums. The office found the city had not tied its proposed library contribution to any of those purposes. A flat contribution did not fit the convention-facility, registration, or arts categories. Advertising the library to attract tourists could fit the advertising-and-promotion category, and if the library were a museum, promoting visits to it could fit the historic-sites-and-museums category, but the city had not limited its contribution to either. So hotel tax money could go to the library only if the contribution were narrowed to a qualifying, listed purpose.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG 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.

This opinion construed article III, section 52 of the Texas Constitution and Tax Code chapter 351 (the municipal hotel occupancy tax), including the list of permitted uses in section 351.101, as they stood in 1996. The hotel occupancy tax statute in particular has been amended many times since, and the list of permitted uses has grown, so the categories and section numbers may differ today. Read this page for the office's 1996 reasoning, and verify the current Tax Code and constitutional case law before relying on any specific provision.

What the opinion meant at the time

For Texas cities considering a contribution to an outside project (such as a university or library): The opinion meant a city could spend public money on a project run by another entity without violating article III, section 52, but only where there was a genuine city purpose, the city received adequate consideration, and controls ensured the public purpose was met. A vague, undesignated contribution risked failing that test.

For the City of College Station specifically: The opinion meant the proposed $50,000-a-year contribution, with the library's year-by-year openness as the only control, was likely too general for the council to establish a city purpose and adequate consideration. The office said the council would be well advised to identify the city purposes served and tie the funds to them with controls.

For cities using hotel-motel occupancy tax revenue: The opinion meant that money could be spent only for the purposes listed in Tax Code section 351.101 (promoting tourism and the convention and hotel industry). A library contribution qualified only if limited to a listed purpose, such as advertising to attract tourists, or, if the library were a museum, promoting visits to it.

For lawyers: The opinion applied the public-purpose framework from Barrington v. Cokinos and the office's prior opinions (including DM-317 and DM-256), and read section 351.101 as an exclusive list of permitted uses of municipal hotel occupancy tax revenue.

Common questions

Can a Texas city give money to a project run by someone else, like a university library?
Under this opinion, a city can spend public money on such a project without violating article III, section 52, but only if there is a genuine city purpose, the city receives adequate consideration, and there are controls to ensure the public purpose is met. A bare gift of public money is what the constitution forbids.

Was the $50,000-a-year contribution to the Bush Library allowed?
The office did not flatly forbid it, but it said the proposal looked too vague. The only described control (that the library stay open each year it is funded) did not say how many days of openness the money secured or how the city would enforce it, so the council could not yet show a city purpose and adequate consideration.

Can hotel-motel occupancy tax money be spent on a library?
Only for the purposes listed in Tax Code section 351.101, which are about promoting tourism and the convention and hotel industry. The office said the city could use hotel tax money on the library only if its contribution were limited to a qualifying use, such as advertising the library to attract tourists, or, if the library were a museum, promoting visits to it.

What is the "adequate consideration" requirement about?
It is part of the public-purpose test under article III, section 52. The city cannot simply hand over public funds; it must receive something of value in return that advances a city purpose, with controls ensuring that purpose is actually carried out.

Did the opinion say the Bush Library had no public value?
No. The question was not whether the library was valuable, but whether this particular spending arrangement met the constitutional and statutory requirements. The office's concern was the vagueness of the proposed contribution and the absence of a tie to a qualifying hotel-tax purpose, not the library itself.

Background and statutory framework

Article III, section 52 of the Texas Constitution provides that, except as otherwise provided, the legislature has no power to authorize a county, city, town, or other political subdivision to lend its credit or to grant public money or a thing of value in aid of any individual, association, or corporation. Despite that language, the Texas Supreme Court in Barrington v. Cokinos held the provision does not stop a city from spending its funds to carry out a municipal purpose, even if another entity also benefits. Out of that line of cases, and the office's prior opinions, came a familiar three-part test: a public purpose, adequate consideration to the city, and controls ensuring the public purpose is carried out. The governing body ordinarily decides those questions subject to judicial review, but the office found the College Station proposal too general to support that decision, because the money was not designated for any specific library program and the openness "control" was undefined.

The hotel-motel occupancy tax is governed by chapter 351 of the Tax Code, which authorizes a municipality to impose the tax by ordinance (section 351.002). Section 351.101(a) states that the revenue "may be used only to promote tourism and the convention and hotel industry" and then limits that use to an enumerated list: convention center facilities and visitor information centers; the registration of convention delegates; advertising and promotional programs to attract tourists and convention delegates; the arts; and historical restoration and preservation, or promoting visits to preserved historic sites or museums at or near convention facilities or elsewhere in the municipality frequented by tourists. The office (citing its Opinion M-965) treated that list as exclusive. Measuring the proposed library contribution against the list, the office concluded it did not fit the convention-facility, registration, or arts categories; that the advertising-and-promotion category could cover advertising the library to attract tourists; and that the historic-sites-and-museums category could cover promoting visits to the library if it were a museum, but that the city had not limited its contribution to either qualifying use. The office noted in a footnote that it was not addressing the separate questions raised by a city's promise to pay a fixed sum in future years, which implicate article XI, section 5 of the constitution.

Citations

Constitutional and statutory provisions discussed:

• Tex. Const. art. III, § 52 (lending of credit and grants of public money)
• Tax Code ch. 351 (municipal hotel occupancy tax), including § 351.002 (imposition by ordinance) and § 351.101 (exclusive permitted uses of the revenue)
• Education Code § 86.24(a)
• Tex. Const. art. XI, § 5 (referenced in a footnote on multi-year municipal obligations)

Attorney General opinions cited:

• DM-317 (1995), DM-256 (1993), JM-1030 (1989), JM-324 (1985), MW-423 (1982), H-1123 (1978), M-965 (1988), V-953 (1949)

Cases discussed:

• Barrington v. Cokinos, 338 S.W.2d 133 (Tex. 1960)
• State ex rel. Grimes County Taxpayers Ass'n v. Texas Municipal Power Agency, 565 S.W.2d 258 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd)
• McNeill v. City of Waco, 33 S.W. 322 (Tex. 1895)
• City of Wichita Falls v. Kemp Public Library Bd. of Trustees, 593 S.W.2d 834 (Tex. Civ. App.-Fort Worth 1980, writ ref'd n.r.e.)
• Clear Lake City Water Auth. v. Clear Lake Utilities Co., 549 S.W.2d 385 (Tex. 1977)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0394
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1996/dm0394.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

May 17, 1996

Dr. Barry B. Thompson
Chancellor
Texas A&M University System
301 Tarrow, 7th Floor
College Station, Texas 77843-1122

Opinion No. DM-394

Re: Whether the City of College Station may expend funds on behalf of the George Bush Library at Texas A&M University (RQ-849)

Dear Dr. Thompson:

On behalf of the City of College Station (the "city"), you ask whether the city may spend public money, including hotel-motel occupancy taxes, on the George Bush Library (the "library"), now under construction on the Texas A&M University campus in College Station. See House Comm. on Land and Resource Management, Bill Analysis, S.B. 1018, 74th Leg., R.S. (1995); see also Educ. Code § 86.24(a). You state as follows:

The George Bush Library Committee is seeking a financial commitment of $50,000.00 per year from the City of College Station, Texas. College Station is a chartered home-rule municipal corporation. The George Bush Library will be located in the corporate limits of College Station, Texas. In addition to being a center for research and scholarship, it is anticipated that the library will attract tourists to College Station.

You raise the following legal issues: whether the city has a legitimate public purpose for spending public funds on the George Bush Library, whether a requirement that the library stay open in each year that is funded constitutes adequate control to establish the public purpose, and whether the city is authorized to expend hotel-motel occupancy funds on the library.[1]

Article III, section 52 of the Texas Constitution provides in part:

Except as otherwise provided by this section, the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit to or grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in any such corporation, association, or company.

This provision does not prevent the City of College Station from spending its funds to carry out a municipal purpose, even if another entity also benefits from the expenditure. Barrington v. Cokinos, 338 S.W.2d 133, 140 (Tex. 1960); see State ex rel. Grimes County Taxpayers Ass'n v. Texas Municipal Power Agency, 565 S.W.2d 258, 268 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd). The city must receive adequate consideration for the funds it provides the university, and contractual or other controls must be in place to ensure that the public purpose will be carried out. See Attorney General Opinions DM-317 (1995), JM-1030 (1989), JM-324 (1985), MW-423 (1982), H-1123 (1978). The governing body of the City of College Station would ordinarily have discretion to determine, subject to judicial review, whether the proposed expenditure serves a public purpose, whether the city receives adequate consideration for its expenditure, and whether there are sufficient controls to ensure that the public purpose will be carried out. Attorney General Opinions DM-317 (1995), DM-256 (1993). However, the agreement described in your letter may be too general for the city government to make this decision. Since the $50,000 is apparently not designated for a specific program or function of the library, it may be difficult to determine whether this expenditure will actually benefit the city.[2] The "control" you describe, that the library will be open in each year that it is funded, does not state how many days of openness per year will be secured by the $50,000 or how the city will enforce the openness requirement attributable to its expenditure. Accordingly, the city council would be well advised to determine what city purpose or purposes will be served by the library, and limit the use of city funds to such purposes, subject to controls to ensure that the city purposes are carried out.

We now consider whether the city may spend hotel-motel occupancy tax funds on the library. Tax Code chapter 351 authorizes a municipality to adopt an ordinance imposing the tax. See Tax Code § 351.002. Section 351.101(a) of the Tax Code provides that

[r]evenue from the municipal hotel occupancy tax may be used only to promote tourism and the convention and hotel industry, and that use is limited to the following:

(1) the acquisition of sites for and the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of convention center facilities or visitor information centers, or both;

(2) the furnishing of facilities, personnel, and materials for the registration of convention delegates or registrants;

(3) advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity;

(4) the encouragement, promotion, improvement, and application of the arts, including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution and exhibition of these major art forms; and

(5) historical restoration and preservation projects or activities or advertising and conducting solicitations and promotional programs to encourage tourists and convention delegates to visit preserved historic sites or museums:

    (A) at or in the immediate vicinity of convention center facilities or visitor information centers; or

    (B) located elsewhere in the municipality or its vicinity that would be frequented by tourists and convention delegates.

Section 351.101 sets out the exclusive purposes for which the tax may be spent. Attorney General Opinion M-965 (1988) at 6. You do not identify any specific function of the George Bush Library for which funds contributed by College Station will be used, and you do not explain how the expenditure of the tax funds will carry out any of the five specific purposes enumerated in section 351.101 of the Government Code. The proposed expenditure is not within the purposes set out in section 351.101(a)(1), (2), or (4). Although section 351.101(3) might authorize expenditures for advertising the library to attract tourists to College Station, no such limitation appears to apply to the proposed expenditure. Finally, if the library could be characterized as a museum, section 351.101(5) would authorize the expenditure of hotel tax funds to conduct "solicitations and promotional programs to encourage tourists and convention delegates" to visit it, but again, you have not indicated that the proposed expenditure would be subject to this limitation. The City of College Station may spend funds raised under chapter 351 of the Tax Code on the George Bush Library only if such limitations are imposed.

SUMMARY

The City of College Station may, without violating article III, section 52 of the Texas Constitution, spend public funds on the George Bush Library to be established by Texas A&M University only if there is a city purpose for the expenditure, if the city receives adequate consideration for the expenditure, and if sufficient controls are attached to the transaction to ensure that the public purpose will be carried out. Hotel-motel occupancy taxes raised by the city under chapter 351 of the Tax Code may be spent only for the purposes expressly set out in section 351.101 of the code. No showing has been made that the tax funds proposed for allocation to the George Bush Library will be used for any purpose stated in section 351.101.

DAN MORALES
Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

SARAH J. SHIRLEY
Chair, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General

[1] You do not inquire about legal issues raised by a city's attempt to contract to provide $50,000 a year in future years. See Tex. Const. art. XI, § 5; McNeill v. City of Waco, 33 S.W. 322, 324 (Tex. 1895) (municipal obligations not payable from current revenues are subject to article XI, section 5 of Texas Constitution); City of Wichita Falls v. Kemp Public Library Bd. of Trustees, 593 S.W.2d 834, 837 (Tex. Civ. App.-Fort Worth 1980, writ ref'd n.r.e.) (same); see also Clear Lake City Water Auth. v. Clear Lake Utilities Co., 549 S.W.2d 385, 390 (Tex. 1977) (contracts that contemplate successive performances and which are indefinite in duration can be terminated at will of either party).

[2] Attorney General Opinion V-953 concluded that a county could not donate public money to an incorporated public school library, but it could contract for library privileges from a library. Attorney General Opinion V-953 (1949) at 4.