Can a Texas economic development corporation spend section 4B sales tax money on a youth football field?

TX AG Opinion GA-0265: 4B Tax Can Fund Football Field

Plain-English summary

A state senator asked whether the Gun Barrel City Economic Development Corporation could use section 4B sales and use tax revenue to build a youth football field, given the ballot language the city's voters actually approved in a 1997 election. A prior 2002 opinion from the same office, Attorney General Opinion JC-0494, had addressed the same underlying question but analyzed a different, earlier version of the ballot proposition drawn from the city's election-calling ordinance, and concluded a youth league football field could not be funded because the project had no discernible connection to economic development.

This opinion reached the opposite result once given the actual official ballot the voters saw and approved. That ballot authorized 4B tax spending on projects "for the promotion of professional and amateur athletics and sports, including stadiums, [and] ball parks," language drawn from the part of section 4B that does not require a project to promote business development, unlike the neighboring provision that does. Because courts treat the ballot proposition itself as the city's "contract with the voters" and require tax proceeds to be spent only as approved at the polls, the opinion concluded the corporation could fund the football field under the ballot language actually approved, and it overruled the 2002 opinion to the extent it conflicted, explaining that opinion had correctly stated the law but had been given the wrong facts.

Currency note

This opinion was issued in 2004. 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.

Who this opinion affected (as of 2004)

The Gun Barrel City Economic Development Corporation: The opinion concluded the corporation could use its section 4B sales tax revenue to fund a youth football field, based on the actual 1997 ballot language voters approved, which covered facilities for professional and amateur, including children's, sports and public park purposes.

Other Texas cities and their type B (4B) economic development corporations: The opinion reinforced that the specific ballot proposition language a city's voters actually approved, not a paraphrase or an earlier draft ordinance, controls what section 4B tax revenue may be spent on, since the ballot becomes the city's "contract with the voters."

Anyone relying on Attorney General Opinion JC-0494 (2002): The opinion overruled JC-0494 to the extent it conflicted with this opinion's conclusion, explaining the earlier opinion was legally correct but had analyzed the wrong ballot text.

Common questions

Can a city's 4B economic development corporation pay for youth sports facilities like a football field?
It depends on the exact ballot language the voters approved, according to this opinion. For Gun Barrel City, the answer was yes, because the actual approved ballot authorized spending on facilities for professional and amateur, including children's, sports and public park purposes, a category that does not require an economic-development connection.

Does every 4B ballot proposition let a city fund non-economic projects like a park or football field?
Not necessarily. The opinion distinguished between the section 4B(a)(2)(A) category, covering sports, athletic, and public park purposes, which does not require promoting business development, and other 4B categories that do require a business-development connection; which category applies depends on the specific ballot language a city's voters approved.

Why did the Attorney General reach a different conclusion than its own 2002 opinion on the same city's tax?
Because the 2002 opinion, JC-0494, was given a different and earlier version of the ballot proposition drawn from the city's election ordinance rather than the official ballot voters actually saw; once the office reviewed the certified official ballot, it found the approved language supported funding the football field and overruled the earlier opinion to that extent.

Background and statutory framework

In 1997, Gun Barrel City voters approved a one-half percent sales and use tax under section 4B of article 5190.6 of the Revised Civil Statutes, the Development Corporation Act of 1979, which lets an eligible city create an industrial development corporation and levy a sales tax for its benefit if approved by a majority of voters. Section 4B does not itself dictate the exact wording of the ballot proposition beyond the tax rate and any listed specific projects. At the time of the election, section 4B(a)(2)(A) defined authorized "projects" to include land, buildings, equipment, facilities, and improvements the corporation's board found suitable for professional and amateur, including children's, sports, athletic, entertainment, tourist, convention, and public park purposes and events, a category the legislature found accomplished public purposes of economic development without requiring the board to make an individual finding of business-promotion for each such project, based on a 1991 legislative finding accompanying the statute's original enactment.

The prior opinion, JC-0494, had analyzed a ballot proposition quoted from the city's election-calling ordinance, Gun Barrel City Ordinance No. 1997-005, which described the tax simply as being "for the promotion and development of new and expanded business enterprises," a formulation drawn from the separate 4B(a)(2)(B) category that does require a business-development connection. Based on that language, JC-0494 concluded the tax could not fund a youth league football field with no discernible economic advantage, though it left open whether section 4B(a)(2)(A) itself required an economic-development purpose. This opinion instead reviewed a certified copy of the official ballot actually voted on May 3, 1997, which the City Secretary said the Mayor had drafted to list all authorized uses of the tax revenue; that ballot's language tracked both the 4B(a)(2)(A) sports-and-park-purposes category and the 4B(a)(2)(B) business-development category, including a paraphrase of "projects for the promotion of professional and amateur athletics and sports, including stadiums, [and] ball parks."

Applying the rule that a ballot proposition, once approved, becomes the city's "contract with the voters" that tax proceeds may be spent only as voted, drawn from cases including Barrington v. Cokinos and Taxpayers for Sensible Priorities v. Dallas, and the older rule from Scarborough v. Eubank that the will of the voters as expressed on the ballot controls, the opinion found the official ballot's sports-and-park-purposes language authorized the football field project without requiring a business-development showing. The opinion noted it did not consider whether the difference between the ordinance language and the official ballot language raised any question about the election's validity, since the deadline for an election contest had long passed and nothing suggested the election was void. It concluded by overruling Attorney General Opinion JC-0494 to the extent inconsistent with this opinion, characterizing the earlier opinion as correct on the law but based on incorrect facts about which ballot language the voters had actually approved.

Citations

Statutes:

• TEX. REV. CIV. STAT. ANN. art. 5190.6 (Vernon 1987 & Supp. 2004-05)
• TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(b), (d)
• TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(g)(1)-(2)
• TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(a)(2)
• TEX. REV. CIV. STAT. ANN. art. 5190.6, §§ 3, 21 (Vernon Supp. 2004-05)
• TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(a)(2)(A) (Vernon Supp. 2004-05)
• TEX. ELEC. CODE ANN. § 233.006 (Vernon 2003)

Cases:

• Scarborough v. Eubank, 53 S.W. 573, 574 (Tex. 1899)
• Ferrell v. Harris County Fresh Water Supply, 241 S.W.2d 242, 244 (Tex. Civ. App.-Galveston 1951, no writ)
• Barrington v. Cokinos, 338 S.W.2d 133, 142 (Tex. 1960)
• Taxpayers for Sensible Priorities v. Dallas, 79 S.W.3d 670, 672 (Tex. App.-Dallas 2002, pet. denied)
• Fletcher v. Howard, 39 S.W.2d 32, 35 (Tex. 1931)
• Robbins v. Limestone County, 268 S.W. 915, 919 (Tex. 1925)
• Brown v. Blum, 9 S.W.3d 840, 846 n.8 (Tex. App.-Houston [14th Dist.] 1999, pet. dism'd w.o.j.)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0265
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2004/ga0265.pdf

Original opinion text

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

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

October 28, 2004

The Honorable Todd Staples
Chair, Infrastructure Development and Security Committee
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Opinion No. GA-0265

Re: Whether the Gun Barrel City Economic Development Corporation may fund the construction of a youth football field (RQ-0221-GA)

Dear Senator Staples:

You ask whether the Gun Barrel City Economic Development Corporation (the "Corporation") may, based on the ballot language approved by the city's voters, fund the construction of a youth football field.[1]

On May 3, 1997, the voters of Gun Barrel City (the "City") approved the adoption of a one-half percent sales and use tax under section 4B, article 5190.6 of the Revised Civil Statutes, the Development Corporation Act of 1979 (the "Act"). See TEX. REV. CIV. STAT. ANN. art. 5190.6 (Vernon 1987 & Supp. 2004-05).[2] Section 4B authorizes an eligible city to create an industrial development corporation and to levy a sales and use tax for the benefit of the corporation, if approved by a majority of the voters at an election called for that purpose. See id. § 4B(b), (d). Other than the tax rate and descriptions of specific projects, section 4B does not specify the contents of the tax election proposition or ballot to be submitted to the voters. See id. See also Tex. Att'y Gen. Op. No. JC-0494 (2002) at 1-2. Upon receipt of the sales tax proceeds, the city must deliver the tax proceeds to the corporation to pay the costs of "projects" as defined by section 4B(a). See id. § 4B(g)(1)-(2). At the time of the Gun Barrel City election, projects included "land, buildings, equipment, facilities, and improvements" found by the corporation's board 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; or

(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.

Act of May 22, 1993, 73d Leg., R.S., ch. 1022, § 3, 1993 Tex. Gen. Laws 4424, 4426 (emphasis added) (former TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(a)(2)).[3]

A prior opinion of this office, Attorney General Opinion JC-0494 (2001), addressed the election you inquire about, but you state that this opinion considered a ballot proposition different from the one that the voters actually saw and approved. See Request Letter, supra note 1, at 2. Attorney General Opinion JC-0494 quoted from the city ordinance calling the election. See GUN BARREL CITY, TEX., ORDINANCE NO. 1997-005 (1997). The ordinance, dated March 11, 1997, called a special election to be held on May 3, 1997, to submit to city voters "a proposition of whether an additional sales and use tax of % of one percent shall be imposed for the promotion and development of new and expanded business enterprises." Id. § 1. The ordinance provided for

the proposition to be expressed on the official ballot in a form substantially as follows:

PROPOSITION NO. 1

The adoption of an additional % of one percent sales and use tax for the promotion and development of new and expanded business enterprises.

For Against

Id. § 3. Another ordinance canvassed the special election returns and found that "the proposition for the adoption of a Section 4B sales and use tax at the rate of one-half of one percent" passed at the special election held May 3, 1997. GUN BARREL CITY, TEX., ORDINANCE NO. 1997-007 (1997).

Relying on the ballot proposition set out in the city ordinance, Attorney General Opinion JC-0494 considered whether the section 4B tax revenues could be used to build a youth league football field at the city park, where no discernible economic advantage was associated with the project. See Tex. Att'y Gen. Op. No. JC-0494 (2002) at 2 (quoting Request Letter).[4] Attorney General Opinion JC-0494 noted that section 4B(a)(2)(A) does not require the projects it authorizes to promote economic development, even though the overall purpose of the Act is to promote economic development. See TEX. REV. CIV. STAT. ANN. art. 5190.6, §§ 3, 21 (Vernon Supp. 2004-05). The opinion did not decide whether section 4B(a)(2)(A) authorizes projects that do not promote business development, because the ballot proposition approved by the voters required the sales tax to be used for economic development purposes. See Tex. Att'y Gen. Op. No. JC-0494 (2002) at 3-4. This question about section 4B(a)(2)(A) is, however, relevant to your inquiry.

You provide a certified copy of the official ballot voted upon at the May 3, 1997 election. The ballot provides, in English and Spanish, that voters are to vote for or against the following proposition:

The adoption of a Section 4B sales and use tax at the rate of one-half of one percent to undertake projects as described in Section 4B of Article 5190.6, including but not limited to projects for the promotion of professional and amateur athletics and sports, including stadiums, ball parks, auditoriums, projects related to entertainment, convention, tourist, and exhibition facilities, amphitheaters, concert halls, and public parks, park facilities and events, open space improvements, learning centers, municipal buildings, museums, and related stores, restaurant, concession, and automobile parking facilities, related area transportation facilities, and related roads, streets, and water and sewer facilities, recycling facilities and projects to promote new or expanded business enterprises including public safety facilities, streets and roads, drainage, and related improvements, demolition of existing structures, and general improvements that municipally owned, as well as any other improvements or facilities that are related to any of the above projects and any other project that the board determines will promote new or expanded business enterprises, and the maintenance and operations expenses for any of the above described projects.

OFFICIAL BALLOT, SPECIAL ELECTION, CITY OF GUN BARREL CITY, TEXAS (May 3, 1997) (emphasis and boldface added) [hereinafter Official Ballot].

The City Secretary has informed us that the Mayor of Gun Barrel City drafted the Official Ballot proposition intending to list all authorized uses of the sales tax revenues.[5] The ballot language first paraphrases the definition of "project" in section 4B(a)(2)(A), stating that the sales and use tax may be used, among other things, for "projects for the promotion of professional and amateur athletics and sports, including stadiums, [and] ball parks." Official Ballot. The section 4B(a)(2)(A) projects are not required to "promote new or expanded business enterprises." Id. The ballot then paraphrases the former section 4B(a)(2)(B) definition of project, which, unlike section 4B(a)(2)(A) projects, must "promote new or expanded business enterprises."

Legislative history shows why section 4B(a)(2)(A) does not refer to economic development. Section 4B as adopted authorized only those projects now defined by section 4B(a)(2)(A). See Act of Mar. 21, 1991, 72d Leg., R.S., ch. 11, § 2, 1991 Tex. Gen. Laws 37, 37. The enactment included the following legislative finding:

The legislature finds for all constitutional and statutory purposes that the authority granted by this Act is for the public purposes of development and diversification of the economy of the state and an eligible city, the elimination of unemployment or underemployment in the state and an eligible city, and the expansion of commerce in the state and that this Act accomplishes those public purposes.

Id. § 1, 1991 Tex. Gen. Laws 37, 37. Thus, the legislature found that section 4B(a)(2)(A) projects accomplished public purposes relating to economic development and did not require the board of an economic development corporation to make a similar finding for individual projects within section 4B(a)(2)(A).

We turn to the Official Ballot that you have submitted. The language that the Official Ballot placed before the voters differs considerably from the language of Proposition No. 1 set out in the Gun Barrel City Ordinance No. 1997-005. See generally Scarborough v. Eubank, 53 S.W. 573, 574 (Tex. 1899) (the important matter in every election is that the will of the voters be fairly expressed, correctly declared, and legally enforced). Accord Ferrell v. Harris County Fresh Water Supply, 241 S.W.2d 242, 244 (Tex. Civ. App.-Galveston 1951, no writ) (quoting Scarborough, 53 S.W. at 574).

The courts look to the language actually voted upon to ascertain the voters' intent, and the ballot proposition becomes part of the city's "contract with the voters." See Barrington v. Cokinos, 338 S.W.2d 133, 142 (Tex. 1960) (the proceeds of bonds voted by the people must be expended for the purposes for which they were voted); Taxpayers for Sensible Priorities v. Dallas, 79 S.W.3d 670, 672 (Tex. App.-Dallas 2002, pet. denied) (contract between city and voters consisted of bond proposition itself). See also Fletcher v. Howard, 39 S.W.2d 32, 35 (Tex. 1931) (bond proceeds may not be diverted from highway described in county order); Robbins v. Limestone County, 268 S.W. 915, 919 (Tex. 1925) (taxes levied and collected for particular purpose may not be diverted to purposes other than for which they were voted); Tex. Att'y Gen. Op. Nos. GA-0156 (2004) at 7-8, JC-0400 (2001) (summarizing law on "contract with the voters"). Proceeds of the section 4B sales tax may be used only for the purposes authorized by statute and expressly approved by the voters. See Tex. Att'y Gen. Op. Nos. GA-0156 (2004) at 7-8, JC-0494 (2002) at 4, JC-0400 (2001) at 4.

Under the language of section 4B(a)(2)(A) and the Official Ballot, the Board of the Gun Barrel City Economic Development Corporation may use sales tax collected under section 4B sales taxes for "land, buildings, equipment, facilities, and improvements . . . found by the board of directors to . . . be required or suitable for use for professional and amateur (including children's) sports, athletic . . . and public park purposes." TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(a)(2)(A) (Vernon Supp. 2004-05). Accordingly, the Gun Barrel City Economic Development Corporation may use the section 4B sales tax to fund the construction of a youth football field. See Tex. Att'y Gen. Op. No. JC-0400 (2001) at 7 ("nature/birding center" is within the scope of public park purposes authorized by section 4B and incorporated by reference into ballot proposition).

While Attorney General Opinion JC-0494 correctly stated the law, it was based on incorrect facts. It is overruled to the extent it is inconsistent with this opinion.

SUMMARY

Consistent with the election proposition approved by the voters in 1997, the sales taxes collected in Gun Barrel City under section 4B of the Development Corporation Act of 1979 may be used to fund facilities for amateur sports, including children's sports, athletic, and public park purposes. The legislature has determined that section 4B(a)(2)(A) projects accomplish public purposes relating to economic development and the board of an economic development corporation is not required to make this finding for individual projects within this provision. Attorney General Opinion JC-0494 (2002), which was based on incorrect facts, is overruled to the extent it is inconsistent with this opinion.

BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General, Opinion Committee

Footnotes

[1] Letter from Honorable Todd Staples, Chair, Senate Infrastructure Development & Security Committee, to Honorable Greg Abbott, Texas Attorney General (May 4, 2004) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].

[2] We will cite the present version of article 5190.6, section 4B, except when we need to refer to provisions existing at the time of the May 3, 1997 election.

[3] The terms "learning center" and "municipal buildings" no longer appear in article 5190.6, section 4B(a)(2)(A) and the conjunction "or" was removed from the end of this provision and placed at the end of section 4B(a)(2)(D). In the present version of section 4B(a)(2)(B), the phrase "that create or retain primary jobs" has been inserted following the phrase "expanded business enterprises." TEX. REV. CIV. STAT. ANN. art. 5190.6, § 4B(a)(2) (Vernon Supp. 2004-05).

[4] See Letter from Honorable Jim Solis, Chair, Committee on Economic Development, Texas House of Representatives, to Honorable John Cornyn, Texas Attorney General (Nov. 7, 2001) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) (RQ-0462-JC, requesting Attorney General Opinion JC-0494).

[5] Telephone Conversation with Christy Eckerman, City Secretary, Gun Barrel City, Texas (Aug. 19, 2004).

[6] We do not consider any issue about the validity of the election that the difference between the city ordinance and the official ballot language may raise. The deadline for filing an election contest suit has passed. See TEX. ELEC. CODE ANN. § 233.006 (Vernon 2003). Nothing indicates that the election in question was void and therefore subject to collateral attack. See Brown v. Blum, 9 S.W.3d 840, 846 n.8 (Tex. App.-Houston [14th Dist.] 1999, pet. dism'd w.o.j.) (election is void when city is wholly without authority to call the election).