Can a Texas mental health authority sell or lease state land it was given and spend the proceeds on services instead of using the land itself?

TX AG Opinion GA-0779: Can Spindletop MHMR sell or lease the state property it received under House Bills 1759 and 1023?

Plain-English summary

A state representative asked whether Spindletop Mental Health Mental Retardation Services could sell or sign a long-term lease for part of the real property the State transferred to it. The transfer happened through two bills. House Bill 1759, from the 80th Legislature, let the state health agencies transfer a parcel (the former Beaumont State Center) to Spindletop for nonmonetary consideration, with the consideration being Spindletop's agreement to use the property in a way that primarily promotes a public purpose of the state by providing community-based mental health or mental retardation services. House Bill 1023, from the 81st Legislature, let the parties amend that agreement to broaden the allowed uses to include community-based physical health and health-related services too. Both bills include a catch: if the property goes unused for the specified purposes for more than 180 continuous days, ownership automatically reverts to the state entity that transferred it.

Spindletop used only part of the property and wanted to sell or lease the rest, then spend the proceeds on the same kinds of services. The representative argued the phrase "use the property" was ambiguous, since "use" could mean either holding and occupying the land, or selling or leasing it and using the money. The Attorney General disagreed. A word that has several possible meanings is not automatically ambiguous; the question is whether a reasonably well-informed person could read the bills in more than one sense, and the opinion found only one reasonable reading: the bills require Spindletop to keep possession of the property for the specified purposes.

Several features of the bills pointed that way. Neither bill contains any express grant of authority to Spindletop to sell, lease, or partition the land, and when the Legislature wants to give an entity power to convey real property, it knows how to say so plainly (the opinion listed examples for municipalities, water districts, and the Board of Criminal Justice). The public-purpose language is better read as making sure the transfer satisfies the Texas Constitution's restraints on gifts of public funds (article III, section 51) than as a hidden grant of authority to sell. And the State's reversionary interest, which snaps ownership back if the property is not used as specified, only makes sense if the Legislature expected Spindletop to physically use the land rather than convert it to cash. So the opinion concluded Spindletop had no authority under either bill to sell or lease the property.

Currency note

This opinion was issued in 2010. 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.

The transfer statutes (House Bill 1759 of 2007 and House Bill 1023 of 2009) and the comparison provisions cited may have been amended or superseded since 2010. Confirm the current law before relying on anything below.

Who this opinion affected (as of 2010)

Spindletop and similar local mental-health authorities: The opinion told them that a legislative transfer of state property for community-based services, framed as a duty to "use the property" for those services, did not by itself let them sell or lease the property; it required them to keep and use the land for the stated purposes.

The transferring state agencies (HHSC, DSHS, DADS): The opinion confirmed the State's reversionary interest remained meaningful, because the recipient could not sell or lease away the land, and ownership would revert if the property went unused for the specified purposes for more than 180 continuous days.

Legislators drafting property-transfer bills: The opinion underscored that authority to sell or lease transferred property has to be granted expressly; a duty to "use the property" for a public purpose was not read as an implied power to alienate it.

Common questions

Could Spindletop sell the unused part of the land and put the money toward services?
No. The opinion held neither House Bill 1759 nor House Bill 1023 gave Spindletop authority to sell or lease the property, even to fund the same services.

Why wasn't "use the property" read to include selling it?
Because the bills gave no express authority to sell or lease, the public-purpose language was aimed at constitutional gift restraints, and the State's reversionary interest showed the Legislature expected physical use of the land.

What is the 180-day reversion?
Both bills provide that if the property is not used for the specified purposes for more than 180 continuous days, ownership automatically reverts to the state entity that transferred it.

What would Spindletop have needed to sell the land?
An express legislative grant of authority to convey the property. The opinion noted the Legislature knows how to grant that power when it intends to, citing examples for municipalities, water districts, and the Board of Criminal Justice.

Background and statutory framework

House Bill 1759 (Act of May 23, 2007, 80th Leg., R.S., ch. 1036, § 1, 2007 Tex. Gen. Laws 3589, 3589-90) authorized the transfer of state property to Spindletop for nonmonetary consideration in the form of an agreement to use the property to provide community-based mental health or mental retardation services; House Bill 1023 (Act of May 21, 2009, 81st Leg., R.S., ch. 339, § 1, 2009 Tex. Gen. Laws 873, 873) allowed the agreement to be amended to add community-based physical health and health-related services. Both bills provide that if the property is not used as specified for more than 180 continuous days, ownership reverts to the transferring state entity.

Construing the bills to give effect to legislative intent, beginning with their language and reading them as a whole (Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009); Leland v. Brandal, 257 S.W.3d 204, 206 (Tex. 2008); Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001)), the opinion held the bills are not ambiguous because a reasonably well-informed person could read them in only one sense (De Leon v. State, 294 S.W.3d 742, 747 (Tex. App.—Amarillo 2009, pet. ref'd)). Neither bill expressly grants authority to alienate the property, the public-purpose language addresses the constitutional restraint on gifts of public funds (Tex. Const. art. III, § 51; Bailey v. State, 15 S.W.3d 622, 626 (Tex. App.—Dallas 2000, no pet.)), and the Legislature knows how to grant conveyance authority when it intends to (FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 884-85 (Tex. 2000); Tex. Loc. Gov't Code Ann. § 51.015(a) (Vernon 2008); Tex. Water Code Ann. §§ 49.225, 49.226 (Vernon 2008); Tex. Gov't Code Ann. § 496.0021(a) (Vernon Supp. 2009)). The reversionary interest reinforced that the Legislature intended Spindletop to physically use the property. The opinion concluded Spindletop has no authority under either bill to sell or lease the property.

Citations

Statutes and enactments:

• Act of May 23, 2007, 80th Leg., R.S., ch. 1036, § 1, 2007 Tex. Gen. Laws 3589, 3589-90 (House Bill 1759)
• Act of May 21, 2009, 81st Leg., R.S., ch. 339, § 1, 2009 Tex. Gen. Laws 873, 873 (House Bill 1023)
• Tex. Const. art. III, § 51
• Tex. Loc. Gov't Code Ann. § 51.015(a) (Vernon 2008)
• Tex. Water Code Ann. §§ 49.225, 49.226 (Vernon 2008)
• Tex. Gov't Code Ann. § 496.0021(a) (Vernon Supp. 2009)

Cases:

• Hernandez v. Ebrom, 289 S.W.3d 316 (Tex. 2009)
• Leland v. Brandal, 257 S.W.3d 204 (Tex. 2008)
• Helena Chem. Co. v. Wilkins, 47 S.W.3d 486 (Tex. 2001)
• De Leon v. State, 294 S.W.3d 742 (Tex. App.—Amarillo 2009, pet. ref'd)
• Bailey v. State, 15 S.W.3d 622 (Tex. App.—Dallas 2000, no pet.)
• FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868 (Tex. 2000)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0779
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2010/ga0779.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

May 26, 2010

The Honorable Joe Deshotel
Chair, Committee on Business & Industry
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768-2910

Opinion No. GA-0779

Re: Authority of Spindletop Mental Health Mental Retardation Services to sell or lease certain real property under House Bill 1759 and House Bill 1023 (RQ-0845-GA)

Dear Representative Deshotel:

You seek our opinion about the authority of Spindletop Mental Health Mental Retardation Services ("Spindletop") to sell or lease certain real property under two recent legislative enactments.¹

House Bill 1759, enacted by the Eightieth Legislature, authorizes the transfer of a parcel of property from the Health and Human Services Commission, the Department of State Health Services, or the Department of Aging and Disability Services to Spindletop for nonmonetary consideration.² House Bill 1759 provides that the consideration for the land transfer

shall be in the form of an agreement between the parties that requires Spindletop MHMR Services to use the property in a manner that primarily promotes a public purpose of the state by using the property to provide community-based mental health or mental retardation services.

House Bill 1759, supra note 2, § 1(c), at 3589. House Bill 1023, enacted by the Eighty-first Legislature, authorizes an agreement between the parties to be amended to expand the uses of the transferred property.³ Under such an amended agreement, Spindletop is to "use the property in a manner that primarily promotes a public purpose of the state by using the property to provide community-based physical health, health-related, mental health, or mental retardation services." House Bill 1023, supra note 3, § 1(c), at 873. Both House Bill 1759 and House Bill 1023 provide that in the event the property is not used by Spindletop in the manner specified for more than 180 continuous days, ownership of the property automatically reverts to the state entity that transferred the property to Spindletop. See House Bill 1759, supra note 2, § 1(c), at 3589; House Bill 1023, supra note 3, § 1(c-1), at 873.

You tell us that Spindletop operates facilities on only a portion of the property and "desires to either sell or execute a long-term lease of the [property] or a portion thereof and use the proceeds [therefrom] to provide community-based physical health, health-related, mental health, or mental retardation services." Request Letter at 2. You claim that the phrase "use the property" is ambiguous and could be construed to include authority to sell or lease the property and apply the proceeds to the specified services or it could be construed to require Spindletop to maintain possession of all portions of the property. Id. Thus, you ask whether Spindletop is authorized, under House Bill 1759 and House Bill 1023, to sell or to execute a long-term lease of a portion of the transferred property. See id. at 1, 3. We consider Spindletop's authority under only House Bill 1759 and House Bill 1023.

The primary objective when construing a legislative enactment is to give effect to the Legislature's intent. Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009). We look first to the enactment's language in attempting to understand that intent. Leland v. Brandal, 257 S.W.3d 204, 206 (Tex. 2008). We also consider the enactment as a whole rather than its isolated provisions. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001).

Though the term "use" by itself has numerous definitions and in some contexts could be construed broadly as you suggest, the mere fact that the term is capable of different meanings does not make the two bills ambiguous. See De Leon v. State, 294 S.W.3d 742, 747 (Tex. App.—Amarillo 2009, pet. ref'd) ("A statute is ambiguous when it is capable of being understood by reasonably well-informed persons in two or more different senses."). For the following reasons, we believe House Bill 1759 and House Bill 1023 are capable of being understood by a reasonably well-informed person in only one sense—requiring Spindletop to maintain possession of the property for the specified purposes.

Neither bill contains an express grant of any authority to Spindletop, much less authority for Spindletop to partition or alienate part of the property by sale or lease. See House Bill 1759, supra note 2, § 1, at 3589-90; House Bill 1023, supra note 3, § 1, at 873. Considering the bills as a whole, the phrase about which you inquire is part of a broader statement about the state's public purpose being achieved by the transfer of the property. See House Bill 1759, supra note 2, § 1(c), at 3589 ("to use the property in a manner that primarily promotes a public purpose of the state by using the property" as specified) (emphasis added); accord House Bill 1023, supra note 3, § 1(c), at 873. This legislative statement about the transfer of property serving the public purpose is more likely a statement designed to ensure that the transaction satisfies constitutional restraints on the state regarding public gifts or grants than it is an indirect grant of authority to Spindletop to alienate the property. See TEX. CONST. art. III, § 51 (prohibiting the granting of public money to an individual); see also Bailey v. State, 15 S.W.3d 622, 626 (Tex. App.—Dallas 2000, no pet.) (characterizing section 51 as a provision intended to "prevent the application of public funds to private purposes" and explaining that "[a] transfer of funds for a public purpose, with a clear public benefit received in return, does not amount to a grant of public funds in violation of article III, section 51"). When the Legislature wants to authorize an entity to engage in such a realty transaction, it knows how to do so. See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 884-85 (Tex. 2000) (relying on the principle of statutory construction that the Legislature knows how to enact law effectuating its intent); cf. TEX. LOC. GOV'T CODE ANN. § 51.015(a) (Vernon 2008) (authorizing Type A general-law municipality to "take, hold, purchase, lease, grant, or convey property located in or outside the municipality"); TEX. WATER CODE ANN. §§ 49.225 (Vernon 2008) (authorizing water district subject to chapter 49 to "lease any of its property, real or personal, to any person"), 49.226 (providing for sale or exchange of property by chapter 49 water district); TEX. GOV'T CODE ANN. § 496.0021(a) (Vernon Supp. 2009) (authorizing Board of Criminal Justice to "sell state-owned real property").

In addition, the very purpose of these two bills—to effectuate the transfer of property to Spindletop—indicates that the Legislature intended Spindletop to physically utilize the property for the named purposes rather than use the proceeds from a sale or lease of the property for the specified purposes. See House Bill 1759, supra note 2, § 1, at 3589; House Bill 1023, supra note 3, § 1, at 873; see also SENATE RESEARCH CENTER, BILL ANALYSIS, Tex. H.B. 1759, 80th Leg., R.S., at 1 (2007) (indicating that a prior bill led to the leasing of the former Beaumont State Center to Spindletop but that "Spindletop wanted to establish ownership but did not have the funds to purchase the former center"); HOUSE RESEARCH ORGANIZATION, BILL ANALYSIS, Tex. H.B. 1023, 81st Leg., R.S., at 2 (2009) (explaining that bill would expand allowable uses of the property transferred to Spindletop). In addition, the fact that the State has retained a reversionary interest to ensure that the property is utilized for the specified purposes by Spindletop supports the view that in adopting the two bills the Legislature did not contemplate sale or lease of the property by Spindletop. See House Bill 1759, supra note 2, § 1, at 3589; House Bill 1023, supra note 3, § 1, at 873.

We conclude that under House Bill 1759 or House Bill 1023 Spindletop does not have authority to sell or lease a portion of the subject real property.

SUMMARY

Spindletop Mental Health and Mental Retardation Services does not, under House Bill 1759 or House Bill 1023, have authority to sell or lease the subject real property.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

ANDREW WEBER
First Assistant Attorney General

JONATHAN K. FRELS
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee