Can a Texas city force a school district to pay for infrastructure like a waterline by ordinance?

Plain-English summary

The City of Eagle Pass told the Eagle Pass Independent School District that, under a city ordinance, the District had to pay to extend a waterline along a newly built school. A state representative asked the Attorney General whether several laws, the impact-fee chapter of the Local Government Code, two Education Code sections, and the Texas Constitution's anti-gift clause, would stop the District from complying.

The Attorney General set the stage with two Texas Supreme Court cases. One held that school buildings are subject to a city's reasonable health-and-safety ordinances. The other let a school district override city zoning where health and safety enforcement was not at issue. Together they mean whether a city can bind a school district often turns on whether the requirement is genuinely about community health and safety, which is a factual question.

The opinion then took the laws one at a time. First, impact fees: if the ordinance imposes an "impact fee" under chapter 395, a separate provision says a school district does not have to pay unless its trustees consent by contract. Whether this particular charge is an impact fee is itself a fact question. Second, Education Code section 45.105 limits how school funds may be spent, allowing expenditures the trustees determine are "necessary in the conduct of the public schools," so the trustees, not the Attorney General, must decide whether the waterline qualifies. Third, Education Code section 11.168 bars a district from agreeing to use its resources for off-site improvements, but it only applies where there is an agreement; a city's unilateral mandate is not an agreement, so the section would not apply. Fourth, the constitutional anti-gift clause is not violated if the District determines the payment serves a public purpose and brings consideration or a clear public benefit in return. Throughout, the opinion stressed that the key calls were factual ones for the District's board.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

School districts (as the opinion held for them): The opinion told them that if a city ordinance imposes a chapter 395 impact fee, the district is not required to pay without its trustees consenting by contract, and that the trustees must decide whether a city-demanded expenditure like the waterline is "necessary in the conduct of public schools" under section 45.105.

Cities imposing infrastructure requirements (as the opinion described it): Under the opinion, a city acting unilaterally by ordinance does not trigger Education Code section 11.168, which depends on an agreement, but a city cannot compel an impact-fee payment from a school district absent the district's consent.

On the constitutional question (what the opinion left to the district): The opinion explained that whether a payment to the city is an unconstitutional gift under article III, section 52 depends on whether it serves a public purpose and brings consideration or a clear public benefit, a determination for the district to make first.

Common questions

Does a school district have to pay a city's impact fee?
The opinion concluded that, under Local Government Code section 395.022(b), a school district is not required to pay a chapter 395 impact fee unless its board of trustees consents by contract.

Who decides if the waterline is a permitted school expense?
The opinion concluded the district's board of trustees must decide whether the expenditure is "necessary in the conduct of public schools" under Education Code section 45.105.

Does section 11.168 block the district from paying?
Not if the city is acting unilaterally. The opinion explained section 11.168 applies only where there is an agreement, and a city's imposition is not an agreement.

Would paying the city be an unconstitutional gift of public funds?
The opinion concluded it would not, if the district determines the payment serves a public purpose and it receives consideration or a clear public benefit in return.

Background and statutory framework

The Texas Supreme Court has addressed when school districts are subject to city regulation, holding that school buildings are subject to a city's reasonable health-and-safety ordinances, while allowing a district to override city zoning where health and safety enforcement was not at issue. Port Arthur Indep. Sch. Dist. v. City of Groves, 376 S.W.2d 330, 334 (Tex. 1964); Austin Indep. Sch. Dist. v. City of Sunset Valley, 502 S.W.2d 670, 674 (Tex. 1973).

Chapter 395 of the Local Government Code authorizes political subdivisions to charge impact fees. Tex. Loc. Gov't Code Ann. § 395.011 (West 2005); Tex. Loc. Gov't Code Ann. § 395.001(4). Section 395.022(b) provides that a school district is not required to pay impact fees unless its board of trustees consents by contract. Tex. Loc. Gov't Code Ann. § 395.022(b) (West Supp. 2010). Education Code section 45.105 limits school-fund spending to enumerated purposes and to other purposes the trustees determine are necessary in the conduct of the public schools. Tex. Educ. Code Ann. § 45.105(a) (West 2006); City of Garland v. Garland Indep. Sch. Dist., 468 S.W.2d 110, 111 (Tex. Civ. App.-Dallas 1971, writ ref'd n.r.e.). Education Code section 11.168 bars a district from entering an agreement to use its resources for off-site improvements, but applies only where there is an agreement. Tex. Educ. Code Ann. § 11.168 (West 2006). The anti-gift clause prohibits granting public money without return; a payment is not gratuitous if the entity receives consideration or a clear public benefit. Tex. Const. art. III, § 52(a); Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383-84 (Tex. 2002).

Citations

Statutes:

• Tex. Loc. Gov't Code Ann. § 395.011 (West 2005)
• Tex. Loc. Gov't Code Ann. § 395.001(4)
• Tex. Loc. Gov't Code Ann. § 395.022(b) (West Supp. 2010)
• Tex. Educ. Code Ann. § 45.105(a) (West 2006)
• Tex. Educ. Code Ann. § 11.168 (West 2006)
• Tex. Const. art. III, § 52(a)

Cases:

• Port Arthur Indep. Sch. Dist. v. City of Groves, 376 S.W.2d 330, 334 (Tex. 1964)
• Austin Indep. Sch. Dist. v. City of Sunset Valley, 502 S.W.2d 670, 674 (Tex. 1973)
• City of Garland v. Garland Indep. Sch. Dist., 468 S.W.2d 110, 111 (Tex. Civ. App.-Dallas 1971, writ ref'd n.r.e.)
• Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383-84 (Tex. 2002)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0850
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2011/ga0850.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

March 30, 2011

The Honorable Mike Hamilton Opinion No. GA-0850
Chair, House Committee on Licensing and
Administrative Procedures Re: Whether the Eagle Pass Independent School
Texas House of Representatives District is subject to a municipal ordinance that
Post Office Box 2910 requires the District to expend funds for certain
Austin, Texas 78768-2910 kinds of infrastructure (RQ-0923-GA)

Dear Representative Hamilton:

Your predecessor explained that the City of Eagle Pass (the "City") has informed the Eagle Pass Independent School District (the "District") that pursuant to a City ordinance the District must fund the extension of a waterline along the property of a newly completed school in the District.[1] He then asked whether chapter 395 of the Local Government Code, sections 45.105 and 11.168 of the Education Code, or article III, section 52 of the Texas Constitution would prohibit the District from complying with the City's ordinance. Request Letter, supra note 1, at 1-2.

The Texas Supreme Court has, on multiple occasions, addressed when school districts are subject to city regulation. See Port Arthur Indep. Sch. Dist. v. City of Groves, 376 S.W.2d 330, 334 (Tex. 1964); Austin Indep. Sch. Dist. v. City of Sunset Valley, 502 S.W.2d 670, 674 (Tex. 1973). In City of Groves, the court addressed the applicability of city building regulations to a school district. City of Groves, 376 S.W.2d at 331. Holding that "school buildings ... are subject to the reasonable ordinances of the city," the court explained that to "hold otherwise would be to leave a hiatus in regulation necessary to the health and safety of the community." Id. at 334. Ten years later in City of Sunset Valley, the court addressed whether a school district could override city restrictions by locating a school facility in an area zoned for residential use. City of Sunset Valley, 502 S.W.2d at 674. Finding in favor of the school district, the court distinguished the City of Groves case, explaining that the "enforcement of health and safety regulations" was not before the court as it was in City of Groves. Id. at 673. This precedent suggests that whether the District must comply with the ordinance depends in part on whether its enforcement is necessary to the health and safety of the community. With this general principle in mind, we address the specific statutes about which your predecessor asked.

We first address the applicability of chapter 395 of the Local Government Code, which authorizes political subdivisions to charge impact fees in certain circumstances. See TEX. LOC. GOV'T CODE ANN. § 395.011 (West 2005). An impact fee is defined as "a charge or assessment imposed by a political subdivision against new development in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to the new development." Id. § 395.001(4).[2] Whether any particular fee constitutes an "impact fee" under chapter 395 would require the resolution of facts and, as a result, cannot be determined in an attorney general opinion. Tex. Att'y Gen. Op. No. GA-0637 (2008) at 5. We can advise you, however, that Local Government Code section 395.022(b) "exempt[s] a school district from the payment of mandatory impact fees to a political subdivision under chapter 395" unless certain conditions are met. Id. at 3. That provision states:

A school district is not required to pay impact fees imposed under this chapter unless the board of trustees of the district consents to the payment of the fees by entering a contract with the political subdivision that imposes the fees. The contract may contain terms the board of trustees considers advisable to provide for the payment of the fees.

TEX. LOC. GOV'T CODE ANN. § 395.022(b) (West Supp. 2010). If the City's ordinance imposes an impact fee, the District is not required to pay that fee in the absence of an agreement to do so.

Your predecessor next questioned whether provisions of the Education Code prohibit the District from complying with the City's ordinance. Request Letter, supra note 1, at 2-3. Education Code section 45.105 expressly limits how public school funds may be spent. TEX. EDUC. CODE ANN. § 45.105(a) (West 2006). That section enumerates specific purposes for which local school funds may be spent and also includes any "other purposes necessary in the conduct of the public schools determined by the board of trustees." Id. § 45.105(c) (emphasis added). One intermediate court analyzed this statute in light of a city's imposition of assessments against a school district for paving streets abutting school property. See City of Garland v. Garland Indep. Sch. Dist., 468 S.W.2d 110, 111 (Tex. Civ. App.-Dallas 1971, writ ref'd n.r.e.).[3] The court explained that school funds could not be spent for that purpose "unless the trustees first determine[d] that such an expenditure [was] 'necessary in the conduct of the public schools.'" Id. at 111-12. In reaching this conclusion, the court acknowledged City of Groves and distinguished it by explaining that such "reasoning does not apply to assessments for street improvements. The city has the power to make the improvements without any action by the district ...." City of Garland, 468 S.W.2d at 114.

The City and the District apparently disagree about the purpose of and need for the waterline. Request Letter, supra note 1, at 1-2. Determining whether the waterline is necessary for health and safety reasons, as in City of Groves, or whether the demanded expenditure is more like the assessment addressed in City of Garland, will require a factual inquiry that this office cannot perform. Without such an inquiry, we cannot answer whether the District is subject to the ordinance and what consequences, if any, may arise from a decision not to comply. The District's trustees must determine whether the expenditure is "necessary in the conduct of public schools" and therefore permitted by section 45.105.

Your predecessor also asked about the impact of section 11.168 of the Education Code, which provides that

the board of trustees of a school district may not enter into an agreement authorizing the use of school district employees, property, or resources for the provision of materials or labor for the design, construction, or renovation of improvements to real property not owned or leased by the district.

TEX. EDUC. CODE ANN. § 11.168 (West 2006). As this office has previously explained, for this "prohibition to apply to a school district's use of its resources, there must be, minimally, an agreement controlling that use." Tex. Att'y Gen. Op. No. GA-0496 (2006) at 2 (emphasis added) (explaining that municipal impact fees are imposed, not agreed to). In GA-0496, we addressed a city's imposition of an impact fee on a school district and explained that such imposition "is a unilateral action that does not involve ... [and] is not paid as a result of an agreement." Id. at 3. To the extent that the City ordinance at issue here imposes unilateral action, section 11.168 would be similarly inapplicable due to the lack of an agreement.

However, we note that the Legislature enacted subsection 395.022(b) of the Local Government Code, addressed above, after GA-0496 was issued "to mitigate the implication ... that a school district must pay an impact fee because such a fee is imposed rather than being the subject of an agreement." Tex. Att'y Gen. Op. No. GA-0637 (2008) at 2; see also Act of May 11, 2007, 80th Leg., R.S., ch. 250, § 1, 2007 Tex. Gen. Laws 356, 356 (enacting section 395.022(b) of the Local Government Code). As we discussed in GA-0637, section 395.022(b) could be construed to conflict with Education Code section 11.168. Tex. Att'y Gen. Op. No. GA-0637 (2008) at 2-3. To the extent of a conflict, section 395.022(b) prevails, allowing a school district's board of trustees to consent to an impact fee by entering into a contract with the entity imposing the fee. Id.

Finally, your predecessor raised concerns about a possible violation of article III, section 52 of the Texas Constitution, which prohibits the Legislature from authorizing any political subdivision of the state "to lend its credit or to grant public money or a thing of value in aid of, or to any individual, association or corporation." TEX. CONST. art. III, § 52(a). A political subdivision's payment is not gratuitous if it receives return consideration or obtains a clear public benefit in return. Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383-84 (Tex. 2002). Whether a particular transfer of funds to the City is exchanged for consideration or serves a public purpose of the District is for the District to determine in the first instance. Tex. Att'y Gen. Op. No. GA-0664 (2008) at 4.

SUMMARY

Pursuant to Local Government Code subsection 395.022(b), if it is determined that a City of Eagle Pass ordinance imposes an impact fee under chapter 395, the Eagle Pass Independent School District is not required to pay that fee in the absence of an agreement to do so.

The District's trustees must determine whether the expenditure for a waterline is "necessary in the conduct of public schools" and therefore permitted under Education Code section 45.105.

To the extent that the City ordinance at issue imposes unilateral action, Education Code section 11.168 is inapplicable to the issue of whether the District must comply with the City ordinance.

If the District determines that paying for city-requested infrastructure accomplishes a public purpose of the District and that it otherwise meets the requirements established by the Texas Supreme Court, the District's expenditure of funds for city-mandated infrastructure will not violate article III, section 52 of the Texas Constitution.

Very truly yours,

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chair, Opinion Committee

Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee

[1] Letter from Honorable Edmund Kuempel, Former Chairman, House Committee on Licensing and Administrative Procedures, Texas House of Representatives, to Honorable Greg Abbott, Attorney General of Texas at 1 (Oct. 11, 2010) (on file with the Opinion Committee, also available at http://www.texasattorneygeneral.gov) [hereinafter Request Letter].

[2] The term impact fee includes "amortized charges, lump-sum charges, capital recovery fees, contributions in aid of construction, and any other fee that functions as described by this definition." TEX. LOC. GOV'T CODE ANN. § 395.001(4) (West 2005). It expressly does not include "pro rata fees for reimbursement of water or sewer mains or lines extended by the political subdivision." Id. § 395.001(4)(D).

[3] City of Garland addressed Education Code section 20.48, which was later recodified as section 45.105. City of Garland, 468 S.W.2d at 111-12; see also Act of June 2, 1969, 61st Leg., R.S., ch. 889, § 20.48, 1969 Tex. Gen. Laws 2735, 2904-05, amended by Act of May 27, 1995, 74th Leg., R.S., ch. 260, § 1, sec. 45.105, 1995 Tex. Gen. Laws 2207, 2439.