Could a Texas city label a tourist-development area in its extraterritorial jurisdiction an industrial district?

Texas AG Opinion JM-189: Tourist Area Industrial District

Plain-English summary

JM-189 concluded that a city could not designate an area in its extraterritorial jurisdiction as an industrial district when the city determined that the area would be used primarily for the tourist industry.

"The governing body of a city may not properly designate as an industrial district under the Municipal Annexation Act an area within its extraterritorial jurisdiction which it determines is to be primarily utilized for the tourist industry."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

The opinion treated an industrial district as an area containing industrial plants, in contrast to an area that was merely commercial in character.

"We believe an 'industrial district,' as the term is customarily used, is an area where industrial plants are located, as contrasted with areas that are merely commercial in character."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

JM-189 rejected the idea that every business category called an "industry" in ordinary conversation could qualify. It distinguished a tourist industry from the statutory land-use concept of an industrial district.

"The question here is not whether businesses catering to tourists might be regarded as engaged in 'the tourist industry.' The question is whether an area primarily utilized for the tourist industry can be properly regarded as an 'industrial district' within the meaning of the statute."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Currency note

This opinion was issued in 1984. 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.

Common questions

What kind of development prompted the request?

Mustang Island areas were being developed with hotels, condominiums, vacation-home subdivisions, and recreation facilities.

"Certain areas along Mustang Island in Nueces County are being extensively developed for tourist-related purposes (through the construction of hotels, condominiums, vacation home subdivisions, and recreation facilities)."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

What authority did section 5 give a city?

It allowed a city to designate part of its extraterritorial jurisdiction as an industrial district, as that term was customarily used, and to enter specified agreements with landowners.

"The governing body of any city shall have the right, power, and authority to designate any part of the area located in its extraterritorial jurisdiction as an industrial district, as the term is customarily used."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Did article 970a define "industrial district"?

No. JM-189 said the statute left the term undefined and directed that it be understood according to customary usage.

"The term 'industrial district' is not defined by article 970a, but is to be understood 'as the term is customarily used.'"
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

How did the opinion distinguish industrial from commercial uses?

It adopted the ordinary understanding of an industrial plant as an establishment primarily engaged in manufacturing, assembling goods, processing raw materials, or both.

"The ordinary man would understand an industrial plant to be any factory, business or concern which is engaged primarily in the manufacture or assembly of goods or the processing of raw materials, or both."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Why not treat "industrial" and "commercial" as synonyms?

JM-189 said statutes used the terms separately, which showed that ordinary legal usage distinguished them.

"If the term 'industrial' were synonymous with the term 'commercial' in ordinary usage, it would be idle for our statutes to refer to them separately."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Did the opinion say agricultural or vacant land could never be included?

No. It discussed cases involving unimproved agricultural land valued for industrial development and said those cases did not represent a different view.

"We do not believe that they represent a different view, however, because the land was acknowledged to be 'far more valuable for industrial development than for any other use.'"
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Background and statutory framework

The Municipal Annexation Act was enacted in 1963. Section 5 allowed industrial-district designation and annexation-immunity agreements for a limited period.

"The Municipal Annexation Act, article 970a, V.T.C.S., was enacted in 1963."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

The section permitted agreements guaranteeing continuation of extraterritorial status and immunity from city annexation for up to seven years.

"The permissive right and power to enter into contracts or agreements with the owner or owners of land in such industrial district to guarantee the continuation of the extraterritorial status of such district, and its immunity from annexation by the city for a period of time not to exceed seven (7) years."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

The AG said the legislature did not intend the industrial-district power to cover every extraterritorial commercial venture that could be described as part of an industry in the broad sense.

"We do not think the legislature intended to allow the extension of a city's powers ... to embrace every extraterritorial area occupied by a commercial venture that might be considered part of some 'industry' in the broad sense."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Citations and references

• Article 970a, section 5 supplied the industrial-district authority interpreted by JM-189.

"Section 5 thereof states in pertinent part: The governing body of any city shall have the right, power, and authority to designate any part of the area located in its extraterritorial jurisdiction as an industrial district, as the term is customarily used."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

• The opinion cited statutes that separately used commercial and industrial terminology to support the distinction.

"If the term 'industrial' were synonymous with the term 'commercial' in ordinary usage, it would be idle for our statutes to refer to them separately."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0189
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0189.pdf

Original opinion text

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

The Attorney General of Texas

JIM MATTOX
August 13, 1984
Attorney General

Supreme Court Building Honorable T. R. Ba"d:r Opinion No. JM-189
P. 0. BOX 12546
Nueces County Attonwy
Aus!in, TX. 76711. 2546 Courthouse Re: Whether an area to be developed
5121475-2501 Corpus Christi, Texas 78401 for tourist purposes within its
Telex 910/874-1367
Telecopier 5121475.0266 extraterritorial jurisdiction may be designated by a city as a" industrial district
714 Jackson, Suite 700
Dallas, TX. 75202-4506
Dear Mr. Bandy:
214/742-8944

You advise tha: certain areas along Mustang Island in Nueces 4624 Alberta Ave., Suite 160 County are being e:r:ensivelydeveloped for tourist-related purposes
El Paso, TX. 79905.2793 (through the const,ruction of hotels, condominiums, vacation home
9151533.3464
subdivisions, and rw:reation facilities). You ask:

PO1 Texas, Suite 700
May the governing body of a cj~tydesignate as a"
Juston, TX. 77002-3111
industria:ldistrict under the Municipal Annexation
7131223-5686
Act certain areas within its extraterritorial
jurisdict:lrm which it determines are primarily utilized :iorthe tourist industry?
606 Broadway,
Suite 312
Lubbock, TX. 79401-3479
6061747-5236
The Municipal Iumexation Act, article 970a, V.T.C.S., was enacted
in 1963. See Acts; 1963, 58th Leg., ch. 160, at 447. Section 5 thereof states in pertinent part:
4309 N. Tenth, Suite B
McA,,en, TX. 76501~1665
512/662-4547
Sec. 5. The governing body of any city shall
have the right, power, and authority to designate w par: of the area located in its
200 Main Plaza, Suite 400
extraterr:it:orialjurisdiction as a" industrial
San Antonio, TX. 76205.2797 district, .XS the term is customarily used, and to 51212254191 treat witi such area from time to time as such governing body may deem to be in the best interest
An Equal Opportunity/ of the city. Included in such rights and powers
Affirmative Action Employer of the governing body of any city is the
permissive right and power to enter into contracts or agreemwts with the owner or owners of land in
such intcstrial district to guarantee the
continuat:1on of the extraterritorial status of such distr:.ct,and its immunity from annexation by the city for a period of time not to exceed seven (7) years, and upon such other terms and Honorable T. R. Bandy - Pagr,2 (JM-189)

considerations iw the parties might deem appropriate . . . . (Emphasis added).

The term "industrial distri':,:" is not defined by article 970a, but is to be understood "as the telxlis customarily used."

In Calvert v. Austin Liulndryand Dry Cleaning Co., 365 S.W.Zd 232 (Tex. Civ. App. - Austin 19c3, writ ref'd n.r.e.), the meaning of the undefined term "industrial cperations," as used in a taxing statute, was at issue, Declaring th:.t the word "industrial" has a meaning of its own, and that the 1egis:l;lture is presumed to have used the word in the sense ordinarily underxood, the court held that the operations of laundrv and drv cleanine xlants were "industrial onerations." The court relied ;pon Nortlh 'Side Laundry Co. v. Board of Property Assessment, Appeals and RevTew, 79 A.2d 419 (Pa. 1951), which held a commercial laundry to be an'sdustrial plant" within the meaning of a Pennsylvania taxing statute. Cf. State ex rel. Keystone Laundry and Dry Cleaners, Inc. v. McDomxll~26 --* S.W.Zd 11 (MO. 1968).

The Pennsylvania SuprenleCourt in the North Side Laundry case, responding to an argument tlat the Pennsylvania statute as construed in a prior case unco"stit,lrionallydiscriminated against a laundry because other "service induj:ries" were not equally taxed, explained:

[T]he fact that tte businesses to which plaintiff referred are rometimes generically called 'industries' is Lrrelevant to the issue here raised. The question is whether their establish- ments are industrisl plants.

The answer to that question is self-evident.
By no stretch oE the imagination could a bank building, a hate:.,a theater or any of the other business establir;l,mentsreferred to by plaintiff be considered ar industrial plant. It is true that we sometimelrspeak of 'the movie industry', 'the hotel industry' or 'the banking industry', but that is merf,~lya loose use of language to convey that idea that the particular business is a sizeable one. Irispite of that colloquialism, we do not speak o!: the buildings housing such businesses as '::"dustrial plants'. Plaintiff attempts to gi~ve to that phrase a legal meaning that goes far beyond anything that was contemplated by the Courts when they pronounced this rule and by the legislature when it adopted it in the Act of 1933. The law can do no better than to define ar industrial plant as that type of establishment whj.(,h the ordinary man thinks of as
: .

Honorable T. R. Bandy - Page 3 (JM-189)

C

such. Certainly a commercial laundry comes within that definition bdt the other businesses here mentioned do not.

See also Union Mutual Life Irsurance Co. v. Emerson, 345 A.2d 504 (Me.
1975); State Police DepartmelG:v. Hargrave, 237 N.E.Zd 269 (Ind. App.
1968); Attorney General Opinlcn MW-552 (1982).

Similarly, the question here is not whether businesses catering to tourists might be regardcclas engaged in "the tourist industry." The question is whether an srea primarily utilized for the tourist industry can be properly regarded as an "industrial district" within the meaning of the statute.

We do not think the leE;jslatureintended to allow the extension of a city's powers, in the mrner contemplated by section 5 of article 970a. to embrace every extraxrritorial are+ occupied by a commercial venture that might be considt:.red part of some "industry" in the broad sense. As the Supreme Court: of Maine noted in Union Mutual Life Insurance Co., supra, where 'Lndustrial plant" status was claimed for the home office of an in3llrance company because it was highly capitalized, had a large labcr force, and other indicia:

If the argument ai.xancedwere to be adopted, it would seem that an:!general office building could in theory qualify 5,san industrial plant.

345 S.W.Zd 507. The Maine Court relied upon and quoted from the Indiana case of State Police Department v. Hargrave, m, to the effect:

[Tlhe ordinary man rrouldunderstand an industrial plant to be any factory. business or concern which is engaged primarily in the manufacture or assembly of good!; or the processing of raw materials, or both.

We believe an "industrial district," as the term is customarily used, is an area where indujrrial plants are located, as contrasted with areas that are merely commercial in character. If the term "industrial" were synonymous with the term "commercial" in ordinary usage, it would be idle for osr statutes to refer to them separately.
See V.T.C.S. art. 1349 (":mxnercial or industrial" clubs); art.
5190.6, §2(10) ("manufacturing and industrial facilities," and "commercial development," in addition); art. 5186 ("business and industrial development"). Cf. V.T.C.S. art. 5190.1, 52(j) ("manufacturing or industrial enterprise"); art. 5190.2, §2(=) ("manufacturing or industrial enterprise"). Article lOlla, V.T.C.S.. grants certain cities zonin;: power over land "for trade, industry, Honorable T. R. Bandy - Page 4 (JM-189)

residence, or other purpose." Distinctions between cormnercialzones or districts and manufacturing or industrial districts have been readily applied. City of Corpus Christ1 v. Jones, 144 S.W.Zd 388 (Tex. Civ. App. - San Antonio 1940, writ dism'd judgmt car.). -.See also City of Amarillo v. :;'&, 109 S.W.Zd 258 (Tex. Civ. App. - Amarillo 1937, writ dism'd). Cf. City of Amarillo v. Stapf. 101 S.W.Zd 229 (Tex. Comm'n App. 1937,pinion adopted).

In only two cases that we have found is there a suggestion that section 5 of article 970a might reach farther. See Mihailov v. City of Cedar Hill, 453 S.W.Zd 111:(Tex. Civ. App. - Dallas 1970. no writ) (mobile home site development); and Fox Development Co. v. City of San Antonio, 459 S.W.2d 670 (Tex. Civ. App. - San Antonio 1970). affirmed, 468 S.W.2d 338 (Tex. 1971) (subdivision development). In the Mihailov case, supra, the court merelr held that the city could not be denied an opportunity to litigate the question of extraterritorial rights under sections 4 and 5 of article 970a. In the Fox Development Co. case, a, the Court o:i Civil Appeals said that because the appellant had not shown a co:.laterallyattacked ordinance to be void, the trial court did not err in holding that the land in dispute was "within the extraterritoria:.jurisdiction of the City of San Antonio under Article 970a, 55." But in affirming the result of the Fox Development Co. case, the fupreme Court held that section 7 (not section 5) of article 970a was the operative section.

Three cases to which Houston Endowment, Inc. was a party concerned unimproved land, used for agricultural purposes, that was considered subject to inclusion in an industrial district. We do not believe that they represent a different view, however, because the land was acknowledged to ,e "far more valuable for industrial development than for any otter use." City of Pasadena v. Houston Endowment, Inc., 438 S.W.Zd -52, 155 (Tex. Civ. App. - Houston [14th Dist.] 1969, writ ref'd n.r.a.). [The land was within territory held by a city under articles llfi:#-1187,V.T.C.S., which authorize limited annexations for improving navigation along navigable streams and for establishing and maintainin,:wharves, docks, railway terminals, and other facilities for aidin]: navigation or wharves. Article 970a, V.T.C.S., does not apply to s,lchterritory, City of Houston v. Houston Endowment, Inc., 428 S.W.2d 706 (Tex. Civ. App. - Houston [lst Dist.1 1968, writ ref'd n.r.e.), but article 1187-l. V.T.C.S., allows the designation of industrial disrricts there in words almost~identical to those of article 970a. --Houston Endowment, Inc. v. City of Houston, 468 S.W.Zd 540 (Tex. Civ. Ap:?.- Houston [14th Dist.] 1971, writ ref'd n.r.e.). Cf. City of Nassau Bay v. City of Webster, 600 S.W.Zd 905 (Tex. Civ.App. - Houston [ist Dist.] 1980), writ ref'd n.r.e.. per curiam, 608 S.W.Zd 618 (Tex. ,.980).]

We are of the opinion, c.fteran examination of the statutes and cases, that the governing bo+ of a city may not properly designate as Honorable T. R. Bandy - Page 5 (JM-189)

an industrial district unde:r the Municipal Annexation Act an area within its extraterritorial jurisdiction which it determines is to be primarily utiljzed for the tourist industry.

SUMMARY
.-
The governing bclc.yof a city may not properly designate as an j.r.dustrialdistrict under the Municipal Annexation Act an area within its extraterritorial jurisdiction which it determines is to be primarily utilized for the tourist industry.

JIM MATTOX
Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney :?neral

Prepared by Bruce Youngblood
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
David Brooks
Colin Carl
Susan Garrison
Jim Moellinger
Nancy Sutton
Bruce Youngblood

p. 829