### ATTORNEY GENERAL OFTEXAS GREG ABBOTT

May 31,2006

The Honorable Kip Averitt Chair, Committee on Natural Resources Texas State Senate Post Office Box 12068 Austin, Texas 787 1l-2068 Opinion No. GA-0434 Re: Authority of the El Paso Water Utilities Public Service Board to set an impact fee for new development in the City of El Paso and its extraterritorial jurisdiction (RQ-04 17-GA)
Dear Senator Averitt: Your predecessor as Chair ofthe Senate Committee onNatural Resources inquired whether the El Paso Water Utilities Public Service Board (the “Public Service Board”) may establish an impact fee for water and wastewater infrastructure needed for new development in the City of El Paso and its extraterritorial jurisdiction.’

The ElPaso City Council created the Public Service Board in 1952by adopting an ordinance under former article 1115, Revised Civil Statutes, now codified as Government Code section 1502.070.2 See ELPASO, TEX. ORDINANCE

No. 752, tj8(1952);3see also Act ofMay 1,1995,74th Leg., R.S., ch. 69, §§ l(5), 4, 1995 Tex. Gen. Laws 448,449 (defining Public Service Board and designating the City of El Paso, through its Public Service Board, as the regional water and wastewater planner). Government Code section 1502.070 provides that “[mlanagement and control of a utility system may be vested in

. . . a board of trustees named in the proceedings adopted by the municipality and consisting of not more than five members, one of whom must be the mayor of the municipality.” TEX. GOV’TCODE

ANN. $ 1502.070(a)(2) (Vernon 2000). It further states that

*Letterfrom Honorable Ken Armbrister, Chair, Comrnittee on Natural Resources, Texas State Senate, to Honorable GregAbbott,Attorney General ofTexas (Nov. 152005) (onfilewiththeOpinionCommittee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter]. 2SeeActeffective 90daysafter adjournment, 32dLeg.,R.S.,ch. 112,§ 4, 1911Tex. Gen.Laws230; repealed and recodzjied by Act of May 10, 1999, 76th Leg., R.S., ch. 227, $5 1,28(c), 1999 Tex. Gen. Laws 3899, 3910; renumberedfrom Government Code § 1502.071 and amended byActofMay20,1999,76th Leg.,R.S.,ch. 1064,§22, 1999Tex. Gen.Laws 3899,391O. 30n file withthe Opinion Committee.The Honorab le Kip Averitt - Page 2 (GA-0434)

(c) The proceedings of the municipality may specify the terms of office ofthe board oftrustees, their powers and duties, the manner of exercising those powers and duties, the election of successor trustees, and any matter relating to the organization and duties ofthe board. On any matter not covered by the proceedings, the board oftrustees is governed by the laws and rules governing the municipality’s governing body, to the extent applicable. Id. 8 1502.070(c); see generally ELPASO, TEX.ORDINANCE

No. 752 (1952) (setting out various powers ofthe Public Service Board). Thus, pursuant to the 1952 ordinance and Government Code section 1502.070, the Public Service Board manages and controls the El Paso water and wastewater system. Since 1952, “the principal action by the City Council on behalf of the water utility was to approve the issuance of water and sewer financial bonds

. . . . The Public Service Board approves its annual budget, sets rates and has complete autonomy over [the] water and sewer system servicing El Paso and El Paso County.” Request Letter, supra note 1,at 1. No provision in chapter 1502 authorizes the Public Service Board to establish impact fees or even refers to such fees; we therefore turn to Local Government Code chapter 395, which authorizes certain political subdivisions to establish impact fees. Section 395.OO 1defines “impact fee” 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 tothe new development. ”TEX. Lot. GOV’T

CODE ANN. 5 395.001(4) (Vernon Supp. 2005). A “capital improvement ” that may be funded by impact fees includes certain “water supply, treatment, and distribution facilities; [and] wastewater collection and treatment facilities” that “are owned and operated by or on behalf of apolitical subdivision.” Id. tj395.001(l). A “political subdivision” within chapter 395 “means a municipality, a district or authority created under Article III, Section 52, or Article XVI, Section 59, of the Texas Constitution, or, for the purposes set forth by Section 395.079, certain counties described in that section.” Id. kj395.001(7); see also id. 9395.079(a) (impact fee for storm water, drainage, and flood control in acounty with apopulation of 3.3 million ormore orthat borders acounty with such population and certain districts and authorities created under Texas Constitution article XVI, section 59). Apolitical subdivision within this definition may impose and collect impact fees inits service areathat iswithin its corporate boundaries or extraterritorial jurisdiction and that will be served by the capital improvements or facility expansions. See id. § 395.001(9). To adopt an impact fee, a political subdivision must comply with the detailed procedures set out in subchapter C of chapter 395, which are designed to keep the public well informed of the political subdivision’s action. See id. 5395.04 1(Vernon 1999). “Unless otherwise specifically authorized by state law orbythis chapter, a governmental entity or political subdivision may not enact or impose an impact fee.” Id. .

9 395.01 l(a).The Honorable Kip Averitt - Page 3 (GA-0434)

The Public Service Board isnot “amunicipality, adistrict or authority created under Article III, Section 52, or Article XVI, Section 59, of the Texas Constitution,” or an entity within section 395.079 and accordingly is not a “political subdivision” within chapter 395. See id. 5 395.001(7) (Vernon Supp. 2005). Chapter 395 confers the power to set impact fees on the City of El Paso, which must act by and through its governing body. See id. ch. 395 (Vernon 1999 & Supp. 2005); see also City of Coppell v. General Homes Corp., 763 S.W.2d 448,456 (Tex. App.-Dallas 1988, writ denied); Cook v. City ofAddison, 656 S.W.2d 650, 657 (Tex. App.-Dallas 1983, writ ref d n.r.e.) (apolitical subdivision ofthe state may act only by and through its governing body). Apublic service board, within its limited field of operation, is an agent ofthe city that established it under Government Code section 1502.070 or its predecessor. See Zacharie v. City ofSan Antonio, 952 S.W.2d 56,59 (Tex. App.- San Antonio 1997, no writ); Mireles v.Deer Run Properties, Inc., 616 S.W.2d 342,343 (Tex. Civ. App.- San Antonio 1981, no writ); San Antonio Indep. Sch. Dist. v. Water Works Bd. ofTrustees, 120 S.W.2d 861,865 (Tex. Civ. App.Beaumont 1938, writ ref d); Tex. Att’y Gen. Op. Nos. DM-444 (1997) atn.7, JM-4 (1983) at2. The powers ofthe Public Service Board are limited to those conferred upon it by Ordinance No. 752 and Government Code chapter 1502. Moreover, the City Council may not delegate to the Public Service Board its authority to impose impact fees. Section 395.011 provides that “[ulnless otherwise specifically authorized by state law or this chapter, agovernmental entity or political subdivision may not enact or impose an impact fee.” TEX.

LOC. GOV’TCODE

ANN. §395.011 (Vernon 1999). This language indicates that only agovernmental entity expressly authorized by statute may establish animpact fee. Furthermore, absent express authority apolitical subdivision may not delegate astatutorily-authorized power. See Newsom v.Adams, 45 1S.W.2d 948,953 (Tex. Civ. App.-Beaumont 1970, no writ); Moody v. Tex. Water Comm’n, 373 S.W.2d 793, 797 (Tex. Civ. App. -Austin 1964, writ ref’d n.r.e.) (absent express legislative authority, a public office may delegate only ministerial tasks); see generally Lipsey v. Tex. Dep )tofHealth, 727 S.W.2d 61, 64 (Tex. App.-Austin 1987, writ ref d n.r.e.) (considering implied statutory authority of an administrative agency to subdelegate a statutorilyauthorized function). Accordingly, apolitical subdivision may not delegate its authority to establish an impact fee to another governmental entity. The Public Service Board does not have authority to setimpact fees. If,however, the ElPaso City Council approves the imposition ofimpact fees for water and wastewater infrastructure in the city and its extraterritorial jurisdiction, it may delegate ministerial authority to the Public Service Board to collect those fees and spend them for authorized purposes pursuant to Local Government Code chapter 395, Ordinance No. 752, and the city ordinance approving the impact fees. See San Antonio Indep. Sch. Dist. v. City ofSanAntonio, 550 S.W.2d 262 (Tex. 1976) (city was authorized to delegate to city public service board ministerial duty ofcomputing excess fuel charges according to a formula set by the city council).The Honorable Kip Averitt - Page 4 (GA-0434)

SUMMARY The El Paso Water Utilities Public Service Board is not authorized to establish an impact fee for water and wastewater infrastructure for new development in the City of El Paso and its extraterritorial jurisdiction. Local Government Code chapter 395 vests in the City of El Paso the sole authority to adopt such impact fees. Ifthe El Paso City Council approves the imposition of impact fees for water and wastewater infrastructure in the city and its extraterritorial jurisdiction, itmay delegate ministerial authority tothe El Paso Water Utilities Public Service Board to collect those fees.

BARRY R. MCBEE First Assistant Attorney General ELLEN L. WITT Deputy Attorney General for Legal Counsel NANCY S. FULLER Chair, Opinion Committee Susan L. Garrison Assistant Attorney General, Opinion Committee