ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

May 4,2005 

Shirley .I. Neeley, Ed.D. 

Commissioner of Education 

Texas Education Agency 

1701 North Congress Avenue 

Austin, Texas 78701-1494 

Opinion No. GA-0321 

Re: Whether an independent school district may 

enter into a 50-year lease with a private entity to 

use and improve the entity’s land for school 

purposes in exchange for $1 .OO per year and the 

agreement to lease excess school district land to 

the private entity for 50 years (RQ-0292-GA) 

Dear Commissioner Neeley: 

On behalf of the Port Neches-Groves Independent School District (“PNG” or “the school 

district”), you ask about the authority of an independent school district to enter into a 50-year lease 

with a private entity to use and improve the entity’s land for school purposes in exchange for $1 .OO 

per year and the agreement to lease excess school district land to the private entity for 50 years.’ 

I. Factual Background 

A letter from PNG enclosed with your request letter describes the following transaction: 

The proposed transaction involves a tract of land owned by Huntsman 

Petrochemicals [“Huntsman”], who has agreed to lease the land to 

PNG for a term of 50 years, with an option to renew the lease for an 

additional 50 years, at the sole discretion ofPNG’s School Board, in 

exchange for the consideration of $1 .OO per year and the use of a tract 

of unused excess land owned by PNG. Essentially, the proposed 

transaction involves a long-term property exchange between the two 

parties. 

‘See Letter from Shirley J. Neeley, Ed.D., Commissioner ofEducation, Texas Education Agency, to Honorable 

Greg Abbott, Texas Attorney General (Nov. 8, 2004) [hereinafter Request Letter]; Letter from Dr. Lani Randall, 

Superintendent, Port Neches-Groves Independent School District, to David A. Anderson, General Counsel, Texas 

Education Agency (Nov. 2,2004) (attached to Request Letter) [hereinafter PNG Letter] (both letters on tile with Opinion 

Committee, also available af http:ilwww.oag.state.tx.us). 
Shirley J. Neeley, Ed.D. - Page 2 (GA-0321) 

The land owned by Huntsman is considered ideal for the 

possible construction of new schools and is almost twice the total 

acreage of land owned by PNG that would be involved in the 

proposed transaction. Huntsman wants the use ofPNG’s excess tract 

for the operation of the local community soccer league that would be 

displaced when it leases the larger tract to PNG. 

PNG Letter, supra note 1, at 1. A brief submitted on PNG’s behalf further informs us that 

“Huntsman will be limited to [using the school district land for the community soccer league], thus 

assuring that if, at the expiration of the first 50 year lease term, PNG wishes not to exercise its 

renewal option, the land’s condition would be substantially similar to the state it would be in upon 

receipt by Huntsman.“z 

II. Analvsis 

PNG states “[tlhis unique proposal” requires it to resolve the following question: 

Whether Port Neches-Groves Independent School District can 

construct buildings using public funds upon property that is owned by 

Huntsman Petrochemicals and that is leased rather than owned and as 

partial consideration for such lease, provide a tract of PNG’s excess 

and unused land to Huntsman Petrochemicals for the use as a 

community youth soccer program without bid or other public 

approval. 

PNG Letter, supra note 1, at 1. No statute expressly authorizes a school district to enter into this 

kind oftwo-part transaction. Therefore, as PNG recognizes, we must consider separately the school 

district’s authority to enter into each lease. See id. at 1-2. Accordingly we address (i) the authority 

of an independent school district to construct buildings on leased land that is privately owned, and 

(ii) the authority of an independent school district to lease excess school district land to a private 

entity as partial consideration for the school district leasing land from the private entity. 

A. School District’s Authority to Lease and Develop Privately Owned Land 

We begin with an independent school district’s authority to lease land from a private 

entity and to develop the land for school district purposes. The Education Code authorizes a board 

of trustees to lease real property on the school district’s behalf. The trustees of an independent 

school district “as a body corporate have the exclusive power and duty to govern and oversee the 

management of the public schools of the district.” TEX. EDUC. CODE ANN. 5 11.15 1 (b) (Vernon 

*Brief from Chris Booth, Mehaffy Weber, on behalf of Port Neches-Groves Independent School District, to 

Honorable Greg Abbott, Texas Attorney General, at l-2 (Dec. 16,2004) ( on file with Opinion Committee) [hereinafter 

PNG Brief]. 
Shirley J. Neeley, Ed.D. - Page 3 (GA-0321) 

Supp. 2004-05). Under section 11.15 l(a) of the Education Code, the trustees of an independent 

school district “in the name of the district may acquire and hold real and personal property.” Id. 

5 11.15 1 (a). And a board of trustees has express statutory authority to spend local school funds for 

purposes it determines necessary, including obtaining school sites and renting schools. See id. 

5 45.105(c) (authorizing the use of certain funds for, among other things, “buying school sites, 

buying, building, repairing, and renting school buildings, and for other purposes necessary in the 

conduct of the public schools determined by the board of trustees”).3 Moreover, a school district is 

also expressly authorized to construct school buildings, see, e.g., id. $8 44.031-,041 (Vernon 1996 

& Supp. 2004-05) (governing school districts’ authority to enter into construction contracts), 

45.105(c) (Vernon Supp. 2004-05) (authorizing use of certain funds to “build[] school 

buildings”), and we are not aware of any statutory provision that would limit a school district to 

constructing school district buildings on land owned by the school district in fee simple. 

In addition, PNG’s letter suggests that it is concerned about constitutional limitations on the 

authority of a school district to use public funds to construct school buildings on privately owned 

land. See PNG Letter, supra note 1, at 2. Article III, section 52(a) of the Texas Constitution limits 

the authority of apolitical subdivision, including a school district, to use public funds to aid a private 

entity. See TEX. CONST. art. III, 5 52(a); Lewis v. Zndep. Sch. Dist. ofAustin, 161 S.W.2d 450,452 

(Tex. 1942) (“That the School District is a political corporation or subdivision of the State, as 

described in Section 52 of Article 3 of the Constitution, is well established.“). Section 52(a) 

prohibits “gratuitous payments to individuals, associations, or corporations,” but “[a] political 

subdivision’s paying public money is not ‘gratuitous’ if the political subdivision receives return 

consideration.” Tex. Mm. League Zntergovernmental Risk Pool v. Tex. Workers ’ Camp. Comm ‘n, 

74 S.W.3d 377,383 (Tex. 2002). With the exception ofgratuitous transactions, which are absolutely 

prohibited, a political subdivision’s use of funds or “thing of value” that aids a private entity must 

serve a “public purpose” to pass constitutional muster. As the Supreme Court ofTexas has recently 

held, in order to comport with article IU, section 52(a), the predominant purpose of a statute 

requiring a public expenditure must be to accomplish a public purpose, not to benefit private parties, 

and the statute must impose public control over the funds to ensure that the public purpose is 

accomplished and to protect the public’s investment and ensure that the political subdivision receives 

a return benefit. See id. at 383-84. This office has identified similar principles for determining if 

a particular expenditure serves a public purpose: “In making an expenditure of [public] funds that 

benefits a private person or entity, . a [political subdivision’s governing body] will avoid violating 

article III, section 52 if it (i) determines in good faith that the expenditure serves a public purpose 

and (ii) places sufficient controls on the transaction, contractual or otherwise, to ensure that the 

public purpose is carried out.” Tex. Att’y Gen. Op. Nos. GA-01 88 (2004) at 4 (citing Young v. City 

of Houston, 756 S.W.2d 813, 814 (Tex. App.-Houston [lst Dist.] 1988, writ denied), City of 

Coleman Y. Rhone, 222 S.W.2d 646, 649 (Tex. Civ. App.-Eastland 1949, writ ref d)); GA-0078 

(2003) at 4-5. 

‘See also Tex. Att’y Gen. Op. No. JM-1000 (1988) at 3, 5 (concluding that former Education Code section 

23.26 authorized a school district to rent portable classroom). 
Shirley J. Neeley, Ed.D. - Page 4 (GA-0321) 

With respect to constructing buildings with public funds on leased property, this office has 

stated: 

It is well established that the Texas Constitution does not 

prohibit the state or a political subdivision from constructing 

improvements on leased property. [Under article III, section 52(a) 

and similar provisions,] . [aIdequate consideration for the 

expenditure must flow to the public, and adequate controls, 

contractual or otherwise, must be in place to ensure that the public 

purpose will be carried out. The fact that improvements are to be 

constructed on leased property, and the terms ofthe lease, are relevant 

to the determination whether the state receives adequate consideration 

for, and retains adequate control over, the expenditure. 

Tex. Att’y Gen. LO-97-078, at 2 (citing Attorney General Opinions JM-1030 (1989) at 3 

(expenditure of public funds to improve realty owned by private parties), MW-290 (1981) at 1,4 

(county may improve building acquired by lease), H-41 6 (1974) at 3 (grant or loan of state funds for 

construction or improvement of municipal airport located on leased land), H-403 (1974) at 3 (state 

agency may spend public funds to build, repair, or maintain improvements on leased property), 

M-512 (1969) at 2 (state agency may refurbish leased building)). 

Whether using public funds to construct buildings on leased land comports with these 

requirements involves questions of fact and cannot be resolved by this office. See id.4 Based on the 

information you have provided, it appears that the PNG board of trustees could reasonably conclude 

that constructing school buildings on the leased land would serve a school district purpose. See PNG 

Letter, supra note 1, at l-2 (stating that the Huntsman tract is ideal for school construction and that 

a loo-year lease term would exceed the structures’ useful life). Your letter also suggests that the 

lease agreement would grant the school district an exclusive right to use the buildings for 50 to 100 

years. Such a lease term could fulfill the PNG board of trustees’ obligation to place sufficient 

controls on the transaction to ensure that the public purpose is carried out. 

B. School District’s Authority to Lease School Land to a Private Entity 

Next, we address an independent school district’s authority to lease excess school 

district land to a private entity as partial consideration for the school district leasing land from the 

private entity, which is the more complicated issue. 

1. The Education Code and Implied Authority 

A board of trustees holds school property in trust to be used for the benefit 

of school children in the district. See Love v. City ofDallas, 40 S.W.2d 20,26 (Tex. 193 1). Section 

4SeegenerailyTex.Att’yGen. Op.Nos. GA-0128 (2003)at5 (aquestionrequiringresolutionofparticularfacts 

is “not one in which this offke ordinarily engages in the opinion process”); GA-0106 (2003) at 7 (“This office cannot 

find facts OI resolve fact questions in an attorney general opinion.“). 
Shirley J. Neeley, Ed.D. - Page 5 (GA-0321) 

11.15 1 (c) of the Education Code provides that “[a]11 rights and titles to the school property of the 

district, whether real or personal, shall be vested in the trustees and their successors in office. The 

trustees may, in any appropriate manner, dispose of property that is no longer necessary for the 

operation of the school district.” TEX. EDUC. CODE ANN. § 11.151(c) (Vernon Supp. 2004-05). 

Section 11.154(a) further provides that a “board of trustees of an independent school district may, 

by resolution, authorize the sale of any property, other than minerals, held in trust for public school 

purposes.” Id. 5 11.154(a) (Vernon 1996). 

While sections 11.151(c) and 11.154 authorize a boardoftrustees to dispose ofreal property 

that is no longer necessary for the operation of the school district and to sell property, no provision 

expressly authorizes a board of trustees to lease school real property to another entity. However, in 

Royse Independent School District v. Reinhardt, 159 S.W. 1010 (Tex. Civ. App.-Dallas 1913, writ 

ref d), the court concluded that a board of trustees’ statutory authority impliedly authorizes a board 

to lease school real property to another entity. In that case, the court held that the board’s exclusive 

power to manage and control school property included the power to lease a school baseball field to 

the Royse Booster Club during summer months for a three-year term in exchange for the club’s 

agreement to make certain improvements to the property. The court observed that “[tlhe primary 

object in granting the privilege to the Royse Booster Club to use its school grounds as a place to play 

baseball is to subserve a public purpose, and not to promote some private end.” Royse, 159 S.W. 

at 1011. Moreover, it concluded that the lease would not harm the property or interfere with school 

activities, given that it was limited to the summer months, and would “result in quite a financial 

advantage to the school district.” Id. 

Based on these facts, the court concluded that “such use [of the property] is not so 

inconsistent with the purposes to which the property has been dedicated or set apart as renders the 

contract illegal or unauthorized.” Id. Relying on Royse, attorney general opinions have 

recognized boards of trustees’ implied authority to permit private groups to lease school property 

when the lease does not interfere with the property’s school purpose. See, e.g., Tex. Att’y Gen. Op. 

Nos. WW-1364 (1962) at 7 (concluding that a school district board of trustees was authorized to 

lease school property to a tire protection district so long as the lease “does not impede or interfere 

with the operation of the school”); O-5354 (1943) at 9 (concluding that a school district board of 

trustees was authorized to lease a school building to a religious sect for a summer religious school 

provided that the school district received reasonable consideration and the lease did not “interfere[] 

with the use of such property for school purposes”). 

While judicial and attorney general opinions after Royse have not questioned school district 

boards of trustees’ implied authority to lease school district land, subsequent opinions addressing 

long-term leases have concluded that boards of trustees lack authority to enter into a lease that 

interferes with the property’s use for school purposes or that relinquishes the board’s authority to 

control the property’s use. For example, in 1972 this office concluded that an independent school 

district lacked authority to lease an unused school facility and grounds for use as a neighborhood 

center for a 20-year term: 

[A] minimum twenty-year lease bythepresent trustees oftheproperty 

in question, without any discretion being left in the trustees of the 
Shirley J. Neeley, Ed.D. - Page 6 (GA-0321) 

future for possible needed use for school purposes, would exceed the 

recognized discretionary leasing authority of the school The 

lease would not be deemed a temporary, casual, or incidental use and 

would amount to an impermissible diversion of governmental 

property from its intended use for school purposes. 

Tex. Att’y Gen. Op. No. M-1047 (1972) at 3, 

And even more significantly, in 1986, in the last judicial opinion to consider a school district 

lease’s validity, the court declared the lease ultra vires and void. See River Rd. NeighborhoodAm ‘n 

v. S. Tex. Sports, 720 S.W.2d 551,559.60 (Tex. App.-San Antonio 1986, writ dism’d). In that case, 

the court considered a school district’s authority to lease a football stadium to a private entity, STS, 

according to terms described in part as follows: 

The lease is for a primary term of 30 years and grants to 

lessee, STS, the right to extend the term for two additional IO-year 

periods. The lease is, thus, for a minimum period of 30 years, and if 

STS chooses to exercise its options, for an additional 20 years. 

The lease gives STS the right to the “exclusive use” of the 

leased premises for “all lawful purposes,” without paying until at 

least February 1, 1986. 

Id. at 559. The plaintiffs did not question the district’s right to permit a private organization to use 

district property in a manner that would not interfere with the property’s use for school district 

purposes, but contended that the lease relinquished the board’s right to manage and control the 

property, including its right to allow other groups to use the property. Id. The court agreed: 

There can be no doubt that [the] District’s Board exceeded its 

powers when it, by the lease in question, effectively divested itself of 

the exclusive right to manage and control the property in question, 

including, for a period of perhaps 50 years, the exclusive right to 

determine when the District itself could use the school property for 

school purposes. The invalidity of such abdication of power and 

diversion ofproperty held for public purposes has been recognized in 

Texas at least since 1887. 

Zd. at 560. 

In sum, a school district board of trustees has implied authority under the Education Code 

to lease district real property to a private entity, but that authority is limited. In leasing district 

property, a board of trustees may not (i) permit uses of the property that would interfere with the 

property’s use for district purposes, or (ii) divest itself of the exclusive right to manage and control 

the property in question. See Tex. Att’y Gen. Op. No. GA-0252 (2004) at 6. 
Shirley J. Neeley, Ed.D. - Page 7 (GA-0321) 

With respect to the proposed lease, we disagree with the suggestion that the PNG board of 

trustees need not concern itself with these traditional limitations on its authority because the school 

district would lease its land to Huntsman as partial consideration for its lease ofHuntsman land. See 

PNG Letter, supra note 1, at 1. Nor do we agree with PNG counsel’s suggestion that any loss of 

control over the school district land would be mitigated by the control the PNG would gain over the 

larger, more valuable Huntsman tract. See generally Love, 40 S.W.2d at 26 (a board of trustees 

holds school property in trust td be used for the benefit of school children in the district). 

But this does not mean that we believe that these limitations on the board’s authority preclude 

it from leasing the school land to Huntsman, or that the school district’s lease of the Huntsman tract 

may not be taken into account as a relevant factor in considering the school district’s authority to 

lease its land to Huntsman. In contrast to the actively used school district facilities at issue in Royse 

and River Road, PNG describes the property it would lease to Huntsman as “unused excess land.” 

PNG Letter, supra note 1, at 1. The fact that the land is not used by the school district is relevant 

to whether the proposed lease would permit uses of the property that would interfere with the 

property’s use for district purposes. See, e.g., Tex. Att’y Gen. Op. No. JM-531 (1986) at 3 

(addressing a school district’s authority to lease for a 50-year term undeveloped land that it did not 

plan to use for instructional purposes and distinguishing River Road on the basis that the facility in 

that case was actively used by school district sports teams). But the board of trustees must also 

consider whether PNG may need the land for school district purposes over the term of the lease and, 

if so, whether the lease would permit the school district to use the land. See, e.g., Tex. Att’y Gen. 

Op. Nos. GA-0252 (2004) at 7 (concluding that a junior college district may not divest itself of the 

right to control campus facilities constructed under a lease); M-1047 (1972) at 3 (concluding that 

school district lacked authority to lease an unused elementary school for a 20-year term with no right 

to terminate). The PNG letter indicates that Huntsman will not agree to a lease that gives PNG the 

right to terminate. See PNG Letter, supra note 1, at 2. A lease divesting PNG of any right to manage 

and control the property for a term of 50 to 100 years is problematic under relevant precedent, unless 

the board of trustees can expressly find that the property is no longer necessary for the operation of 

the school district. Cj: TEX. EDUC. CODE ANN. 5 11.15 l(c) (Vernon Supp. 2004-05) (authorizing 

a school district board of trustees to dispose ofproperty “that is no longer necessary for the operation 

of the school district”). In making such a finding, the board of trustees could take into account the 

fact that the Huntsman tract would be available for school purposes. 

In the end, the final determination whether a lease comports with these limitations involves 

questions of fact and contract interpretation and is thus beyond the purview of an attorney general 

opinion. See Tex. Att’y Gen. Op. No. GA-0252 (2004) at 6 (junior college district’s authority to 

lease campus land to private foundation involves questions of fact and contract interpretation); see 

also Tex. Att’y Gen. Op. No. JM-531 (1986) at 2 (whether a school district’s agreement to lease 

school district land for a 50-year term interfered with the property’s school district use and the 

board’s authority “is essentially a question of fact”).’ We suggest that the PNG board of trustees 

consider and make express findings regarding these issues. 

‘See genera& Tex. Att’y Gen. Op. Nos. GA-0176 (2004) at 2 (attorney general opinions may “address a public 

entity’s authority to agree to a particular contract term, if the question can be answered as a matter of law,” but they do 

not construe contracts); GA-0078 (2003) at 2 (same). 
Shirley J. Neeley, Ed.D. - Page 8 (GA-0321) 

2. Other Limitations on Authority to Lease School District Land 

The Local Government Code and the Texas Constitution also impose 

limitations on the authority of a school district to lease real property to a private entity that the board 

of trustees must address. 

First, PNG describes the transaction at issue as a “long-term property exchange.” PNG 

Letter, supra note 1, at 1. The Local Government Code requires political subdivisions, including 

school districts, to sell or exchange land using competitive procedures, and, in some instances, a 

long-term lease (or “long-tennproperty exchange”) by apolitical subdivisionmaybe subject to these 

requirements. 

Section 272.001 of the Local Government Code governs the authority of political 

subdivisions to sell or exchange land, generally requiring a political subdivision to provide notice 

and to obtain bids. See TEX. Lot. GOV’T CODE ANN. 5 272.001 (Vernon Supp. 2004-05). Courts 

construe the term “political subdivision” to embrace school districts. See City ofE1 Paso Y. El Paso 

Cmty. Junior Coil. Dist., 729 S.W.2d 296, 299 (Tex. 1987).6 Section 272.001 “protect[s] public 

property in order that it might not be disposed of for less than true value. The notice and bidding 

requirements stimulate competition, prevent favoritism, and secure the best price for the property.” 

Bell Y. Katy Indep. Sch. Dist., 994 S.W.2d 862,866 (Tex. App.-Houston [lst. Dist.] 1999, no pet.) 

(citing CityofDallas v. McKasson, 726 S.W.2d 173,176 (Tex. App.-Dallas 1987, writ ref d n.r.e.); 

West Orange-Cove Consol. Indep. Sch. Dist. v. Smith, 928 S.W.2d 773,776 (Tex. App.-Beaumont 

1996, no writ)). 

Specifically, section 272.001(a) requires that “before land owned by a political subdivision 

of the state may be sold or exchanged for other land, notice to the general public of the offer of the 

land for sale or exchangemust be published in anewspaper of general circulation,” with information 

about sealed bidding procedures. See TEX. Lot. GOV’T CODE ANN. 5 272.001(a) (Vernon Supp. 

2004-05). Section 272.001(b) excepts certain types of land and interests from the section 272.001(a) 

notice and bidding requirements, including, for example, “land that the political subdivision wants 

to have developed by contract with an independent foundation.” Id. $272.001 (b)(4).’ However, the 

land and interests described by section 272.001(b), including section 272.001(b)(4), “may not be 

conveyed, sold, or exchanged for less than the fair market value of the land or interest unless the 

%e Education Code also indicates that section 272.001 generally applies to school district land sales. Chapter 

45, subchapter D of the Education Code authorizes a board of trustees to sell real property and to issue revenue bonds 

payable from the proceeds of the sale, see TEX. EDUC. CODEANN. $5 45.08 l-.086 (Vernon 1996 & Supp. 2004-05), and 

expressly provides that Local Govemment Code section 272.001 does not apply to a real property sale conducted under 

the subchapter, see id. 5 45.083 (Vernon 1996); see also Bell v. Kaiy Indep. Sch. Dist., 994 S.W.Zd 862, 865-66 (Tex. 

App.-Houston [lst Dist.] 1999, no pet.) (holding that subchapter D applies only when a school district issues revmoe 

bonds from the land sale proceeds and suggesting that section 272.001 otherwise applies). 

‘See also Tex. Att’y Gen. LO-97.076, at 3 (“[A]ny contract of sale under the tern of Local Govemment Code 

section 272.001 (b)(4) between a political subdivision and a private foundation for the development of a parcel ofpublic 

land owned by the political subdivision must include an undertaking that the foundation will develop the land as the 

political subdivision determines.“). 
Shirley .I. Neeley, Ed.D. - Page 9 (GA-0321) 

conveyance, sale, or exchange is with one or more abutting property owners who own the underlying 

fee simple.” Id. 5 272.001(b). 

Whether a lease arrangement is a sale or exchange of land subject to section 272.001 depends 

upon the lease’s terms, such as the lease’s duration, the political subdivision’s right to control the 

land during the lease term, andthe political subdivision’s right to improvements at termination. See 

Tex. Att’y Gen. LO-96-053, at 3 (noting that a court could “conclude that a transaction in which a 

county transfers equitable title to county real property to another entity with an irrevocable option 

to purchase constitutes a sale of land for purposes of section 272.001”). A court of appeals recently 

concluded that section 272.001 does not apply when a political subdivision temporarily leases land 

to a private entity. See Walker-v. City of Georgetown, 86 S.W.3d 249,259 (Tex. App.-Austin 2002, 

pet. denied). In that case, the court found that “there was no permanent disposition of land. The City 

of Georgetown entered into a ten-year lease, with a ten-year renewal option, during which the City 

retains significant control over the use of the property. Upon termination of the lease, if renewed, 

the City will acquire the batting cages [built on city property by the private lessee].” Id. at 258. 

Neither the PNG letter nor its counsel’s brief addresses section 272.001. See PNG Letter, 

supra note 1; PNG Brief, supra note 2. This office cannot ultimately determine whether the 

proposed lease at issue here would constitute a permanent disposition of land subject to section 

272.001. See, e.g., Tex. Att’y Gen. Op. No. GA-0252 (2004) at 8; Tex. Att’y Gen. LO-96-053, 

at 3 (“the determination whether a particular lease-purchase agreement constitutes a sale [subject to 

section 272.001] would involve questions offact and contract interpretation and is therefore beyond 

the scope of an attorney general opinion”). However, the proposed lease term, 50 to 100 years with 

no right to terminate, suggests that the lease could rise to a sale or exchange under section 272.001. 

We urge PNG to consider section 272.001’s requirements and exceptions before proceeding with 

the transaction.8 

In addition, a school district’s agreement to permit a private entity to use its land constitutes 

a “thing of value” for purposes of article III, section 52(a). See Walker, 86 S.W.3d at 260 

(addressing whether city’s lease ofpark land to private company violated article III, section 52(a)); 

Tex. Att’y Gen. Op. Nos. GA-0252 (2004) at 8-9 (addressing whetherjunior college district’s lease 

of campus land to private foundation violated article III, section 52(a)), GA-0084 (2003) at 9 

(addressing whether a city lease agreement with avolunteer firefighters association violated article 

III, section 52(a)), JC-0582 (2002) at 5-6 (addressing whether a county lease agreement with a 

museum violated article III, section 52(a)). Thus, a school district lease to a private entity must 

*For example, it may be possible for the school district to enter into an agreement with Huntsman after providing 

notice and accepting bids for an exchange of property. See TEX. Lot. GOV’T CODE ANN. $272.001(a), (d) (Vernon 

Supp. 2004-05) (“This section does not require the goveming body of a political subdivision to accept any bid or offer 

or to complete any sale or exchange.“). Alternatively, it may be possible for PNG to lease the school district land for 

an independent foundation to develop athletic fields under section 272.001(b)(4) without notice and bids. See also note 

7 supra. PNG suggests that the value ofthe Huntsman tract equals or exceeds the fair market value of the school district 

land. See PNG Letter, sup-a note 1, at 2; TEX. Lot. GOV’TCODEANN. 5 272.001(b) (Vernon Supp. 2004-05) (generally 

requiring that land or an interest under subsection(b) may not be conveyed, sold, or exchanged for less than fair market 

Willie). 
Shirley .I. Neeley, Ed.D. - Page 10 (GA-0321) 

satisfy the public purpose test. See, e.g., Tex. Att’y Gen. Op. Nos. GA-0084 (2003) at 8 (applying 

the public purpose test to a city lease agreement with a volunteer firefighters association), JC-0582 

(2002) at 4 (applying the public purpose test to a county lease agreement with a museum). 

Here, PNG asserts that in exchange for leasing its property to Huntsman, it would “obtain 

an interest in a valuable piece of land, without any significant cost and certainly far below fair market 

value.” PNG Letter, supra note 1, at 1. It also states that the Huntsman land “is considered ideal 

for the possible construction of new schools and is almost twice the total acreage” of the land PNG 

would lease to Huntsman. Id. These statements indicate that the lease would serve a school district 

purpose, school construction, and would be supported by valuable consideration. Under these 

circumstances, assuming the lease includes sufficient controls to ensure the public purpose is carried 

out, we believe a court could conclude that the lease of school land to Huntsman would comply with 

article III, section 52(a). See Walker, 86 S.W.3d at260 (“[Tlhe lease entered into here was supported 

by valuable consideration. As such, it was not a gratuitous donation of public funds or a thing of 

value.“). 
Shirley J. Neeley, Ed.D. - Page 11 (GA-0321) 

SUMMARY 

An independent school district is authorized to lease land 

from a private entity and to develop the land for school district 

purposes. An independent school district has implied authority to 

lease school land to a private entity, but in leasing school property the 

board of trustees may not (i) permit uses of the property that would 

interfere with the property’s use for district purposes, or (ii) divest 

itself of the exclusive right to manage and control the property. A 

long-term exchange of school land for private land may be subject to 

section 272.001 of the Local Government Code, in which case the 

school district may be required to provide notice and accept bids. 

Article III, section 52(a) of the Texas Constitution does not 

prohibit a school district from using public funds to construct 

buildings on leased property or from leasing school land to a private 

entity if the board of trustees determines that the expenditure or use 

of the thing of value serves a public purpose and places sufficient 

controls on the transaction to ensure that the public purpose is carried 

out. 

BARRY R. MCBEE 

First Assistant Attorney General 

DON R. WLLLETT 

Deputy Attorney General for Legal Counsel 

NANCY S. FULLER 

Chair, Opinion Committee 

Mary R. Crouter 

Assistant Attorney General, Opinion Committee