JIM MATTOX Attorney General

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An Equal Opportunity/ Affirmative Action Employer 

# The Attorney General of Texas

August 13, 1984

HonorableT. R. Ba"d:r Nueces CountyAttonwy Courthouse Corpus Christi,Texas 78401 OpinionNo. JM-189

Re: Whether an area to be developed for tourist purposes within its extraterritorial jurisdiction may be designated by a city as a" industrialdistrict

Dear Mr. Bandy:

You advise tha: certain areas along Mustang Island in Nueces County are being e:r:ensivelydeveloped for tourist-related purposes (through the const,ructionof hotels, condominiums, vacation home subdivisions,and rw:reation facilities). You ask:

May the governing body of a cj~tydesignate as a" industria:l

districtunder theMunicipalAnnexation Act certain areas within its extraterritorial jurisdict:lrmwhich it determines are primarily utilized :iorthe tourist industry?
The Municipal IumexationAct, article 970a,V.T.C.S.,was enacted in 1963. See Acts;1963, 58th Leg., ch. 160, at 447. Section 5 thereof states inpertinentpart:

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 extraterr:it:orial jurisdiction as a" industrial district, .XSthe term is customarilyused, and to treat witi such area from time to time as such governingbody may deem to be in the best interest of the city. Included in such rights and powers of the governing body of any city is the permissiveright and power to enter into contracts or agreemwts with the owner or owners of land in such intcstrial district to guarantee the continuat:1onof the extraterritorial status of such distr:.ct,

and its immunity from annexationby the city fora period of time not to exceed seven (7) years, and upon such other terms and

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considerations iw the parties might deem appropriate

. . . . (Emphasisadded).
The term "industrialdistri':,:" is not definedby article 970a, but is tobe understood "as the telxlis customarilyused."

In Calvertv. Austin Liulndry and Dry Cleaning Co., 365 S.W.Zd 232 (Tex.Civ. App. - Austin 19c3,writ ref'd n.r.e.), themeaning of the undefined term "industrial cperations," as used in a taxing statute, was at issue, Declaring th:.tthe word "industrial"has a meaning of its own, and that the 1egis:l;lture is presumed to have used theword in the sense ordinarilyunderxood, the courtheld that the operationsof 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 tobe an'sdustrial plant"within themeaning 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,lrionally discriminated 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 establishments are industrislplants.
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,ments referred to by plaintiff be considered ar industrial plant. It is true that we sometimelrspeak of 'themovie industry', 'the hotel industry' or 'the banking industry', but that is merf,~ly a loose use of language to convey that idea that theparticularbusiness is a sizeable one. Irispite of that colloquialism,we do not speak o!: the buildings housing such businesses as '::"dustrialplants'. Plaintiff attempts to gi~veto that phrase a legal meaning that goes far beyond anything that was contemplated by the Courts when they pronounced this rule and by the legislaturewhen it adopted it in the Act of 1933. The law can do no better than to define ar industrialplant as that type of establishmentwhj.(,h the ordinaryman thinks of as

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

C

such. Certainlya commercial laundry comeswithin that definition bdt the other businesses here mentioned do not.

See also Union Mutual Life IrsuranceCo. v. Emerson, 345 A.2d 504 (Me. 1975); State Police DepartmelG: v. Hargrave, 237 N.E.Zd 269 (Ind.App. 1968);Attorney General OpinlcnMW-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 themeaning of the statute.

We do not think the leE;jslature intended to allow the extension of a city'spowers, in themrner contemplatedby section 5 of article 970a. to embrace every extraxrritorial are+ occupiedby a commercial venture thatmight 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 'Lndustrialplant" statuswas claimed for the home office of an in3llrancecompany because it was highly capitalized,had a large labcr force,and other indicia:

If the argument ai.xanced were to be adopted, it would seem that an:!general office building could in theoryqualify 5,s an industrialplant.

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 ordinaryman rrouldunderstand an industrial

plant to be any factory.business or concernwhich 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 indujrrialplants 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. 5190.6, 1349 (":mxnercial or industrial" clubs); art.

§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(=) ("manufacturingor industrial enterprise"). Article lOlla, V.T.C.S.. grants certain cities zonin;:power over land "for trade, industry,

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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'nApp. 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) (mobilehome site development);and Fox Development Co.v. City of San Antonio, 459 S.W.2d 670 (Tex.Civ.App. - SanAntonio 1970).affirmed, 468 S.W.2d 338 (Tex. 1971) (subdivisiondevelopment). 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 appellanthad not shown a co:.laterally attacked 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 970awas 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 industrialdistrict. 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 landwas within territoryheld 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., doesnot apply to s,lch territory,City of Houstonv. Houston Endowment, Inc., 428 S.W.2d 706 (Tex.Civ. App. - Houston [lstDist.1 1968, writ ref'd n.r.e.), but article 1187-l. V.T.C.S., allows the designationof industrialdisrricts there inwords almost~identicalto those of article 970a. Houston Endowment, Inc. v. City of Houston, -- 468 S.W.Zd 540 (Tex.Civ.Ap:?.- Houston [14thDist.] 1971,writ ref'd n.r.e.). Cf. City of Nassau Ba (Tex. Civ.App. y v. City of Webster, 600 S.W.Zd 905

- 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 governingbo+ of a citymay not properly designateas

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an industrial district unde:rthe Municipal Annexation Act an area within its extraterritorialjurisdictionwhich it determines is to be primarilyutiljzed for the tourist industry.

SUMMARY .- The governing bclc.y of a city may not properly designate as an j.r.dustrial district under the Municipal Annexation Act an area within its extraterritorial jurisdictionwhich it determines is to be primarily utilized for the tourist industry.

JIM MATTOX Attorney General of Texas

TOM GREEN FirstAssistantAttorney General

DAVID R. RICHARDS ExecutiveAssistantAttorney :?neral
Preparedby BruceYoungblood AssistantAttorney General

APPROVED: OPINION COMMITTEE
Rick Gilpin, Chairman David Brooks Colin Carl SusanGarrison Jim Moellinger Nancy Sutton BruceYoungblood

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