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-.**~~ ~~Il**  ATTORNEY GENERAL OF TEXAS GREG ABBOTT

Mr. Andrew C. Hughey General Counsel Texas Southern University 3100 Cleburne Avenue Houston, Texas 77004

Dear Mr. Hughey: December 8,2011
Opinion No. GA-0894 Re: Whether Texas Southern University may exchange or grant outright a portion of its real propertythatcontains or is adjacent to a historical cemetery (RQ-0975-GA)

On behalfofMr. Glenn Lewis, Chair oftheBoard ofRegents ofTexas Southern University ("TSU" or the "University"), you ask whether TSU may convey real property associated with a historic cemetery by exchange or gift. 1 Request Letter at 1. You provide us with the following background information. TSU owns three parcels of land associated with the Olivewood Cemetery in Houston. [d. at 1-2. The Descendents ofOlivewood, a Texas nonprofit corporation (the"Corporation"), has beenauthorized by courtorderto restore, operate, andmaintainthecemetery and wishes to obtain TSU property as part of a major restoration project. [d. at 2. Two ofTSU's parcels contain graves and are dedicated cemeterylands, and the thirdparcel abuts the cemetery. [d. TSU has obtained an appraisal assessing the value ofthe dedicated cemetery lands as having zero value, and the adjacent property as having a value of$11,250. [d

. TheCorporationhasproposedthatitdonate historicalpapersrelatingto thecemeteryto TSU, orgrant TSU access to the cemetery for various educational purposes in exchange for TSU's three parcels ofreal property. Id. at 2-3. In light ofconstitutional restraints on granting state property or funds to private entities, you wish to know ifTSU may convey the property to the Corporation (1) in exchange for the historical papers, (2) in exchange for a right ofaccess to the cemetery, or (3) as a gift "to serve the greater public purpose" ofhistoric preservation. Id. at 1-3. The TSU board of regents has general statutory authority to acquire and convey land on behalfofthe University. TEX. EDUC. CODE ANN. § 106.35(a) (West 2002). Property belonging to a state university such as TSU is state property. See Walsh v. Univ. ofTex., 169 S.W.2d 993,993

1 SeeLetterfromMr. AndrewC. Hughey, General Counsel, Texas SouthernUniversity, to Office oftheAttorney General, Opinion Committee at 1 (May 31, 2011), https://www.oag.state.tx.us/opiniindex_rq.shtml ("RequestLetter").Mr. Andrew C. Hughey

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(Tex. Civ. App.-EI Paso 1942, writ ref'd) (observing that property ofthe University ofTexas is state property because the university has no existence independent ofthe state). Article III, sections 51 and 52 of the Texas Constitution are complementary provisions limiting the Legislature's appropriation ofpublic funds and resources for private purposes, either directly orby authorityvested in an agency or local entity. See Byrdv. City of Dallas, 6 S.W.2d738, 740-41 (Tex. 1928) (observing that article III, sections 51 and 52 prohibit the state and its political subdivisions from gratuitously paying public funds for private purposes). Section 51 provides that the "Legislature shall have no power to make any grant or authorize the making of any grant of public moneys to any individual, association of individuals, municipal or other corporations whatsoever." TEX. CONST. art. III, § 51. Similarly, section 52 prohibits the Legislature from authorizing any political corporation or subdivision ofthe state "to lend its credit or to grant public money or thing ofvalue in aid of, or to any individual, association or corporation whatsoever." Id. § 52(a). Both sections 51 and 52 have been construed by the courts as "prohibiting the gratuitous disposition ofthe state's money, property, or contractual rights." RhoadsDrilling Co. v. Allred , 70 S.W.2d 576, 582 (Tex. 1934); accord Tex. Att'y Gen. Op. Nos. JM-1091 (1989) at 2, MW-373 (1981) at 9 (observing that while article III, section 51 expressly mentions "public funds," it also pertains to the disposition ofstate property and contract rights). Therefore, TSU is constitutionally prohibitedfrommaking apurelygratuitous transfer ofreal propertyto aprivateentity. See Pasadena Police OfficersAss'n v. City of Pasadena, 497 S.W.2d388, 392-93 (Tex. Civ. App.-Houston [1st Dist.] 1973, writ ref'd n.r.e.) (holding that gratuitous transfer ofproperty rights violated article III, sections 51 and 52, among other constitutional prohibitions). However, a transfer ofproperty interests or rights in exchange for adequate consideration is not a gratuity. See Walker v. City ofGeorgetown, 86 S.W.3d 249, 260 (Tex. App.-Austin 2002, pet. denied) (determining that a lease ofcity property for valuable consideration was not gratuitous and did not violate the comparable prohibition ofarticle III, section 52(a)). Although you have not had the historical papers appraised, your description of the facts suggests that the papers could constitute valuable consideration that could support an exchange for the real property in question. Also, we recognizethat a grant ofcontractrights or othercovenants can constituteconsiderationthat will support a transaction, provided it grants a right that the grantee does not already possess. See City of Austin v. Austin City Cemetery Ass'n, 73 S.W. 525, 529 (Tex. 1903) (determining that permission to use property as cemetery was sufficient consideration to support agreement to limit the cost oflots); Pasadena Police OfficersAss'n, 497 S.W.2d at 392-93 (concluding that promise to build building was consideration for transfer ofpublic property, but modification of agreement without additional consideration was contrary to the constitution); Tex. Att'yGen. Op. No. DM-441 (1997) at 4 (opining that a grant of city property in exchange for a university's commitment to establish a campus on the property could satisfy the requirements of article III, section 52). However, whether a donation of the historical papers or the granting of access rights constitute adequate consideration for a conveyance ofthe real property involves questions offact that cannot be determined in an attorney general opinion. See Tex. Att'y Gen. Op. No. GA-0298 (2005) at 3 (advising that the value of property is inherently a fact question that cannot be determined in an attorney general opinion). Instead, the adequacy of consideration is a determination for theMr. Andrew C. Hughey

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governing board of the granting entity to make. Tex. Att'y Gen. Op. No. GA-0706 (2009) at 2 (concerning the findings a governing body must make to make a grant that complies with article III, section 52). You also ask if TSU may convey the property to the Corporation as a gift "to serve the greaterpublic purpose." Request Letter at 3. The grant or transfer ofpublic funds orresources "for a public purpose, with a clear public benefit received in return, does not amount to a ... violation ofarticle III, sections 51 and 52

." EdgewoodIndep. Sch. Dist. v. Meno, 917 S.W.2d 717,740 (Tex. 1995). Attorney general opinions have long advised that to avoid a violation ofarticle III, sections 51 and 52, agoverningbodythatgrants funds orpropertythatbenefits aperson orprivate entitymust (1) determine that the grant serves a public purpose and (2) place sufficient controls on the transaction to ensure that the public purpose is carried out. Tex. Att'y Gen. Gp. Nos. GA-0743 (2009) at 2 (discussing attorney general opinions' interpretation ofarticle III, section 51); GA-0321 (2005) at 2-3 (concerning alease ofpublicpropertyconsistentwith article III, section 52); GA-0084 (2003) at 7-9 (concerning a lease and conveyance ofreal property consistent with article III, section 52). However, a grant to benefit the public generally would not suffice; rather, the public purpose to be served by the grant must be an authorized public purpose ofthe granting entity. State ex reZ. Grimes Cnty. Taxpayers Ass'n v. Tex. Mun. PowerAgency, 565 S.W.2d 258,265-66 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd)

.2 Therefore, TSU may not grant real property to a private corporation except to serve an authorized purpose ofthe University. Whether granting the three parcels ofreal property ownedby TSU to the Corporation would serve apublic purpose ofthe University is for TSU's regents to determine in the first instance. See Tex. Att'y Gen. Gp. No. MW-373 (1981) at 9-10 (stating that whether grant ofuniversity office space rent-free to private foundation would serve a public purpose is for the university to determine in the first instance).3

2 See, e.g., Tex

. Att'y Gen. Op

. Nos. GA-0747 (2009) at 3-4 & n.6 (stating that under article III, sections 51 and 52, a school district's payment to a municipality must serve the public purpose ofthe district); MW-373 (1981) at 9 (determining that "[a]rticle III, section 51 ofthe constitution requires that a grant [ofoffice space] by the university to the foundation must serve a public purpose, appropriate to thefunction ofa university" (emphasis added»; JM-1255 ( 1990) at3,9-10(municipal bondresources cannotbeused to assista school district to acquire aschool building without a direct municipal purpose other than the incidental economic benefit to the community). 3you also ask whether, "in any case," TSUmay grant by gift the two parcels ofland containing the graves that were appraised as having zero value and note that the University would incur substantial costs to make such property marketable. Request Letter at 3. The special characteristics of the property are factors the Board might consider in determining the adequacy ofthe consideration or whether the transaction would serve a University purpose. Cf Tex. Att'y Gen

. Op. No. DM-268 (1993) at 2-3 (noting that an agreement to donate to a charity the county-owned personalty that is ofno use or resale value to the county, thereby relieving the county of transportation and disposal costs, might serve a public purpose and constitute adequate consideration in accordance with article III, section 52).Mr. Andrew C. Hughey

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### SUMMARY Article 

### ill, sections 51 and 52 oftheTexas Constitutionwould notprohibitTexas Southern University from conveyingreal property to aprivate entityin exchangefor historical papers or aright ofaccess to property,provided suchpapers or access rights constitute adequate consideration for the real property. Whether the papers or rights constitute adequate consideration is a matter for the University's governing board to determine in the first instance. Texas Southern Universitymaynot grantrealpropertyby gift to a private corporation except to serve an authorized purpose ofthe University.

DANIEL T. HODGE First Assistant Attorney General DAVID J. SCHENCK Deputy Attorney General for Legal Counsel JASON BOATRIGHT Chair, Opinion Committee William A. Hill Very truly yours,

Assistant Attorney General, Opinion Committee