C

.- THEN ATTORNEY GENERAL OF TEXAS

December 21, 1988

Honorable Ii.

Tati Santiesteban Chairman Natural Resources Committee Texas State Senate P. 0. Box 12068 Austin, Texas 78711

Dear Senator Santiesteban: OpinionNo. JM-997

Re: Authority of a home rule citv to convev land to the state for us;? as a park, where the transfer is made at a price below market value (RQ-1572)

You ask a question about the state's acquisition of a specificparcel of land ownedby the city of El Paso and administeredby the city's Public Service Board. This land, consisting of approximately 6,833.g acres, is within the boundaries of the Franklin Mountains State Parkwhich were delineatedby the legislature in 1979 and redrawn to exclude five sections of land in 1987. See Acts 1979, 66th Leg., ch. 736, at 1804;Acts 1987, 70th Leg. ch. 304, at 1676. The Parks and Wildlife Code establishesthe park under the jurisdiction of the Parks and Wildlife Department and provides that the department gift, lease, "shallacquire by purchase,

or condemnationall of the land described" in the 1979 legislation,except for the tracts deleted in 1987. Parks &Wild. Code 55 22.221; 22.222(a). A proposed agreement between El Paso and the stateprovides for transferring the land to the state at a nmodest price" that is considerably less thanmarketvalue.
The Public Service Board of the city of El Paso is appointed by the city and has responsibility for administeringthe water system for the city and the bond issues supporting thewater system. The lands in question have been designated Public Service Board lands, and the board holds them as agent for the city, &g V.T.C.S. art. 1109a;San Antonio Inden

. School Dist.v. Water Works Bd f Trustees 120 S.W.Zd. 861 (Tex.Civ. writ ref:d). APP. - Beaumont 193:

Concern has been expressed as to the city#L authority to transfer these lands to the state at a time when the Public Service Board of the city of El Paso still has outstandingbonds.

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Your question is as follows:

Does the City of El Paso, through its duly elected governing body, have the power and authority to make the transfer of land to the State for inclusion in the statepark system at a price which may be less than market value?

Your question raises the followingthree issues: the effect of the outstandingbonds on the city's transfer of these lands: the statutoryauthority for selling the land at less thanmarket value: and the constitutionalityof this transactionunder article III, section 52, of the Texas Constitution.

We will first address your concern that provisions of prior bond issues might prevent the city of El Paso from selling this property at less thanmarket value. The Public Finance Section of this officehas reviewed the relevant bond documents and has foundthat themanagement and control of the citywaterworks system (hereinafterthe **tnsystemvn)** is vested in the Trustees of the Public Service Board by city ordinance of Way 22, 1952. Includedas subsectionsD and E of section 12 of this ordinance are covenants on the disposition of the system'spropertywhich have been carried forward **by** all subsequentbond ordinances.
Subsection D is a general covenantby which the board agrees not to take any actionwhereby the lien of the bonds on the revenues of the systemmight be lost or impaired. Subsection E specificallyaddresses the board's authority to dispose of the property of the system. This covenant reads inpart as follows:

E. That the citywill not sell, encumber or in anymanner dispose of the system or any substantialpart thereof, includingany and all extensionsand additions thatmay be made thereto,until the bonds herein authorized to be issued shallhave been paid in full as to both principal and interest (provided that this covenant shall not be construed to prevent the disposalby the city of property which in the Board's judgment has become inexpedientto use in connection with the system

. . .).

We are informedthat the property to be sold does not generate any revenues fromwhich the debt service on the bonds ispaid, nor is itused forwater or wastewater system

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P

.- functions. If this

makes the required

._ _ _ information is

determination, this property. prevent tne sale of the bondholdersprotects them from impair their source of repayment and permits sales of property not needed for the system. Sale of the land in accordancewith these provisions, even if at less than market value,will not impair the bondholder's interests. aenerallv Citv of Aransas Passv. Keeling, 247 S.W. See 818 (Tex.1923). correct and if the board these covenants do not The city's contractwith property saleswhich will

We next consider whether the city. of El Paso has statutoryauthorityto transfer this land to the Parks and Wildlife Departmentat less thanmarketvalue.
Sections 22.221 through 22.223 of the Parks and Wildlife Code authorize the Parks and Wildlife Department to acquire the specific acreageyou inquireabout. Acts 1979, 66th Leg., ch. 736, at 1804. The bill analysis of the 1979 billwhich establishedthe FranklinMountains State Park states as follows:

Backcrround: The only statepark near El Paso,Hueco Tanks State Historical Park, is located twenty-six miles east of the city and is a limited access, historical preservation park. The city and county parks are small and for 'playground#recreation.
The proposedpark in the Franklin Mountains includesthe majority of the high mountains in the Franklin Range and some of the remainingwild desertmountains in El Paso County. The area contains many unique features, such as prehistoric and historic archaelogicalsites

. . . . The closeness of the proposed area to El Paso would enable residents and visitors to hike mountain trails and study a unique natural environment.

The billwould require the Texas Parks and Wildlife Department to acquire the portion of the Franklin Mountains of El Paso County north of Trans-MountainRoad (Loop375) to create a state recreational park. The

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departmentwould acquire the land by purchase, gift, or condemnationwith funds from the Texas Park DevelopmentFund.
BillAnalysis, Tex. H.B. 867, 66th Beg. (1979). Thus, the Parks and Wildlife Code provisions were adopted to govern the acquisition of identified land which included the specific land in question. The legislature amended these provisions in 1987 to facilitatethe proposed transfer agreement which is the subject of your request. The BillAnalysis to the 1987 legislation stated inpart:

Backaroa :
In 1979 the 66th Legislature created the Franklin Wountains State Park. The park is

. . .the largesturban park in the United States. The Public Service Board of El Paso owns land that iswithin the boundary of the Park (approximately 8,100 acres) which is presently valued at $40,000,000. The State is currently in litigation involving the purchase of this parcel of land from the City of El Paso. The Public Service Board has offered to sell to the State 4,780 acres . . .at a substantially lower price ($250,000)if the 5 sections (3,320acres) on the eastern border of the park may be exempted as proposed park lands. The property described as Sections 24, 17, 16, 9, and 4 are considered to be prime developable lands and shouldnot be a part of a wilderness park.

Provides that 5 sections of landwithin the FranklinMountains State Park be deleted from the land described for acquisition in Section 2 of the Act. BillAnalysis Tex. H.B. No. 1839, 70th Leg. (1987).
The legislature thus contemplated that sections 22.221 through 22.223 of the Parks andWildlife Codewould provide comprehensive statutory authority for the department to acquire land designated for FranklinMountains State Park, includingthe authority to acquire land from the city of El Paso at less than market value. These provisions constitute a specific law authorizing the sale of the El Paso property -..

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to the department on these terms and they remove this transaction fromgeneral statutesthat ordinarilygovern the sale of landby a city, in particular from chapter 272 of the Local Government Code. See, e.a., Gov't Code 55 311.003; 311.023; 311.025. See also Flowers v. PecosRiver R. co., 156 S.W.Zd 260, 263 (Tex. 1941,writ granted):Townsend v. TerrelJ 16 S.W.2d 1063, 1064 (Tex.1929) (specific control; over general statute). statute

Chapter 272 of the Local Government Code requires political subdivisions to comply with notice and bidding requirementsbefore selling or exchanging land. Local Gov't Code 5 272.001. These notice and bidding requirements do not apply to land conveyed to a governmental entity that has the power of eminent domain,but such landmay not be conveyed for less than its fairmarket value. Id. Sections 22.221 through 22.223 of the Parks and Wildlife Code impliedly excepts the transfer of the Franklin Mountains land from the requirementsof chapter 272 of the Local Government Code. Thus, the requirement that land be conveyed at not less thanmarketvalue does not apply to the transfer of the designated land fromEl Paso to the Parks and Wildlife Department.
We finally considerwhether article III, section 52, of the Texas Constitution prohibits the city of El Paso from selling the land to the department at less than market value. Article III, section 52 provides inpart:

(a) Except as otherwiseprovidedby this section, the Legislature shallhave no power to authorizeany county, city, town or other political corporationor subdivisionof the State to lend its credit or to grant public money or thing ofvalue in aid of, or to any individual, association or corporation whatsoever

. . . . Tex

.Const. art. III, § 52. The proposed sale at less than market value involvesan element of donation.

In Texas Nat'1 GuardArmorv Bd v . .McGraw, 126 S.W.2d 627 (Tex. 1939), the Supreme Court determined that the attorney generalwas within his right in refusing to approve revenuebonds to finance the construction of armories for the Texas National Guard. The attorneygeneral argued that part of the security for the bondswould be invalid because itwould consist of rentals from armory sitesdonated to the Armory Board by incorporatedcities inviolation of article III, section 52, of the Texas Constitution. 126 S.W.2d at

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630. The Supreme Court stated as follows in response to this argument:

ThisAct [the National Guard Armory Board Act] does not undertake to authorizemunicipal corporations to donate sites for armories: nor has the Legislature enacted any law which undertakes to confer on such cities that power. Since the Legislature has not by law authorizedmunicipal corporations to donate sites for armories, itbecomes unnecessary to decide the power of the Legislature to authorize municipal corporations to lend their aid to the Board **by** donating sites for armories under the provisions of Section 52 of Article 3 of the Constitution.
126 S.W.2d at 638. Thus, the Supreme Court did not determine whether a city could constitutionally donate land to the National GuardArmory Board.

InAttorney General Opinion H-108 (1973),this office considereda questionvery similar to the one not reached in Texas Nat91 Guard Armorv Bd. v. McGraw and decided that the city of Beaumont could give the Department of Mental Health andMental Retardation ten acres of land in fee simple as a site for constructinga ward.buildingat the Beaumont State Center forHuman Development.
The opinion stated as follows:
The fact that the transaction is denominated *agift# does not invalidate it unless the Beaumont City charter contains restrictive provisionsunknown to us. The proposed use is clearly for a publicpurpose and thus does not violateArticle 3 88 50, et. seq., of the Texas Constitution. Similardonations were involvedand approved by the courts in El Paso COW&Y v. Citv of El PasQ . . . [357 S.W.2d 783 (Tex.Civ.App. - El P&o 1962,no writ)], and-

g tion of Sisters of Q&,&y 360 S.W.2d 580 (Tex.Civ.App. - [Waco]1662, [writ ref'd, n.r.e.1). Actually, the transfer is not a gift. The improvementof the property and the consequent benefit to the city of Beaumont supply consideration for the transaction. In the Bl Paso case, suora, the county order -

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approving the transaction recited as consideration for its transfer that 'it will reduce the fire insurancerate in El Paso.R Attorney General OpinionH-108 at 4 (1973).
The city of El Paso similarlybenefits from transferring its land to the Parks and Wildlife Department because itwill be maintained at state expense as part of a state recreationalpark **easily accessible**  to residents of the city. Consideration for the transfer of land to the state isprovided by these benefits to the city, and not merely by the cash sum it receives. Opinion H-1256 (1978). &S Attorney General

The judicial opinion in &Ha v. Sha 157 682 (Tax.Civ.App. - Austin 1941,writ ref'd &.o.m.)S.W.Zdaddresses a question analogous to the questionbefore us, The legislatureappropriated funds to purchase land for the Big BendNational Parkwhich would be deeded to the federal government to use fornational park purposes only. A taxpayer challenged the appropriationas violating sections 50, 51, and 52 of article III,which "inhibit the lending or giving of the credit of the State, individual, or the granting ofpublic money . . .to any association, corporation, etc." 157 S.W.2d at 686.
The court quoted at some length fromMalone

. Peqy 17 S.W.2d 901 (Tenn.1929),a Tennessee case dealXng with the transfer of state land to the federalgovernment for a nationalpark. The Tennessee court cited authorities to the effect that theUnited Stateswas not an individual, association, or corporation within state constitutional provisions forbidding the gift or grant of public funds. The court also stated that a transfer of the lands from the state to the United States for park purposes would not impair the beneficial rights of the people of Tennessee,who are also citizens of the United States. The transfer relieved the state from the continuingexpense of maintaining the park,while its residents stillhad the benefits of the park system.
The Kina Sheovard court concluded that the Tennessee decisionwas s%nd and shouldbe followedas the law of the case. 157 S.W.2d at 686. Much of the reasoning followed in Kina v. Shevnard applies to the transfer of the Franklin Mountainsproperty from El Paso to the Parks and Wildlife Department. The benefits of the FranklinMountains State Parkwill accrue to El Paso, its residentsand visitors. Moreover, authorities from other jurisdictions have held that the state is not an individual,association, company or

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corporationwithin constitutional provisions comparable to article III, sections 50, 51, and 52. See. e.a., Citv of Sacramentov. Adams, 153 P. 908 (Cal. 1915) (city donated land to state for site for statebuildings):&n%cnv v. Kinq w, 45 P. 645 (Wash.1896) (useof county land for public improvementsundertakenby state and United States): Ransom
**V.** Rutherford County, 130 S.W. 1057 (Tenn.1910) (city and county bonds financepurchase of sites and construction of buildings for state teacher's college).
On the basis of the reasoning and authorities cited above,we believe that the city of El Pasomay transfer the land in question to the Departmentof Parks and Wildlife at less than market value without violating article III, section 52 of the Texas Constitution.
Our opinion is limited to the questionsdiscussed. We do not consider any contractprovisions,home rule charter provisions, or other provisionsnot expressly addressed.

SUMMARY Under sections 22.;21 through 22.223 of the Parks and Wildlife Code, the city of El Pasomay sell land at less thanmarket value to the Parks and Wildlife Department for inclusion in the Franklin Mountains State Park. The transfer at less than market value does notviolate article III, section 52, of the Texas Constitution. Based on the informationsubmittedto us, the fact that the land has been designated land of the El Paso Public Service Board and that the board has outstandingbonds does not bar sale of this land at less thanmarket value.

JIM MATTOX Attorney General of Texas

MARYKELLER FirstAssistantAttorney General

MU MCCREARY ExecutiveAssistantAttorney General
JUDGE ZOLLIE STEAKLEY SpecialAssistantAttorney General

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RICK GILPIN Chairman,Opinion Committee Preparedby Susan L. Garrison AssistantAttorney General

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