Court Opinion

ID: 9917392
Source: CourtListenerOpinion
Date Created: 2024-01-12 12:09:11.532275+00
Date Added: 2024-06-11T08:02:36.557248
License: Public Domain

IN THE
                        TENTH COURT OF APPEALS

                               No. 10-17-00316-CV

CORSICANA INDUSTRIAL FOUNDATION, INC.,
GANDER MOUNTAIN COMPANY AND
JP MORGAN CHASE BANK, N.A.,
                                   Appellants
 v.

CITY OF CORSICANA AND NAVARRO COUNTY,
                                  Appellees

                          From the 13th District Court
                            Navarro County, Texas
                         Trial Court No. D17-26224-CV

                                    OPINION

      In this declaratory judgment action, we must determine the constitutionality of

certain Agreements between governmental entities, the City of Corsicana and Navarro

County, Appellees, and private entities, Corsicana Industrial Foundation, Inc., and

Gander Mountain Company, Appellants. Additionally, Appellant JP Morgan Chase

Bank, N.A. is a third-party beneficiary of the Agreements. We refer to the Appellants
collectively as "Chase." Chase complains of the partial summary judgment rendered in

favor of Appellees that resulted in termination of the Agreements. We affirm.

                                               Background

        Corsicana Industrial Foundation, Inc., owner of 132 acres, sought to develop a

retail center on its land. In 2004, to help facilitate that project, the Foundation entered

into separate Retail Center Development Agreements (RCDAs) with the City of

Corsicana and Navarro County. The City and County each passed a resolution, signed

respectively by the mayor of the City and the Navarro County judge and county

commissioners, to enter into the RCDA and incorporated the RCDA into the resolution.

The City and County agreed to grant to the Foundation certain sales tax revenues

generated by Gander Mountain, Home Depot, and the other businesses that would be

located in the development. The Foundation agreed to use all proceeds solely for the

purpose of repayment of debt associated with the construction of a Gander Mountain

facility.

        Three months after signing the RCDAs, the City, County, Foundation, and Gander

Mountain entered into an "Interlocal Agreement." The Interlocal Agreement provided

that the City and County determined it is in the public interest to promote the economic

development of the Gander Mountain facility and to grant portions of the city and county

sales tax to facilitate such economic development.

Corsicana Indus. Found. v. City of Corsicana                                         Page 2
        The Interlocal Agreement specified the amounts of sales taxes to be pledged to the

Foundation as security for the loan it was to obtain to construct the Gander Mountain

facility. The tax revenue was to be deposited into the Foundation's Sales Tax Fund and

applied to the payment of the loan. The yet-to-be-determined lender, now Chase, was

named as a third-party beneficiary of the Interlocal Agreement. The Foundation leased

the Gander Mountain site to Gander Mountain by a lease dated May 6, 2004. Further,

those two parties entered into a Development Agreement pursuant to which the

Foundation was obligated to obtain a construction loan to finance construction of the

Gander Mountain store. The $10,000,000 loan ultimately obtained by the Foundation in

2005 was secured in part by a pledge of certain portions of the sales taxes granted to the

Foundation.

        The Gander Mountain store opened for business in August 2004 and closed in

2015. In early 2016, the City and County determined that closing of the Gander Mountain

store extinguished the constitutionally permissible public purposes for which they can

dedicate public funds. They each passed a resolution to seek relief from the Foundation

and Gander Mountain. Pursuant to those resolutions, they filed this declaratory action

against Gander Mountain and the Foundation seeking declarations regarding the

following five matters:

        1.    Whether the closing of the Gander Mountain store in Corsicana
             extinguished the public purposes which authorized the City's and
             County's grants of public money.

Corsicana Indus. Found. v. City of Corsicana                                        Page 3
        2. Whether the Interlocal Agreement and Retail Center Development
           Agreements, and the other transaction documents including the Lease
           and Development Agreement, fail to place sufficient controls on the
           transaction to ensure that the public purposes for which the original
           grant was made are carried out.
        3. Whether the Retail Center Development Agreements and Interlocal
           Agreement are unconstitutional, void and/or illegal because they allow
           public funds to be spent without the necessary controls in place to
           ensure the public purposes are carried out.
        4. Whether it would be unconstitutional and/or illegal (and a void act) for
           the City and County to continue to grant sales tax to pay off the loan
           when public purposes are no longer being served and the Gander
           Mountain facility is no longer open.
        5. Whether the Interlocal Agreement and Retail Center Development
           Agreements are unconstitutional, void and/or illegal to the extent they
           purport to require the City and County to grant sales tax revenues to
           pay off the loans when the public purposes are no longer being served.

        The Foundation and Gander Mountain filed counterclaims against the City and

the County, seeking declaratory relief regarding the City's and County's obligations.

Also, the Foundation and Gander Mountain filed cross-claims against each other

regarding the lease.       Chase filed a plea in intervention seeking, in pertinent part,

declaratory relief regarding the construction of the provisions of the constitution

involved in this dispute.         The City and County amended their petition, seeking

declaratory judgment against Chase.

        In February 2017, the City and the County filed their motion for partial summary

judgment asserting they are entitled to summary judgment regarding their requests for

declaratory relief. The following month, Gander Mountain filed a Chapter 11 petition for

bankruptcy. The bankruptcy court modified the automatic stay, allowing the City and

Corsicana Indus. Found. v. City of Corsicana                                          Page 4
County to proceed to final hearing on their pending motion for summary judgment. It

further provided that, if the City and County prevail on the summary judgment motion,

the trial court could take steps necessary to enter an appealable final judgment. 1 In July

2017, the trial court granted the motion for partial summary judgment, rendering a

declaratory judgment in favor of the City and County. The following month, the trial

court severed the City's and County's claims against the Foundation, Gander Mountain,

and Chase, and the counterclaims against the City and County, from the remaining

claims asserted by and between Gander Mountain, the Foundation, and Chase. 2 The City

and County non-suited their claim for attorney's fees. The trial court signed a final

judgment on November 7, 2017 rendering declaratory judgment in favor of the City and

County and ordering that Gander Mountain, the Foundation, and Chase take nothing on

their counterclaims against the City and the County.

          Specifically, the trial court declared that the closing of the Gander Mountain store

extinguished the public purposes which authorized the City's and County's grants of

public money to repay loans taken out by the Foundation to build the Gander Mountain

1 Thereafter, the City and County filed their second amended petition and first amended motion for
summary judgment, to which Chase and Gander Mountain objected as violative of the bankruptcy court's
order partially lifting the stay. The parties entered into a Rule 11 agreement providing that the City and
County would withdraw their second amended petition and first amended motion for partial summary
judgment. Accordingly, the City's and County's first amended original petition and initial motion for
partial summary judgment are the live pleadings.

2   The claims between Gander Mountain, the Foundation, and Chase are not part of this appeal.

Corsicana Indus. Found. v. City of Corsicana                                                       Page 5
store; the Agreements3 failed to place sufficient controls on the transaction to ensure that

the public purposes for which the original grants of sales tax were made were carried out;

the Agreements are unconstitutional because they allow public funds to be spent without

the necessary controls in place to ensure that the public purposes which authorized the

grants are carried out; it would be unconstitutional for the City and County to continue

to grant sales tax proceeds to repay the loan once the Gander Mountain facility was no

longer open and no public purpose is being served; and the Agreements are

unconstitutional to the extent they purport to require the City and County to grant sales

tax proceeds to pay off the loan when the public purposes supporting the grants are no

longer being served.

        Gander Mountain, the Foundation, and Chase filed notices of appeal. Shortly

thereafter, they filed a notice of bankruptcy stay, and this court issued an opinion

suspending the appeal pursuant to Texas Rule of Appellate Procedure 8.2. See TEX. R.

APP. P. 8.2.; Corsicana Indus. Found. v. City of Corsicana, No. 10-17-00316-CV, 2017 Tex.

App. Lexis 11581 (Tex. App.—Waco Dec. 13, 2017, no pet.) (mem. op.). The Foundation

and Chase filed an unopposed motion to reinstate on November 3, 2022 based on the

bankruptcy court's order allowing this appeal to proceed. The bankruptcy court also

ordered that Gander Mountain shall not participate in this appeal. By order of November

3  Unless otherwise specified, the term "Agreements" refers to the RCDAs and Interlocal Agreement
collectively.

Corsicana Indus. Found. v. City of Corsicana                                              Page 6
8, 2022, this court reinstated this appeal. See TEX. R. APP. P. 8.3. Chase and the Foundation

filed an unopposed motion to substitute parties explaining that, in connection with

Gander Mountain's bankruptcy, the Foundation assigned all of its rights in this appeal

and the underlying lawsuit to Chase. This court granted the motion. Accordingly, Chase

now pursues this appeal both individually and as assignee of the Foundation.

                                        Declaratory Judgment

        In its sole issue, Chase contends the trial court erred in granting partial summary

judgment and rendering a final declaratory judgment in favor of Appellees. In four sub-

issues, Chase focuses on determination of the applicable constitutional provision, the

effect of the closing of Gander Mountain, whether the Agreements contain sufficient

controls to protect taxpayers, and the applicability of a statute requiring the Agreements

to be presumed valid.

STANDARD OF REVIEW

        In reviewing a declaratory judgment, we refer to the procedure for resolution of

the issue at trial to determine the applicable standard of review on appeal. See TEX. CIV.

PRAC. & REM. CODE ANN. § 37.010; English v. BGP Int'l, Inc., 174 S.W.3d 366, 370 (Tex.

App.—Houston [14th Dist.] 2005, no pet.). Thus, declaratory judgments decided by

summary judgment are reviewed under the same standards of review that govern

summary judgments generally. Cadle Co. v. Bray, 264 S.W.3d 205, 210 (Tex. App.—

Houston [1st Dist.] 2008, pet. denied).

Corsicana Indus. Found. v. City of Corsicana                                           Page 7
        We review the trial court's decision to grant summary judgment de novo. Tex.

Mun. Power Agency v. Pub. Util. Comm'n, 253 S.W.3d 184, 192 (Tex. 2007). The movant for

traditional summary judgment has the burden of showing that there is no genuine issue

of material fact and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c);

Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). Once

the movant establishes a right to summary judgment as a matter of law, the burden shifts

to the nonmovant to present any evidence raising a genuine issue of material fact, thereby

precluding summary judgment. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d

671, 678-79 (Tex. 1979). Review of a summary judgment requires that the evidence be

viewed in the light most favorable to the party against whom the summary judgment

was rendered, crediting evidence favorable to that party if reasonable jurors could, and

disregarding contrary evidence unless reasonable jurors could not. Fielding, 289 S.W.3d

at 848. We indulge every reasonable inference in favor of the non-movant and resolve

any doubts in his favor. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).

APPLICABLE LAW

        The Texas constitution provides that the Legislature has no power to authorize

any county, city, town, or other political corporation or subdivision of the State to lend

credit or grant public money or thing of value in aid of, or to any individual, association,

or corporation whatsoever. TEX. CONST. art. III, § 52(a). The Texas Supreme Court has

explained that provision means that the Legislature cannot require gratuitous payments

Corsicana Indus. Found. v. City of Corsicana                                           Page 8
to individuals, associations, or corporations. Tex. Mun. League Intergovernmental Risk Pool

v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002). A political subdivision's

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

consideration. Id.

        Additionally, article III, Section 52-a of the constitution authorizes the legislature

to provide for the creation of programs and the making of loans and grants of public

money for the public purposes of development and diversification of the economy of the

state, the elimination of unemployment or underemployment, or the development or

expansion of commerce in the state. TEX. CONST. art. III, § 52-a. The Texas Local

Government Code authorizes the governing body of a municipality and the

commissioners court of a county to establish and administer programs for making loans

and grants of public money to promote state or local economic development. TEX. LOC.

GOV. CODE ANN. §§ 380.001, 381.004.

        Constitutionality of the Agreements

        Chase contends that the resolution of this case is governed by article III, Section

52-a of the Texas Constitution which creates an exception to the constitutional prohibition

on the lending of public credit or granting of public money by providing that programs

fostering economic growth serve a public purpose. Furthermore, the Texas legislature

enacted statutes to encourage economic development through grants of public money,

including Local Government Code Sections 380.001 and 381.004.               To facilitate the

Corsicana Indus. Found. v. City of Corsicana                                            Page 9
development of a new shopping center, Chase's argument continues, the City and County

availed themselves of the economic development opportunities afforded by article III,

Section 52-a and Sections 380.001 and 381.004. It concludes that "[b]ecause the City and

County properly pledged sales tax funds to repay the Foundation's loans under these

constitutional and statutory provisions, the [Agreements] granting those funds for

economic development are constitutional."

        Appellees respond by arguing there is a three-part test for determining the

constitutionality of the agreements. They rely on a Texas Supreme Court case that

considered whether the Texas Workers' Compensation Subsequent Injury Fund and the

regulations implementing the fund violate Section 52(a) of the Texas Constitution. See

Tex. Mun. League, 74 S.W.3d at 384-86. That section is a general prohibition of the use of

public money for private purposes. See Byrd v. City of Dallas, 6 S.W.2d 738, 740-41 (Tex.

1928). Section 52(a) is intended to prevent the gratuitous grant of such funds to any

individual, corporation, or purpose. Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717,

740 (Tex. 1995). Clarifying prior law, Texas Municipal League identified a three-part test

to determine if a statute accomplishes a public purpose consistent with Section 52(a). The

Legislature must: (1) ensure that the statute's predominant purpose is to accomplish a

public purpose, not to benefit private parties; (2) retain public control over the funds to

ensure that the public purpose is accomplished and to protect the public's investment;

Corsicana Indus. Found. v. City of Corsicana                                        Page 10
and (3) ensure that the political subdivision receives a return benefit. Tex. Mun. League,

74 S.W.3d at 384.

        In rebuttal, Chase argues that Texas Municipal League does not apply because it

interpreted Section 52(a), which restricts the use of public money generally, not Section

52-a, which specifically allows use of public money for economic development. Chase

asserts that Section 52-a is the only constitutional provision that applies here; but that if

Texas Municipal League does apply, the three-prong test has been met.

        Applicability of Texas Municipal League

        The Texas Constitution contains several provisions limiting the use of

governmental resources and powers for public purposes. See TEX. CONST. art. VIII, § 3

(taxes shall be levied and collected by general laws and for public purposes only); art. III,

§§ 50, 51, 52(a) (prohibiting donation or loan or pledge of public moneys or credit to any

person, association, or corporation); art. XI, § 3 (forbidding counties and cities from

making donations or loans to private corporations); art. XVI, § 6(a), (b) (forbidding any

appropriation for private or individual purposes unless authorized by the Texas

Constitution and describing parameters of use of public money to aid handicapped

persons). Other constitutional provisions provide for exemptions from taxation if public

property is used for public purposes. See id. art. XI, § 9 (county or municipal property

held for public purposes exempt from forced sale and taxation); art. VIII, § 2(a) (public

property used for public purposes may be exempt from taxation).

Corsicana Indus. Found. v. City of Corsicana                                          Page 11
        It is for the courts to determine, as a matter of law, what a public purpose is. Hous.

Auth. v. Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940); see also Davis v. City of Taylor, 67

S.W.2d 1033, 1034 (Tex. 1934). However, where the legislature has declared a certain

thing to be for a public use, such declaration of the legislature must be given weight by

the courts. Higginbotham, 143 S.W.2d at 83. Generally, the objective of a "public purpose"

is the promotion of the general prosperity and welfare of residents within a given political

subdivision. See Davis, 67 S.W.2d at 1034. "[I]f an object is beneficial to the inhabitants

and directly connected with the local government it will be considered a public purpose."

Id. (quoting 6 EUGENE MCQUILLIN, MUNICIPAL CORPS. 292, § 2532 (2d ed. 1928)).

        But establishing that the action at issue was implemented for a public purpose

does not end the inquiry as to constitutionality. Long before the Texas Municipal League

decision, when determining the constitutionality of any provision authorizing use of

public funds committed in furtherance of some public purpose, courts have considered

whether the governmental entity properly supervised and controlled the enterprise. See

Gillham v. City of Dallas, 207 S.W.2d 978, 983 (Tex. Civ. App.—Dallas 1948, writ ref'd n.r.e.)

(held that cold storage facilities serve a public market purpose so long as the city

supervises and controls the buildings and business conducted therein). Additionally, in

determining the constitutionality of an ordinance that provides for the grant of public

money, courts have historically considered whether the governmental entity receives a

return benefit. See Byrd, 6 S.W.2d at 740-41 (considering whether city's pension plan was

Corsicana Indus. Found. v. City of Corsicana                                           Page 12
gratuitous and in violation of article III, Sections 51, 52; article VIII, Section 3; and article

XVI, Section 6). Stated differently, courts require some form of continuing public control

to ensure that the governmental entity receives its consideration, that is, accomplishment

of the public purpose. Key v. Comm'rs Court, 727 S.W.2d 667, 669 (Tex. App.—Texarkana

1987, no pet.) (per curiam) (considering whether county violated article III, Section 52(a)

when it transferred projects to a non-profit entity and failed to retain public control).

        Article III, Section 52-a, the provision Chase relies on, is one of several

constitutional provisions limiting the use of governmental resources for public purposes.

Adopted in 1987, it specifically expanded the definition of public purposes to include

economic development. See Tex. Att'y Gen. Op. No. JM-1255 at *13 (1990).4 But there is

nothing to suggest that Section 52-a was intended to relieve governmental entities from

the obligation to prove the same factors required when determining the constitutionality

of government actions involving other constitutional provisions. That is, government

entities relying on Section 52-a are still required to show that public resources and powers

are used for the direct accomplishment of a public purpose, transactions using such

resources and powers contain sufficient controls to ensure the public purpose will be

carried out, and the governmental entity receives a return benefit. Id. at *15-16; see also

Tex. Att'y Gen. Op. No. KP-0261 at *5-7 (2019) (applying the Texas Municipal League test

4Even though Attorney General opinions are not controlling, they can be persuasive. Holmes v. Morales,
924 S.W.2d 920, 924 (Tex. 1996).

Corsicana Indus. Found. v. City of Corsicana                                                  Page 13
in construing Local Government Code Section 381.004(b) regarding a commissioner's

court's authority to develop and administer economic development programs). We

conclude that the determination of the constitutionality of provisions implemented for a

public purpose calls for consideration of the same factors regardless of which

constitutional provision may be implicated. In its Texas Municipal League opinion, the

Texas Supreme Court merely restated prior law. See Tex. Mun. League, 74 S.W.3d at 384.

Accordingly, we reject Chase's argument that the so-called Texas Municipal League three-

prong test does not apply here.

        Application of Texas Municipal League

        1) Accomplishment of a Public Purpose

        To meet the first requirement of the Texas Municipal League test, Appellees must

ensure that the predominant purpose of the Agreements is to accomplish a public

purpose. See id. Economic development has been declared a public purpose. TEX. CONST.

art. III, § 52-a; Higginbotham, 143 S.W.2d at 83. Undoubtedly, Appellees intended a species

of economic development. But the parties disagree as to the precise activity meant by

that term. The trial court made no declaration identifying the public purposes that

authorized the grant of sales tax proceeds. However, by its determination that the closing

of the Gander Mountain store extinguished the public purposes, the trial court necessarily

impliedly found as a matter of law that the operation of the Gander Mountain store in

Corsicana was a public purpose. See WesternGeco, L.L.C. v. Input/Output, Inc., 246 S.W.3d

Corsicana Indus. Found. v. City of Corsicana                                        Page 14
776, 783-87 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (examining declarations

requested in motion for summary judgment to determine implied declarations made by

the trial court when it granted motion).

        Chase asserts that the public purpose of the tax grant was the development of a

new shopping center, and when the shopping center was developed Appellees' objectives

were met. Additionally, it contends, since the tax revenue was to be used for the exclusive

purpose of paying the loan that financed the construction of the Gander Mountain

facility, the public purpose of the tax incentives was tied to the construction of the

building, not the continuous operation of Gander Mountain.

        Appellees contend that the grant of tax money was meant to incentivize Gander

Mountain's presence in Corsicana which would, in turn, spawn more economic

development.       Because the facility closed, they argue, Gander Mountain and the

Foundation ceased fulfilling the public purposes for which they received sales taxes. In

other words, they contend, and as declared by the trial court, the closing of the Gander

Mountain store extinguished the public purposes which authorized Appellees' grants of

public money. Instead, they assert, the result is the ongoing grant of public dollars to a

defunct business.

                a) Evidence

        In 2003, the Corsicana Chamber of Commerce sent a letter of intent to the Chief

Executive Officer of Gander Mountain outlining a sixteen-million-dollar incentive

Corsicana Indus. Found. v. City of Corsicana                                        Page 15
package based on the opening of a Gander Mountain flagship store in Corsicana. The

sixteen million was to go toward the building, fixtures, infrastructure, improvements,

and land. In addition, the City of Corsicana would waive permit and hook-up fees and

expedite the permitting process. Local banks had given preliminary approval of the

incentive package pending finalization of certain aspects of the deal.

        The RCDAs provided that the City and County determined it was necessary to

enter into the Agreements with the Foundation "to implement certain components of the

economic development program." The Foundation agreed to use all of the tax money it

received solely for the purpose of repayment of debt associated with the funding of

incentives offered solely to Gander Mountain. Further, each RCDA provided that it shall

terminate upon repayment of the debt associated with the Gander Mountain incentive

package.

        The Interlocal Agreement filled in some details and clarified. It explained that the

Foundation entered into a Development Agreement with Gander Mountain to develop a

retail facility on a portion of the 132-acre development site. Pursuant to that agreement,

the Foundation was obligated to obtain a construction loan for $10 million to finance the

construction of a Gander Mountain facility. The terms of that loan were to be mutually

acceptable to both Gander Mountain and the Foundation. The loan was to be secured by

a pledge of sales tax granted to the Foundation, a first lien security interest on the land

Corsicana Indus. Found. v. City of Corsicana                                         Page 16
and facility, and an assignment of the lease payments under the lease signed by Gander

Mountain.

        The Interlocal Agreement explained that the City and County determined "it is in

the public interest to promote the economic development of the Gander Mountain

facility" and grant a specified percentage of sales taxes generated by Gander Mountain

and other businesses in the development site "to facilitate such economic development,"

meaning "the economic development of the Gander Mountain facility." The grants to the

Foundation serve as security for the Foundation's construction loan obtained to build the

Gander Mountain facility, and the sales tax fund is to be used for the sole and exclusive

purpose of paying principal and interest on that loan. The Interlocal Agreement also

stated that the City and County shall deposit the sales taxes into the Foundation's sales

tax fund "following the completion and opening of Gander Mountain."

        In support of their motion for partial summary judgment, Appellees presented

affidavits of the city manager and the county judge stating that:

                The purpose of the grant of sales tax was to facilitate the
                development of the retail center and assist in the
                implementation of the economic development objectives of
                the City . . . and . . . County, including the development of the
                retail center, the creation of jobs, the establishment of a retail
                business within the City and County of a type not previously
                found in Corsicana, the generation of ad valorem tax revenues
                on the real property, inventory and equipment and the
                generation of sales tax revenues from the retail center and
                other businesses.

                ....
Corsicana Indus. Found. v. City of Corsicana                                         Page 17
                The purpose of the grants of sales tax was to make payments
                on a construction loan, and then a permanent loan that
                replaced the construction loan.

The language in the affidavits echoed the 2004 agreements. The purpose of the sales tax

grants was, generally, to facilitate development of the retail center, and the specific

purpose was to repay the debt associated with construction of the Gander Mountain

facility.

                b) Analysis

        All of the promised tax revenue, some of which was generated by other stores in

the shopping center, was meant to pay for construction of the Gander Mountain facility.

The agreements at issue did not provide for the grant of tax revenue to finance any other

buildings or help any other businesses. Had the agreements provided that the tax grants

would be used to build the entire retail center, rather than just one store, that might

indicate the parties intended that the public purpose of the agreements was to build the

entire retail center. Tying the obligation to pay to the construction of one specific store in

the retail center signals that the public purpose meant to be achieved by these agreements

was to have a Gander Mountain store in Corsicana that was open for business.

        Furthermore, Appellees' obligation to help finance the construction of the Gander

Mountain facility by contributing a portion of the sales tax revenue hinged on the opening

of that store. If Gander Mountain had never opened, Appellees would not have been

required to contribute to the sales tax fund at all. If, as Chase argues, the Foundation met
Corsicana Indus. Found. v. City of Corsicana                                           Page 18
its obligation and the public purpose was achieved when the building was constructed,

then construction of the building should have triggered Appellees' requirement to pay.

Where payment is tied to opening the store, it follows that payment is tied to its continued

operation.

        In reviewing a summary judgment, we must indulge every reasonable inference

in favor of the non-movant. See City of Keller, 168 S.W.3d at 824. Based on the language

in the Agreements, it is not reasonable to infer that the parties intended that the public

purpose to be achieved was the development of the entire shopping center as Chase

would have us do. The record supports the trial court's implied finding that the public

purposes which authorized Appellees' grants of public money was the opening and

continued operation of the Gander Mountain store.

                c) Extinguishment of the Public Purpose

        Next, we consider Chase's argument that, contrary to the trial court's declarations,

the closure of the Gander Mountain store did not extinguish the public purpose of the

grants or render the Agreements void and unconstitutional. In support of this argument

Chase contends that the public purpose of the tax grants was to develop a retail shopping

center, it was developed, and Appellees received the benefit of their bargain. Chase also

asserts that Appellees' unconditional payment obligations are not contingent on the

Gander Mountain store remaining open. Relying on each RCDA's provision that it would

terminate upon repayment of the debt associated with the Gander Mountain incentive

Corsicana Indus. Found. v. City of Corsicana                                         Page 19
package, Chase asserts that since the multimillion-dollar debt to Chase has not been fully

repaid, the trial court has judicially re-written the Agreements.

        As explained above, the record supports the trial court's implied determination

that development of the shopping center as a whole was not the public purpose behind

the tax grants. But rather, the public purposes of the sales tax grants were to secure the

presence and operation of a Gander Mountain store in Corsicana. Thus, during the time

period Gander Mountain was open, the public purposes of the Agreements were being

achieved. Accordingly, when Gander Mountain closed it was no longer possible to

accomplish the public purposes of ensuring the presence and operation of Gander

Mountain in Corsicana. The unpaid debt owed on the building does not have any bearing

on the determination of the constitutionality of the Agreements. Thus, describing the

determination that those Agreements are unconstitutional as an act of judicially re-

writing the Agreements is a mischaracterization. The record supports the trial court's

determination that the closure of Gander Mountain extinguished the public purposes of

the tax grants. Accordingly, the first prong of the Texas Municipal League test is no longer

being met. See Tex. Mun. League, 74 S.W.3d at 384.

        2) Public Control

        The second prong of the Texas Municipal League test requires that the governmental

body retain public control over the funds to ensure that the public purpose is

accomplished and to protect the public's investment. Id. Chase contends that Appellees

Corsicana Indus. Found. v. City of Corsicana                                         Page 20
controlled the economic development project and ensured the public purpose was

accomplished by requiring the Foundation to obligate itself contractually to perform a

function beneficial to the public. Chase asserts that the Agreements contain numerous

controls "with respect to both the spending of public funds and the repayment of Chase's

loan" to ensure the public purpose was carried out by the sales tax grant. Those

purported controls are as follows:

                *The grant of sales tax is subject to the limitations set forth in
                the Agreements.
                *None of the money will come from ad valorem taxes; funded
                solely from sales taxes.
                *All of the money will be used solely to repay debt associated
                with Gander Mountain incentives.
                *Said incentives are limited to the construction of real
                property.
                *The Foundation will provide written reports tracking the
                funds.
                *Appellees have the right to request information regarding
                construction.
                *The Foundation must deposit grant proceeds into a separate
                account and use all interest earned by that account to pay the
                debt associated with the incentive.
                *The Foundation is prohibited from using the funds for any
                other purpose.
                *The Foundation is obligated to obtain a loan secured by sales
                tax revenue.
                *Appellees must segregate the sales taxes pledged and
                deposit them into the separate account maintained by the
                Foundation.
                *The grants are limited to sales taxes actually received from
                the Comptroller.
                *The Foundation must provide to Appellees any information
                reasonably requested regarding construction.

        Based on the foregoing provisions in the Agreements, Chase asserts the
Corsicana Indus. Found. v. City of Corsicana                                         Page 21
Agreements contain the following safeguards:

                (a) Appellees retain control of the sales taxes until they are
                    transferred to a Foundation account that exists only to
                    repay the loan;
                (b) The Foundation shall use 100% of the sales taxes to pay the
                    principal and interest of the loan;
                (c) The loan can only be used to fund and finance the
                    construction of the Gander Mountain store;
                (d) The grant of sales taxes is contingent on sales taxes
                    actually being generated from the stores in the retail
                    center; and
                (e) The sales tax grants are funded only after the sales taxes
                    are actually received by Appellees from the State.

        Appellees assert that "control," as used in this context, means that the government

must retain sufficient rights to ensure that it can compel compliance, now and in the

future, to ensure a public purpose is achieved.         They contend that the transaction

documents must contain actual benchmarks, rights, and remedies to ensure that the

purpose is achieved, so that the transaction is not a mere unconditional grant of funds.

        Control is defined as the power or authority to manage, direct, or oversee. Control,

BLACK'S LAW DICTIONARY (11th ed. 2019). A public entity may retain public control over

the use of its resources by entering into an agreement or contract that imposes an

obligation on the recipient to perform a function benefiting the public. See Tex. Att'y Gen.

Op. No. KP-0234 (2019) at *8-10. But the agreement should also contain some element of

oversight by the governmental entity to ensure the public purpose is met.                Id.

Additionally, the agreement should provide rights or remedies in favor of the

Corsicana Indus. Found. v. City of Corsicana                                         Page 22
governmental entity if the public purpose is no longer being achieved. See Tex. Att'y Gen.

Op. No. KP-0423 (2023) at *5.

        Terms that would constitute governmental control could include requiring a

minimum term of occupancy or continued operations, occupancy by a specific tenant or

business, and the creation and maintenance of employment positions; a recapture

provision stating that if the private entity does not meet required performance standards,

the governmental entity will have a right to seek reimbursement of the incentives that

were provided; and an authorization for the governmental entity to terminate or modify

the agreement if the recipient fails to comply with any terms of the agreement. See TEXAS

MUNICIPAL LEAGUE ECONOMIC DEVELOPMENT HANDBOOK 148 (Amber McKeon-Mueller

ed., 2022).

        As set out above, Chase points out some safeguards in the Agreements. Where

the money comes from and where it goes is specified. Importantly, the Foundation's use

of the tax grant funds is restricted to repayment of the loan on the Gander Mountain

facility.   However, the Agreements do not provide rights or remedies in favor of

Appellees should the Foundation fail to comply with these requirements. In other words,

there are directions for funneling the money to repay the construction loan that would

fulfill the public purposes, opening and operating Gander Mountain, but nothing in the

Agreements addresses Appellees' recourse if the public purposes failed, that is, if Gander

Corsicana Indus. Found. v. City of Corsicana                                       Page 23
Mountain closed. The Agreements focus on the money trail. They lose sight of the public

purposes.

        In furtherance of the public purpose of bringing a Gander Mountain store to

Corsicana, the Agreements reference the loan on a building, the intended occupant of

which was Gander Mountain. The RCDAs specifically say that the obligation to make

the payments "shall be absolute and unconditional," and Appellees "shall make such

payment without abatement, diminution or deduction regardless of any cause or

circumstances whatsoever" until the loan is paid off.5 The Interlocal Agreement provides

that it will remain in effect until the latter to occur of the expiration or earlier termination

of Gander Mountain's twenty-year lease or the full and final payment of all principal and

interest on the loan. The absolute and unconditional obligation to pay off the loan

connotes the absence of control. Furthermore, the imperative to pay required by the

Agreements dovetails with the lease term providing that Gander Mountain is not

required to continuously operate the premises "throughout or during any portion of the

term" of the lease to leave no doubt that Appellees' obligation remains even if Gander

Mountain is not doing business in Corsicana.

5A prior version of the Agreements provided that"[t]his agreement shall terminate upon repayment of the
debt associated with the incentive package or cessation of operations of Gander Mountain." The record
does not include evidence indicating why that last phrase was removed or identifying the party advocating
for its removal.

Corsicana Indus. Found. v. City of Corsicana                                                     Page 24
        The Agreements provide no recourse for Appellees if Gander Mountain vacates

the store before the end of its lease or before the loan is paid in full. If the building is

empty, or another business leases the building, that in no way advances the public

purpose of bringing Gander Mountain to Corsicana. Yet, as illustrated by this case, there

is no termination provision in the Agreements that Appellees can employ if they

determine the public purposes are no longer being achieved. See Tex. Att'y Gen. Op. No.

KP-0234, at *9-10.

        We have been unable to discern any provisions in the Agreements that constitute

an element of oversight by Appellees to ensure the public purposes are met, nor has

Chase identified any. The right to mere document review does not provide authority to

address irregularities. There is no provision allowing Appellees to back out for any

reason, to change any terms, or seek reimbursement. The Agreements do not give

Appellees any control over the shopping center, the Gander Mountain building, or the

terms of either the loan or the lease.

        We conclude that the Agreements do not include provisions sufficient to protect

taxpayer money and ensure the public purposes are being met. Accordingly, the second

prong of the Texas Municipal League test, which requires that the governmental entity

retain control over the funds to ensure the public purposes are met and to protect the

public's investment, has not been met here. See Tex. Mun. League, 74 S.W.3d at 384.

Corsicana Indus. Found. v. City of Corsicana                                         Page 25
         Appellees did not assert in their summary judgment that the third prong,

requiring them to receive a return benefit, was not met. Thus, we need not address that

prong.

         Summation

         Appellees were entitled to enter into agreements with the Foundation to further

economic development in Corsicana. See TEX. CONST. art. III, § 52-a; TEX. LOC. GOV. CODE

ANN.     §§ 380.001, 381.004.       However, because their Agreements failed to include

provisions allowing Appellees to retain control over the funds to ensure that the public

purposes are accomplished and to protect the public's investment, and because Gander

Mountain's closing extinguished the public purposes for which the tax grants were

created, the Agreements are not constitutional. See Tex. Mun. League, 74 S.W.3d at 384.

         Presumption of Validity

         Chase contends that the 2004 resolutions authorizing Appellees to enter into the

economic development agreements cannot be challenged due to application of Section

51.003(a) of the Texas Local Government Code.              That statute provides that a

governmental act or proceeding of a municipality is conclusively presumed, as of the date

it occurred, to be valid and to have occurred in accordance with all applicable statutes

and ordinances if a lawsuit to annul or invalidate the act or proceeding was not filed on

or before the third anniversary of the effective date of the act or proceeding. See TEX. LOC.

GOV. CODE ANN. § 51.003(a).

Corsicana Indus. Found. v. City of Corsicana                                          Page 26
        Section 51.003(b)(1) provides that Section 51.003(a) does not apply to an act or

proceeding that was void at the time it occurred. Id. § 51.003(b)(1). Here, because the

parties' Agreements did not include adequate controls to protect taxpayers, the

Agreements are unconstitutional. See Tex. Mun. League, 74 S.W.3d at 384. The rule

generally is that unconstitutional laws are void ab initio. See Ex parte E.H., 602 S.W.3d

486, 494 (Tex. 2020). Therefore, there is no applicable presumption of validity pursuant

to Section 51.003(a). See TEX. LOC. GOV. CODE ANN. § 51.003(b)(1).

                                               Conclusion

        The Agreements are unconstitutional and therefore not binding on the parties. See

Tex. Mun. League, 74 S.W.3d at 384. Accordingly, Appellees met their burden to show

there is no genuine issue of material fact and they are entitled to judgment as a matter of

law. See Fielding, 289 S.W.3d at 848. The trial court did not err in granting partial

summary judgment and rendering a final declaratory judgment in favor of the City of

Corsicana and Navarro County. We overrule Chase's sole issue.

        We affirm the trial court's judgment.

                                                      STEVE SMITH
                                                      Justice

Corsicana Indus. Found. v. City of Corsicana                                        Page 27
Before Chief Justice Gray,
       Justice Johnson, and
       Justice Smith
(Chief Justice Gray dissenting.)
Affirmed
Opinion delivered and filed January 11, 2024
[CV06]

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