Court Opinion

ID: 4129649
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:54:40.510048+00
Date Added: 2024-06-11T12:45:04.967747
License: Public Domain

April 12, 1999

The Honorable Sonya Letson                  Opinion No. JC-0032
Potter County Attorney
500 South Fillmore, Room 303               Re: Whether chapter 2258 of the Government Code,
Amarillo, Texas 79101                      which requires payment         of prevailing   wages in
                                           connection with public work contracts, applies to a
                                           project of a development      corporation cieated under
                                           article 5190.6 of the Revised Civil Statutes (RQ-1207)

Dear Ms. Letson:

         You ask whether chapter 2258 of the Government Code, which requires payment of
prevailing wages to workers employed on a public work by or on behalf of the state or a political
subdivision of the state, applies to workers employed on a project undertaken by a development
corporation created under the Development Corporation Act of 1979, TEX. REV. Crv. STAT. ANN.
art. 5190.6 (Vernon 1987 & Supp. 1999). Because a development corporation created under the
Development Corporation Act of 1979 is not a political subdivision for purposes of the laws of this
state, see id. 5 22 (Vernon 1987), we conclude that chapter 2258 does not apply to workers employed
by or on behalf of a development corporation. Chapter 2258 will apply to workers employed on a
project undertaken by a development corporation only if the development corporation employs the
workers on behalf of the state or a political subdivision of the state. In order for the workers to be
employed on behalf of the state or a political subdivision of the state, the state or political
subdivision must be a party to the construction contract.

         You inform us that the Amarillo Economic Development Corporation (the “AEDC”), a
development corporation in your county created by the City of Amarillo (the “City”) under section
4A of the Development Corporation Act of 1979, has agreed to construct a facility for a private
company. Upon completion of the construction, the &DC will lease the facility to the company,
which will have the option to buy the land and improvements after twenty years. We assume, baaed
on the information you provided, that the AEDC will enter into a contract for construction of the
facility with a private contractor and that neither the City of Amarillo, the state, nor any other
political subdivision of the state will be a party to the construction contract.

        We begin with a brief review of the relevant statutory provisions.       The prevailing wage
statute was first enacted in 1933 as article 5159a of the Revised Civil Statutes.’ Article 5159a was
repealed and codified as chapter 2258 ofthe Government Code as part ofthe nonsubstantive revision
The Honorable      Sonya Letson       - Page 2             (JC-0032)

ofstatutesin   1995.* Section2258.021,         theoperativeprovisionofchapter2258,providesinpertinent
part that:

                       (a) A worker employed on a public work by or on behalf of the
                  state or a political subdivision of the state shall be paid [not less than
                  the prevailing wage.]

                         . . .

                       (c) A worker is employed on a public work for purposes of this
                  section if the worker is employed by a contractor or subcontractor in
                  the execution of a contract for the public work with the state, a
                  political subdivision of the state, or any officer or public body of the
                  state or political subdivision of the state.

TEX. GOV’T      CODE ANN. 5 2258.021 (Vernon 1999). Section 2258.001 defines a “public body” as
“a public body awarding a contract for a public work on behalf of the state or a political subdivision
of the state.” Id. 5 2258.001(2). Section 2258.002 provides that:

                        This chapter applies only to the construction of a public work,
                   including a building, highway, road, excavation, and repair work or
                   other project development or improvement, paid for in whole or in
                   part from public funds, without regard to whether the work is done
                   under public supervision or direction.

Id. 5 2258.002(a).

         First, we consider whether the AEDC is a political subdivision subject to chapter 2258.
Again, section 2258.021 provides: “A worker employed on a public work by or on beharfof the
state or a political subdivision of the state shall be paid not less than the general prevailing rate of
per diem wages for work of a similar character in the locality in which the work is performed.” Id.
§ 2258.021(a)(l) (emphasis added). A worker employed by a private contractor or subcontractor
is employed on a public work if employed “in the execution of a contract for the public work with
the state, a political subdivision of the state, or any officer or public body of the state or a political
subdivision of the state.” Id. 5 2258.021(c). The Development Corporation Act of 1979 expressly
provides that a development corporation created under the Act “is not intended to be and shall not
be a political subdivision or a political corporation within the meaning of the constitution and the
laws of the state.” TEX. REV. CIV. STAT. ANN. art. 5190.6,s 22 (Vernon 1987). For this reason, we
conclude that a development corporation is not a political subdivision for purposes of chapter 2258

          ‘See ActofApr. 25,1995,74tbLeg.,R,S.,ch.      76, $5 1.01 (purposeofacttocodifystatuteswithoutsubstantive
 change), 5.49(a) (codifying article 5159a byaddingGovemmentCodecbapter2258),            (b)(repealing article 5159a), 1995
 Tex. Gen. Laws 458,458,502-05.
The Honorable     Sonya Letson       - Page 3             (JC-0032)

and that chapter 2258 does not apply to workers employed by or on behalf of a development
corporation or by a contractor in the execution of a contract with a development corporation.

         Next, we must decide whether, for purposes of chapter 2258, a development corporation
contracts on behalf of the city that created it. Based on the language of its statutory predecessor, we
conclude that chapter 2258 applies only to work to which the state or a political subdivision of the
state is a party by contract. We also conclude that cities are not generally party to the contracts of
the development corporations they create.

        We find the terminology ofchapter 2258 unclear. Section 2258.021(a) establishes the right
of workers “employed on a public work by or on behalf of the state or a political subdivision of the
state” to be paid a prevailing wage. See TEX. GOV’T CODE ANN. 4 2258.021(a) (Vernon 1999)
(emphasis added). Section 2258.021(c) establishes that a worker employed by a private contractor
or subcontractor is employed on a public work if the worker is employed “in the execution of a
contract for the public work with the state, apolitical subdivision ofthe state, or any of3cer orpublic
body of the state or a political subdivision of the state.” Id. 5 2258.021(c) (emphasis added). The
meaning of the phrases “on behalf of’ and “any officer or public body” in section 2258.021 is
unclear. While these phrases could be read to further expand the scope of chapter 2258 to workers
employed by or on behalf of public entities other than the state and its political subdivisions, we
believe, based on the chapter’s statutory predecessor, that this construction is incorrect.

          As noted above, former article 5159a was repealed and codified as chapter 2258 without
substantive change in 1995.’ The language of section 2258.021 derives from section 1 of former
article 5159a. Because section 2258.021 is a nonsubstantive codification of section 1, we construe
it consistently with its statutory predecessor. See City ofLa Porte v. Barfield, 898 S.W.2d 288,294
(Tex. 1995) (construing nonsubstantive         codification consistently with statutory predecessor);
Johnson v. City ofFort Worth, 774 S.W.2d 653,654-55 (Tex. 1989) (same).

         Section 1 of former article 5 159a provided that workers entitled to receive not less than the
prevailing wage were those

                   employed by or on behalf of the State of Texas, or by or on behalf of
                   any county, city and county, city, town, district or other political
                   subdivision ofthe State, engaged in the construction of public works,
                   exclusive of maintenance work. Laborers, workmen, and mechanics
                   employed by contractors or subcontractors in the execution of any
                   contract or contracts for public works with the State, or any officer or
                   public body thereof, or in the execution of any contract or contracts

          ‘See ActofApr. 25,199s. 74thLeg., R.S., ch. 76, $5 1.01 (purposeofacttocodifystatutes      without substantive
 change), 5.49(a)(codifyingarticle5159abyaddingGovemmentCodechapter2258),(b)(repealingarticle5159a),                1995
 Tex. Gen. Laws 458,458,502-05.         Section 2258.021 was amended in 1997 to correct an mm in tbe 1995 codification.
 See Act of May 8, 1997,75th Leg., R.S., ch. 165,§ 18.01.1997 Tex. Gem Laws 327,486. The purpose of the 1997
 amendment was to amend section 2258.021 “to more closely conform to the law from which Chapter 2258, Government
 Code. was derived.” Id.
The Honorable      Sonya Letson      - Page 4              (JC-0032)

                  for public works, with any county, city and county, city, town, district
                  or other political subdivision of this State, or any oficer or public
                  body thereof, shall be deemed to be employed upon public works.4

In the first sentence of this provision, the phrase “on behalf of’ embraced situations in which others,
such as private contractors or subcontractors, employ workers on behalf of the state or a political
subdivision. The second sentence established when a worker employed by a private contractor or
subcontractor is entitled to the prevailing wage, specifying that such a worker is entitled to the
prevailing wage if the worker is employed to execute a contract “with” the state or a political
subdivision.    In this sentence, the phrase “with . . any officer or public body” makes it clear that
a contract executed by an “officer,” such as the head of a state agency or a mayor, or a “public
body,” such as a state board, county commissioners court, or city council, is a contract “with” the
state or political subdivision.     We believe that the phrase “any officer or public body” refers to
officers and bodies authorized to contract on behalf of the state or a political subdivision. See Tex.
Att’y Gen. Op. No. O-2059 (1940) at 4 (concluding that Texas State Highway Department was a
“public body” within the meaning of former article 5159a because “a contract made by the State
Highway Department is a contract of the State”). We do not believe that the term “public body”
 expanded the scope of former article 5 159a to workers employed by or on behalf of public entities
 other than the state and its political subdivisions. For this reason, we conclude that the phrases “on
behalf of’ and “any officer or public body” do not expand the scope of chapter 2258 beyond the
 contracts of the state and political subdivisions and that chapter 2258 applies only to those public
 works contracts to which the state or a political subdivision of the state is a party.

        Cities are not generally party to the contracts of the development corporations they create.
No provision in the Development Corporation Act of 1979 authorizes a development corporation
to execute a contract on behalf of the unit that created it or provides that a unit that has created a
development corporation is in any way a party to the development corporation’s contracts. Of
course, a city might be a party to a particular development corporation contract as a matter of fact.
Whether a city (or the state or any other political subdivision) is a party to a particular contract,
however, is a question of fact and contract interpretation beyond the purview of this office.’

        Now we turn to your specific points about chapter 2258. You urge us to conclude that
chapter 2258 applies to the AEDC project at issue for a number of reasons. First, you contend that
chapter 2258 applies because the project is a “public work” given that it will be paid in part with
public funds and that development corporation projects serve the “public purpose” of promoting
economic development.     See TEX. REV. Crv. STAT. ANN. art. 5190.6,s 3(l) (Vernon Supp. 1999).

          ‘Act ofMar. 21, 1933,43d Leg., RX, ch. 45,§ 1, 1933 Tex. Gen. Laws 91,91-92 (emphasis added). Section
 1 of former article 5 159a was not amended between its enachnent in 1933 and the repeal and codification of article
 5159a in 1995.

          ‘see Tex. Att’y Gen. Op. Nos. DM-383 (1996) at 2 (interpretation of contract not appropriate function for
 opinion process), DM-192 (1992) at 10 (“This office, in the exercise of its authority to issue legal opinions, does not
 conshue contracts.“), m-697 (1987) at 6 ( “‘review of contracts is not an appropriate function for the opinion process”).
The Honorable     Sonya Letson       - Page 5             (X-0032)

In support ofyour    argument that the AEDC project is a public work, you rely on section 2258.002,
which provides:

                      This chapter applies only to the construction of a public work,
                 including a building, highway, road, excavation, and repair work or
                 other project development or improvement, paid for in whole or in
                 part from public funds, without regard to whether the work is done
                 under public supervision or direction.

TEX. GOV’T CODE ANN. 8 2258.002(a) (Vernon 1999). While we agree that this provision, taken
in isolation, could be construed to establish that chapter 2258 applies to the construction of any
building paid in whole or in part with public funds, we do not believe that it may be construed so
broadly. This language derives from the section 4 of former article 5159a,6 which followed the
language in section 1 establishing that the prevailing wage requirement applies to workers
“employed by or on behalf’ of the state or a political subdivision of the state engaged in the
construction of public works. The purpose of section 4 was not to expand the scope ofthe prevailing
wage requirement but rather to clarify the meaning of “public works.” Section 4 established that
only public works paid for in whole or in part with public funds were subject to the prevailing wage
requirement. See Tex. Att’y Gen. Op. No. O-2059 (1940) at 6 (construing section 4 of former article
5 159a to provide that a public work is “‘[alny construction or repair work done under contract, and
paid for in whole or in part out of public funds”‘).

         Construing section 2258.002(a) consistently with its statutory predecessor and in light of
chapter 2258 as a whole, we conclude that section 2258.002(a) does not define the term “public
works,” but rather limits the scope of chapter 2258 to public works paid for in whole or in part with
public funds. In order to establish that chapter 2258 applies to a particular worker, one must first
establish that the worker is “employed on a public work by or on behalf of the state or a political
subdivision of the state.” TEX. GOV’T CODE ANN. 5 2258.021(a) (Vernon 1999) (emphasis added).

         6Section 2258.002(a)   appears to derive from the following   portion of section 4:

                       Any constmction or repair work done under contract, andpoidfor in whole
                  or in part out ofpublic funds,   whether or not done under public supervision or
                  direction, or paid for wholly or in part out of public funds, shall be held to be
                  ‘public works” within the meaning of this Act. The term “locality in which the
                  work is performed” shall be held to mean the county, city and county, city, town,
                  district or other political subdivision of this State in which the building, highway,
                  road, excavation, or other structure. project, development or improvement is
                  situated in all cases in which the contiact is awarded by the State, OI any public
                  body thereof, and shall be held to mean the limits of the county, city and county,
                  city, town, district 01 other political subdivisions on whose behalf the contract is
                  awarded in all other cases.

 ActofMar. 21,1933,43dLeg.,R,S.,ch.      45, g 4, 1933 Tex. Gen. Laws91,93 (emphasisadded).  Thisportionofsection
 4 of former article 5 159a was not amended between its enactment in 1933 and the repeal and codification of article
 5159a in 1995.
The Honorable   Sonya Letson    - Page 6           UC-0032)

We understand that the AEDC is financed with sales and use tax proceeds. See TEX. REV. CIV.
STAT. ANN. art. 5190.6,s 4A(d) (Vernon Supp. 1999) (authorizing city to levy sales and use tax for
the benefit of a development corporation if approved by a majority of the voters). Nevertheless, we
believe a project of the AEDC does not constitute a “public work” within the meaning of chapter
2258 unless the project is undertaken by or on behalf of the state or a political subdivision of the
state.

         Next, while you acknowledge that the AEDC is not itself a political subdivision, you argue
that the project is subject to chapter 2258 because the AEDC acts on behalf of the City of Amarillo.
You suggest that the AEDC acts on behalf of the City of Amarillo because the City created it and
must give final approval to the project. See id. $5 21 (“[t]he unit will approve all programs and
expenditures of the corporation”), 23(a)(ll) (powers ofdevelopment corporation “subject at all times
to the control of the governing body of the unit under whose auspices the corporation was created”).
You also note that the AEDC is an “authority and an instrumentality” for purposes of federal tax law
“authorized to act on behalf of the” City. See id. § 22 (Vernon 1987). As noted above, however, we
believe that the term “employed on a public work            on behalf of’ as used in chapter 2258 refers
 to workers employed pursuant to contracts with the state or a political subdivision, contracts to
 which the state or a political subdivision is a party. Again, no provision in the Development
 Corporation Act of 1979 authorizes a development corporation to execute a contract on behalf of the
 unit that created it or provides that a unit that has created a development corporation is in any way
 a party to the development corporation’s contracts. The City of Amarillo is not party to AEDC
 contracts by operation of the Development Corporation Act of 1979. Whether the City is a party to
 a particular AEDC contract will depend upon the terms of the contract.

         Finally, you argue that the AEDC is a “public body” within the meaning of chapter 2258.
In support of this argument, you note that a development corporation like the AEDC is entitled to
governmental immunity and is subject to the Open Records and Open Meetings Acts. See id.
$5 4A(i) (Vernon Supp. 1999) (development corporation “is a governmental unit and its actions are
governmental functions” for purposes ofTexas Tort Claims Act); 11 (b) (Vernon 1987) (development
corporation board of directors subject to Open Meetings Act); 14A (development corporation board
of directors subject to Open Records Act). You cite section 2258.001, which defines the term
“public body” to mean “a public body awarding a contract for a public work on behalf of the state
or apolitical subdivisionofthe    state.” TEX. GOV’TCODE ANN. 5 2258.001(2) (Vernon 1999). Your
argument suggests that the term “public body” extends chapter 2258 to workers employed by or on
behalf of public entities other than the state and political subdivisions of the state. As noted above,
however, we believe that the statutory predecessor to chapter 2258 demonstrates that the term
 “public body” refers to the governing body of a state agency or political subdivision authorized to
 execute a contract on the state’s or political subdivision’s behalf. We do not believe that the term
 “public body” extends the scope of chapter 2258 to include workers employed on contracts with
 public entities other than the state or political subdivisions.

          In sum, chapter 2258 applies to a worker employed on a public work “by or on behalf of the
 state or a political subdivision of the state.” Id. 5 2258.021(a)(l).     Because a development
 corporation created under the Development Corporation Act of 1979 is not a political subdivision
The Honorable         Sonya Letson     - Page 7             (X-0032)

for purposes of the laws of this state, see TEX. F&v. CIV. STAT. ANN. art. 5190.6, 5 22 (Vernon
1987), we conclude that chapter 2258 does not apply to a worker employed by or on behalf of a
development corporation.       Chapter 2258 will apply to a worker on a project undertaken by a
development corporation only if the development corporation undertakes the project on behalf of
the state or a political subdivision of the state. In order for the project to be undertaken on behalf
of the state or a political subdivision, the state or political subdivision must be a party to the
construction contract.

         We note that the statutory predecessor to chapter 2258, enacted in 1933 as a response to the
Great Depression,’ was drafted in a time before entities like development corporations were
authorized to undertake projects with public monies. Furthermore, the legislature specified that a
development corporation is not a political subdivision when it passed the Development Corporation
Act in 1979, a decade before it first amended the Act to authorize cities to levy sales and use taxes
for the benefit of section 4A and section 4B development corporations.s Whether chapter 2258 or
the Development Corporation Act of 1979 should be amended to guarantee a prevailing wage to
workers on development corporations’ publicly financed projects is a matter committed to the
legislature.

           ‘See Act of Mar. 21, 1933,43d     Leg., R.S., ch. 45, 1933 Tex. Gen. Laws 91. The act’s “emergency     clause”
included    the following statement:

                          The fact that there is no adequate law protecting laborers, workmen and
                      mechanics engaged in doing and performing work on public works in Texas and
                      its political subdivisions, and the further fact that many contractors are taking
                      advantage of the present industrial and economic condition to beat down wages to
                      a level far below that required to maintain a laborer, workman 01 mechanic in
                      reasonable circumstances, and the further fact that this condition has created a
                      social problem demanding the immediate attention of the legislative department of
                      OUI State, create an emergency and an imperative public necessity

 Id. 5 7, at 93-94.

            ‘Section 22, article 5 190.6 ofthe Texas Revised Civil Statutes, which provides that a development corporation
 is not a political subdivision      “within the meaning of        the laws of the state,” dates from 1979. See Act of
 May 23,1979,66th       Leg., R.S., ch. 700.5 22.1979 Tex. Gen. Laws 1675,1684. Sections 4A and 4B, which authorize
 cities to levy sales and use taxes to benefit development corporations, were adopted in 1989 and 1991 respectively. See
 Act of Mar. 21, 1991, 72d Leg., R.S., ch. 11, 5 2, 1991 Tex. Gen. Laws 37.37-39; Act of May 27, 1989,71st Leg.,
 R.S., ch. 877, 9 2, 1989 Tex. Gen. Laws 3871, 3871-73.            Prior to that time, development corporations were not
 authorized to use public funds.
The Honorable   Sonya Letson   - Page 8          (X-0032)

                                       SUMMARY

                Chapter 2258 ofthe Government Code applies to a worker employed on
           a public work “by or on behalf of the state or a political subdivision of the
           state.” TEX. GOV’T CODE ANN. Q 2258.021(a) (Vernon 1999). Because a
           development corporation created under the Development Corporation Act of
           1979 is not a political subdivision for purposes of the laws of this state, see
           TEX. REV. CIV. STAT. ANN. art. 5190.6, 5 22 (Vernon 1987), chapter 2258
           does not apply to a worker employed by or on behalf of a development
           corporation. Chapter 2258 will apply to a worker on a project undertaken by
           a development corporation only if the development corporation undertakes
           the project on behalf of the state or a political subdivision of the state. In
           order for the project to be undertaken on behalf of the state or a political
           subdivision,   the state or political subdivision must be a party to the
           construction contract.

                                               Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

 ELIZABETH ROBINSON
 Chair, Opinion Committee

 Prepared by Mary R. Crouter
 Assistant Attorney General