Court Opinion

ID: 4127669
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:32:00.848647+00
Date Added: 2024-06-11T08:45:41.824319
License: Public Domain

ATTORNEY GENERAL OF TEXAS
                                       GREG       ABBOTT

                                             June 16, 2014

The Honorable Rene 0. Oliveira                        Opinion No. GA-1066
Chair, Committee on Business & Industry
Texas House of Representatives                        Re: Whether a Type B economic development
Post Office Box 2910                                  corporation may use sales tax funds to hire an
Austin, Texas 78768-2910                              independent contractor for the purpose of
                                                      developing a comprehensive plan for future
                                                      development of the city (RQ-1174-GA)

Dear Representative Oliveira:

        You ask whether a Type B economic development corporation may use sales tax funds to
hire an independent contractor for the purpose of developing a comprehensive plan for the future
development of a city. 1 You explain that the envisioned comprehensive plan would be "a long-
range development tool for the municipality that would include provisions on land use, economic
development, transportation, and public facilities, in accordance with section 213.002 of the
Local Government Code." Request Letter at 2; see TEX. Loc. Gov'T CODE ANN. §§ 213.001-
.005 (West 2008) (providing for municipal comprehensive plans). You indicate that the
"comprehensive plan would be used by the corporation and the city to coordinate and guide them
in the selection and establishment of development regulations and economic development
projects and in making decisions about growth and development." Request Letter at 2; see Bd. of
Adjustment of City of San Antonio v. Leon, 621 S.W.2d 431, 436 (Tex. Civ. App.-San Antonio
1981, no writ) (describing comprehensive plan as one "designed to control and direct the use and
development of property in the municipality"). You state that the city's administration requested
that the economic development corporation fund the cost of hiring an independent contractor to
prepare and produce this comprehensive plan. Request Letter at 2. You ask for an opinion
"regarding whether this expense is a qualified project that the ... [e]conomic [d]evelopment
[c]orporation may fund from its available 4B sales tax revenues." Id. The question of whether a
particular expenditure is authorized by the statute is one that involves fact issues and cannot be
resolved by an attorney general opinion. See Tex. Att'y Gen. Op. No. GA-1050 (2014) at 2.

        1
         See Letter from Honorable Rene 0. Oliveira, Chair, House Comm. on Bus. & Indus., to Honorable Greg
Abbott, Tex. Att'y Gen. at 1 (Dec. 20, 2013), http://www.texasattomeygeneral.gov/opin ("Request Letter").
The Honorable Rene 0. Oliveira - Page 2                  (GA-1066)

Instead, it is a matter in the first instance for the corporation's board of directors. See id.
Assuming the proposed expenditure otherwise complies with the other statutory requirements,
we advise you generally on the use of Type B sales tax proceeds?

        Formerly known as a Type 4B economic development corporation due to initial
authorization in article 5190.6 section 4B of the Revised Civil Statutes, a Type B economic
development corporation is now primarily governed by chapter 505 of the Local Government
Code. See TEX. Loc. Gov'T CoDE ANN.§§ 505.001-.355 (West Supp. 2013) (governing Type B
corporations), id. § 501.002(16) (defining Type B corporations as those governed by chapter
505). Under section 505.302, a Type B corporation may use its economic development sales and
use tax proceeds to pay the costs of authorized projects. !d. § 505.302(1); see id. § 501.152
(pertaining to "costs" associated with projects). The different types of authorized projects are
enumerated in chapters 505 and 501. See id. §§ 505.151 (defining project to include the
definition of project in chapter 501 ), 50 1.002(13) (defining "project" by reference to subchapter
C, chapter 501); see also id. §§ 505.151-.161 (subchapter D, chapter 505, identifying authorized
projects);§§ 501.101-.108 (subchapter C, chapter 501, identifying authorized projects).

         Generally, chapters 501 and 505 define projects in terms of "land, buildings, equipment,
facilities, . . . targeted infrastructure, and improvements." See id. § 501.101; see also id.
§ 505.151 (referring to "land, buildings, equipment, facilities, ... and improvements"). An
expenditure for the service of preparing a comprehensive plan is not a direct expenditure for
land, buildings, equipment, facilities, targeted infrastructure and improvements and thus may not
constitute a project as contemplated by these definitions. However, a few provisions in chapters
501 and 505 expressly identify a project to include an "expenditure." !d. §§ 501.101, .103, .104,
.105, 505.157(b), .158(a)-{b). Most of these provisions involve an expenditure for projects with
a specific focus not relevant in the context of the preparation of a comprehensive development
plan or not applicable to the city at issue. See id. §§ 501.104 ("Projects Related to Certain
Military Bases or Missions"); 501.105 ("Career Center Projects Outside of Junior College
District"); 505.157 ("Projects Related to Business Enterprises in Landlocked Communities");
505.158 ("Projects Related to Business Development in Certain Small Municipalities").

         Two provisions, sections 501.101 and 501.103, potentially apply to the expenditure about
which you ask. Under section 501.101, a project includes an expenditure that satisfies two
requirements. The first is that the expenditure must be "for the creation or retention of primary
jobs. " 3 !d. § 501.101 (1 ). The second is that the expenditure must be found by the economic

         2
           The authority of a development corporation may be limited by any resolution creating the corporation or
any ballot language restricting the use of Type B tax proceeds. See TEX. Loc. GOV'T CODE ANN. §§ 505.251 (West
Supp. 2013) (providing for election to create development corporation), 505.160 (pertaining to election required for
particular project).
         3
          "Primary jobs" is defined in section 501.002(12) and refers to a job included in the "North American
Industry Classification System (NAICS)." TEX. LOC. GOV'T CODE ANN. § 50 1.002( l2)(A)(ii) (West Supp. 20 13).
The Honorable Rene 0. Oliveira - Page 3             (GA-1066)

development corporation's board "to be required or suitable for the development, retention, or
expansion of' a list of twelve types of centers and facilities. !d. § 501.101 (2) (identifying
manufacturing and industrial facilities, research and development facilities, military facilities,
transportation facilities, disposal, recycling and pollution facilities, distribution, warehouse, job
training facilities, and corporate headquarters facilities). A municipal comprehensive plan could
impact a municipality's economy, but to qualify as an authorized project it must directly relate to
the creation or retention of primary jobs as measured by the standards in section 501.101(1)-(2).

         Section 501.103 relates to expenditures that are "found by the board of directors to be
required or suitable for infrastructure necessary to promote or develop new or expanded business
enterprises, limited to: (1) streets and roads, rail spurs, water and sewer utilities, electric utilities,
or gas utilities, drainage, site improvements; and . . . ; (2) telecommunications and Internet
improvements .... " I d. § 501.103. The limiting language in section 501.1 03 indicates this is an
exclusive list. See Peterson v. Calvert, 473 S.W.2d 314, 317 (Tex. Civ. App.-Austin 1971, writ
ref' d) ("The specification of one particular class excludes all other classes."); cf Pro Path Servs.,
L.L.P v. Koch, 192 S.W.3d 667, 670-71 (Tex. App.-Dallas 2006, pet. denied) (discussing
noninclusive nature of statutory language "including"). An expenditure for a comprehensive
plan that does not fall precisely within the contours of section 501.103 is not an authorized
project under that section.

         As noted previously, the question of whether a particular expenditure is authorized by
the statute is one that we cannot resolve. See supra page 1. Here, it is particularly appropriate
for this office to refrain from providing a definitive answer given the fact that potentially relevant
statutes require specific findings from the economic development corporation's board. See TEX.
Loc. Gov'T CODE ANN. §§ 501.101(2), .103(1)-(2) (West Supp. 2013). In the event the
corporation's board makes the required findings, any judicial review would utilize an abuse of
discretion standard. Cf Pearce v. City of Round Rock, 78 S.W.3d 642, 646-47 (Tex. App.-
Austin 2002, pet. denied) (utilizing abuse of discretion standard to review decision of city's
development review board).
The Honorable Rene 0. Oliveira - Page 4         (GA-1066)

                                     SUMMARY

                       To the extent an expenditure of Type B sales tax proceeds
              for the services involved in the preparation of a municipal
              comprehensive plan by an independent contractor is within the
              scope of sections 501.101 or 501.103 of the Local Government
              Code, it may be an authorized project under the statute. It is,
              however, for the board of directors of the economic development
              corporation to determine, in the first instance and subject to
              judicial. review, whether an expenditure is authorized under the
              statute.

                                                EG -ABBOTT
                                            Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee