City of Austin v. Harry M. Whittington , 384 S.W.3d 766 ( 2012 )

IN THE SUPREME COURT OF TEXAS
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NO . 10-0316
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CITY OF AUSTIN, PETITIONER,
v.
HARRY M. WHITTINGTON, ET AL., RESPONDENTS.
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS
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Argued December 6, 2011
JUSTICE GUZMAN delivered the opinion of the Court in which CHIEF JUSTICE JEFFERSON ,
JUSTICE WAINWRIGHT , JUSTICE MEDINA , JUSTICE GREEN , JUSTICE JOHNSON and JUSTICE
LEHRMANN joined.
JUSTICE HECHT filed a concurring and dissenting opinion, in which JUSTICE WILLETT joined.
In this appeal from the City of Austin’s (City) condemnation of property to build a parking
garage for a nearby convention center and a facility to chill water to cool nearby buildings, we
examine and define the scope of judicial review of legislative takings. The Texas Constitution and
the Local Government Code authorize takings by municipalities when the municipality determines
the property is necessary for a public use and provides just compensation to the owner. TEX . CONST .
art. I, § 17; TEX . LOC. GOV ’T CODE § 251.001(a). We have long held that judicial review is proper
to challenge a taking on the basis of fraud, bad faith, or arbitrary and capricious determinations by
the condemnor. Today we reaffirm that principle. On judicial review of the City’s taking, the
property owners alleged that the City’s determination that the property was necessary for public use
was fraudulent, in bad faith, and arbitrary and capricious. The jury agreed, the trial court entered
judgment on the verdict (invalidating the taking), and the court of appeals affirmed. __ S.W.3d __.
Because we conclude that the City’s determinations were not fraudulent, in bad faith, or arbitrary and
capricious, we reverse the judgment of the court of appeals and remand for entry of judgment in
accordance with this opinion.
I. Procedure for Takings
Article I, section 17 of the Texas Constitution requires that condemned property be taken for
a public use and be justly compensated: “No person’s property shall be taken, damaged or destroyed
for or applied to public use without adequate compensation being made, unless by consent of such
person . . . .” TEX . CONST . art. I, § 17. The Local Government Code imposes an additional
restriction on municipal takings. Section 251.001 of the Local Government Code adds that the
condemnor must consider the taking necessary for public use: “When the governing body of a
municipality considers it necessary, the municipality may exercise the right of eminent domain for
a public purpose to acquire public or private property . . . for any other municipal purpose the
governing body considers advisable.” TEX . LOC. GOV ’T CODE § 251.001(a). In short, these
provisions require the municipality to demonstrate: (1) it intends to put the property to public use
(the public use requirement); and (2) the condemnation is necessary to advance or achieve that public
use (the necessity requirement).
2
Procedurally, the condemnor typically negotiates with the landowner to purchase the
property. See Hubenak v. San Jacinto Gas Transmission Co., 141 S.W.3d 172, 179 (Tex. 2004);
TEX . PROP . CODE §§ 21.0112(a), 21.012(a). If they are unable to agree on damages, the condemnor
files a condemnation petition in county or district court. TEX . PROP. CODE §§ 21.001, 21.012,
21.013; Hubenak, 141 S.W.3d at 179. The petition must, among other things, describe the property
to be condemned and the purpose for which the condemnor intends to use the property. TEX . PROP .
CODE § 21.012(b). The judge of the court then appoints “‘three disinterested freeholders who reside
in the county as special commissioners to assess the damages.’” Hubenak, 141 S.W.3d at 179
(quoting TEX . PROP . CODE § 21.014). The special commissioners hold a hearing to assess the value
of the property to be condemned (and any damage to the remainder). TEX . PROP . CODE
§§ 21.014–.015; Hubenak, 141 S.W.3d at 179.
If any party files written objections to the special commissioners’ findings with the court,
“‘the court shall cite the adverse party and try the case in the same manner as other civil causes.’”
Hubenak, 141 S.W.3d at 179 (quoting TEX . PROP . CODE § 21.018). During that litigation, the
condemnor may take possession of the condemned property by paying the damages determined by
the special commissioners and executing a bond approved by the court to secure payment of potential
additional costs that could be awarded at trial or on appeal. TEX . PROP . CODE § 21.021(a).
II. Factual Background
Harry Whittington and members of his family (collectively “the Whittingtons”) acquired
Block 38 in Austin, Texas in 1981. Block 38 is cater-cornered to the Austin convention center and
was used for surface parking. The City opened the convention center in 1992. An 1,100 space
3
parking garage a block west of the west entrance to the convention center has 600 spaces to serve
the convention center and 500 spaces for monthly leases. In 1998, Austin voters approved an
expansion to the convention center to more than double its size, financed by an increase in the hotel
tax. That expansion was completed in 2002 and added an entrance on the north side.
After the expansion, a feasibility study indicated a lack of hotel rooms in close proximity to
the convention center. The City sought to address not only the hotel room issue but also the need
for additional parking after the doubling in size of the convention center. The City sought to add
approximately 500 parking spaces near the new north entrance to the convention center.
The City pursued a project that would include an 800-room hotel, residential space, retail
shops, and underground parking that could support the expanded convention center. In 1998, the
City began the process of selecting a developer to design and build the hotel project. The City chose
H.L. Hotels, LLC (a venture between Hilton Hotel Corp. and Landmark Organization, Inc.) as the
developer in July 1999.
The City created Austin Convention Enterprises, Inc., a nonprofit public facility corporation
that issued tax exempt bonds to fund the project.1 The City also granted $15 million toward the
project from convention center revenue. See TEX . LOC. GOV ’T CODE § 380.001(a). The construction
and financing for the project cost approximately $280 million. The developer received a 4.5% fee
1
Municipal bonds are often used to finance public capital projects. S ECU RITIES I N D U STRY & F IN AN CIA L
M ARKETS A SSO CIATIO N , T H E F U ND AM EN TALS O F M U N IC IPAL B O N DS 1 (6th ed. 2012). The municipality, or an authority
it creates, issues or sells the bonds to raise proceeds to perform the capital improvement. Id. at 2, 4. The municipality
then pays the holder of the bond the agreed interest (called a coupon) on a fixed schedule, either through the
municipality’s general revenue or a specific revenue stream. Id. at 1, 3, 24. The bonds issued for the hotel project were
funded through the revenue stream of the hotel project. The municipality sometimes uses a sinking fund to collect
revenue to repay the principal to the holder when the bond matures, typically in 1 to 30 years. Id. at 23, 51.
4
(of the construction portion for the project) in the form of third-tier bonds, totaling approximately
$10.5 million. After the project bonds are retired in 26–30 years from their issuance, the City will
own the hotel (which accounts for 73.52% of the project) and the developer will own the residential
and retail portions (which account for 26.48% of the project).
Before H.L. Hotels broke ground on the project, the City was investigating ways to make the
project’s debt coverage ratios more favorable (such as increasing revenue or decreasing expenses)
to allow the project bonds to sell on favorable terms. The City had planned to build an underground
garage with 500 spaces to support the hotel and another 500 spaces to support the expanded
convention center. That plan required the garage to extend to the street on three sides and
underneath the street on the west side. However, the close proximity to a train corridor on the south
side of the project and a park on the west side of the project prevented construction of as wide of a
garage as planned and the project encountered water at the fourth level of excavation—making it less
feasible to excavate deeper to accommodate for the smaller footprint of the garage. In October 1999,
the City determined that building a smaller garage was the most feasible option for lowering the
overall project cost in order to obtain favorable financing. The City’s decision to build a smaller
garage had the practical effect of reducing the hotel project budget by $10–12 million.2 H.L. Hotels
broke ground in June 2001 and completed the project in December 2003.
2
The W hittingtons state in their briefing that H.L. Hotels benefitted from the decision to not build the larger
underground garage. However, there is no evidence in the record to support this assertion. The W hittingtons did not
call the project developer or an expert to testify as to any alleged benefit the developer might have received. W hen
counsel for the W hittingtons asked the convention center director if the project would take less time to complete with
the smaller underground garage, he testified that he did not know. The only evidence of any impact on the developer
was that the project cost was reduced by $10-12 million, which would have resulted in a lesser fee to the developer of
at least $450,000 in light of its 4.5% fee.
5
The City sought to acquire land elsewhere to build a garage to serve the expanded convention
center. The City looked at acquiring Block 38 or a vacant block three blocks south of Block 38.
City staff considered but decided against cancelling the 500 leases in the existing garage near the
west side of the convention center because it relied on the steady stream of income from the monthly
leases and the garage and its elevator were not located near the new north entrance to the convention
center. The City chose to try to acquire Block 38 because of its close proximity to the north
convention center entrance. At the time, the Whittingtons were leasing half of Block 38 to the City
for convention center parking.
In 2001, Austin Energy, the municipal utility department of the City, approached City
convention center staff about constructing a district cooling plant near the expanded convention
center. A district cooling plant provides chilled water to cool the air in nearby buildings. Utilities
use district cooling plants to shift the demand for electricity from peak usage hours during the day
time to off-peak hours at night to freeze water. During the day, the melting ice chills water that is
piped to cool nearby buildings. By shifting energy demand to off-peak hours, utilities are able to
avoid building more power plants. District cooling is not regulated by the Public Utility
Commission or the City Council.
Austin Energy previously built a district cooling plant on the west side of downtown Austin
(District Plant 1). A loop of pipes connects the plant to the buildings it cools, including the
convention center and expansion. Austin Energy predicted that District Plant 1 would reach full
capacity in 2005, but later revised that estimate to 2007 after the economy slowed and fewer
buildings used the program. However, Austin Energy was contractually obligated to meet more
6
demand than was actually occurring at the time. Austin Energy also sought to build a second district
plant to be able to serve its customers if District Plant 1 required down time.
Austin Energy entered an agreement with the convention center department for the
department to find a suitable location for a second district plant (District Plant 2). The agreement
set out guidelines for a suitable location. Austin Energy preferred a location near the east portion
of the chilled water loop for two main reasons. First, proximity to the loop was a significant factor
because laying the pipe to connect to the loop costs around $1,500 per linear foot. Second, farther
distances between the loop and District Plant 2 would require more pump horsepower to achieve
sufficient flow of chilled water.
In addition to Block 38, the City considered several other properties for District Plant 1.3 The
City decided to acquire Block 38 to support a parking garage for the expanded convention center and
District Plant 2. The garage would occupy 70% of the block and the cooling plant would occupy the
remaining 30%.
The City and the Whittingtons could not agree on a price for Block 38, so the City Council
passed a resolution in August 2001 authorizing a condemnation suit to acquire Block 38.4 On
October 17, 2001, the City wrote a final offer letter to the Whittingtons. The letter stated that the
“plant will be used to provide chilled water necessary to operate the air conditioning systems of the
Convention Center Expansion and” the hotel project. The project manager for District Plant 2, in
3
Those other properties included: (1) 5th Street and San Jacinto Boulevard; (2) East Cesar Chavez and Red
River Street, (3) 5th Street and Lamar Boulevard; and (4) several vacant lots the City owned east of Interstate Highway
35.
4
The City Council passed previous condemnation resolutions, but the earlier resolutions had procedural defects.
7
an email to the author of that letter, noted that, “to be completely clear, someone’s pointed out that
actually those buildings are currently going to be served from [District Plant 1] until the new plant
is built . . . . So this new plant is not absolutely necessary for operation of the buildings mentioned
but a redundancy is much better.” District Plant 1 provided service to the convention center
expansion and the hotel project for some time even after District Plant 2 became operational.
The City filed a condemnation suit in October 2001. The trial court appointed three special
commissioners, who awarded the Whittingtons $7,650,000. Both parties filed objections to the
award. The City deposited that amount into the registry of the court in January 2002 and took
possession of Block 38. TEX . PROP . CODE § 21.021. The City then spent $15–18 million building
a 740-space parking garage on 70% of Block 38, which opened in February 2005, and constructed
District Cooling Plant 2 on the remaining portion of Block 38.
The trial court granted the City’s motion for partial summary judgment concluding there were
no genuine issues of material fact on the City’s right to take Block 38. The Whittingtons also
asserted that the City had not condemned the twenty-foot strip of land bisecting Block 38.5 The jury
awarded $7,750,000 in damages, and the trial court entered judgment on that award. The judgment
specified that, as a county court, the trial court lacked authority to decide matters regarding title and
made no determination on whether the City also took the twenty-foot strip. The court of appeals
determined that the City failed to meet its summary judgment burden as to either public use or
5
The twenty-foot strip of land is essentially an alley but has never been used by the public as an alley.
8
necessity. Whittington v. City of Austin, 174 S.W.3d 889, 906 (Tex. App.—Austin 2005, pet.
denied) (Whittington I).
Shortly before the Whittingtons filed that appeal, they filed a declaratory judgment action in
district court. The district court determined that the City had not condemned the twenty-foot strip
of land bisecting Block 38. On appeal, the court of appeals held that the county court judgment,
which failed to adjudicate the issue of the twenty-foot strip, was not final and the district court did
not have jurisdiction to review that judgment. City of Austin v. Whittington, __ S.W.3d __, __ (Tex.
App.—Austin 2007, no pet.) (Whittington II). The court of appeals vacated the district court
judgment and dismissed the case. Id. at __.
On remand, the case was transferred to district court. The City amended its petition to clarify
that it was also seeking to condemn the twenty-foot strip. The parties agreed to submit this issue to
the trial court separately. The trial court found that the City had not properly condemned the twenty-
foot strip. After a trial on the remaining issues, the jury found that: (1) the taking was not necessary
to advance or achieve a public use; (2) the taking was for economic development purposes; and
(3) the decision to take the property was fraudulent, in bad faith, and arbitrary and capricious as to
the parking garage and the district plant. After post-verdict motions, the trial court concluded as a
matter of law that: (1) the taking was necessary to advance or achieve a public use; and (2) that
Government Code section 2206.001—the statute prohibiting takings for economic
development—did not apply retroactively to the proceeding (disregarding the jury’s contrary
answers). However, the trial court entered judgment for the Whittingtons because it determined that
legally and factually sufficient evidence supported the jury’s findings that the taking was fraudulent,
9
in bad faith, and arbitrary and capricious. The trial court awarded the Whittingtons attorney’s fees
of $779,418.57.
On appeal, the court of appeals upheld the jury’s finding that the City’s taking as to the
district plant was in bad faith because it determined that the City misrepresented the necessity of the
district cooling plant to chill the air of nearby buildings, citing that District Plant 1 performed those
tasks even after the plant was built on Block 38. __ S.W.3d __, __ (Whittington III). The court of
appeals modified the Whittingtons’ attorney’s fee award to $674,418.57. Id.
The City filed a petition for review, which we granted. 54 Tex. Sup. Ct. J. 811 (Tex. Apr.
15, 2011). The City asserts that: (1) there is no exception to invalidate takings for public use, even
if the takings were fraudulent, in bad faith, or arbitrary and capricious; (2) legally insufficient
evidence supports the jury’s findings that the taking was fraudulent, in bad faith, or arbitrary and
capricious; (3) the City properly took the twenty-foot strip; and (4) the court of appeals opinion in
Whittington III was defective because it only addressed the district cooling plant and not also the
parking garage. Though they did not file a notice of appeal, the Whittingtons assert that (1) the
City’s taking violated Government Code section 2206.001 because it was for economic development
purposes; and (2) the taking was not necessary for a public use.
III. The Scope of Judicial Review
The parties first ask us to clarify the scope of judicial review. The City asserts that: (1) fraud,
bad faith, and arbitrariness and capriciousness are simply means of proving that the City’s stated use
was actually private; and (2) this inquiry is one for the court, not the jury. We disagree with the first
assertion because this Court has long recognized that fraud, bad faith, and arbitrariness and
10
capriciousness are exceptions that may invalidate takings, but we agree with the second assertion that
this inquiry is generally a question of law for the Court.
We held in 1940 that the “question of what is a public use is a question for the determination
of the courts; 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.”6 Hous. Auth. of City of Dallas v.
Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940). We explained that, “‘[w]here the Legislature
declares a particular use to be public use the presumption is in favor of this declaration, and will be
binding upon the courts unless such use is clearly and palpably of a private character.’” Id. at 83
(quoting West v. Whitehead, 238 S.W. 976, 978 (Tex. Civ. App.—San Antonio 1922, writ ref’d)).
But the presumption favoring the legislative declarations that the property is being taken for
public use and is necessary for that use does not abrogate judicial review. We held in Higginbotham
that “[t]he law is well established in this state that where the power of eminent domain is granted,
a determination by the condemn[or] of the necessity for acquiring certain property is conclusive in
the absence of fraud.” Id. at 88 (citing West, 238 S.W. at 978). Since Higginbotham, we have
clarified that judicial review may nullify a taking where the condemnor’s decision was fraudulent,
in bad faith, or arbitrary and capricious. See FKM P’ship Ltd. v. Bd. of Regents of the Univ. of
Houston Sys., 255 S.W.3d 619, 629 n.9 (Tex. 2008) (“‘Once the presumption of necessity arises, the
defendant can contest the fact of necessity only by establishing affirmative defenses such as fraud
6
Our jurisprudence often refers to these takings as “legislative” ones because the Texas Legislature has
delegated its condemnation authority to legislative bodies of local governments, which determine the public use and
necessity and take the property. See Burch v. City of San Antonio, 518 S.W .2d 540, 542-43 (Tex. 1975).
11
(that, contrary to the ostensible public use, the taking would actually confer only a private benefit),
bad faith, or arbitrariness.’” (quoting Whittington I, 174 S.W.3d at 898)).
In the absence of allegations that the condemnor’s determinations of public use and necessity
were fraudulent, in bad faith, or arbitrary and capricious, the legislative declaration that a specific
taking is necessary for a public use is conclusive. Coastal Indus. Water Auth. v. Celanese Corp. of
Am., 592 S.W.2d 597, 600 (Tex. 1979) (“In the absence of allegations that the condemnor acted
arbitrarily or unjustly, the legislature’s declaration that a specific exercise of eminent domain is for
public use is conclusive . . . .”); see FKM P’ship, 255 S.W.3d at 629–30. If such allegations are
asserted, the trial court must inquire into whether the condemnor’s determinations of public use or
necessity were fraudulent, in bad faith, or arbitrary and capricious. See FKM P’ship, 255 S.W.3d
at 630.
As the parties concede, this inquiry is an affirmative defense and the landowner bears the
burden of proving his allegations as to this defense. See id. at 629 (“we have held that the agency’s
determination of public necessity is presumptively correct, absent proof by the landowner of the
agency’s fraud” (emphasis added)). The inquiry into whether the determinations of public use or
necessity were fraudulent, in bad faith, or arbitrary and capricious is a question of law for the court.
See Maher v. Lasater, 354 S.W.2d 923, 925 (Tex. 1962) (“the ultimate question of whether a
particular use is a public use is a judicial question to be decided by the courts”); Higginbotham, 143
S.W.2d at 88 (approvingly noting that question of necessity was not submitted to the jury).7 The trial
7
In Higginbotham, we noted that courts and juries should not second guess the advisability of takings because
takings for such projects as railway lines might result in the same taking being upheld in one county and invalidated in
another. 143 S.W .2d at 89 (“The reason for the rule seems to be that: If different courts and juries were allowed to pass
12
court should only submit the issue to a jury if the underlying facts are in dispute. See Tony Gullo
Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006); Richey v. Brookshire Grocery Co., 952
S.W.2d 515, 518 (Tex. 1997). If the court (or the jury when the underlying facts are in dispute) finds
that the condemnor’s determinations of public use or necessity were fraudulent, in bad faith, or
arbitrary and capricious, the taking is invalid.
Here, the Whittingtons allege that the City’s determinations of public use and necessity were
fraudulent, in bad faith, and arbitrary and capricious. The trial court initially only ruled on whether
the City took the twenty-foot strip and submitted the remaining issues to the jury.8 However, the
City and the Whittingtons do not dispute the underlying facts on these issues; rather, they dispute
the legal effect of those facts (e.g., whether those facts amount to fraud, bad faith, or arbitrariness
and capriciousness). Because these issues are legal questions, we review them de novo. See
Chrysler Ins. Co. v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252 (Tex. 2009).9
IV. The Parking Garage
on the necessity or advisability of condemning each tract out of the many which go to make up a right of way for a
railway line, straight courses from point to point, with the consequent lessening of mileage, would in many, if not all,
cases be impossible to secure. So in the case of depot grounds. One jury might hold, on competent evidence, that the
land in question was not necessary to the purposes of the railroad. Another might render a like verdict as to any other
tract sought to be subjected to its uses, and by such a course the company could be excluded altogether.” (quotation
marks omitted)). That rationale likewise necessitates that, although fraud, bad faith, and arbitrariness and capriciousness
are the subject of judicial cognizance, their uniform application necessitates that they are questions of law for the court.
8
The trial court ruled as a matter of law after the verdict that the taking was necessary for a public use and that
Government Code section 2206.001 (prohibiting takings for economic development purposes) did not retroactively apply
to this taking.
9
The W hittingtons assert that the City waived the argument that fraud, bad faith, and arbitrariness and
capriciousness are questions of law for the court. The City properly objected to these questions in its Motion to Bifurcate
and its Motion to Disregard the Jury Verdict and Motion for Judgment Notwithstanding the Verdict. See Hoffman-
LaRoche Inc. v. Zeltwanger, 144 S.W .3d 438, 450 (Tex. 2004) (pure legal questions may be raised in post-verdict
motions).
13
The City took possession of Block 38 for two distinct public purposes (the parking garage
and the district plant). We analyze each separately.
A. Fraud
We first examine whether City’s determination that the parking garage was necessary for a
public use was fraudulent. The parties’ agreed to define fraud as “the taking of property for private
use under the guise of public use, even though there may be no fraudulent intent on the part of the
condemnor.”10 See Higginbotham, 143 S.W.2d at 83 (“‘Where the Legislature declares a particular
use to be public use the presumption is in favor of this declaration, and will be binding upon the
courts unless such use is clearly and palpably of a private character.’” (quoting West, 238 S.W. at
978)); see also Whitfield v. Klein Indep. Sch. Dist., 463 S.W.2d 232, 235 (Tex. Civ. App.—Houston
[14th Dist.] 1971, writ ref’d n.r.e.) (holding proof of fraud in taking does not require proof of
fraudulent intent).
1. Fraud in the Public Use of the Parking Garage
The parties agreed to define public use as:
a use which the public is entitled to share indiscriminately in as a matter of right. A
use is public when the public obtains some definite right or use in the undertaking to
which the property is devoted. What is important in the public-use determination is
the character of the right inuring to the public, not the extent to which the public’s
right is exercised.
10
The City objected and proposed an alternate definition of fraud, but has not pursued that issue on appeal. As
our inquiry is a question of law, these definitions in the jury charge should instead have been conclusions of law. W e
may review conclusions of law to determine their correctness. BMC Software Belgium, N.V. v. Marchand, 83 S.W .3d
789, 794 (Tex. 2002). But we will not reverse an erroneous conclusion if the trial court rendered the proper judgment.
Id. Because any change in the definition would not yield a different outcome here, we do not address whether the parties’
definition of fraud is legally correct in its entirety.
14
A “public use” is not a private use. A taking may not be used to confer a
private benefit on a particular private party or parties through the use of the property.
A taking may not be used for a public use that is merely a pretext to confer a private
benefit on a particular private party or parties.
This Court has defined public use in similar circumstances as when the public obtains some definite
right or use in the undertaking to which the property is devoted. Coastal States Gas Producing Co.
v. Pate, 309 S.W.2d 828, 833 (Tex. 1958); see also Higginbotham, 143 S.W.2d at 84 (“‘It is
immaterial if the use is limited to the citizens of a local neighborhood, or that the number of citizens
likely to avail themselves of it is inconsiderable, so long as it is open to all who choose to avail
themselves of it.’”(quoting West, 238 S.W. at 978)). Public use, however, does not include a benefit
to the public welfare or good under which any business that promotes the community’s comfort or
prosperity might be benefitted from the taking.11 Pate, 309 S.W.2d at 833.
In 2001, the City Council authorized a condemnation lawsuit “for the construction of a
parking garage for the Austin Convention Center . . . .” The Whittingtons assert that the taking was
fraudulent as to the parking garage because it “favored one private party over another at public
expense” by “reliev[ing] H.L. Hotels of its obligation to provide parking for the Convention Center.”
We disagree. The parking garage was to provide parking for the expanded convention center.
This is a public use. Pate, 309 S.W.2d at 833.12 The effect of the City’s decision to take Block 38
11
In 2003, the Legislature added section 21.023 to the Property Code, which requires a governmental entity
acquiring property through eminent domain to notify landowners of their right to repurchase the property if the public
use for which the property was acquired is cancelled before the tenth anniversary of the acquisition. T EX . P RO P . C O DE
§ 21.023.
12
See T EX . L OC . G O V ’T C O D E § 251.001(a)(1) (authorizing home rule municipalities to “exercise the right of
eminent domain for a public purpose” such as providing, enlarging, or improving auditoriums); id. at § 251.001(a)(5)
(authorizing home rule municipalities to “exercise the right of eminent domain for a public purpose,” including “for any
other municipal purpose the governing body considers advisable”).
15
rather than build the larger underground garage with the hotel project was, at best, an incidental
benefit to the H.L. Hotels.13 The decision not to build the larger underground garage resulted in a
cost savings to the hotel project of approximately $10–12 million, resulting in fewer bonds being
issued. The direct impact to the project developer was that its fee would be reduced if the overall
project cost was reduced. There was no evidence introduced at trial to prove a benefit to H.L. Hotels
due to the lower cost of the project. We hold that the City’s determination that the parking garage
was a public use was not fraudulent.
2. Response to the Dissent
The dissent argues that the developer benefitted from the taking because, even though the
project budget was reduced by $10–12 million, the developer took third-tier bonds in lieu of its 4.5%
fee. __ S.W.3d __, __ (Hecht, J., dissenting). The dissent reasons that only a short time elapsed
between the decision to negotiate exclusively with the developer and the decision to not build the
underground garage and that the bonds in lieu of the fee were not adjusted when the plans changed.
Id. But this assertion is devoid of any record support. The only testimony the dissent cites is from
the convention center director stating that the developer took bonds in lieu of its fee. Id. at __, n.15.
But the director never testified that the amount of bonds was not reduced after the parking garage
plans were altered.14 Nor did the Whittingtons put on any evidence proving that it was. The director
13
There is no evidence in the record of a benefit to H.L. Hotels, and there is evidence to suggest it received a
diminished fee as a result of the project costing less. See supra note 2.
14
The convention center director testified:
“Q. How much did [the developer] make out of this project in fees?
“A. I’m not sure exactly how much they made at the end. There was—they took— in lieu of fees, they took
16
merely testified as to an approximate amount of bonds the developer ultimately received. Second,
even if the amount of bonds in lieu of fees had been reduced—and there is no evidence it had—the
dissent assumes the developer received a benefit without corresponding work performed with respect
to the garage. The developer’s fee compensates it for such costs as the design of the structure and
the permitting process. The developer performed sufficient design work on the garage to determine
what variances were needed. The developer then applied for those variances but they were not
granted. In short, there is no evidence, much less proof, that the developer received the same fee
when the plans for the garage were altered, and even if it had, there is evidence that the developer
performed work associated with the fee. In sum, the record plainly refutes the dissent’s assertion that
the Whittingtons proved the developer benefitted from the decision to not build the garage.
3. Fraud in the Necessity of the Parking Garage
We next address whether the City’s determination concerning the necessity of the parking
garage was fraudulent. The Whittingtons assert that the determination of necessity for the garage
was fraudulent because the City could cancel the 500 leases in its existing garage and therefore
would not need to build a garage on Block 38.
We disagree that the City did not actually consider the garage necessary for parking for the
convention center. The jury charge did not define “necessary.” The statutory constraint on the City’s
some third-tier bonds.
* * *
“Q. . . . [D]id you say that they got $10 million worth of bonds for their development fees?
“A. That was— yeah, that was in lieu of fees. They got the third-tier bonds.”
17
right to take here is that the City must “consider[] it necessary.” TEX . LOC. GOV ’T CODE
§ 251.001(a). When there are allegations of fraud with regard to the necessity of a taking such as
this, the question is whether the condemnor actually considered the taking necessary for the public
use—not whether the court believes the taking was actually necessary. See Higginbotham, 143
S.W.2d at 83. “The city council is the authority to exercise the power of eminent domain and must
itself officially express the intention and necessity to condemn the land in question.” Burch v. City
of San Antonio, 518 S.W.2d 540, 545 (Tex. 1975). We look to official materials such as orders,
resolutions, and minutes to examine the City’s determinations of public use and necessity. See
Horton v. Mills Cnty., 468 S.W.2d 876, 878 (Tex. Civ. App.—Austin 1971, no writ.).
The City Council declared that public necessity required taking Block 38 for the parking
garage. The evidence confirms that the City’s determination of necessity was not fraudulent.
Testimony from the director of the convention center department indicated that the existing garage
and especially its elevator were too far from the new north entrance to the convention center to serve
the expansion. That belief led the City staff to recommend the taking to the City Council because
they believed it was necessary to accommodate parking requirements for the expanded convention
center. We hold that the City’s determination that the taking was necessary for a public use was not
fraudulent.
B. Bad Faith
18
Our second inquiry on the parking garage is whether the City’s determination that the parking
garage was necessary for a public use was in bad faith. The parties agreed to define bad faith as
“more than negligence or lack of diligence. Bad faith implies an intent to injure, or some other
improper motive. Mere bad judgment does not qualify as bad faith. Rather, the Whittingtons must
show that the City knowingly disregarded their rights.”15
1. Bad Faith in the Public Use of the Parking Garage
The Whittingtons assert that the taking was in bad faith as to the parking garage because it
relieved H.L. Hotels of an obligation to provide parking for the expanded convention center. We
disagree. As previously addressed, the City’s decision to take Block 38 rather than build the larger
underground garage with the hotel project was, at best, an incidental benefit to H.L.
Hotels—especially in light of the percentage fee it received as the project developer combined with
the lower project cost of building a smaller garage. See supra Part IV.A.1. The evidence indicates
that this decision was made because $10-12 million in hotel project costs needed to be cut to obtain
favorable financing, and the additional construction difficulties of not obtaining variances and
encountering water in the excavation made the garage a prime candidate for the cost savings to the
hotel project. The City instead pursued the acquisition of Block 38, which was cater-cornered to the
new north entrance to the convention center and was being leased to the City for convention center
parking at the time. This does not prove that the City “knowingly disregarded [the Whittingtons’]
15
W e express no opinion as to the complete accuracy of this definition but note that any variation would not
affect our holding. See supra note 10.
19
rights” or had some intent to injure the Whittingtons. We hold that the City’s determination that the
parking garage was for a public use was not made in bad faith.
2. Bad Faith in the Necessity of the Parking Garage
We next address whether the City’s determination of necessity for the parking garage was
made in bad faith. The Whittingtons assert that the determination of necessity as to the garage was
made in bad faith because the City could cancel the 500 leases in its existing garage, thereby
removing the need to build a garage on Block 38.
We disagree. The City Council declared that public necessity required taking Block 38 for
the parking garage. The evidence confirms that the City’s determination of necessity was not in bad
faith (defined here as an intent to injure the Whittingtons or some other improper motive). Rather,
testimony indicated that the City was concerned with locating the parking garage close to the new
north entrance of the convention center—which could not feasibly be done in conjunction with the
hotel project due to construction and financing issues. We hold that the City’s determination that
the taking was necessary for the parking garage was not in bad faith.
C. Arbitrary and Capricious
Our third inquiry is whether the City’s determination that the parking garage was necessary
for a public use was arbitrary and capricious. The parties agreed to define arbitrary and capricious
as:
a decision not done according to reason or judgment and is a willful and unreasoning
action, action without consideration and in disregard of the facts and circumstances
that existed at the time the condemnation was decided upon. When there is room for
two opinions, an action cannot be deemed arbitrary when it is exercised honestly and
upon due consideration, regardless of how strongly one believes an erroneous
20
conclusion was reached. A showing that alternate plans are feasible or better does
not make the condemnation determination arbitrary or capricious.
See Ludewig v. Houston Pipeline Co., 773 S.W.2d 610, 614 (Tex. App.—Corpus Christi 1989, writ
denied); Wagoner v. City of Arlington, 345 S.W.2d 759, 763 (Tex. Civ. App.—Fort Worth 1961,
writ ref’d n.r.e.).16
The Whittingtons assert that the City’s determination of the necessity for the parking garage
was arbitrary and capricious because the City (1) failed to consider reasonable alternatives to
condemning Block 38; and (2) abdicated its decision on the need to condemn Block 38 to H.L.
Hotels.
1. Consideration of Alternatives
The Whittingtons rely on Houston Lighting and Power Co. v. Klein Independent School
District to support their assertion that failure to consider alternatives is arbitrary and capricious. 739
S.W.2d 508 (Tex. App.—Houston [14th Dist.] 1987, writ denied). In Houston Lighting and Power,
a utility sought to condemn school district property for a high-voltage power line. Id. at 511. The
school argued that the decision was arbitrary and capricious because of the potential health risks to
the students resulting from the power line’s magnetic fields. Id. The court of appeals held that the
jury could have found that the utility failed to take these concerns into consideration, which could
be an action “not done according to reason or judgment.” Id. at 518. The Whittingtons assert that
the City Council “wholly failed to consider any alternatives in deciding to condemn,” and acted
arbitrarily and capriciously just as the condemnor in Houston Lighting and Power did.
16
We express no opinion as to the legal accuracy of this definition but note that any variation would not affect
our holding. See supra note 10.
21
We disagree. The City Council was considering Block 38 as the alternative parking solution
for the hotel project. Testimony indicated that the City was concerned with locating the parking
garage close to the new north entrance of the convention center—which could not feasibly be done
in conjunction with the hotel project due to construction and financing issues. The record also
indicates that City staff considered an additional site for a parking garage as well as cancelling the
500 leases in the existing garage near the west side of the convention center.
The definition of arbitrariness and capriciousness here does not require the chosen course to
be more feasible or better than the alternative. Rather, it forbids decisions not made according to
reason or judgment. The decision here that a parking garage close to the new convention center
entrance that would not adversely affect the financing for the hotel project was made according to
reason and judgment. Moreover, the rationale of Houston Lighting and Power does not apply to
these facts because the City did, in fact, consider alternatives for the parking garage, such as building
the garage as part of the hotel project, cancelling the leases in the other garage, or building a garage
on an alternate site. We hold that the City’s determination that the parking garage was necessary for
a public use was not arbitrary and capricious due to a failure to consider alternatives.
2. Abdicating the Decision to Condemn
The Whittingtons also rely on Malcomson Road Utility District v. Newsom for their assertion
that a condemnor acts arbitrarily and capriciously by abdicating its decision on the need to condemn
to a private developer. 171 S.W.3d 257 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). In
Malcomson, the condemnor did not conduct due diligence on where to locate a detention pond but
instead followed the recommendation of a developer to locate the pond on another owner’s property
22
nearby. Id. at 272–73. The developer agreed to pay the costs of the condemnation in the event it did
not succeed. Id. at 273–74. The court of appeals held that a fact issue existed as to whether the
District declined to exercise its discretion in determining what land to condemn. Id. at 273. The
Whittingtons assert that the City abdicated the decision of the need to condemn to H.L. Hotels here,
which amounts to arbitrariness and capriciousness.
We disagree. We need not decide here whether a condemnor acts arbitrarily and capriciously
by abdicating the condemnation decision to a developer. Here, the City did not abdicate the decision
to condemn Block 38 to H.L. Hotels. When financing and construction issues for building a larger
underground garage with the hotel project began to surface, the City began negotiating with the
Whittingtons to acquire Block 38. There is evidence that the City staff had a brief conversation with
the developer, and the developer made several phone calls to Harry Whittington in the fall of 1999
to discuss parking—after City staff had already begun negotiating with the Whittingtons. However,
there is no evidence that the developer made the decision to acquire Block 38 or funded the
condemnation of Block 38 as the developer in Newsom did. 171 S.W.3d at 273–74. Rather, the City
undertook the due diligence and did not rely on the developer to determine the new location of the
garage or fund the condemnation. Because the City did consider alternatives and did not abdicate
the determinations to a private developer, its determination that Block 38 was necessary for a parking
garage was not arbitrary and capricious.
23
V. The District Plant
The City also took possession of Block 38 to build District Plant 2 for use with its chilled
water program. We assess separately the City’s determinations of public use and necessity as to the
district plant.
A. Fraud
We must first decide whether the City’s determination that the district plant was necessary
for a public use was fraudulent. The parties agreed to define fraud as “the taking of property for
private use under the guise of public use, even though there may be no fraudulent intent on the part
of the condemnor.”17
1. Fraud in the Public Use of the District Plant
In 2001, the City Council authorized a condemnation lawsuit “for the construction of . . . a
district cooling plant for Austin Energy . . . .” The Whittingtons assert that the taking was fraudulent
because district cooling is not a public use.
We disagree. We have defined public use in similar circumstances as when the public
obtains some definite right or use in the undertaking to which the property is devoted. Pate, 309
S.W.2d at 833. “‘It is immaterial if the use is limited to the citizens of a local neighborhood, or that
the number of citizens likely to avail themselves of it is inconsiderable, so long as it is open to all
who choose to avail themselves of it.’” Higginbotham, 143 S.W.2d at 84 (quoting West, 238 S.W.
at 978). Public use, however, does not include a benefit to the public welfare or good under which
17
See supra note 10.
24
any business that promotes the community’s comfort or prosperity might be benefitted from the
taking. Pate, 309 S.W.2d at 833.
A home rule municipality that provides electric service is serving a public use.18 While the
Local Government Code does not expressly authorize takings for district cooling, it does authorize
takings “as necessary to efficiently carry out” its purposes of providing public utilities and “for any
other municipal purpose the governing body considers advisable.” TEX . LOC. GOV ’T CODE
§§ 251.001(a)(5), 552.002(b). The City considered district cooling as a method of efficiently
assisting the electric utility by shifting demand from peak to off-peak times, thereby avoiding having
to build more power plants. Moreover, the chilled water service is available to any customer that
applies, though pricing for the service is determined by the cost of connecting the customer to the
chilled water loop. While district cooling may be limited in its geographic scope, it is available to
all who apply and agree on pricing with the City. We hold that the district plant here was serving
a public use. See Pate, 308 S.W.2d at 833; Higginbotham, 143 S.W.2d at 84.
2. Fraud in the Necessity of the District Plant
The Whittingtons assert that the City’s determination of necessity for District Plant 2 was
fraudulent because the City misrepresented to the Whittingtons that it was necessary to serve the
convention center expansion and the hotel project. The City’s final offer letter to the Whittingtons
stated the “plant will be used to provide chilled water necessary to operate the air conditioning
systems of the Convention Center expansion and” the hotel project. As evidence of fraud, the
18
See T EX . L OC . G O V ’T C O D E § 251.001(a)(1) (authorizing home rule municipalities to “exercise the right of
eminent domain for a public purpose” such as providing, enlarging, or improving electric power systems).
25
Whittingtons point to an email from the project manager for District Plant 2 to the author of the final
offer letter stating: “to be completely clear, someone’s pointed out that actually those buildings are
currently going to be served from [District Plant 1] until the new plant is built . . . . So this new plant
is not absolutely necessary for operation of the buildings mentioned but a redundancy is much
better.” (emphasis added). District Plant 1 still provided service to the convention center expansion
and the hotel project for some time even after District Plant 2 became operational due to a decrease
in customer demand as a result of economic market conditions.
The project manager’s statement is not evidence of fraud for multiple reasons. First, the
statement that the district plant was not absolutely necessary was in a class of communications not
ordinarily relevant to the inquiry of whether the City Council’s determination of necessity was
fraudulent, in bad faith, or arbitrary and capricious. To assess the City’s determinations, we look to
official materials such as orders, resolutions, and minutes. See Horton, 468 S.W.2d at 878. Our
purpose in restricting our review to these materials is that the words of one city council member or
city employee do not ordinarily bind the entire city council. See, e.g., AT&T Commc’ns of Tex., LP
v. Sw. Bell Tel. Co., 186 S.W.3d 517, 528-29 (Tex. 2006) (“But the statement of a single legislator,
even the author and sponsor of the legislation, does not determine legislative intent”). Therefore,
emails by City employees are not among the items we ordinarily consider in undertaking this review.
Here, the Whittingtons argue that the City Council ratified the acts of its employees, adopting
the email as its own. Specifically, the City’s 2006 resolution stated that the
public necessity to acquire Block 38 in its entirety . . . is hereby confirmed and
ratified . . . and all acts done or initiated by employees, attorneys or representatives
of the City to acquire or condemn Block 38 in its entirety . . . are hereby authorized,
26
ratified, approved, confirmed and validated and declared to be valid in all respects
and purposes as of the respective dates thereof for the public necessity and for the
public use as a City parking garage, a chilling plant, and other municipal facilities.
Assuming without deciding that the ratification elevated the email to have the force of a City
Council resolution, we disagree that it demonstrates that the City’s determination of necessity was
fraudulent. As an initial matter, this argument equates “necessary” with “absolutely necessary.” The
Local Government Code only requires that the condemnor consider the taking necessary for the
public use. TEX . LOC. GOV ’T CODE § 251.001(a). The email the Whittingtons rely on states that the
district plant was not “absolutely necessary” for the operation of the convention center expansion
and the hotel project. See United States v. Comstock, 130 S. Ct. 1949, 1956 (2010) (differentiating
“necessary” and “absolutely necessary” under the federal constitution’s Necessary and Proper
Clause). Moreover, even had the email stated that the district plant was not necessary, the City
Council expressed a clear belief in its 2006 resolution that the district plant was necessary. This
determination of necessity was one of the two purposes the resolution accomplished (the other being
the inclusion of a twenty-foot strip in the taking, addressed infra at Part VI). We interpret statutes
and ordinances to avoid absurd results. Carreras v. Marroquin, 339 S.W.3d 68, 73 (Tex. 2011).
The Whittingtons invite us to interpret the resolution in a way that negates one of its two purposes.
We decline to do so.
The evidence instead indicates that District Plant 2 was necessary to perform district cooling
in the future. Consumer demand for the program increased over time, and the City needed additional
capacity to meet not only the demand but also its contractual obligations. In addition, District Plant
2 was needed as a backup in the event that District Plant 1 required down time. This evidence
27
confirms that the City determined District Plant 2 to be necessary—even if we were to assume the
City did not believe it was absolutely necessary.
B. Bad Faith
Our second inquiry on the district plant is whether the City determined in bad faith that the
plant was necessary. The charge defines bad faith as “more than negligence or lack of diligence.
Bad faith implies an intent to injure, or some other improper motive. Mere bad judgment does not
qualify as bad faith. Rather, the Whittingtons must show that the City knowingly disregarded their
rights.”19 The Whittingtons argue that the City’s decision to take Block 38 was made in bad faith
because the City misrepresented to the Whittingtons that the district plant was necessary to serve the
convention center expansion and the hotel project.
We disagree. As previously addressed, the evidence confirmed the City’s representation to
the Whittingtons that the district plant was necessary to serve the convention center expansion and
the hotel project due to future demand and the need for a backup for the existing district plant. See
supra Part V.A.2. Likewise, we hold that the City’s determination that the district plant was
necessary was not made in bad faith as it did not evidence an intent to injure the Whittingtons or a
knowing disregard of their rights.
C. Arbitrary and Capricious
Our third inquiry as to the district plant is whether the City’s determination that the plant was
necessary was arbitrary and capricious. The charge defined arbitrary and capricious as:
19
See supra note 10.
28
a decision not done according to reason or judgment and is a willful and unreasoning
action, action without consideration and in disregard of the facts and circumstances
that existed at the time the condemnation was decided upon. When there is room for
two opinions, an action cannot be deemed arbitrary when it is exercised honestly and
upon due consideration, regardless of how strongly one believes an erroneous
conclusion was reached. A showing that alternate plans are feasible or better does
not make the condemnation determination arbitrary or capricious.20
The Whittingtons assert that the City’s determination of the necessity for the district plant was
arbitrary and capricious because the City Council failed to consider reasonable alternatives to
condemning Block 38 for the district plant.
We disagree. The evidence indicates that City staff investigated multiple alternative
locations for the district plant and that the City Council determined the plant was necessary. See
supra note 2. Because only the City Council has the power to condemn for the City, only it may
make the determinations of public use and necessity. Burch, 518 S.W.2d at 543-45. But this does
not mean that investigation of alternatives must be conducted exclusively by the City Council rather
than by City staff. The Whittingtons cite no authority for this proposition, and we are not aware of
any.21 We hold that the City’s determination that the district plant was necessary was not arbitrary
and capricious.
20
See supra note 10.
21
Neither Newsom nor Houston Power and Lighting, on which the W hittingtons rely, indicate that a
condemnor’s governing body cannot delegate some due diligence to the condemnor’s staff. Newsom involved a
condemnor delegating all due diligence to a private developer that was interested in the condemnation decision. 171
S.W .3d at 272–73. Here, City staff investigated the alternative locations for District Plant 2. In Houston Lighting and
Power, the condemnor ignored a potential health risk to students of taking school property for a high-voltage power line.
739 S.W .2d at 517-18. The failure by the condemnor to consider a risk is not at issue here.
29
VI. The Twenty-Foot Strip
Also at issue in this appeal is whether the City took the twenty-foot strip of land bisecting
Block 38. The City’s original plan in 1830 created Block 38, which indicated there was a twenty-
foot wide alley. In 1929, the Legislature relinquished fee title to the center of the alleys in the City
to owners of the abutting land.22 Act of July 17, 1929, S.B. 18, 41st Leg., 3d C.S., § 1, 1929 Tex.
Gen. Laws 239. The language in the deeds with which the Whittingtons acquired Block 38 referred
to: “Block Thirty-eight . . . being all of Lots One through Eight (1–8), inclusive, in said Block, and
all alleys and easements heretofore existing, none of such alleys having been opened and all such
alleys and easements having been relinquished by the City of Austin, Texas.” Subsequent deeds
among the Whittingtons described the property as: “All of Block Thirty-eight (38), being Lots One
(1) through Eight (8).” The City’s 2001 condemnation resolution described the property to be taken
as “Lots 1–8, inclusive, Block 38.” The City passed a resolution in 2006 stating that public use and
necessity had required the taking of Block 38 (including the strip) in 2001 and that if a court
determined the City did not take the strip, City staff were authorized to negotiate to acquire it and
file a condemnation suit if negotiations were not successful. The City then amended its
condemnation pleading to include the twenty-foot strip.
The issue was tried to the court by agreement of the parties. The trial court found that Harry
Whittington acquired all of Block 38 (including the twenty-foot strip) in 1981, and concluded that:
22
The law provided: “there shall be and is hereby relinquished to each owner of land abutting streets, alleys or
highways in the City of Austin, Texas, the fee title to the center of the street, alley or highway upon which the particular
land abuts, and for the distance along such street, alley or highway that the land abuts.” Act of July 17, 1929, S.B. 18,
41st Leg., 3d C.S., § 1, 1929 Tex. Gen. Laws 239. The law preserved any then-existing easements. Id. at § 2.
30
(1) the City’s 2001 condemnation resolution description of “Lots 1–8, inclusive, Block 38” did not
encompass the twenty-foot strip; and (2) there is no easement on the strip. The City challenges these
last two conclusions. We review conclusions of law de novo. BMC Software Belgium, NV v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002).
A. The 2001 Resolution
The City argues that the 1929 relinquishment law means the Whittingtons took title to the
strip when they acquired Block 38 and the City’s reference to “Lots 1–8, inclusive, Block 38” in the
2001 resolution included the strip. The Whittingtons argue that the 1929 relinquishment law vested
title in alleys to landowners at the time but did not change the legal description of the alleys.
We agree with the Whittingtons that the 2001 resolution did not include the strip. The 1929
relinquishment law granted fee simple title in the strip to the adjoining landowners. Act of July 17,
1929, S.B. 18, 41st Leg., 3d C.S., § 1, 1929 Tex. Gen. Laws 239. However, the strip was then a
separate parcel of land. As the trial court found, Harry Whittington acquired this strip in 1981 in a
deed referring to “Block Thirty-eight . . . being all of Lots One through Eight (1–8), inclusive, in said
Block, and all alleys and easements heretofore existing, none of such alleys having been opened and
all such alleys and easements having been relinquished by the City of Austin, Texas.” (emphasis
added). The use of “and” in the 1981 deed indicates that “Lots 1–8, inclusive” does not encompass
the strip. The City’s 2001 condemnation resolution only referred to “Lots 1–8, inclusive, Block 38”
and did not include the twenty-foot strip.
The City points to a line of cases indicating that alleys are presumed to be covered by
descriptions of adjoining lots. See Cox v. Campbell, 143 S.W.2d 361, 362–64 (Tex. 1940);
31
Amerman v. Missouri, K. & T. Ry. Co. of Tex., 182 S.W. 54, 57 (Tex. Civ. App.—Galveston 1915,
writ ref’d). However, these cases refer to alleys that involve easements. See Angelo v. Biscamp, 441
S.W.2d 524, 526 (Tex. 1969). When an easement is abandoned, the landowner is vested with
unencumbered fee simple title, and the presumption of an intent to convey the easement no longer
applies. Id. The 1929 relinquishment law vested fee simple title to the strip in the owners of Lots
1–8 at that time. The presumption that conveying the lots also conveyed the alley no longer
applied.23 See Angelo, 441 S.W.2d at 526. Accordingly, the 2001 resolution did not include the
strip.
B. The 2006 Resolution
The question then is whether the 2006 resolution and pleading amendment include the
twenty-foot strip and are permissible. The City asserts that the 2006 resolution and pleading
amendment cured any defect and took the strip. The Whittingtons respond that the trial court lacked
jurisdiction to add the strip to the condemnation proceeding because it would prejudice them.24
We agree with the City. The language of the 2006 resolution clearly indicated the City’s
belief that, as of 2001, public use and necessity required condemning all of Block 38, including the
strip: “The public necessity to acquire Block 38 in its entirety, including, but not limited to, the
23
This Court has long recognized a presumption that narrow strips of land that are small in size and value
compared to the adjoining tract are conveyed with the larger, adjoining tract— a policy known as the “strip and gore
doctrine.” Angelo, 441 S.W .2d at 526–27. The City does not assert that doctrine here.
24
The W hittingtons also assert that the City Council only authorized taking the strip if the current proceeding
finds the City did not take the strip. W e disagree. The 2006 resolution indicated the City believed in 2001 that all of
Block 38, the strip included, was necessary for public use. W hile the 2006 resolution did authorize separate negotiations
and a condemnation proceeding if this proceeding determined the City did not take the strip, the resolution did not
prohibit its use in this proceeding.
32
[strip], for the public purpose of a City parking garage, a chilling plant, and other municipal facilities
is hereby confirmed and ratified as of the effective date of [the 2001 resolution].”
The next inquiry is whether the 2006 resolution and pleading amendment were permissible.
We have held that taking less land than a resolution specified is within a court’s subject matter
jurisdiction if it does not prejudice the landowner. FKM P’ship, 255 S.W.3d at 626. We have also
held that taking additional land is within a court’s jurisdiction if the parties so stipulate because the
stipulation indicates no material prejudice to the landowner. State v. Nelson, 334 S.W.2d 788,
791–92 (Tex. 1960). In FKM Partnership, we left open the question of whether a trial court has
jurisdiction when the condemnor amends its pleadings to take additional land after the
commissioner’s hearing. 255 S.W.3d at 626 n.3.
As the parties indicate, the inquiry here is whether the Whittingtons were prejudiced by the
pleading amendment that included the strip. The Whittingtons’ expert testified that the strip had no
independent value if the City took Lots 1–8. The jury agreed, finding the same value for Block 38
with or without the strip. Further, there is no indication that the Whittingtons were unprepared to
litigate the issue and were denied a continuance. Therefore, we hold that the inclusion of the twenty-
foot strip in the trial court proceedings did not prejudice the Whittingtons, and the City’s 2006
resolution properly took the twenty-foot strip.
VII. Economic Development
The Whittingtons raise two other arguments supporting their request that we should
nonetheless affirm the court of appeals conclusion that the taking is invalid: (1) section 2206.001 of
the Government Code invalidates the taking; and (2) the taking was not necessary for a public use.
33
A. Preservation
We must first determine whether the Whittingtons may raise such points of error as they did
not file a notice of appeal. Texas Rule of Appellate Procedure 25.1 requires that “[a] party who
seeks to alter the trial court’s judgment or other appealable order must file a notice of appeal.” TEX .
R. APP . P. 25.1(c). The rule further provides that “[t]he appellate court may not grant a party who
does not file a notice of appeal more favorable relief than did the trial court except for just cause.”
Id.
The Whittingtons argue that a litigant is only attacking a judgment (and must only file a
notice of appeal) if it seeks greater relief than awarded in the judgment. See Tex. Disposal Sys.
Landfill, Inc. v. Waste Mgmt. Holdings, Inc., 219 S.W.3d 563, 574 n.11 (Tex. App.—Austin 2007,
pet. denied) (allowing cross-point that did not seek greater relief); Dean v. Lafayette Place (Section
One) Council of Co-Owners, Inc., 999 S.W.2d 814, 818 (Tex. App.—Houston [1st Dist.] 1999, no
pet.) (“The independent grounds for affirmance can be raised in a cross-point as long as the appellee
is not requesting greater relief than that awarded by the trial court.”). We agree. Here, the
Whittingtons do not seek greater relief than the judgment provided. They only seek the same relief
the judgment provided in the event that we rule for the City on its points of error. Accordingly, we
address the Whittingtons’ points of error.
B. Whether Section 2206.001 Is Retroactive
The Whittingtons first point of error is that section 2206.001 of the Government Code
invalidates the taking because it was for economic development purposes. Section 2206.001 states:
“A governmental or private entity may not take private property through the use of eminent domain
34
if the taking . . . is for economic development purposes . . . .” TEX . GOV ’T CODE § 2206.001(b)(3).
The charge asked:
Does the City of Austin seek to take the Whittingtons’ property for economic
development purposes?
The City may not take private property if the taking is for economic
development purposes.
A condemnation for “economic development purposes” does not include a
condemnation for a public building or the provision of utility services.25
The jury answered “yes” as to both the parking garage and the district plant. The trial court
disregarded the answer, holding that section 2206.001 does not apply retroactively to this case.
We disagree that section 2206.001 is not retroactive, but we hold that the statutory exceptions
apply. Section 2206.001 was added in 2005—after the City filed its condemnation proceeding in
2001. Act of Aug. 31, 2005, 79th Leg., 2d C.S., S.B. 7, Ch. 1, § 1, 2005 Tex. Gen. Laws 1. The
Texas Constitution provides that “[n]o bill of attainder, ex post facto law, retroactive law, or any law
impairing the obligation of contracts, shall be made.” TEX . CONST . art. I, § 16. We generally
presume that statutes are prospective unless they are expressly made retroactive. TEX . GOV ’T CODE
§ 311.022; State v. Fidelity Deposit Co. of Md., 223 S.W.3d 309, 311–12 (Tex. 2007) per curiam).
Section 2206.001 is not expressly retroactive. Act of Aug. 31, 2005, 79th Leg., 2d C.S., S.B. 7, Ch.
1, § 1, 2005 Tex. Gen. Laws 1. However, applying procedural, remedial, or jurisdictional statutes
retroactively does not violate the Constitution’s prohibition on retroactive laws. Univ. of Tex. Sw.
25
See T EX . G O V ’T C O DE § 2206.001(c)(4)–(5). The City objected to the lack of a definition of economic
development but does not raise that issue in this Court.
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Med. Ctr. v. Estate of Arancibia, 324 S.W.3d 544, 548 (Tex. 2010). This is because procedural and
remedial laws generally do not affect vested rights, which are property rights that the Constitution
protects like any other property. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212,
219 (Tex. 2002). Such procedural and remedial laws that do not affect vested rights should be
enforced as they exist at the time judgment is rendered. Tex. Mun. Power Agency v. Pub. Util.
Comm’n of Tex., 253 S.W.3d 184, 198 (Tex. 2007).
In this context, a condemnor only obtains a vested right in property it seeks to take once it
obtains a judgment in its favor. TEX . PROP . CODE § 21.065 (“A judgment of a court under this
chapter vests a right granted to a condemnor.”); see also Middleton v. Tex. Power & Light Co., 185
S.W. 556, 559 (Tex. 1916) (holding that a vested right is a property right). The City has yet to obtain
a judgment in its favor on the taking of Block 38. Accordingly, we must apply section 2206.001 as
it currently exists. Tex. Mun. Power Agency, 253 S.W.3d at 198.
C. Whether Section 2206.001 Invalidates the Taking
The question then is whether section 2206.001 invalidates the City’s taking. The jury found
that the taking was for economic development purposes as to both the parking garage and district
plant. The trial court’s basis for disregarding this finding (that the law was not retroactive) was in
error. See supra Part VII.B. We must uphold that finding unless the City conclusively proved that
the taking was not for economic development purposes. See Dow Chem. Co. v. Francis, 46 S.W.3d
237, 241 (Tex. 2001) (per curiam).
The City asserts that the parking garage is a public building and the district plant is for the
provision of utility services—both of which are statutory exceptions to section 2206.001’s
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prohibition on takings for economic development purposes that were incorporated into the charge.26
TEX . GOV ’T CODE § 2206.001(c)(4)–(5). The Government Code does not define the “public
building” or “utility services,” and because they have acquired technical or particular meanings, we
construe them accordingly. TEX . GOV ’T CODE § 311.011(b).
We conclude the evidence conclusively establishes that the parking garage is a public
building. The garage is open to the public, but the primary purpose of the garage is to support the
expanded convention center.27 The City owns the garage and receives the income from those who
park in the garage. Providing, enlarging, or improving auditoriums are public uses under the Local
Government Code, and land may be condemned by a municipality if considered necessary for those
public uses. TEX . LOC. GOV ’T CODE § 251.001(a)(1). We have concluded that the parking garage
serving the expanded convention center in this situation is a public use. See supra Part IV.A.1. It
follows that the garage, which is owned by the City and for a public use, is a public building.
Moreover, the evidence conclusively establishes that the district plant is for the provision of
utility services. The parties do not dispute that electricity is a utility service. The Whittingtons assert
that district cooling provides chilled water, not electricity, and is not a utility because it is not
regulated.
We disagree. There are two factors that indicate the district plant is assisting the municipal
electric utility. First, district cooling shifts demand from peak to off-peak times, thereby avoiding
26
The City has not asserted, and we do not decide, whether the district plant is also a public building.
27
See Higginbotham, 143 S.W . 2d at 84(“‘It is immaterial if the use is limited to the citizens of a local
neighborhood, or that the number of citizens likely to avail themselves of it is inconsiderable, so long as it is open to all
who choose to avail themselves of it.’”(quoting West, 238 S.W . at 978)).
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the need to build more power plants. Second, the district plant still uses municipal electricity to cool
subscribing buildings by freezing water at night and circulating chilled water during the day.
Without district cooling, those customers would be consuming municipal electricity during the
daytime as there are no other providers of district cooling in the area. We determined that the district
plant here serves a public use by assisting the electric utility. See supra Part V.A.1; see TEX . LOC.
GOV ’T CODE § 552.002(b)(authorizing takings “as necessary to efficiently carry out” the purposes
of providing public utilities). It follows that the district plant is providing utility services by assisting
the City’s electric utility. Because the City conclusively established that the parking garage and
district plant fell within statutory exceptions to section 2206.001 of the Government Code, that
section does not invalidate the City’s taking.
VIII. Necessity for Public Use
The Whittingtons’ second point of error is that the taking was not necessary for a public use
and is thus invalid. The charge asked: “Is the taking of the Whittingtons’ property necessary to
advance or achieve a public use?” The jury answered “no” as to both the parking garage and the
district plant. The trial court disregarded the jury’s answer, holding that the taking was necessary
to advance or achieve a public use as a matter of law.
We must note that the proper inquiry for a court is to determine whether the condemnor’s
determinations of public use and necessity were fraudulent, in bad faith, or arbitrary and capricious
(if the landowner so alleges). See supra Part III. As part of this inquiry, we have held that the
parking garage and district plant serve public uses. See supra Parts IV.A.1, V.A.1. Further, we have
held that the City’s determinations of necessity as to the parking garage and district plant were not
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fraudulent, in bad faith, or arbitrary and capricious. See supra Parts IV.A.2, IV.B.2, IV.C, V.A.2,
V.B, and V.C. This ends the judicial inquiry into the legislative determinations of public use and
necessity. See supra Part III. We overrule the Whittingtons second point of error.
IX. Conclusion
We hold that the City’s determination that Block 38 was necessary for public use was not
fraudulent, in bad faith, or arbitrary and capricious. We further hold that City’s taking included the
twenty-foot wide strip of land bisecting Block 38, and its inclusion in the underlying proceeding did
not prejudice the Whittingtons. Moreover, we conclude that, although section 2206.001 of the
Government Code is retroactive as applied here, it does not invalidate the City’s taking because the
purposes for the taking fall within statutory exceptions to section 2206.001. Because we have
affirmed the City’s right to take the land at issue, we reverse the judgment of the court of appeals and
remand for entry of judgment in accordance with this opinion.
____________________________________
Eva M. Guzman
Justice
OPINION DELIVERED: August 31, 2012
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