Untitled Texas Attorney General Opinion ( 2014 )

GREG
0
ATTORNEY GENERAL OF TEXAS
ABBOTT
October 13, 2014
The Honorable Joe R. Smith Opinion No. GA-1084
Tyler County Criminal District Attorney
Courthouse Annex Re: Authority of a municipality to sell real
100 West Bluff property including a building and improvements
Woodville, Texas 75979 located in the middle of a city street
(RQ-1196-GA)
Dear Mr. Smith:
You ask about the authority of a municipality to sell real property including a building
and improvements located in the middle of a city street. 1
You inform us that the City of Ivanhoe (the "City"), a Type-A municipality, began as a
private community and was incorporated in 2009. Request Letter at 1; City Letter at 2. The
property you ask about is a small tract located in the middle of a street that provides entrance into
the City. Request Letter at 1. The tract contains a building formerly used as a guardhouse prior
to the City's incorporation, a community sign paid for and erected by the Ivanhoe Property
Owners Improvement Association (IPOIA), and other improvements. !d. You tell us that the
developer executed a quitclaim deed in 2013 conveying his interest in the street and the
structures to the City. City Letter at 1_2 You further explain that the IPOIA wishes to continue
using the sign and has offered to purchase the small tract including the building, the sign, and
other improvements. Request Letter at 1.
Your first three questions ask whether the Texas Constitution and statutes, in particular,
Texas Constitution article III, section 52(a) and article XI, section 3, prohibit a municipality from
"sell[ing] a building that is constructed on a city street and right-of-way." !d. at 2. You also ask
whether a municipality must comply with open-bidding and public-notice requirements before
1
See Letter ft·om Honorable Joe R. Smith, Tyler Cnty. Crim. Dist. Att'y, to Office of Att'y Gen. at 2 (Jan. 7,
2014) ("Request Letter' ) http://www.texasattomeygeneral.gov/opin, and attached Letter from David Baier,
Councilman & Charles Jack Brockhouse, Mayor, City oflvanhoe, Tex. (Mar. 14, 2014) ("City Letter").
2
See Geodyne Energy Income Prod. P'ship I-E v. Newton Corp., 161 S.W.3d 482, 486 n.12 (Tex. 2005)
(stating that a quitclaim deed does not convey property, only whatever rights the grantor has in the property, if any).
The Honorable Joe R. Smith - Page 2 (GA-1084)
the municipality may agree to such a sale. !d. As a preliminary matter, we understand your
questions to concern municipal authority to sell not only the building but also whatever title,
right, or interest the City has in the land on which the building is located. The City's title, right,
or ·interest in the tract, however, is not clear from the information you have provided. To answer
your questions with respect to the specific transaction you describe would require the
investigation and determination of factual questions, which is outside of the opinion process. 3
We will, however, discuss general legal principles of municipal authority to sell streets or other
real property.
A Type-A municipality has general authority to "lease, grant, or convey" real property,
but only "[t]o carry out a municipal purpose." TEX. Loc. Gov'T CoDE ANN. § 51.015(a) (West
2008). When the property is a public street, however, there are additional considerations. While
a municipality may hold legal title in its streets, it does so not in its own right, but as trustee for
the benefit ofthe state and the public. Tex. Dep't ofTransp. v. City ofSunset Valley, 146 S.W.3d
637, 645 (Tex. 2004); Mission v. Popplewell, 294 S.W.2d 712, 715 (Tex. 1956). 4 A general-law
municipality has only the ·authority over its streets that the Legislature or the Texas Constitution
has granted. Mission, 294 S.W.2d at 715. The Legislature has granted general-law
municipalities the right of exclusive control over their streets and the authority to change a street.
TEX. TRANSP. CODE ANN. § 311.002(a) (West 2013). It has also authorized municipalities to
"sell and convey land or an interest in land ... that is an abandoned part of a street or alley," and
such a sale "may include the improvements on the property." TEX. Loc. Gov'T CODE ANN.
§ 253.001(a) (West Supp. 2013).
Generally, municipal land and real property interests must be sold by giving notice and
taking sealed bids. !d. § 272.001(a). There are several statutory exceptions that allow a sale of
real property without complying with notice and bidding procedures, depending on the
circumstances. For example, section 272.001 allows a municipality to sell small strips of land
and "streets or alleys, owned in fee or used by easement" without following bidding procedures,
but only to owners of abutting property. Id § 272.00l(b)(l)-(2), (c). Another exception, section
253.011 of the Local Government Code, allows a municipality to convey real property to a
"nonprofit organization" without complying with notice and bidding requirements, provided the
transaction is governed by an agreement requiring the organization "to use the property in a
manner that primarily promotes a public purpose of the municipality." !d. § 253.01l(c)-(d)
3
Detennining real estate title is not a function of an attorney general opinion. See Tex. Att'y Gen. Op. Nos.
GA-0750 (2009) at 2 (stating that this office cannot investigate and resolve mixed questions of fact and law); GA-
0471 (2006) at 5-6 (stating that, in a particular case, whether a property interest is part of a public road is a question
of fact).
4
See Miller v. R.R. Comm 'n of Tex., 185 S.W.2d 223, 224-25 (Tex. Civ. App.-Austin 1945, writ refd)
(observing that, depending on the facts, a municipality may own a street in fee, subject to the public's street
easement, or merely hold easement to use the property of abutting owners for street purposes).
The Honorable Joe R. Smith - Page 3 (GA-1084)
(West 2005). Whether a particular exception allows a general-law municipality to sell real
property and interests to a private entity without following notice and bidding procedures will
depend on the particular facts and circumstances of the property and the terms of the sale.
Article III, section 52( a) and article XI, section 3 of the Texas Constitution both prohibit
"gratuitous payments to individuals, associations, or corporations." Tex. Mun. League
Intergov'tl Risk Pool v. Tex. Workers' Camp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002)
(regarding article III, section 52(a)); see also Barrington v. Cokinos, 338 S.W.2d 133, 139--40
(Tex. 1960) (regarding article XI, section 3). A political subdivision's conveyance of property is
not "gratuitous" as contemplated by these constitutional provisions if the political subdivision
receives adequate return consideration. See Tex. Mun. League, 74 S.W.3d at 383. Moreover,
such a conveyance is not unconstitutional if it "(1) serves a legitimate public purpose; and (2)
affords a clear public benefit received in return." !d.; see also Barrington, 338 S.W.2d at 140 (a
transfer of public assets "for the direct accomplishment of a legitimate public and municipal
purpose is not rendered unlawful by the fact that a privately owned business may be benefited
thereby"). Before conveying public property to a private entity, the municipal governing body
should determine that (1) the conveyance will serve a predominantly public purpose; (2) the
municipality will retain sufficient control to ensure the public purpose is carried out; and (3) the
municipality will receive return benefit. See Tex. Att'y Gen. Op. No. GA-0583 (2007) at 3
(determining that a political subdivision that grants a public thing of value to a private entity
should comply with the Texas Supreme Court's "public purpose" test in Texas Municipal
League); see also Tex. Att'y Gen. Op. No. GA-0033 (2003) at 9 (determining that "[a] contract
that imposes upon a recipient an obligation to perform a function benefitting the public may
provide adequate controls for constitutional purposes"). These constitutional provisions do not
prohibit a municipality from selling real property to a private entity if the transaction serves a
legitimate public purpose of the municipality and provides a return public benefit to the
municipality.
The Honorable Joe R. Smith - Page 4 (GA-1084)
SUMMARY
A Type-A municipality may sell a building located in the
middle of a street only as authorized by the Texas Constitution and
statutes. Generally, a municipality must sell its land or other real
property interest by complying with statutory notice and bidding
requirements. Whether a particular exception allows a general-law
municipality to sell real property and interests to a private entity
without following notice and bidding procedures will depend on
the particular facts and circumstances of the property and the terms
ofthe sale.
Article III, section 52(a) and article XI, section 3 of the
Texas Constitution do not prohibit a municipality from selling a
public property to a private entity provided the transaction serves a
public purpose and the municipality receives a public benefit in
return.
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
William A. Hill
Assistant Attorney General, Opinion Committee