Smith v. City of Bastrop ( 2023 )

Case: 21-51039 Document: 00516707857 Page: 1 Date Filed: 04/11/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
April 11, 2023
No. 21-51039 Lyle W. Cayce
Clerk
Carolyn Smith, as Trustee of the Smith Family Living
Trust; Lirtex Properties, L.L.C.,
Plaintiffs—Appellants,
versus
The City of Bastrop; Connie Schroeder, in her official
capacity as a member of the City Council of the City of
Bastrop, Texas; Willie "Bill" Lewis Peterson, in his
official capacity as a member of the City Council of
the City of Bastrop, Texas; Drusilla Rogers, in her
official capacity as a Director of Hunters Crossing
Local Government Corporation; Lyle Nelson, in his
official capacity as a member of the City Council of
the City of Bastrop, Texas; Bill Ennis, in his official
capacity as a member of the City Council of the City of
Bastrop, Texas; Dock Jackson, in his official capacity
as a member of the City Council of the City of Bastrop,
Texas; Lynda Humble, in her official capacity as a
Director of Hunters Crossing Local Government
Corporation; Drusilla Rogers, in her official capacity
as a member of the City Council of the City of Bastrop,
Texas; Rick Womble, in his official capacity as a
Director of Hunters Crossing Local Government
Corporation; Michelle Dodson, in her official
capacity as a Director of Hunters Crossing Local
Government Corporation; Lyle Nelson, in his official
Case: 21-51039 Document: 00516707857 Page: 2 Date Filed: 04/11/2023
No. 21-51039
capacity as a Director of Hunters Crossing Local
Government Corporation; Tabitha Pucek, in her
official capacity as a Director of Hunters Crossing
Local Government Corporation; TF Hunters Crossing,
L.P., as successor-in-interest to Forestar (USA) Real
Estate Group, Inc.,
Defendants—Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:19-CV-1054
Before Richman, Chief Judge, and Ho and Engelhardt, Circuit
Judges.
Per Curiam:*
Plaintiffs-Appellants Carolyn Smith, as Trustee of the Smith Family
Living Trust, and Lirtex Properties, L.L.C. (collectively, “Plaintiffs-
Appellants), challenge the district court’s dismissal of the claims that they
have asserted under the United States and Texas Constitutions relative to
City of Bastrop Ordinance No. 2019-40. For the reasons stated herein, the
district court’s judgment of dismissal is AFFIRMED IN PART and
VACATED and REMANDED IN PART. Specifically, we affirm the
dismissal of Plaintiffs-Appellants’ federal procedural and substantive due
process claims but, because the basis for the district court’s dismissal of
Plaintiffs-Appellants’ Texas law claims is not sufficiently clear to enable
proper appellate review, we vacate and remand relative to those claims.
*
This opinion is not designated for publication. See 5th Circuit Rule 47.5.
2
Case: 21-51039 Document: 00516707857 Page: 3 Date Filed: 04/11/2023
No. 21-51039
I.
City of Bastrop Ordinance No. 2019-40 (the “2019 Ordinance”) was
enacted on September 24, 2019, by the City Council of the City of Bastrop,
Texas, pursuant to the Texas Public Improvement District Assessment Act
(“PIDA Act”), Tex. Loc. Gov’t Code § 372.001, et seq. The Texas
PIDA Act permits municipalities and counties to undertake and finance
public improvement projects in definable parts of the municipality or county
by levying special financial assessments upon the property within the
definable area specially benefited by the improvement. The legislation thus
makes public improvements possible that otherwise might not be if the
entirety of the municipality’s taxpaying citizenry, rather than only the owners
of property specially benefited by them, had to bear their costs. Various types
of improvements are permitted, including constructing or improving streets
and sidewalks, providing water, wastewater, and drainage facilities, and
constructing or improving off-street parking, landscaping, lighting and signs.
See Tex. Loc. Gov’t Code § 372.003.
The public improvement project that is the focus of the 2019
Ordinance involved the creation and/or provision of public streets, water
distribution lines and facilities, storm sewer lines and facilities, public area
landscaping, a public park and hike/bike trail, and area signage, as well as
public area property maintenance, on a previously unimproved 283.001-acre
parcel of land on which various residences and commercial buildings were to
be built. The project commenced with the filing of a petition, as required by
§ 372.003, on July 18, 2001. And, on September 11, 2001, City of Bastrop
Resolution No. R-2001-19 established the “Hunters Crossing Public
Improvement District” (hereinafter, the “Hunters Crossing PID”).
After notices were published and a public hearing held, the City of
Bastrop City Council passed and approved Resolution No. R-2003-34 on
November 11, 2003, and Ordinance No. 2003-35 (hereinafter, the “2003
3
Case: 21-51039 Document: 00516707857 Page: 4 Date Filed: 04/11/2023
No. 21-51039
Ordinance”) on December 9, 2003. 1 Exhibit B to the 2003 Ordinance is the
Hunters Crossing PID “Service and Assessment Plan” (hereinafter, the
“2003 SAP”), which was prepared on November 19, 2003. In 2004, another
ordinance (the “2004 Ordinance”) involving the Hunters Crossing PID was
passed and approved. The 2004 Ordinance included a “Revised Capital
Assessment Roll” correcting minor mathematical and scrivener errors in the
“2003 Assessment Roll” that is part of the 2003 SAP.
In 2005, the original developer of the Hunters Crossing PID broke
ground on the improvement project. By mid-July 2011, a majority of the
capital improvements projects in the Hunters Crossing PID had been
completed.
In 2017 and 2018, the Bastrop City Council conducted annual reviews
of the 2003 SAP, and passed and approved additional ordinances involving
the Hunters Crossing PID. Although both the 2017 and 2018 Ordinances
included an “Assessment Roll” for the next fiscal year, the City Council did
not amend the 2003 SAP in either year.
In September 2019, however, the City Council passed and approved
the 2019 Ordinance, along with the 2019 “Amended and Restated Service
and Assessment Plan” (hereinafter, “the 2019 SAP”), 2 which includes the
“2019 Assessment Roll.” Notably, unlike the 2003 and 2004 Assessment
Rolls, the 2019 Assessment Roll lists all of the commercial, multifamily, and
single-family lots in the Hunters Crossing PID—each identified by property
identification number—that the developer had subdivided and sold since the
1
Certain documents in the record also refer to the 2003 Ordinance as the “Original
Assessment Ordinance.”
2
The 2019 SAP, which is Exhibit A to the 2019 Ordinance, replaces the 2003 SAP.
4
Case: 21-51039 Document: 00516707857 Page: 5 Date Filed: 04/11/2023
No. 21-51039
2003 Ordinance and 2003 SAP were approved. 3 The 2019 Ordinance
documents reveal that 510 single-family lots were created, whereas the 2003
Ordinance and SAP had contemplated 464 single-family lots. The number of
planned versus actually-developed commercial and multifamily lots likewise
differ.
The 2003 Ordinance and SAP and the 2019 Ordinance and SAP also
set forth different time periods over which the Hunters Crossing PID capital
assessments are amortized and payable in annual installments. The 2003
documents contemplate payments over 25 years; the 2019 documents extend
that time until January 2034 for commercial assessments, until January 2041
for multi-family and undeveloped lot assessments, and until January 2030 for
single-family residential assessments. Finally, although the total capital
assessment is $11,961,260 in the 2003 Ordinance and SAP, as well as in the
2019 Ordinance and SAP, the 2019 documentation reveals that the entirety
of that amount is capital costs (exclusive of interest) incurred in constructing
the planned public improvements, 4 whereas the 2003 documents indicate
that sum includes $7,475,787 of estimated capital costs (exclusive of interest)
and $4,485,473 of estimated capitalized interest.
Following the September 24, 2019 adoption of the 2019 Ordinance
and 2019 SAP, two Hunters Crossing PID property owners—Plaintiffs-
3
The 2003 and 2004 Assessment Rolls did not provide that information because,
as of those dates, the property was not yet subdivided into, and sold as, individual lots.
Thus, the 2003 and 2004 documents identify larger tracts of land described as including
varying numbers of individual lots to be sold by the developer during the course of the
project. And the Fiscal Year 2018 and Fiscal Year 2019 Assessment Rolls reflect ten tracts
of land (encompassing varying amounts of single-family home lots), rather than the eight
tracts identified for single-family lots in the 2003 and 2004 documentation.
4
Unless otherwise indicated, “capital costs” refers to construction costs,
(including land costs and various professional fees) for the Hunters Crossing PID public
improvements.
5
Case: 21-51039 Document: 00516707857 Page: 6 Date Filed: 04/11/2023
No. 21-51039
Appellants Smith and Lirtex—filed this suit, on October 28, 2019, against
the City of Bastrop and various city officials (collectively, the “City
Defendants), as well as the Hunters Crossing PID property developer,
Forestar (USA) Real Estate Group, Inc. (“Forestar”), and its successor-in-
interest, TF Hunters Crossing, LP (“TF”). Plaintiffs-Appellants seek (i) a
declaration that the 2019 Ordinance violates the substantive and procedural
due process protections provided by the United States Constitution and thus
is invalid; (ii) a declaration that the 2019 Ordinance violates the Texas
Constitution’s prohibition against retroactive lawmaking; (iii) a declaration
that the City Defendants have acted ultra vires in seeking to enforce the 2019
Ordinance; (iv) a permanent injunction against enforcement of the 2019
Ordinance; and (v) an award of reasonable and necessary attorneys’ fees
under 42 U.S.C. § 1988.
Challenging various aspects of the 2019 Ordinance, Plaintiffs-
Appellants aver that, by 2019, the City of Bastrop was legally prohibited from
assessing any capital costs that the developer had incurred in excess of the
$7,475,787 estimated in the 2003 Ordinance and SAP because (i) the 2003
Ordinance only permitted the City to legally levy $7,475,787 for capital costs,
and (ii) the City Council had not timely reviewed and updated the 2003 SAP
to account for any “cost overruns”— i.e., capital costs (exclusive of interest)
that the developer had incurred in excess of the $7,475,787 estimated in the
2003 Ordinance and SAP.
The district court denied a motion to dismiss filed by the City
Defendants, denied a motion for partial summary judgment filed by
Plaintiffs-Appellants, and granted in part and denied in part a motion for
summary judgment filed by the City Defendants. In granting the City
Defendants’ motion in part, the district judge rejected Plaintiffs-Appellants’
assertions that (1) the PIDA Act prevented the City of Bastrop from including
a particular type of interest in the original 2003 Ordinance; and (2) the 2019
6
Case: 21-51039 Document: 00516707857 Page: 7 Date Filed: 04/11/2023
No. 21-51039
Ordinance deprived property owners of the right to immediately pay off the
entirety of their individual assessments. More specifically, the district court
reasoned that the PIDA Act “contains no provision prohibiting municipal
governments from including interest in an assessment” and, even if
immediate payoff was not available prior to 2019, there is no evidence
demonstrating that the 2019 Ordinance—the ordinance in question—
precluded immediate payoff. 5 In denying the City Defendants’ summary
judgment motion in part, the district court decided that (1) Plaintiffs-
Appellants have constitutionally-protected property interests “aris[ing]
from the PIDA Act” and (2) disputed fact issues prevented granting the
motion in its entirety. 6
On May 17–18, 2021, a bench trial was held on the remaining issues;
thereafter, the parties submitted post-trial briefs. On September 29, 2021, the
district court entered an order setting forth written findings of fact and
conclusions of law. Though acknowledging the City of Bastrop’s various
administrative shortcomings in the interim years between passing and
approving the 2003 Ordinance and passing and approving the 2019
Ordinance, the district court rejected the federal due process challenges to
the 2019 Ordinance and rendered judgment in the defendants’ favor.
Concluding that Plaintiffs-Appellants had failed to carry their evidentiary
burden of proof, the district court explained, in pertinent part:
As an initial matter, until 2019, Defendants did not ex-
ercise due diligence in properly and transparently administer-
ing the Hunters Crossing PID. Plaintiffs Smith and Liriano
5
The district judge adopted the magistrate judge’s recommendation regarding this
determination.
6
The district judge also adopted the magistrate judge’s recommendations
regarding these issues.
7
Case: 21-51039 Document: 00516707857 Page: 8 Date Filed: 04/11/2023
No. 21-51039
[Lirtex’s representative] testified that they did not have access
to accurate information about the PID before purchasing their
properties or in the years after. The City of Bastrop repeatedly
provided inaccurate information to property owners. This is
bolstered by testimony from representatives of the City of
Bastrop and Hunters Crossing that the PID was poorly admin-
istered and that they were unaware of how the PID was being
administered or the legal parameters of the PID before 2019.
This should have been corrected sooner. However, as to this
action, Plaintiffs have not met their burden of proving that the
2019 Ordinance was unlawful.
The outcome of this case turns on whether Defendants
increased the total amount due on the PID in the 2019 Ordi-
nance. The Court concludes that the 2003 Ordinance and SAP
levied a total of [approximately] $11.962 million collectively on
the properties, without specifically apportioning this among in-
dividual properties or limiting a portion of this total to interest.
The 2003 Ordinance did not finally apportion the Capital As-
sessment levied in lump sum on the approximately 283 acres of
property in the Hunters Crossing PID because the property
had not been developed. Not until the 2019 Ordinance was
there an apportionment of the Capital Assessment levied in
lump sum by the 2003 Ordinance. The 2019 Ordinance con-
firmed actual costs of PID Capital Improvements, credited past
payments made towards the Capital Assessment on a parcel-
by-parcel basis, provided for the owner’s option to either pay
in lump sum or pay in annual installments the Capital Assess-
ments on a parcel-by-parcel basis, and made findings of special
benefits received by properties on a parcel-by-parcel basis
based on the actual costs of the PID Capital Improvements and
the classified land-use as measured by a square-foot or per-lot
basis. As such, the 2019 Ordinance did not increase the amount
of the Capital Assessment levied in lump sum on the 283 acres
in the PID in the amount of approximately $11.962 million. The
2019 Ordinance accurately credited property owners for the
payments that they had previously made towards the PID.
8
Case: 21-51039 Document: 00516707857 Page: 9 Date Filed: 04/11/2023
No. 21-51039
Plaintiffs did not meet their burden to show that the ex-
tended time period for property owners to make payments, be-
yond 2028, increased the amount of the PID’s capital assess-
ment due by each of the Plaintiffs.
Further, the 2019 Ordinance did not include interest in
the $11.962 million total that was apportioned. Because interest
was not included, the Court concludes that interest was not im-
properly calculated in the 2019 Ordinance.
***
[The] PIDA [Act] grants governing bodies discretion in
adjusting assessments, but places significant restrictions on
that discretion by mandating the process required for adjust-
ment, thus creating a property interest for individuals within
the PID. Tex. Local Gov’t Code §§ 372.013, 372.014,
372.015, 372.017, 372.018.
[The] PIDA [Act] states that the service plan must be
reviewed and updated annually “for the purpose of determin-
ing the annual budget for improvements.” Tex. Local
Gov’t Code § 372.013(b). [The City defendants] did not
conduct these annual reviews until 2019. However, because
the Court finds that the total amount levied under the 2003 Or-
dinance was $11.9 million, the Court concludes that there was
no increase under the 2019 Ordinance and therefore there are
no actionable substantive due or procedural due process viola-
tions. Additionally, for the same reasons, the Court concludes
that none of the Defendants have acted ultra vires or engaged
in a civil conspiracy, and Hunters Crossing is not liable for neg-
ligent misrepresentation.
Although the district court did not expressly address Plaintiffs-Appellants’
claims asserted under the Texas Constitution in its findings and conclusions,
it “order[ed] that judgment be entered in favor of Defendants.” A “Final
Judgment” awarding judgment “in favor of the Defendants,” and ordering
9
Case: 21-51039 Document: 00516707857 Page: 10 Date Filed: 04/11/2023
No. 21-51039
that “all relief not specifically granted is denied,” was entered the same day.
This appeal followed.
II.
An appellate court reviews a district court’s grant of summary
judgment de novo, “applying the same standard as the district court.” Moon
v. City of El Paso, 906 F.3d 352, 357 (5th Cir. 2018). Summary judgment is
appropriate where “there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). “A genuine dispute of material fact exists if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Kitchen v.
BASF, 952 F.3d 247, 252 (5th Cir. 2020). A party asserting that there is a
genuine dispute as to any material fact must support its assertion by citing to
particular parts of materials in the record. See Fed. R. Civ. P. 56(c)(1)(A).
Following a bench trial, appellate courts “review the district court’s
findings of fact for clear error, and conclusions of law and mixed questions of
law and fact de novo.” French v. Allstate Indem. Co., 637 F.3d 571, 577 (5th
Cir. 2011) (internal citation omitted). “A finding is clearly erroneous if it is
without substantial evidence to support it, the court misinterpreted the effect
of the evidence, or th[e] court is convinced that the findings are against the
preponderance of credible testimony.” Bd. of Trs. New Orleans Emp. Int’l
Longshoremen’s Ass’n v. Gabriel, Roder, Smith & Co., 529 F.3d 506, 509 (5th
Cir. 2008). A district court’s interpretation of a statute or ordinance is
reviewed de novo. Rothe Dev. v. United States DOD, 666 F.3d 336, 338 (5th
Cir. 2011).
We may affirm on any basis supported by the record even if it differs
from that on which the district court relied. Although cited most often in the
summary judgment context, this rule applies regardless of whether judgment
has been rendered on summary judgment motions or follows a bench trial. In
10
Case: 21-51039 Document: 00516707857 Page: 11 Date Filed: 04/11/2023
No. 21-51039
re Deepwater Horizon, 48 F.4th 378, 385 (5th Cir. 2022) (summary
judgment); Amerisure Mut. Ins. Co. v. Arch Specialty Ins. Co., 784 F.3d 270,
273 (5th Cir. 2015) (summary judgment); Meche v. Doucet, 777 F.3d 237, 244
(5th Cir. 2015) (bench trial); see also West African Ventures Ltd. v. SunTx Cap.
Partners II GP, L.P., 841 F. App’x 705, 706 (5th Cir. 2021) (unpub.) (per
curiam) (bench trial); Hearn v. McCraw, 856 F. App’x 493, 495 (5th Cir.
2021) (unpub.) (per curiam) (bench trial), cert. denied sub nom. Hearn v.
McCraw, 142 S. Ct. 754 (2022). Notably, the matter is one within our
discretion as a court of review; thus, we are not required to “sift through the
record for potential reasons to affirm that were not addressed by the district
court.” Bank of Am., N.A. v. Estrada, No. 22-50039, 2022 WL 2826447, at
*3 (5th Cir. July 19, 2022) (summary calendar) (unpub.) (per curiam) (citing
Rutila v. Dep’t of Transp., 12 F.4th 509, 511 (5th Cir. 2021)).
III.
On appeal, Plaintiffs-Appellants contend that the district court erred
in rejecting their assertions that the 2019 Ordinance violates the due process
protections provided by the Fourteenth Amendment to the United States
Constitution.
A.
The Fourteenth Amendment to the United States Constitution
provides that no state shall “deprive any person of life, liberty, or property,
without due process of law.” U.S. Const. amend. XIV § 1. 7 The
Fourteenth Amendment’s due process clause provides both procedural and
substantive protections. Although federal procedural due process
7
Appellants’ federal due process claims are asserted under 42 U.S.C. § 1983.
Section 1983 itself is not an origin of substantive rights, but instead acts as a vehicle for
enforcing federal rights secured by the United States Constitution and other federal law.
Albright v. Oliver, 510 U.S. 266, 271 (1994).
11
Case: 21-51039 Document: 00516707857 Page: 12 Date Filed: 04/11/2023
No. 21-51039
protections do not preclude governmental deprivations of life, liberty, or
property, they do require that such deprivations include certain procedural
safeguards. See Bd. of Regents v. Roth, 408 U.S. 564, 576 (1972). Substantive
due process protections, in contrast, “bar[] certain government actions
regardless of the fairness of the procedures used to implement them.”
Daniels v. Williams, 474 U.S. 327, 331 (1986); Franklin v. United States, 49
F.4th 429, 435 (5th Cir. 2022).
Plaintiffs-Appellants maintain that the 2019 Ordinance deprives
them of property interests in violation of their federal procedural and
substantive due process protections. The property interests protected by
federal due process “are not created by the [United States] Constitution.”
Roth, 408 U.S. at 577. “Rather they are created and their dimensions are
defined by existing rules or understandings that stem from an independent
source such as state law[.]” Id.; see also Schaper v. City of Huntsville, 813
F.2d 709, 714 (5th Cir. 1987) (“Once a state confers a property right, it
cannot constitutionally deprive such an interest without procedural
safeguards.”). Whether a state-created property interest “rises to the level”
of a constitutionally-protected interest, however, is determined by federal
constitutional law. Town of Castle Rock v. Gonzales, 545 U.S. 748, 757 (2005);
Wigginton v. Jones, 964 F.3d 329, 336 (5th Cir. 2020), cert. denied sub nom.
Wigginton v. Univ. of Mississippi, 141 S. Ct. 1268 (2021). Even so,
“[r]esolution of the federal issue [] begins with a determination of what it is
that state law provides.” Castle Rock, 545 U.S. at 757. And, though
protected property interests “extend well beyond actual ownership of real
estate, chattels, or money,” a legitimate claim of entitlement is required.
Roth, 408 U.S. at 571–72.
Federal law also determines what procedural protections the Four-
teenth Amendment requires. This is true even where state law is the source
of the protected property right at issue. See Cleveland Bd. of Educ. v.
12
Case: 21-51039 Document: 00516707857 Page: 13 Date Filed: 04/11/2023
No. 21-51039
Loudermill, 470 U.S. 532, 541 (1985) (“the answer to the question of what
process is due ‘is not to be found in a [state] statute’”). Thus, although state
action may constitute a breach of contract or a violation of state law, federal
due process is not violated “every time a . . . government entity violates its
own [procedural] rules.” Levitt v. Univ. of Texas at El Paso, 759 F.2d 1224,
1230 (5th Cir. 1985) (emphasis added). Rather, “unless the conduct tres-
passes on federal constitutional safeguards, there is no [federal] constitu-
tional deprivation.” Id. In other words, where the procedures utilized satisfy
the constitutional minimum, “entitlement to something more by virtue of
[state rules] [is] a matter of state law, not [federal] constitutional law.” Id. at
1231 (emphasis added). See also Jackson v. Pierre, 810 Fed. App’x 276, 279
(5th Cir. 2020) (summary calendar) (per curiam) (requirements of proce-
dural due process not violated simply by virtue of officials’ failure to comply
with university’s internal rules or policies); Dearman v. Stone Cnty. Sch. Dist.,
832 F.3d 577, 584 (5th Cir. 2016) (whereas denial of official nonrenewal hear-
ing may have violated state law, federal due process was satisfied by receipt
of notice and an opportunity to respond); Brown v. Texas A&M Univ., 804
F.2d 327, 335 (5th Cir. 1986) (state university’s failure to comport with inter-
nal procedures does not by itself amount to violation of federal due process
requirements).
Federal procedural due process requirements are “flexible and call[]
for such procedural protections as the particular situation demands.”
Mathews v. Eldridge, 424 U.S. 319, 334 (1976). The core requirement of fed-
eral procedural due process is the “‘opportunity to be heard at a meaningful
time and in a meaningful manner.’”Id. at 333 (quoting Armstrong v. Manzo,
380 U.S. 545, 552 (1965)).
Conversely, a violation of substantive due process occurs, regardless
of procedural protections, when (i) a governmental entity deprives a plaintiff
of a constitutionally protected property interest; and (ii) the government’s
13
Case: 21-51039 Document: 00516707857 Page: 14 Date Filed: 04/11/2023
No. 21-51039
deprivation lacks a rational basis. See Simi Inv. Co., Inc. v. Harris Cnty., 236
F.3d 240, 249–50 (5th Cir. 2000); see also Daniels, 474 U.S. at 331 (procedural
fairness is not determinative of substantive protections); Franklin, 49 F.4th
at 435 (same). No substantive due process violation exists where it is “at
least debatable” that a rational relationship with a conceivable legitimate gov-
ernment interest exists. Simi Inv. Co., 236 F.3d at 251 (quoting 50 FM Prop-
erties Operating Co. v. City of Austin, 93 F.3d 167, 174–75 (5th Cir. 1996)).
B.
Plaintiffs-Appellants maintain that the 2019 Ordinance deprived them
of federal procedural due process protections by increasing their Hunters
Crossing PID capital assessments without having timely satisfied the Texas
PIDA Act’s annual procedural requirements. Specifically, Plaintiffs-
Appellants emphasize the absence of any record evidence that the Bastrop
City Council—as purportedly required by Tex. Loc. Gov’t Code
§§ 372.013–372.017—annually reviewed and approved the developer’s
actual capital expenditures in excess of the capital costs estimated in the 2003
Ordinance and SAP and, during the same year that the additional costs were
incurred, updated the SAP to reflect the adjusted amount of capital costs. In
other words, Plaintiffs-Appellants maintain that 2019 Ordinance is unlawful
because its $11,961,260 capital assessment includes capital cost “overruns”
despite the City Council’s failure to annually review and adjust the SAP to
reflect the additional capital costs in the same years that they were incurred.
Plaintiffs-Appellants’ substantive due process claims also allege an
“increased assessment,” but add the assertion that the 2019 Ordinance fails
rational basis review. Specifically, because the City itself would bear no
financial liability if the 2019 Ordinance were invalidated, Plaintiffs-
Appellants maintain that the allegedly illegitimate purpose of the 2019
Ordinance is to benefit a private developer at the expense of Hunters
Crossing PID property owners.
14
Case: 21-51039 Document: 00516707857 Page: 15 Date Filed: 04/11/2023
No. 21-51039
C.
Having carefully considered the parties’ submissions, the record in
this matter, and applicable law, we find no reversible error in the district
court’s federal due process rulings and thus affirm the district court’s
judgment, relative to those claims, for the reasons stated herein. In reaching
this decision, we note, at the outset, that the Texas PIDA Act is hardly a
model of clarity. 8 Indeed, even at this stage of these proceedings, counsel for
the parties seemingly cannot agree on the order in which various key events
contemplated by the Texas PIDA Act occur and, in some instances, what
those events entail.
Further complicating matters, the 2003 Ordinance and SAP reveal
that City officials and the Hunters Crossing PID project developer originally
contemplated a 25-year amortization period for the project’s capital
assessments. But, the planned public improvements also (1) involved a large,
undivided and undeveloped tract of land that the developer/original owner
was to subdivide, over time, into an undetermined number of privately-
owned lots; and (2) was to be financed by means of a special property
assessment (secured by a lien on the property) for which annual payments
were not due and collected for each lot until such (undetermined) time that
the developer transferred ownership of the lot. By virtue of this arrangement,
the beginning and ending dates of the amortization payment periods for the
individual lots within the Hunters Crossing PID are determined by the date
on which the property developer transferred ownership of the lot and thus
vary.
8
Although the Texas Legislature has amended certain PIDA Act provisions in
recent years, those amendments—given the relevant timeframe—do not apply here.
15
Case: 21-51039 Document: 00516707857 Page: 16 Date Filed: 04/11/2023
No. 21-51039
At the same time, section 372.018 of the Texas PIDA Act provides
that an “assessment or reassessment . . . is a first and prior lien against the
property assessed . . . [and] a personal liability of and charge against the
owners of the property . . . that is effective from the date of the ordinance or
order levying the assessment until the assessment is paid.” See Tex. Loc.
Gov’t Code § 372.018 (emphasis added). And, at least for the years
between 2001 and 2009, section 372.017 provided that an assessment made
payable in periodic installments “must continue for a period of time
necessary to retire the indebtedness on the improvements.” See Tex. Loc.
Gov’t Code § 372.017 (effective June 16, 2001–June 18, 2009) (as
amended by Acts 2001, 77th Leg., ch. 1341, § 15, eff. June 16, 2001). 9
Considering all of this information together, the staggered nature of
the property owners’ payment schedules, combined with apparently later-
than-anticipated conveyances of at least some of the lots in the Hunters
Crossing PID, has made the originally contemplated 25-year amortization
schedule problematic. The same reasons seemingly necessitate the extended
payment periods established by the 2019 Ordinance.
In any event, for purposes of this aspect of the instant appeal,
Plaintiffs-Appellants challenge the federal constitutionality of the 2019
Ordinance, not the PIDA Act itself or the 2003 Ordinance and SAP. 10 And
9
In 2009, section 372.017 was amended, relative to the payment of assessments in
periodic installments, to state, in pertinent part: “The installments . . . must continue for:
(1) the period necessary to retire the indebtedness on the improvements; or (2) the period
approved by the governing body for the payment of the installments.” See Tex. Loc.
Gov't Code Ann. § 372.017 (as amended by Acts 2009, 81st Leg., ch. 320, § 1, eff. June
19, 2009).
10
Given that the applicable limitations period for claims asserted under 42 U.S.C.
§ 1983 is borrowed from state law, and Texas has a two-year limitations period for personal
injury claims, Plaintiff-Appellants’ focus on the 2019 Ordinance, rather than the 2003
Ordinance, or even the City Council’s inaction during the interim years in which the bulk
16
Case: 21-51039 Document: 00516707857 Page: 17 Date Filed: 04/11/2023
No. 21-51039
the PIDA Act’s various statutory complexities and uncertainties do not
materially hinder our assessment of the specific federal due process claims at
issue here.
As the district court concluded, the 2019 Ordinance and SAP, like the
2003 Ordinance and SAP, provide for a total capital assessment of
$11,961,260. Additionally, although the $11,961,260 amount stated in the
2003 Ordinance and SAP includes an estimated $4,485,473 of capitalized
interest in its total, the Texas PIDA Act, contrary to Plaintiffs-Appellants’
assertions, does not clearly prohibit the inclusion of interest in an assessment.
Nor have Plaintiffs-Appellants shown that the district court clearly erred in
finding that the 2019 Ordinance and SAP properly confirmed the actual costs
of the Hunters Crossing PID’s capital improvements, credited past payments
made on a parcel-by-parcel basis, and determined the special benefits
received by properties on a parcel-by-parcel basis.
We recognize, of course, that the 2019 Ordinance’s assessment is for
$11,961,260 in capital costs, rather than the $7,475,787 of capital costs
(exclusive of interest) plus $4,485,473 of capitalized interest that are
estimated in the 2003 Ordinance and SAP documents. Importantly, however,
Plaintiffs-Appellants’ complaints regarding the capital costs incurred in
excess of the 2003 estimate are not directed to alleged waste, fraud, or
extravagance—or any other inappropriate labor/material expenditures—
that presumably would have been discovered and disallowed if the Bastrop
City Council had annually reviewed and adjusted the SAP for the Hunters
Crossing PID during the same years that the additional capital costs were
of the construction work apparently was completed, is understandable. See Redburn v. City
of Victoria, 898 F.3d 486, 496 (5th Cir. 2018) (courts considering the timeliness of § 1983
claims must borrow the relevant state’s statute of limitations for personal injury actions);
Tex. Civ. Prac. & Rem. Code § 16.003(a).
17
Case: 21-51039 Document: 00516707857 Page: 18 Date Filed: 04/11/2023
No. 21-51039
incurred. Instead, Plaintiffs-Appellants simply tout the City Council’s failure
to perform annual ministerial duties without showing any actual prejudice
resulting from those omissions.
Specifically, Plaintiffs-Appellants maintain that, under the PIDA Act,
the property developer “waived” its right to recover capital costs in excess
of the amount estimated in the 2003 Ordinance and SAP by failing to ensure
that the Bastrop City Council satisfied the PIDA Act’s “annual review and
adjustment requirements” during the same years in which the cost overruns
were incurred. Contrary to Plaintiffs-Appellants’ assertions, the Texas PIDA
Act, despite requiring annual reviews and updates of the SAP, and permitting
corresponding adjustments of the capital assessment for each property
owner, does not explicitly mandate the “waiver” consequence urged by
Plaintiffs-Appellants. Nor are we aware of any Texas jurisprudence
concluding that one is implied. Certainly, none of the PIDA Act sections
cited by the Plaintiffs-Appellants, in support of this “all or nothing”
approach, expressly state that a governing body’s failure to perform these
ministerial duties automatically invalidates the property assessment and
relieves the owners of property benefiting from the public improvements of
the obligation to pay for them. See Tex. Loc. Gov’t Code §§ 372.013–
372.017. In fact, the Texas PIDA Act does not specify a statutory
consequence for a violation of any of its requirements.
Given the numerous and evolving duties imposed upon and
undertaken by municipal governing bodies like the Bastrop City Council,
combined with the relative recency and complexity of the Texas PIDA Act,
occasional administrative shortcomings are not surprising. Had the Texas
Legislature intended for “any and all” such shortcomings—even in the
absence of actual resulting prejudice—to automatically trigger the “waiver”
consequence urged by Plaintiffs-Appellants, it could have easily said so. But,
it did not. And, given the varied nature, size, and complexity of the myriad
18
Case: 21-51039 Document: 00516707857 Page: 19 Date Filed: 04/11/2023
No. 21-51039
of improvement projects authorized by the PIDA Act—some involving
substantial financial expenditures and commitments, and extensive, if not
irreversible, modifications of immovable property—that omission is
significant, if not telling. 11 In any case, we decline to infer that Texas law
mandates such an extreme consequence in the absence of an unequivocal
directive from the Texas Legislature or the Texas Supreme Court. 12
Furthermore, the pertinent question presently before this court is
whether Plaintiffs-Appellants were deprived of federal due process
protections. Apparently failing to appreciate this point, Plaintiffs-Appellants
maintain that “no process in 2019 would have been sufficient to satisfy the
Constitution’s minimum demands.” Specifically, they reason that “the
PIDA Act itself provides the procedures that the City was required to follow
if it had wanted to adjust the assessment to incorporate the developer’s
overrun capital costs,” and “[g]iven [that] the annual reviews had not taken
place[], the 2019 Ordinance violates procedural due process.” 13
11
Given the absence of a specified statutory consequence for any violation of the
PIDA Act’s requirements, it is conceivable that Texas legislators may have logically
expected that property owners concerned about government inaction vis-à-vis third-party
developers, contractors, suppliers, etc., would promptly seek to bring about compliance,
including, if necessary, by applying for a writ of mandamus in state court.
12
Given the obvious difficulty that local government officials, property developers,
and experienced lawyers have had in understanding and applying the Texas PIDA Act,
additional legislative efforts to clarify the legislation’s requirements likely would prove
beneficial to all.
13
This argument also improperly lumps together two different deprivations: one
is procedural (annual review and adjustment in the same year that a cost overrun occurs)
and one is substantive (the 2019 capital assessment). In the context of the Fourteenth
Amendment’s due process clause, “life, liberty, and property” are “substantive rights
[that] cannot be deprived except pursuant to constitutionally adequate procedures.” Levitt
759 F.2d at 1232. “The categories of substance and procedure are distinct.” Id. And,
“‘[p]roperty’ cannot be defined by the procedures provided for its deprivation any more
than life or liberty.” Id.19
Case: 21-51039 Document: 00516707857 Page: 20 Date Filed: 04/11/2023
No. 21-51039
This argument, like Plaintiff-Appellants’ “waiver” argument, again
fails to recognize that federal law, not state law, dictates the procedural pro-
tections required by the Fourteenth Amendment’s due process clause. And,
the core requirement of federal procedural due process is the “‘opportunity
to be heard at a meaningful time and in a meaningful manner.’” Mathews, 424
U.S. at 333 (quoting Armstrong, 380 U.S. at 552). On the record before us,
there is no indication that the Bastrop City Council, prior to passing and ap-
proving the 2019 Ordinance and SAP, on September 24, 2019, failed to pro-
vide sufficient notice and opportunity to be heard, at a meaningful time and
manner, to Plaintiffs-Appellants and the other Hunters Crossing PID prop-
erty owners.
To the contrary, the parties’ submissions reflect that: (1) the City
hosted a Hunters Crossing PID “Town Hall Meeting” at the Bastrop Con-
vention Center, on August 19, 2019, to review the proposed 2019 SAP; (2) at
the August 19, 2019 “Town Hall Meeting,” City officials disseminated a
four-page pamphlet (the “Town Hall Pamphlet”) explaining the background
and rationale for the proposed 2019 SAP, as well as its contents, and provid-
ing instructions for the submission of questions and comments for the City
Council to consider prior to its September 10, 2019 meeting; (3) on August
31, 2019, the City published a notice in the Bastrop Advertiser of a public hear-
ing to be held, on September 10, 2019, to consider the 2019 SAP; (4) the
minutes of the September 10, 2019 City Council meeting reflect that a public
hearing was held on that date regarding the 2019 Ordinance, the 2019 SAP,
and the Fiscal Year 2020 Assessment Roll, during which the City Council
heard from a number of speakers, including counsel for Plaintiffs-Appellants,
before approving the first reading of the 2019 Ordinance; (5) on September
12, 2019, the City published notice in the Bastrop Advertiser of a public hear-
ing to be held on September 24, 2019 to consider the 2019 SAP; and (6) on
September 24, 2019, the City Council met in a public meeting during which
20
Case: 21-51039 Document: 00516707857 Page: 21 Date Filed: 04/11/2023
No. 21-51039
the 2019 Ordinance and SAP were approved and adopted after a second read-
ing.
Nor have we been given any reason to think that any valid objections
to particular capital cost amounts could not have been adequately considered
by the City Council, in 2019, prior to voting on the 2019 Ordinance and 2019
SAP. For instance, Plaintiffs-Appellants have not shown that events occur-
ring between the time that the capital cost overruns were incurred and the
City Council’s consideration of the proposed 2019 Ordinance and SAP some-
how deprived them of previously available pricing or other relevant infor-
mation. Indeed, on the instant record, it is far from clear that the capital im-
provement project’s final figures differ from those that would apply if the
City had previously performed the annual SAP review and adjustments in the
same years that capital cost amounts exceeding the 2003 estimate were in-
curred. Thus, for all these reasons, we are not convinced that Plaintiffs-Ap-
pellants were not accorded the procedural protections required by the Four-
teenth Amendment’s due process clause.
Now turning to the substantive due process challenges asserted by
Plaintiffs-Appellants, we conclude those claims likewise lack merit. Although
the capital assessments set forth in the 2019 Ordinance and SAP certainly
constitute governmental deprivations of a protected property interest, such
deprivations do not violate substantive due process protections unless they
lack a rational basis. See, e.g., Simi Inv. Co., 236 F.3d at 251. Notably, a gov-
ernment entity’s failure to follow the procedures established by state law
does not automatically render that conduct arbitrary or unrelated to a legiti-
mate state interest. See Stern v. Tarrant Cnty. Hosp. Dist., 778 F.2d 1052,
1060 (5th Cir. 1985) (rejecting the notion that “state law defines . . . which
means to a chosen goal are rational, [because] then all intentional violations
of state law by state agencies would violate the fourteenth amendment”); see
also Levitt, 759 F.2d at 1233 (rejecting assertion that a “state’s failure to
21
Case: 21-51039 Document: 00516707857 Page: 22 Date Filed: 04/11/2023
No. 21-51039
follow its own [procedural] rules is a per se deprivation of substantive due
process”).
Nor does the fact that the City would bear no financial responsibility
to the project developer for capital costs in excess of the 2003 estimated
amount—if the 2019 Ordinance were invalidated—necessarily divest the
2019 Ordinance of a rational basis. To the contrary, ensuring that persons
who have provided goods and/or services, as part of a PIDA Act project, are
fairly compensated by the owners of property specially benefitting from the
resulting improvements is entirely consistent with the purpose of the PIDA
Act. Otherwise, public improvements made possible by the PIDA Act might
cease to exist if third-party providers were to become unwilling to participate
in such projects because of concerns that inconsequential government short-
comings might ultimately deprive them of reasonable compensation.
This is particularly true where, as here, it is not apparent that the
Hunters Crossing PID’s total capital assessment actually increased as a result
of the City Council’s admitted administrative shortcomings, and invalidating
the 2019 Ordinance seemingly would provide a windfall to the property
owners who have benefited from the public improvements. Accordingly, on
the showing made, we are not convinced that the 2019 Ordinance lacks the
rational basis required by the Fourteenth Amendment’s substantive due
process protections.
For the foregoing reasons, we, like the district court, are not
persuaded that Plaintiffs-Appellants suffered actionable violations of the
procedural and substantive protections guaranteed by the Fourteenth
Amendment’s due process clause. Accordingly, we affirm the district
22
Case: 21-51039 Document: 00516707857 Page: 23 Date Filed: 04/11/2023
No. 21-51039
court’s judgment to the extent that it rejected the Plaintiffs-Appellants’ due
process claims. 14
IV.
Plaintiffs-Appellants also contend that the district court erred in
rejecting their assertions that the 2019 Ordinance violates the Texas
Constitution’s prohibition against retroactive laws. Specifically, Article I,
section 15 of the Texas Constitution states: “No bill of attainder, ex post
facto law, retroactive law, or any other law impairing the obligations of
contracts, shall be made.” See Tex. Const. art. I, sec. 16. A retroactive
law “is one which gives pre-enactment conduct a different legal effect from
that which it would have had without the passage of the statute.” Union
Carbide Corp. v. Synatzske, 438 S.W.3d 39, 60 (Tex. 2014).
Plaintiffs-Appellants argue the 2019 Ordinance is “a textbook
instance of retroactive lawmaking” because it “adjusts the assessments by
incorporating the developer’s overrun costs incurred many years earlier,
despite the fact that the City never reviewed these costs in the years that
they were incurred.” Thus, Plaintiffs-Appellants maintain, “the 2019
Ordinance gives the City’s and developer’s pre-enactment conduct ‘a
different legal effect than that which it would have had[.]’”
14
As stated above, the district court determined that the PIDA Act’s
establishment of procedural requirements for the adjustment of property assessments
“creat[ed] a [federally protected] property interest for individuals within the PID.”
Considering all of the legal principles discussed herein, as well as the Texas Legislature’s
failure to have expressly legislated a specific consequence for noncompliance with the
PIDA Act’s annual review and adjustment requirements, when it easily could have done
so, we disagree. Nevertheless, for the reasons stated, we affirm the district court’s
judgment relative to the federal due process claims asserted by Plaintiffs-Appellants.
23
Case: 21-51039 Document: 00516707857 Page: 24 Date Filed: 04/11/2023
No. 21-51039
Although the district court entered a “Final Judgment” awarding
judgment in favor of the defendants, and further ordered that “all relief not
specifically granted is denied,” the district court did not expressly address
Plaintiffs-Appellants’ claims asserted under the Texas Constitution in its
post-trial findings of fact and conclusions of law. On this limited record, we
are left to speculate regarding the scope and substance of the district court’s
assessment of Plaintiffs-Appellants’ state-law claims and, thus, are unable
to provide adequate appellate review. Accordingly, we vacate the district
court’s judgment relative these claims and remand them to the district court
for further consideration and/or a statement of reasons for judgment.
V.
As stated herein, the district court’s September 29, 2021 judgment
in favor of Defendants-Appellees is AFFIRMED IN PART, VACATED
IN PART, and REMANDED IN PART.
24