Untitled Texas Attorney General Opinion ( 1988 )

C
THEN ATTORNEY GENERAL
OF TEXAS
December 21, 1988
Honorable Ii.Tati Santiesteban Opinion No. JM-997
Chairman
Natural Resources Committee Re: Authority of a home rule
Texas State Senate citv to convev land to the
P. 0. Box 12068 state for us;? as a park,
Austin, Texas 78711 where the transfer is made
at a price below market
value (RQ-1572)
Dear Senator Santiesteban:
You ask a question about the state's acquisition of a
specific parcel of land owned by the city of El Paso and
administered by the city's Public Service Board. This land,
consisting of approximately 6,833.g acres, is within the
.- boundaries of the Franklin Mountains State Park which were
delineated by the legislature in 1979 and redrawn to exclude
five sections of land in 1987. See Acts 1979, 66th Leg.,
ch. 736, at 1804; Acts 1987, 70th Leg. ch. 304, at 1676.
The Parks and Wildlife Code establishes the park under the
jurisdiction of the Parks and Wildlife Department and
provides that the department "shall acquire by purchase,
gift, lease, or condemnation all of the land described" in
the 1979 legislation, except for the tracts deleted in 1987.
Parks & Wild. Code 55 22.221; 22.222(a). A proposed agree-
ment between El Paso and the state provides for transferring
the land to the state at a nmodest price" that is con-
siderably less than market value.
The Public Service Board of the city of El Paso
is appointed by the city and has responsibility for
administering the water system for the city and the bond
issues supporting the water system. The lands in question
have been designated Public Service Board lands, and the
board holds them as agent for the city, &g V.T.C.S. art.
1109a; San Antonio Inden. School Dist. v. Water Works Bd f
Trustees 120 S.W.Zd. 861 (Tex. Civ. APP. - Beaumont 193:
writ ref:d). Concern has been expressed as to the city#L
authority to transfer these lands to the state at a time
when the Public Service Board of the city of El Paso still
has outstanding bonds.
p. 5105
Honorable H. Tati Santiesteban - Page 2 (JM-997)
Your question is as follows:
Does the City of El Paso, through its duly
elected governing body, have the power and
authority to make the transfer of land to the
State for inclusion in the state park system
at a price which may be less than market
value?
Your question raises the following three issues: the
effect of the outstanding bonds on the city's transfer of
these lands: the statutory authority for selling the land at
less than market value: and the constitutionality of this
transaction under article III, section 52, of the Texas
Constitution.
We will first address your concern that provisions of
prior bond issues might prevent the city of El Paso from
selling this property at less than market value. The Public
Finance Section of this office has reviewed the relevant
bond documents and has found that the management and control
of the city waterworks system (hereinafter the tnsystemvn) is
vested in the Trustees of the Public Service Board by city
ordinance of Way 22, 1952. Included as subsections D and E
of section 12 of this ordinance are covenants on the
disposition of the system's property which have been carried
forward by all subsequent bond ordinances.
Subsection D is a general covenant by which the board
agrees not to take any action whereby the lien of the bonds
on the revenues of the system might be lost or impaired.
Subsection E specifically addresses the board's authority to
dispose of the property of the system. This covenant reads
in part as follows:
E. That the city will not sell, encumber
or in any manner dispose of the system or any
substantial part thereof, including any and
all extensions and additions that may be made
thereto, until the bonds herein authorized to
be issued shall have been paid in full as to
both principal and interest (provided that
this covenant shall not be construed to
prevent the disposal by the city of property
which in the Board's judgment has become
inexpedient to use in connection with the
system . . .).
We are informed that the property to be sold does not
generate any revenues from which the debt service on the
bonds is paid, nor is it used for water or wastewater system
p. 5106
Honorable H. Tati Santiesteban - Page 3 (JM-997)
P
functions. If this information is correct and if the board
makes the
._ required
_ _ determination, these covenants do not
prevent tne sale of this property. The city's contract with
the bondholders protects them from property sales which will
impair their source of repayment and permits sales of
property not needed for the system. Sale of the land in
accordance with these provisions, even if at less than
market value, will not impair the bondholder's interests.
See aenerallv Citv of Aransas Pass v. Keeling, 247 S.W. 818
(Tex. 1923).
We next consider whether the city. of El Paso has
statutory authority to transfer this land to the Parks and
Wildlife Department at less than market value.
Sections 22.221 through 22.223 of the Parks and Wild-
life Code authorize the Parks and Wildlife Department to
acquire the specific acreage you inquire about. Acts 1979,
66th Leg., ch. 736, at 1804. The bill analysis of the 1979
bill which established the Franklin Mountains State Park
states as follows:
Backcrround:
.-
The only state park near El Paso, Hueco Tanks
State Historical Park, is located twenty-six
miles east of the city and is a limited
access, historical preservation park. The
city and county parks are small and for
'playground# recreation.
The proposed park in the Franklin Mountains
includes the majority of the high mountains
in the Franklin Range and some of the
remaining wild desert mountains in El Paso
County. The area contains many unique
features, such as prehistoric and historic
archaelogical sites . . . .
The closeness of the proposed area to El Paso
would enable residents and visitors to hike
mountain trails and study a unique natural
environment.
The bill would require the Texas Parks and
Wildlife Department to acquire the portion of
the Franklin Mountains of El Paso County
north of Trans-Mountain Road (Loop 375) to
create a state recreational park. The
p. 5107
Honorable H. Tati Santiesteban - Page 4 (JM-997)
department would acquire the land by pur-
chase, gift, or condemnation with funds from
the Texas Park Development Fund.
Bill Analysis, Tex. H.B. 867, 66th Beg. (1979).
Thus, the Parks and Wildlife Code provisions were
adopted to govern the acquisition of identified land which
included the specific land in question. The legislature
amended these provisions in 1987 to facilitate the proposed
transfer agreement which is the subject of your request.
The Bill Analysis to the 1987 legislation stated in part:
Backaroa :
In 1979 the 66th Legislature created the
Franklin Wountains State Park. The park
is . . . the largest urban park in the United
States. The Public Service Board of El Paso
owns land that is within the boundary of the
Park (approximately 8,100 acres) which is
presently valued at $40,000,000. The State
is currently in litigation involving the
purchase of this parcel of land from the
City of El Paso. The Public Service Board
has offered to sell to the State 4,780
acres . . . at a substantially lower price
($250,000) if the 5 sections (3,320 acres) on
the eastern border of the park may be
exempted as proposed park lands. The
property described as Sections 24, 17, 16, 9,
and 4 are considered to be prime developable
lands and should not be a part of a wilder-
ness park.
Provides that 5 sections of land within the
Franklin Mountains State Park be deleted from
the land described for acquisition in Section
2 of the Act.
Bill Analysis Tex. H.B. No. 1839, 70th Leg. (1987).
The legislature thus contemplated that sections 22.221
through 22.223 of the Parks and Wildlife Code would provide
comprehensive statutory authority for the department to
acquire land designated for Franklin Mountains State Park,
including the authority to acquire land from the city of El -..
Paso at less than market value. These provisions constitute
a specific law authorizing the sale of the El Paso property
p. 5108
Honorable H. Tati Santiesteban - Page 5 (JM-997)
to the department on these terms and they remove this trans-
action from general statutes that ordinarily govern the sale
of land by a city, in particular from chapter 272 of the
Local Government Code. See, e.a., Gov't Code 55 311.003;
311.023; 311.025. See also Flowers v. Pecos River R. co.,
156 S.W.Zd 260, 263 (Tex. 1941, writ granted): Townsend v.
TerrelJ 16 S.W.2d 1063, 1064 (Tex. 1929) (specific statute
control; over general statute).
Chapter 272 of the Local Government Code requires
political subdivisions to comply with notice and bidding
requirements before selling or exchanging land. Local Gov't
Code 5 272.001. These notice and bidding requirements do
not apply to land conveyed to a governmental entity that
has the power of eminent domain, but such land may not be
conveyed for less than its fair market value. Id. Sections
22.221 through 22.223 of the Parks and Wildlife Code
impliedly excepts the transfer of the Franklin Mountains
land from the requirements of chapter 272 of the Local
Government Code. Thus, the requirement that land be
conveyed at not less than market value does not apply to the
transfer of the designated land from El Paso to the Parks
and Wildlife Department.
We finally consider whether article III, section 52, of
the Texas Constitution prohibits the city of El Paso from
selling the land to the department at less than market
value. Article III, section 52 provides in part:
(a) Except as otherwise provided by this
section, the Legislature shall have no power
to authorize any county, city, town or other
political corporation or subdivision of the
State to lend its credit or to grant public
money or thing of value in aid of, or to any
individual, association or corporation
whatsoever . . . .
Tex . Const. art. III, § 52. The proposed sale at less than
market value involves an element of donation.
In Texas Nat'1 Guard Armorv Bd . v . McGraw, 126 S.W.2d
627 (Tex. 1939), the Supreme Court determined that the
attorney general was within his right in refusing to approve
revenue bonds to finance the construction of armories for
the Texas National Guard. The attorney general argued that
part of the security for the bonds would be invalid because
it would consist of rentals from armory sites donated to the
Armory Board by incorporated cities in violation of article
III, section 52, of the Texas Constitution. 126 S.W.2d at
p. 5109
Honorable H. Tati Santiesteban - Page 6 (JM-997)
630. The Supreme Court stated as follows in response to
this argument:
This Act [the National Guard Armory Board
Act] does not undertake to authorize municipal
corporations to donate sites for armories: nor
has the Legislature enacted any law which
undertakes to confer on such cities that
power. Since the Legislature has not by law
authorized municipal corporations to donate
sites for armories, it becomes unnecessary to
decide the power of the Legislature to
authorize municipal corporations to lend
their aid to the Board by donating sites for
armories under the provisions of Section 52 of
Article 3 of the Constitution.
126 S.W.2d at 638. Thus, the Supreme Court did not deter-
mine whether a city could constitutionally donate land to
the National Guard Armory Board.
In Attorney General Opinion H-108 (1973), this office
considered a question very similar to the one not reached in
Texas Nat91 Guard Armorv Bd. v. McGraw and decided that the -
city of Beaumont could give the Department of Mental Health
and Mental Retardation ten acres of land in fee simple as a
site for constructing a ward.building at the Beaumont State
Center for Human Development.
The opinion stated as follows:
The fact that the transaction is denomi-
nated *a gift# does not invalidate it unless
the Beaumont City charter contains restric-
tive provisions unknown to us. The proposed
use is clearly for a public purpose and thus
does not violate Article 3 88 50, et. seq.,
of the Texas Constitution. Similar donations
were involved and approved by the courts in
El Paso COW&Y v. Citv of El PasQ . . . [357
S.W.2d 783 (Tex. Civ. App. - El P&o 1962, no
writ)], and-g
tion of Sisters of Q&,&y 360 S.W.2d 580
(Tex. Civ. App. - [Waco] 1662, [writ ref'd,
n.r.e.1).
Actually, the transfer is not a gift. The
improvement of the property and the con-
sequent benefit to the city of Beaumont
supply consideration for the transaction.
In the Bl Paso case, suora, the county order
p. 5110
Honorable H. Tati Santiesteban -'Page 7 (JM-997)
approving the transaction recited as consi-
deration for its transfer that 'it will
reduce the fire insurance rate in El Paso.R
Attorney General Opinion H-108 at 4 (1973).
The city of El Paso similarly benefits from trans-
ferring its land to the Parks and Wildlife Department
because it will be maintained at state expense as part of a
state recreational park easily accessible to residents of
the city. Consideration for the transfer of land to the
state is provided by these benefits to the city, and not
merely by the cash sum it receives. &S Attorney General
Opinion H-1256 (1978).
The judicial opinion in &Ha v. Sha 157 S.W.Zd
682 (Tax. Civ. App. - Austin 1941, writ ref'd &.o.m.) add-
resses a question analogous to the question before us, The
legislature appropriated funds to purchase land for the Big
Bend National Park which would be deeded to the federal
government to use for national park purposes only. A tax-
payer challenged the appropriation as violating sections 50,
51, and 52 of article III, which "inhibit the lending or
giving of the credit of the State, or the granting of public
money . . . to any individual, association, corporation,
etc." 157 S.W.2d at 686.
The court quoted at some length from Malone . Peqy
17 S.W.2d 901 (Tenn. 1929), a Tennessee case dealXng with
the transfer of state land to the federal government for a
national park. The Tennessee court cited authorities to
the effect that the United States was not an individual,
association, or corporation within state constitutional
provisions forbidding the gift or grant of public funds.
The court also stated that a transfer of the lands from the
state to the United States for park purposes would not
impair the beneficial rights of the people of Tennessee, who
are also citizens of the United States. The transfer
relieved the state from the continuing expense of main-
taining the park, while its residents still had the benefits
of the park system.
The Kina Sheovard court concluded that the Tennessee
decision was s%nd and should be followed as the law of the
case. 157 S.W.2d at 686. Much of the reasoning followed in
Kina v. Shevnard applies to the transfer of the Franklin
Mountains property from El Paso to the Parks and Wildlife
Department. The benefits of the Franklin Mountains State
Park will accrue to El Paso, its residents and visitors.
Moreover, authorities from other jurisdictions have held
that the state is not an individual, association, company or
P. 5111
Honorable H. Tati Santiesteban - Page 8 (JR-997)
corporation within constitutional provisions comparable to
article III, sections 50, 51, and 52. See. e.a., Citv of
Sacramento v. Adams, 153 P. 908 (Cal. 1915) (city donated
land to state for site for state buildings): &n%cnv v. Kinq
w, 45 P. 645 (Wash. 1896) (use of county land for public
improvements undertaken by state and United States): Ransom
V. Rutherford County, 130 S.W. 1057 (Tenn. 1910) (city and
county bonds finance purchase of sites and construction of
buildings for state teacher's college).
On the basis of the reasoning and authorities cited
above, we believe that the city of El Paso may transfer the
land in question to the Department of Parks and Wildlife at
less than market value without violating article III,
section 52 of the Texas Constitution.
Our opinion is limited to the questions discussed. We
do not consider any contract provisions, home rule charter
provisions, or other provisions not expressly addressed.
SUMMARY
Under sections 22.;21 through 22.223 of
the Parks and Wildlife Code, the city of El
Paso may sell land at less than market value
to the Parks and Wildlife Department for
inclusion in the Franklin Mountains State
Park. The transfer at less than market
value does not violate article III, section
52, of the Texas Constitution. Based on the
information submitted to us, the fact that
the land has been designated land of the El
Paso Public Service Board and that the board
has outstanding bonds does not bar sale of
this land at less than market value.
JIM MATTOX
Attorney General of Texas
MARYKELLER
First Assistant Attorney General
MU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
p. 5112
Honorable H. Tati Santiesteban - Page 9 (JM-997)
RICK GILPIN
Chairman, Opinion Committee
Prepared by Susan L. Garrison
Assistant Attorney General
-.
p. 5113