                                         GREG        ABBOTT




                                              March 9,2007


The Honorable Jesusa Sanchez-Vera                     Opinion No. GA-0529
Jim Wells County Attorney
Post Office Drawer 2080                               Re: Whether Texas Constitution article 111,
Alice, Texas 78333                                    section 52-a and Local Government Code section
                                                      380.001 authorize a city to make a loan to a
                                                      private developer to fund a private housing proj ect
                                                      (RQ-053 5-GA)

Dear Ms. Sanchez-Vera:

        You ask about the validity of "action taken by the City Council of the City of Alice, Texas
[the "City"] approving a commitment for a loan to a private developer for a private housing
project. . . under the Texas Constitution, Texas Local Government Code [slection 380.001 et seq.,
the ordinance adopted under such statutory provision and the City Charter."' You suggest that the
City Council was not authorized to approve the loan commitment because Texas Constitution article
111, section 52-a and section 380.001, enabling legislation under the constitutional amendment
authorizing municipal loans and grants for economic development purposes, do not authorize loans
for housing purposes. See Request Letter, supra note 1, at 4-6. You also suggest that the City
Council's action did not conform to the requirements of the City's economic development program
ordinance and the City's home rule charter. See id. at 7-9.

        Our analysis of the issues you raise is necessarily limited. Whether specific laws or charter
or ordinance provisions were violated in particular circumstances is a question requiring the
determination of facts that cannot be answered in an attorney general opinion. See Tex. Att'y Gen.
Op. No. GA-043 1 (2006) at 2 (declining to determine whether specific laws or charter provisions
were violated). Additionally, such a question requires construing the particular charter and ordinance
with respect to the facts; this office does not ordinarily construe city charters and ordinances. See
id.; Tex. Att'y Gen. Op. No. GA-0449 (2006) at 1 ("In deference to municipal officials' authority
to interpret their charters and ordinances, this office does not ordinarily construe city charters or
ordinances."). Consequently, we consider here only whether the City is authorized under article 111,
section 52-a and section 380.001 to make a loan for the development of a housing project.



         'See Letter from Honorable Jesusa Sanchez-Vera, Jim Wells County Attorney, to Honorable Greg Abbott,
Attorney General of Texas, at 1 (Sept. 25, 2006) (on file with the Opinion Committee, also available at
http://www.oag.state.tx.us) [hereinafter Request Letter].
The Honorable Jesusa Sanchez-Vera - Page 2             (GA-0529)



       Article 111, section 52-a of the Texas Constitution permits the Legislature to authorize
expenditure of public funds for economic development purposes and provides, in relevant part, as
follows:

               Notwithstanding any other provision of this constitution, the
               legislature may provide for the creation ofprograms and the making
               of loans and grants ofpublic money . . . for the public purposes of
               development and diversiJication of the economy of the state, the
               elimination of unemployment or underemployment in the state, the
               stimulation of agricultural innovation, the fostering of the growth of
               enterprises based on agriculture, or the development or expansion of
               transportation or commerce in the state.

TEX.CONST.art. 111, 5 52-a (emphasis added). This constitutional amendment establishes that
programs fostering economic growth or loans and grants of public funds to assist private businesses
to foster economic growth serve a public purpose. See id. ;Tex. Att'y Gen. Op. No. JC-0092 (1999)
at 8; see also TEX.CONST.art. 111, 6 52(a) (prohibiting political subdivisions, including cities, from
lending their credit or granting public money to individuals, corporations, and associations); Tex.
Att' y Gen. Op. No. JM- 1227 (1990) at 3 (stating that article 111, section 52-a was intended to create
exceptions to the constitutional prohibition on lending of public credit).

        Pursuant to the authority granted by article 111, section 52-a, the Legislature enacted Local
Government Code section 380.001. See TEX.LOC.GOV'TCODEANN.5 380.001(a) (Vernon 2005);
see also Tex. Att'y Gen. Op. No. DM-185 (1992) at 4-5 (discussing the legislative history of section
380.001 and stating that it implements article 111, section 52-a). Section 380.001(a) provides in
relevant part as follows:

                The governing body of a municipality may establish andprovide for
                the administration of one or moreprograms, includingprogramsfor
                making loans and grants of public money and providing personnel
                and services of the municipality, to promote state or local economic
                development and to stimulate business and commercial activity in the
                municipality.

TEX.LOC.GOV'TCODEANN.5 380.001(a) (Vernon 2005) (emphasis added).

         You contend that because article 111, section 52-a and section 380.001 do not expressly
reference housing, they do not authorize loans for the development of housing projects. See Request
Letter, supra note 1, at 5. Article 111, section 52-a broadly authorizes the Legislature to "provide for
the creation of programs and the making of loans and grants of public money" that will develop and
diversify the economy, reduce unemployment, or develop commercial activity (collectively,
"economic development"). See TEX.CONST.art. 111,s 52-a. The amendment does not reference any
programs or measures; it merely requires that the legislatively authorized programs or measures
promote economic development. See id.; see also Tex. Att'y Gen. Op. No. DM-1 85 (1992) at 6
The Honorable Jesusa Sanchez-Vera - Page 3             (GA-0529)



("The legislature intended article 111, section 52-a . . . and section 380.001 . . . to authorize
municipalities to implement a range of programs designed to promote economic development.").

         Like article 111, section 52-a, section 380.00 1broadly permits a city's governing body to make
"loans and grants ofpublic money" for purposes that will promote economic development. See TEX.
LOC.GOV'TCODEANN.5 380.001(a) (Vernon 2005). The statute does not, by its terms, limit loans
and grants of public money to particular purposes or projects, but only requires that they promote
economic development. See id.; see also Tex. Att'y Gen. Op. No. DM-185 (1992) at 5 ("The
legislature did not expressly instruct what such [an economic development] program would be.").
Furthermore, we have not found and you do not cite to any authority holding that housing projects,
as a matter of law, do not promote economic development. Whether a particular housing project will
promote economic development is a question of fact for a city's governing body to determine in the
first instance, subject to judicial review. CJ Tex. Att'y Gen. Op. No. JC-0362 (2001) at 5 ("the
determination of whether a particular project will promote the economic development purposes of
[the Development Corporation Act of 19791 is, in general, a question of fact within the discretion
of the board of directors of the development corporation in the first instance").

       Thus, in answer to your question, we conclude that article 111, section 52-a and section
380.001 authorize a city to make a loan for a housing project if the project will promote economic
development within the meaning of these provisions.
The Honorable Jesusa Sanchez-Vera - Page 4          (GA-0529)



                                     S U M M A R Y

                      Texas Constitution article 111, section 52-a and Local
              Government Code section 3 80.00 1 authorize a city to make a loan for
              a housing project if the project will promote economic development
              within the meaning of these provisions.

                                            Very truly yours,




                                            ~ t t o w ~ e n e rofa Texas
                                                                   l


KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee
