    OFFICE     OF THE ATTORNEY    GENERAL   - STATE OF TEXAS

    JOHN        CORNYN




                                                       April 13,200l



The Honorable David Swinford                                     Opinion No. JC-0368
Chair, Agriculture and Livestock Committee
Texas House of Representatives                                   Re: Whether a municipality may provide labor
P.O. Box 2910                                                    and equipment to construct utilities on public
Austin, Texas 78768-29 10                                        easements and rights-of-way to serve a private
                                                                 subdivision (RQ-03 13 -JC)


Dear Representative         Swinford:

         On behalf of the City of Dumas (the “City”), you ask whether the City may extend utilities
to a residential subdivision on public easements and rights-of-way using City labor and equipment.’
Sections 402.001 and 402.002 of the Local Government Code explicitly authorize the City to do so.

         Although your letter provides little background, the Texas Municipal League has provided
relevant facts,2 and counsel for the City has conf%-rned the Municipal League’s information.3 The
Texas Municipal League reports that the City “has not experienced extensive growth [and] does not
routinely extend its utility mains to serve new development,” but it has, for some past projects,
contracted with private contractors to construct the facilities. TML Letter, supra note 2, at 1. City
counsel also indicates that, in general, when the City receives a request to extend utility lines, it
requires the requestor to pay for the labor and materials and to donate the utility lines to the City,
and then the City reimburses the requesting developer as private home owners tap into the utility
lines. See Telephone Conversation, note 3; cf: Crownhill Homes, Inc. v. City of San Antonio, 433
S.W.2d 448, 460 (Tex. Civ. App.-Corpus Christi 1968, writ ref’d n.r.e.) (suggesting that some
municipalities refund water-main-extension      costs to developers while others do not). But in this
case, the City would like to provide its own labor and equipment to extend utility mains to a new



          ‘Letter from Honorable David Swinford, Chair, Committee on Agriculture and Livestock, Texas House of
Representatives,   to Ms. Susan D. Gusky, Chair, Opinion Committee, Office of the Attorney General (Nov. 15,200O)
(on file with Opinion Committee) [hereinafter Request Letter]; see also Letter from Thomas C. Moore, Moore, Lewis,
Russwurm & Elliott, P.C., to Honorable David Swinford, Chair, Committee on Agriculture and Livestock, Texas House
of Representatives    (Nov. 8,200O) (on file with Opinion Committee, attached to Request Letter) [hereinafter Request
Letter].

           *See Letter from Monte Akers, Director, Legal Services, Texas Municipal League, to Ms. Susan D. Gusky,
Chair, Opinion Committee, Office of the Attorney General (Dec. 20, 2000) (on file with Opinion Committee)
[hereinafter TML Letter].

            3Telephone Conversation   with TomMoore,    Moore, Lewis, Russwurm & Elliott, P.C. (Feb. 9,200l)   [hereinafter
Telephone     Conversation].
The Honorable David Swinford        - Page 2        JC-0368




residential subdivision to provide residents with City gas, water, and sewer services, rather than to
contract with a third party to do so. See TML Letter, supra note 2, at 1. The subdivision’s developer
and the City have agreed that the developer will compensate the City by donating park land to the
City. See id. The residential subdivision to be served in this case “is not a private, gated
community; . . . the easements and rights-of-way along which the utility lines will be installed are
public in nature; and the facilities involved are utility mains rather than private distribution lines.”
Id.; cj: Crownhill Homes, Inc., 433 S.W.2d at 450 & 451 n.2 (describing “off-site or approach
mains” and distinguishing “on-site or local benefit mains”). Thus, the facilities to be extended do
not cross private property and do not connect directly to private residences. See TML Letter, supra
note 2, at 1. Rather, a private home owner will pay to have his or her home connected to the City’s
utility lines, which run in public easements or rights-of-way.      Id. One or more local contractors
question the City’s authority to use City labor and equipment to extend the utility lines.

         We refer to the subdivision as a “residential subdivision” rather than a “private subdivision.”
You describe the subdivision as private, see Request Letter, supra note 1, at 1, but you state that the
subdivision is not gated. We deduce, therefore, that subdivision streets are open to the general
public. See TML Letter, supra note 2, at 1. We consequently presume that your phrase “private
subdivision” refers to a subdivision of private residences.

          We assume that the current City charter permits the proposed use of City labor and
equipment.    See Telephone Conversation, supra note 3. This office normally defers to a city
official’s construction of a city charter. See Tex. Att’y Gen. Op. No. JC-0143 (1999) at 3.

        Sections 402.001 and 402.002 of the Local Government Code explicitly authorize the City
to extend its utilities in the circumstances about which you ask. Section 402.001 expressly permits
a municipality to “construct[] or operate a utility system inside or outside the municipal boundaries
and [to] regulate the system in a manner that protects the interests of the municipality.” TEX. LOC.
GOV’T CODE ANN. 4 402.001(b) (Vernon 1999). A “utility system” is defined to mean “a water,
sewer, gas, or electricity system.” Id. 9 402.001(a). Section 402.002(b) expressly permits a home-
rule municipality to own a utility system and to construct necessary facilities:

                     (b) A home-rule municipality may . . . own, construct inside or
                outside the municipal limits, and maintain and operate a gas system,
                electric lighting plant, sewage plant, or other . . . public utility and
                may require and receive compensation for services furnished for
                private purposes or otherwise. The municipality may use eminent
                domain authority to appropriate real property, rights-of-way, or other
                property as necessary to efficiently carry out those objects. . . . In its
                charter, the municipality may adopt rules it considers advisable for
                the acquisition or operation of the . . . public utility.

Id. § 402.002(b) (Vernon Supp. 2001).
The Honorable    David Swinford     - Page 3        JC-0368




          Because a municipality has express authority to own, construct, and operate public utilities,
it may decide to extend its utility lines to serve a residential subdivision, and its decision is subject
to limited review. See Crownhill Homes, Inc., 433 S.W.2d at 457. With respect to its public
utilities, a municipality’s exercise of discretion may be reviewed only for abuse. See id. at 458-59.
Moreover, under sections 402.001 and 402.002, amunicipality is not obligated to receive from those
for whom it extends utilities some sort of consideration. A municipal governing body can establish
its own policy as to the circumstances in which it will extend utility lines and what it will require
of a requesting developer, so long as the policy is applied impartially. See id. at 457.

         Given that the City has express statutory authority to extend its utilities-and    we do not
understand the contractors here to question the City’s authority in this regard-the   City may choose
to accomplish the extension using City labor and equipment or by contracting with a third party.
Competitive-bidding    laws do not prohibit a municipality from using municipal labor or equipment
to perform desired services. See Director of Dep ‘tofAgric. & Env ‘tv. Printing Indus. Ass ‘n of Tex.,
600 S.W.2d 264, 268 (Tex. 1980) (stating that article XVI, section 21 of Texas Constitution
“does not prohibit the State fi-om performing its own printing needs”); cf: Tex. Att’y Gen. Op. Nos.
DM-242 (1993) at 3 (concluding that school district need not competitively bid contract if it wished
to perform work with district employees); V-506 (1948) at 3 (stating that county commissioners
court has option of performing road work itself, rather than using statutory competitive-bidding
procedure).

         Counsel for the City suggests that the issue you raise implicates article III, section 52 and
article XI, section 3 of the Texas Constitution.        See Telephone conversation, supra note 3
(mentioning article III, section 52 of Texas Constitution).      Article III, section 52 of the Texas
Constitution forbids the legislature generally to authorize a municipality “to grant public money or
thing of value” to a private entity. TEX. CONST.art. III, 5 52. Article XI, section 3 similarly forbids
a municipality    to donate funds or things of value to a private entity. See id. art. XI, 8 3.
Consequently, a municipality may not gratuitously apply public resources to a private use, but it may
expend public resources to directly accomplish a public purpose, even if the expenditure incidentally
benefits a private interest. See Tex. Att’y Gen. Op. No. JC-0016 (1999) at 3; c$ Tex. Att’y Gen. Op.
No. JC-0288 (2000) at 2 (discussing “public use”). A utility extension serves a public purpose. See
also A. & M. Consol. Indep. Sch. Dist. v. City of Bvan, 184 S.W.2d 914, 915-16 (Tex. 1945)
(concluding that land owned by city for electric lines is used for public purpose); Lenzen v. City of
New Braunfels, 35 SW. 341, 343 (Tex. Civ. App. 1896, no writ) (suggesting public benefits of
utility service generally).
The Honorable David Swinford       - Page 4        JC-0368




                                       SUMMARY

                       A municipality may use municipal labor and equipment
               to extend utility lines on public easements and rights-of-way to
               serve a residential subdivision. See TEX. LOC. GOV’T CODE ANN.
               $8 402.001, .002 (Vernon 1999 & Supp. 2001).

                                              Yo    s ve   truly,



                                              dJ(aw-d-
                                              JOtiN    CORNYN
                                              Attorney General of Texas



ANDY TAYLOR
First Assistant Attorney General

SUSAN D. GUSKY
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General - Opinion Committee
