                                    ATTORNEYGENERAL                        OF TEXAS
                                                 GREG        ABBOTT




                                                   November 4,2004



     The Honorable Rodney Ellis                                     Opinion No. GA-0268
     Chair, Committee on Government           Organization
     Texas State Senate                                             Re: Whether municipal management districts
     Post Office Box 12068                                          have eminent domain powers (RQ-0228-GA)
     Austin, Texas 78711

     Dear Senator Ellis:

              You ask whether municipal management districts have eminent domain powers, and if so,
     the extent of those powers.’ Although you specifically ask about “management districts” without
     limitation, we limit our response to municipal management districts created under chapters 375 and
     376 of the Local Government Code because the type of district that prompts your question is a
     municipal management district. See Request Letter, supra note 1, at 1; see also TEX. LOC. GOV’T
.-
     CODE ANN. chs. 375-76 (Vernon 1999 & Supp. 2004-05). We do not consider any other type of
     management district. See, e.g., TEX. REV. CIV. STAT. ANN. art. 4477-7k, 5 2.01 (Vernon Supp. 2004-
     05) (creating the Upper Sabine Valley Solid Waste Management District, a conservation and
     reclamation district).

     I.      Factual Backeround

             Earlier this year, the Harris County Improvement District No. 3 (the “HCID3”), formerly
     known as the “Upper Kirby Management District,‘” a municipal management district created under
     chapter 376, subchapter E threatened to condemn a building in Houston that the Girl Scouts of San
     Jacinto Council was attempting to acquire from the owner, AAA of Southern Califomia.3 See TEX.
     Lot. GOV’TCODE ANN. 5 376.151(a)        (Vernon Supp. 2004-05) (creating the HClD3).  The HCID3
     also wished to acquire the building. See March 9 Letter, supra note 3, at 1. At that time, the



               ‘Letter from Honorable Rodney Ellis, Chair, Committee on Government Organization, Texas State Senate, to
     Honorable Greg Abbott, Texas Attorney General, at 1 (May 12, 2004) (on file with the Opinion Committee, nlso
     available af http://www.oag.state.tx.us) [hereinafter Request Letter].

             *See Act of June 1,2003,78th   Leg., R.S., ch. 766,§    8(a), 2003 Tex. Gen. Laws 2224,2226

                ‘See Letter fromHonorable Rodney Ellis, chair, Committee on Government Organization, Texas State Senate,
     to Honorable Greg Abbott, Texas Attorney General, at 1 (Mar. 9, 2004) (on file with the Opinion Committee)
     [hereinafter March 9 Letter].
The Honorable Rodney Ellis - Page 2




HClD3’s power of eminent domain was questioned in a lawsuit. See id.4 You inform us, however,
that the HClD3 and the Girl Scouts of San Jacinto Council “reached an agreement. and ended all
legal action.” Request Letter, supra note 1, at 1.

         Nevertheless, you ask us to “clarify the extent of the power of eminent domain for all
management districts,” not just the HCID3. Id. As you aver, “management districts have been
formed around the state” under a variety of statutes. Id. Some of these statutes, you suggest, “have
conflicting provisions regarding eminent domain.” Id. You therefore ask us to resolve these
perceived conflicts.

II.     Chauters 375 and 376 of the Local Government                   Code

          Chapter 375 of the Local Government Code provides generally for municipal management
districts. See TEX. Lot. GOV’T CODE ANN. ch. 375 (Vernon 1999 & Supp. 2004-05). The Texas
Commission on Environmental Qualit (the “TCEQ”) may create a municipal management district
(a “district”) only:
                          (1) in an area devoted primarily to commercial development
                 and business activity inside the boundaries of a municipality with a
                 population of at least 25,000; or

                          (2) in an area devoted primarily to commercial            development
                  or business activity.

Id. 5 375.021 (Vernon 1999). But see id. 5 375.027 (limiting the creation of a district in a
municipality with a population of more than 1.5 million). Once created by TCEQ order, the district
is governed by a board of “at least nine but not more than 30 directors who serve staggered four-year
terms.” Id. 5 375.061. The TCEQ order lists the initial board members, but the municipal governing
body appoints succeeding board members. See id. 3 375.064(a). A municipal management district
has the general powers of a conservation and reclamation district subject to Water Code chapter 49.
See id. § 375.091 (“General Powers”). The Water Code expressly gives eminent domain powers to
conservation and reclamation districts that are subject to its provisions. See TEX. WATERCODE ANN.
 5 49.222(a) (Vernon 2000) (granting a conservation and reclamation district authority to condemn
property “inside or outside the district boundaries        necessary for water, sanitary sewer, storm
drainage, or flood drainage or control purposes for any other of its projects or purposes”).        By



           %ee also Letter from Nancy S. Fuller, Chair, Opinion Committee, Texas Attorney General, to Honorable
Rodney Ellis, Chair, Committee on Government organization, Texas State Senate, at 1 (Apr. 21,2004) (on file with the
Opinion Committee) (stating the policy of this offke “to refrain from issuing an attorney general opinion” on a matter
that is “the subject of pending litigation”).

            ‘Chapter 375 expressly provides that the “Commission,” which term is defmed as the Texas    Natural Resource
Conservation Commission, see TEX. Lot. GOV’T CODE ANN. 5 375.003(3) (Vernon 1999), has sole            authority to create
a district.    See id. $9 375.022.,041 (referring in num~mus places to the “commission”).        The   Natural Resource
Conservation        Commission      is now      the   Texas    Commission    on    Environmental       Quality.        See
http:Nwww.tceq.state.tx.uslabout/.
The Honorable Rodney Ellis - Page 3                     (GA-0268)




contrast, chapter 375 of the Local Government Code expressly withholds eminent domain powers
from municipal management districts: “A district may notexercise the power of eminent domain.”
TEX. LQC. GOV’T CODE ANN. 5 375.094 (Vernon 1999).


        Chapter 376 provides for the creation of 17 specific municipal management districts. In the
following list, the names of the districts from which eminent domain powers are expressly withheld
are underlined?

                   1.   Houston DowntownManagement                 District, see id. 5 376.001(a);

                  2.    Westchase Area Management              District, see id. $ 376.041(a);

                  3.    Greater Greenspoint Management             District, see id. 5 376.081(a);

                  4.    First Colony Management           District, see id. 5 376.11 l(a);

                   5. Harris County Improvement              District No. 3, see id. 5 376.151(a)
                   (Vernon Supp. 2004-05);

                   6. Harris Countvhnurovement               District No. 2, see id. 5 376.21 l(a)
                   (Vernon 1999);

                   7. Greater East End Management                 District, see id. $ 376.261(a)
                   (Vernon Supp. 2004-05);

                   8.   East Downtown Management               District, see id. 5 376.301(a);

                   9.   Midtown Management            District, see id. $ 376.351(a);

                   10. Harris County Municipal Management                 District No. 1, see id. 9
                   376.401(a);

                   11. Near Northwest Management              District, see id. 9 376.45 l(a);



          6With the except&n of subchapter K, (ISadded by Act of May 26,2001,77th           Leg., R.S., ch. 1380, 5 1, sec.
376.451, 2001 Tex. Gen. Laws 3542, 3542, creating the Port Bolivar Improvement District, chapter 376 has been
repealed effective April 1,2005. See Act of May 20,2003,78th          Leg., R.S., ch. 1277,s 6(6)(B)-(I), 2003 Tex. Gem
Laws 4454,4653-54.      Effective April 1,2005, these subchapters (again with the exception of the subchapter creating
the Port Bolivar Improvement District) will be codified in the new Special District Local Laws Code. See id. 5 1,2003
Tex. Gen. Laws at 4489-4591; id. $9,2003 Tex. Gen. Laws at 4654 (“Effective Date”). Subchapter K, as added by Act
of May 26,2001,77th      Leg., R.S., ch. 1380, 5 1, 2001 Tex. Gen. Laws 3542,3542-48,         expired on January 1,2003,
“unless before that date the district [was] cmfiied   at an election.” Act of May 26,2001,77tb       Leg., R.S., ch. 1380,s
3,200l Tex. Gen. Laws 3542,3548.         We have found no information that such an election was ever conducted.

         ‘As adopted by Act of May 15,2001,77th       Leg., R.S., ch. 418, $1,2001    Tex. Gen. Laws 797,798.
The Honorable Rodney Ellis - Page 4                   (GA-0268)




                 12. Greater Northside Management              District, see id. 5 376.451(a);*

                 13. Old Town Snrine Improvement               District, see id. 5 376.451(a);9

                 14. Harris County           tiprovement        District       No.      4, see   id.   5
                 376.451(a);”

                 15. Frisco Square Management              District, see id. 5 376.451(a);”

                 16. Aldine CommunitvhnurovementDistrict,see                      id. 5 376.451(a);”
                 and

                 17. Greater Southeast Management              District, see,id. § 376.451(a).13

 See id. $5 376.052(b), .222, .272, ,312, .462,14 .462,n .463,16 .465,” .474’s (Vernon 1999 & Supp.
,2004-05) (stating, with respect to certain districts, that “[tlhe district may not exercise the power of
 eminent domain”).

III.    Analvsis and Conizlusions

        A.       Questions 1 and 2

                 The legislature must confer the power of eminent domain “either expressly or by
 necessary implication.” Burch v. City of San Antonio, 5 18 S.W.2d 540,544 (Tex. 1975); Anderson
 v. Teco Pipeline Co., 985 S.W.2d 559,564 (Tex. App.-San Antonio 1998, pet. denied). Because



         ‘As adopted by Act of May 23,2001,77th      Leg., RX, ch. 1356,s      1,200l    Tex. Gen. Laws 3349,3349.

         9As adopted by Act ofMay     17,2001,77th   Leg., R.S., ch. 1371,s    1,200l    Tex. Gen. Laws 3460,346O.

         “As adopted by Act ofMay     23,2001,77th    Leg., R.S., ch. 1376,s    1,200l    Tex. Gen. Laws 3528,3528.

         “As adopted by Act of May 23,2001,77th       Leg., R.S., ch. 1384,s    1,200l    Tex. Gen. Laws 3557,3557.

         l*Asadopted   by Act ofMay   17,2001,77thLeg.,     R.S., ch. 1433, $ I, 2001 Tex. Gen. Laws 5131,5131

         ‘?4s adopted by Act of May 25,2001,77th      Leg., R.S., ch. 1476,§    1,200l    Tex. Gen. Laws 5245,5246.

         14Asadopted by Act of May 23,2001,77th       Leg., R.S., ch. 1356,$    1,200l    Tex. Gen. Laws 3349,3352.

         “As adopted by Act of May 25,2001,77th       Leg., R.S., ch. 1476,§    1,200l    Tex. Gen. Laws 5245,525O.

         16Asadopted by Act ofMay     15,2001,77th    Leg., R.S., ch. 418,s    1,200l    Tex. Gen. Laws 797,798.

         “As adopted by Act of May 17,2001,77thLeg.,        R.S., ch. 1371,s    I,2001    Tex. Gen. Laws 3460,3464.

         ‘*As adopted by Act of May 17,2001,77th      Leg., R.S., ch. 1433,§    1,200l    Tex. Gen. Laws 5131,5136.
    The Honorable Rodney Ellis - Page 5             (GA-0268)



-
    chapter 375 expressly withholds eminent domain authority from municipal management districts
    created under that chapter, such a municipal management district does not possess eminent domain
    powers. With respect to a particular district created under chapter 376, on the other hand, the special
    statute must be analyzed to determine whether the power of eminent domain is conferred expressly
    or by necessary implication.

            With respect to the nine districts from which the power of eminent domain is expressly
    withheld, whose names are underlined in the list supra, we conclude, in answer to your first two
    questions, that the legislature did not intend to confer and indeed did not confer the power of eminent
    domain. Consequently, these districts have no power of eminent domain.

             The enabling statutes of the remaining districts are silent on the issue of eminent domain.
    None ofthe districts are expressly authorized to exercise that power. Looking specifically at HCID3,
    the subject of your original question, as an example, section 376.160 of the Local Government Code
    provides it with the powers of certain other types of districts, including a municipal management
    district created under chapter 375:

                            The district has:

                            (1) all powers necessary or required       to accomplish    the
                    purposes for which the district was created;

                             (2) the rights, powers, privileges, authority, and functions of
                    a district created under Chapter 375 [“Municipal Management
                    Districts in General,” discussed supra at pp. 2-31;

                           (3) the powers, duties, and contracting authority specified in
                    Subchapters H and I, Chapter 49, Water Code;

                            (4) the powers given to a corporation under Section 4B,
                    Development Corporation Act of 1979 . . and the power to own,
                    operate, acquire, construct, lease, improve, and maintain projects
                    described by that section;

                           (5) the power of a housing finance corporation created under
                    Chapter 394;

                            (6) the power to impose, assess, charge, or collect advalorem
                    taxes, assessments, impact fees, or other fees in accordance with
                    Chapter 49, Water Code . . . ;

                            (7) the power to contract with the municipality or county for
                    the provision on a fee basis of law enforcement and security services
-                   by the county or municipality; and
       The Honorable Rodney Ellis - Page 6            (GA-0268)



,-
                               (8) the power to contract with a private        entity for the
                      provision of supplemental security services.

       TEX. Lot. GOV’T CODEANN. 5 376.160 (Vernon Supp. 2004-05) (footnote             omitted).

                Of the types of entities whose powers the HClD3 is given under section 376.160, two have
       certain express eminent domain powers. Section 49.222 of the Water Code, part of chapter 49,
       subchapter H and incorporated by section 376.160(3), provides a district or water supply corporation
       subject to the chapter with authority to acquire certain real property by condemnation, or eminent
       domain. See TEX. WATER CODE ANN. $49.222(a) (Vernon 2000). A corporation created under
       section 4B of the Development Corporation Act of 1979, whose powers are among those of the
       HCID3 by virtue of section 376.160(4), has the power to condemn real property but only if the
       eligible city’s governing body approves the action. See TEX. REV. CIV. STAT. ANN. art. 5190.6,
       5 4B(i) (Vernon Supp. 2004-05). Because section 376.160(3) of the Local Government Code
       provides the HClD3 with powers given a water district or water supply corporation under chapter
       49, subchapter H of the Water Code, and the powers given a corporation under section 4B of the
       Development Corporation Act of 1979, arguably the HCID3 has the power of eminent domain. On
       the other hand, chapter 375 of the Local Government Code, which applies to the HUD3 through
       section 376.160(2) and which applies generally to management districts like the HClD3, expressly
       forbids a management district to exercise the power of eminent domain. See TEX. LOC.GOV’T CODE
       ANN. 5 375.094 (Vernon 1999). Moreover, ifthe HCID3’s powers included that of eminent domain,
 ,..   we would have to determine whether the district may exercise that power without the approval of
       another governmental body, as section 49.222 of the Water Code would allow, or only with the
       approval of some governmental body, as section 4B of the Development Corporation Act of 1979
       would require.

                Given the contradictory nature of the HCID3’s powers, we cannot say that its enabling
       statute, chapter 376, subchapter E, implicitly confers the power of eminent domain. In particular
       here, given the fact that the eminent domain powers of two of the entities whose powers are
       incorporated into the HCJD3’s powers conflict, the legislature’s intent is unclear. We consequently
       conclude that the HClD3 does not have the power of eminent domain.

               We have not considered whether the remaining seven management districts have the power
       of eminent domain, notwithstanding      their lack of express eminent domain power. The enabling
       statute for each district must be analyzed as we have done here for the HCID3, with possible
       consideration of the statute’s legislative history, to determine whether the particular district has
       eminent domain power.

               B.      Question 3

                      You finally ask whether a municipal management district that has the power of
       eminent domain-assuming       there are any-may      use its power to “interfere with a transaction
       between two interested parties solely because the [dlistrict desires to acquire the property for its own
       use.” Request Letter, supra note 1, at 1. A governmental body in Texas may exercise the power of
       eminent domain for a public purpose only. See TEX. CONST.art. I, $ 17; Maher v. Lasater, 354
The Honorable Rodney Ellis - Page 7          (GA-0268)




S.W,2d923,924 (Tex. 1962). A governmental bodyexceedsits        eminent domainpowers“whenand
only when” it condemns property “for a use unconnected with its legitimate purposes.” Atwood v.
Willacy County Navigation Dist., 271 S.W.2d 137, 141 (Tex. Civ. App.San         Antonio 1954, writ
ref d n.r.e.); accord Tex. Att’y Gen. Op. No. X-0179 (2000) at 5. Thus, a district with the power
of eminent domain may use the power to acquire property for a use consistent with the district’s
legitimate purposes even if exercise of the eminent domain power may interfere with a transaction
between private parties. Whether property is being condemned, in any particular circumstance, for
alegitimatepurposeofacond~ingmunicipalmanagementdistrictis             aquestion offactthatcannot
be resolved in the opinion process. See Tex. Att’y Gen. Op. No. GA-0156 (2004) at 10 (stating that
fact questions cannot be answered in the opinion process).
    The Honorable Rodney Ellis - Page 8          (GA:0268)




                                          SUMMARY

                           A municipal management district created under chapter 375
                  of the Local Government Code has no power of eminent domain.
                  A municipal management district created under chapter 376 has
                  eminent domain power only if the power is conferred expressly or
                  implicitly. Those districts whose enabling statutes expressly withhold
                  eminent domain power do not have such power. The Harris County
                  Improvement District No. 3 does not have eminent domain power.
                  The enabling statute of any other municipal management district
                  must be analyzed to consider whether the statute confers expressly or
                  implicitly the power of eminent domain. A municipal management
                  district with the power of eminent domain may use the power to
                  acquire property for a use consistent with the district’s legitimate
                  purposes even if exercise of the eminent domain power may interfere
                  with a transaction between private parties. Whether property is being
                  condemned, in any particular circumstance, for a legitimate purpose
                  of the condemning municipal management district is a question of
                   fact.

                                                 Very truly yours,
-




    BARRY R. MCBEE
    First Assistant Attorney General

    DON R. WILLETT
    Deputy Attorney General for Legal Counsel

    NANCY S. FULLER
    Chair, Opinion Committee

    Kymberly K. Oltrogge
    Assistant Attorney General, Opinion Committee
