                                                The Attorney        General of Texas

  JIM MATTOX                                                    August 13, 1984
  Attorney General


  Supreme   Court Building                    Honorable T. R. Ba"d:r              Opinion No. JM-189
  P. 0. BOX 12546                             Nueces County Attonwy
  Aus!in, TX. 76711. 2546                     Courthouse                          Re: Whether an area to be developed
  5121475-2501                                Corpus Christi, Texas 78401         for tourist purposes within its
  Telex    910/874-1367
  Telecopier      5121475.0266
                                                                                  extraterritorial jurisdiction may
                                                                                  be designated by a city as a"
                                                                                  industrial district
  714 Jackson,  Suite 700
  Dallas, TX. 75202-4506
                                              Dear Mr. Bandy:
  214/742-8944

                                                   You advise tha: certain areas along Mustang Island in Nueces
  4624 Alberta          Ave., Suite     160   County are being e:r:ensivelydeveloped for tourist-related purposes
  El Paso, TX.          79905.2793            (through the const,ruction of hotels, condominiums, vacation home
  9151533.3464                                subdivisions, and rw:reation facilities). You ask:

PO1         Texas,    Suite 700
                                                       May the governing body of a cj~tydesignate as a"
        Juston,    TX. 77002-3111                      industria:ldistrict under the Municipal Annexation
      7131223-5686                                     Act certain areas within its extraterritorial
                                                       jurisdict:lrm which it determines are primarily
                                                       utilized :iorthe tourist industry?
  606 Broadway,            Suite 312
  Lubbock,     TX.        79401-3479
  6061747-5236                                     The Municipal Iumexation Act, article 970a, V.T.C.S., was enacted
                                              in 1963. See Acts; 1963, 58th Leg., ch. 160, at 447. Section 5
                                              thereof states in pertinent part:
      4309 N. Tenth,     Suite B
      McA,,en,     TX. 76501~1665
      512/662-4547                                           Sec. 5. The governing body of any city shall
                                                       have the right, power, and authority to designate
                                                       w        par:   of    the   area  located    in  its
      200 Main Plaza, Suite 400                        extraterr:it:orialjurisdiction as a" industrial
      San Antonio,  TX. 76205.2797
                                                       district, .XS the term is customarily used, and to
      51212254191
                                                       treat    witi  such area  from time to time  as such
                                                       governing body may deem to be in the best interest
      An Equal       Opportunity/                      of the city. Included in such rights and powers
      Affirmative      Action     Employer             of the governing body of any city is the
                                                       permissive right and power to enter into contracts
                                                       or agreemwts with the owner or owners of land in
                                                       such      intcstrial district to      guarantee the
                                                       continuat:1on of the extraterritorial status of
                                                       such distr:.ct,and its immunity from annexation by
                                                       the city for a period of time not to exceed seven
                                                       (7) years, and upon such other terms and




                                                                            p. 825
Honorable T. R. Bandy - Pagr,2     (JM-189)




          considerations iw       the   parties   might   deem
          appropriate . . . .    (Emphasis added).

The term "industrial distri':,:"
                               is not defined by article 970a, but is
to be understood "as the telxlis customarily used."

     In Calvert v. Austin Liulndryand Dry Cleaning Co., 365 S.W.Zd 232
(Tex. Civ. App. - Austin 19c3, writ ref'd n.r.e.), the meaning of the
undefined term "industrial cperations," as used in a taxing statute,
was at issue, Declaring th:.t the word "industrial" has a meaning of
its own, and that the 1egis:l;lture
                                  is presumed to have used the word in
the sense ordinarily underxood, the court held that the operations of
laundrv and drv cleanine xlants were "industrial onerations." The
court relied ;pon Nortlh 'Side Laundry Co. v. Board of Property
Assessment, Appeals and RevTew, 79 A.2d 419 (Pa. 1951), which held a
commercial laundry to be an'sdustrial plant" within the meaning of a
Pennsylvania taxing statute. Cf. State ex rel. Keystone Laundry and
Dry Cleaners, Inc. v. McDomxll~26
                           --*       S.W.Zd 11 (MO. 1968).

     The Pennsylvania SuprenleCourt in the North Side Laundry case,
responding to an argument tlat the Pennsylvania statute as construed
in a prior case unco"stit,lrionallydiscriminated against a laundry
because other "service induj:ries" were not equally taxed, explained:

          [T]he fact that tte businesses to which plaintiff
          referred   are   rometimes   generically   called
          'industries' is Lrrelevant to the issue here
          raised. The question is whether their establish-
          ments are industrisl plants.

             The answer to that question is self-evident.
          By no stretch oE the imagination could a bank
          building, a hate:.,a theater or any of the other
          business establir;l,mentsreferred to by plaintiff
          be considered ar industrial plant. It is true
          that we sometimelrspeak of 'the movie industry',
          'the hotel industry' or 'the banking industry',
          but that is merf,~lya loose use of language to
          convey that idea that the particular business is a
          sizeable one. Irispite of that colloquialism, we
          do not speak o!: the buildings housing such
          businesses as    '::"dustrial plants'.   Plaintiff
          attempts to gi~ve to that phrase a legal meaning
          that   goes   far   beyond   anything   that   was
          contemplated by the Courts when they pronounced
          this rule and by the legislature when it adopted
          it in the Act of 1933. The law can do no better
          than to define ar industrial plant as that type of
          establishment whj.(,h
                              the ordinary man thinks of as




                                  p. 826
    :   .


            Honorable T. R. Bandy - Page 3   (JM-189)



C




                      such. Certainly a commercial laundry comes within
                      that definition bdt the other businesses here
                      mentioned do not.

            See also Union Mutual Life Irsurance Co. v. Emerson, 345 A.2d 504 (Me.
            1975); State Police DepartmelG:v. Hargrave, 237 N.E.Zd 269 (Ind. App.
            1968); Attorney General Opinlcn MW-552 (1982).

                 Similarly, the question here is not whether businesses catering
            to tourists might be regardcclas engaged in "the tourist industry."
            The question is whether an srea primarily utilized for the tourist
            industry can be properly regarded as an "industrial district" within
            the meaning of the statute.

                 We do not think the leE;jslatureintended to allow the extension
            of a city's powers, in the mrner contemplated by section 5 of article
            970a. to embrace every extraxrritorial are+ occupied by a commercial
            venture that might be considt:.red
                                             part of some "industry" in the broad
            sense. As the Supreme Court: of Maine noted in Union Mutual Life
            Insurance Co., supra, where 'Lndustrial plant" status was claimed for
            the home office of an in3llrance company because it was highly
            capitalized, had a large labcr force, and other indicia:

                      If the argument ai.xancedwere to be adopted, it
                      would seem that an:!general office building could
                      in theory qualify 5,san industrial plant.

            345 S.W.Zd 507. The Maine Court relied upon and quoted from the
            Indiana case of State Police Department v. Hargrave, m,  to the
            effect:

                      [Tlhe ordinary man rrouldunderstand an industrial
                      plant to be any factory. business or concern which
                      is engaged primarily in the manufacture or
                      assembly of good!; or the processing of raw
                      materials, or both.

                    We believe an "industrial district," as the term is customarily
            used, is an area where indujrrial plants are located, as contrasted
            with areas that are merely commercial in character. If the term
            "industrial" were synonymous with the term "commercial" in ordinary
            usage, it would be idle for osr statutes to refer to them separately.
            See V.T.C.S. art. 1349 (":mxnercial or industrial" clubs); art.
            5190.6,     §2(10) ("manufacturing and industrial facilities," and
            "commercial development," in addition); art. 5186 ("business and
            industrial development").        Cf.   V.T.C.S.   art.  5190.1,   52(j)
             ("manufacturing or industrial enterprise"); art. 5190.2, §2(=)
             ("manufacturing or industrial enterprise"). Article lOlla, V.T.C.S..
            grants certain cities zonin;: power over land "for trade, industry,




                                             p. 827
Honorable T. R. Bandy - Page 4   (JM-189)




residence, or other purpose." Distinctions between cormnercialzones
or districts and manufacturing or industrial districts have been
readily applied. City of Corpus Christ1 v. Jones, 144 S.W.Zd 388
(Tex. Civ. App. - San Antonio 1940, writ dism'd judgmt car.). -.See
also City of Amarillo v. :;'&, 109 S.W.Zd 258 (Tex. Civ. App. -
Amarillo 1937, writ dism'd). Cf. City of Amarillo v. Stapf. 101
S.W.Zd 229 (Tex. Comm'n App. 1937,pinion adopted).

     In only two cases that we have found is there a suggestion that
section 5 of article 970a might reach farther. See Mihailov v. City
of Cedar Hill, 453 S.W.Zd 111:(Tex. Civ. App. - Dallas 1970. no writ)
(mobile home site development); and Fox Development Co. v. City of San
Antonio, 459 S.W.2d 670 (Tex. Civ. App. - San Antonio 1970). affirmed,
468 S.W.2d 338 (Tex. 1971) (subdivision development). In the Mihailov
case, supra, the court merelr  held that the city could not be denied
an opportunity to litigate the question of extraterritorial rights
under sections 4 and 5 of article 970a. In the Fox Development Co.
case, a,       the Court o:i Civil Appeals said that because the
appellant had not shown a co:.laterallyattacked ordinance to be void,
the trial court did not err in holding that the land in dispute was
"within the extraterritoria:.jurisdiction of the City of San Antonio
under Article 970a, 55." But in affirming the result of the Fox
Development Co. case, the fupreme Court held that section 7 (not
section 5) of article 970a was the operative section.

     Three cases to which Houston Endowment, Inc. was a party
concerned unimproved land, used for agricultural purposes, that was
considered subject to inclusion in an industrial district. We do not
believe that they represent a different view, however, because the
land was acknowledged to ,e "far more valuable for industrial
development than for any otter use." City of Pasadena v. Houston
Endowment, Inc., 438 S.W.Zd -52, 155 (Tex. Civ. App. - Houston [14th
Dist.] 1969, writ ref'd n.r.a.). [The land was within territory held
by a city under articles llfi:#-1187,V.T.C.S., which authorize limited
annexations for improving navigation along navigable streams and for
establishing and maintainin,:wharves, docks, railway terminals, and
other facilities for aidin]: navigation or wharves. Article 970a,
V.T.C.S., does not apply to s,lchterritory, City of Houston v. Houston
Endowment, Inc., 428 S.W.2d 706 (Tex. Civ. App. - Houston [lst Dist.1
1968, writ ref'd n.r.e.), but article 1187-l. V.T.C.S., allows the
designation of industrial disrricts there in words almost~identical to
those of article 970a. --Houston Endowment, Inc. v. City of Houston,
468 S.W.Zd 540 (Tex. Civ. Ap:?.- Houston [14th Dist.] 1971, writ ref'd
n.r.e.). Cf. City of Nassau Bay v. City of Webster, 600 S.W.Zd 905
(Tex. Civ.App. - Houston [ist Dist.] 1980), writ ref'd n.r.e.. per
curiam, 608 S.W.Zd 618 (Tex. ,.980).]

     We are of the opinion, c.fteran examination of the statutes and
cases, that the governing bo+ of a city may not properly designate as




                                 p. 828
Honorable T. R. Bandy - Page 5      (JM-189)




an industrial district unde:r the Municipal Annexation Act an area
within its extraterritorial jurisdiction which it determines is to be
primarily utiljzed for the tourist industry.

                               SUMMARY
                               .-
             The governing bclc.yof a city may not properly
         designate as an j.r.dustrialdistrict under the
         Municipal   Annexation Act an area within its
         extraterritorial jurisdiction which it determines
         is to be primarily utilized for the tourist
         industry.




                                         JIM     MATTOX
                                         Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney :?neral

Prepared by Bruce Youngblood
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
David Brooks
Colin Carl
Susan Garrison
Jim Moellinger
Nancy Sutton
Bruce Youngblood




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