                                ATTORNEY GENERAL OF TEXAS
                                              GREG         ABBOTT




                                                 November 3,2005



Mr. Jerry Clark                                              Opinion No. GA-03 7 1
Executive Vice President and General Manager
Sabine River Authority of Texas                              Re: Whether the Sabine River Authority of Texas
Post Office Box 579                                          may sell surplus real property to an adjoining
Orange, Texas 7763 1                                         landowner without holding a public sale
                                                             (RQ-0342-GA)

Dear Mr. Clark:

        You ask whether the Sabine River Authority of Texas (the “SRA”) may sell surplus real
property to an adjoining landowner without holding a public sale.’

         You state that the SRA is a river authority created under article XVI, section 59 of the Texas
Constitution and is a “district” governed by Water Code chapter 49. See Request Letter, supra note
1, at 1.’ You inform us that the SRA owns “various lands which are not used in its day-to-day
operations.” Id. As the result, the board of directors “is considering declaring certain portions of
such real property to be surplus and disposing of it” by selling it to adjoining landowners. Id. You
explain that there is some confusion regarding whether such a transaction would be governed by
section 272.001 of the Local Government Code, which generally requires political subdivisions to
sell real property by providing public notice and accepting sealed bids,3 or section 49.226 of the
Water Code, which permits districts to sell certain property by public or private sale. See id.



          ‘See Letter from Jerry Clark, Executive Vice President and General Manager, Sabine River Authority of Texas,
to Honorable Greg Abbott, Texas Attorney General (May 2,2005) ( on f 11e with Opinion Committee, also available at
http://www.oag.state.tx.us)   [hereinafter Request Letter].

          *See also Act of April 27, 1949, 51st Leg., R.S., ch. 110, 8 1, 1949 Tex. Gen. Laws 193 (creating the Sabine
River Authority under article XVI, section 59 of the Texas Constitution); TEX. WATER CODE ANN. 5 49.001(a)( 1)
(Vernon Supp. 2004-05) (“As used in this chapter [] ‘District’ means any district or authority created by authority of
either Sections 52(b)( 1) and (2) Article III, or Section 59, Article XVI, Texas Constitution, regardless ofhow created.“).

          3See TEX. Lot. GOV’T CODE ANN. 5 272.001(a)-(b) (V emon Supp. 2004-05); see also Bell v. Katy Indep. Sch.
DA., 994 S.W.2d 862, 866 (Tex. App.-Houston      [ 1st. Dist.] 1999, no pet.) (Section 272.001 “protect[s] public property
in order that it might not be disposed of for less than true value. The notice and bidding requirements          stimulate
competition, prevent favoritism and secure the best price for the property.“) (citing City of Dallas v. McKasson, 726
S.W.2d 173, 176 (Tex. App.-Dallas 1987, writ ref dn.r.e.); West Orange-Cove Consul. Indep. Sch. Dist. v. Smith, 928
S.W.2d 773, 776 (Tex. App.-Beaumont     1996, no writ)).
Mr. Jerry Clark - Page 2                       (GA-0371)




       Section 49.226 of the Water Code provides in pertinent part:

                        (a) Any personal property valued at more than $300 or any
               land or interest in land owned by the district which is found by the
               board to be surplus and is not needed by the district may be sold
               under order of the board either bypublic orprivate sale, or the land,
               interest in land, or personal property may be exchanged for other
               land, interest in land, or personal property needed by the district.
               Except as provided in Subsection (b), land, interest in land, or
               personal property must be exchanged for like fair market value, which
               value may be determined by the district. In connection with the sale
               of surplus land, the board, at its discretion, may impose restrictions
               on the development and use of the land.




                         (c) Before a public sale of real property, the district shall
               give notice of the intent to sell by publishing notice once a week for
               two consecutive weeks in one or more newspapers with general
               circulation in the district.

TEX. WATER CODEANN. 5 49.226(a), (c) (V emon Supp. 2004-05) (emphasis             added).

        Section 49.226(b) authorizes a district to dispose of other types of real property, but also
contains a more general reference to chapter 272 of the Local Government Code:

                        (b) Any property dedicated to or acquired by the district
               without expending district funds may be abandoned or released to the
               original grantor, the grantor’s heirs, assigns, executors, or successors
               upon terms and conditions deemed necessary or advantageous to the
               district and without receiving compensation for such abandonment
               or release.    District property may also be abandoned, released,
               exchanged, or transferred to another district, municipality, county,
               countywide agency, or authority upon terms and conditions deemed
               necessary or advantageous to the district. Narrow strips of property
               resulting from boundary or surveying conflicts or similar causes,
               or from insubstantial encroachments by abutting property owners,
               or property of larger configuration         that has been subject to
               encroachments by abutting property owners for more than 25 years
               may be abandoned, released, exchanged, or transferred to such
               abutting owners upon terms and conditions deemed necessary or
               advantageous to the district. Chapter 272, Local Government Code,
               does not apply to this section.

Id. 5 49.226(b) (emphasis added). As originally enacted, section49,226(b) provided that chapter 272
of the Local Government Code “shall not apply to this subsection”; the exception from chapter 272
Mr. Jerry Clark - Page 3                                  (GA-0371)




was limited to those specific transactions authorized by section 49.226(b). See Act of May 25,1995,
74th Leg., ch. 715, 5 2, 1995 Tex. Gen. Laws 3755, 3775. However, the legislature changed
“subsection” to “section” in 2001. See Act of May 26,2001, 77th Leg., R.S., ch. 1423, 5 14,200 1
Tex. Gen. Laws 5069,5072.

         Section 49.226(a) expressly authorizes a district to sell surplus land by public or private sale.
See TEX. WATER CODE ANN. 9 49.226(a) (Vernon 2004-05) (“any land or interest in land owned by
the district which is found by the board to be surplus and is not needed by the district may be sold
under order of the board either by public or private sale”). Moreover, by its plain terms, section
49.226(b) provides that chapter 272 of the Local Government Code “does not apply to this section.”
Id. 5 49.226 (b). Thus, if a land transaction is authorized by section 49.226, public sale requirements
prescribed by section 272.001 of the Local Government Code do not apply. In addition, the notice
requirement set forth in section 49.226(c) for a public sale of real property does not apply to a private
sale. See id. § 49.226(c).

        Given these statutory provisions, in the event the SRA board of directors determines that land
is “surplus and is not needed by the district,” the district may sell the land by private sale under
section 49.226(a) of the Water Code. See id. 8 49.226(a). The requirements of section 272.001 of
the Local Government Code would not apply. Thus, in answer to your specific question, the SRA
may sell real property, which the board has determined is surplus and is not needed by the SRA, to
an adjoining landowner without holding a public sale.4




            4Counsel for the SRA observes that section 49.226 does not establish procedures or requirements for a private
land sale and advises that “a reasonable private sale should incur no legal consequences to the [ SRA] . However, when
possible, the [SRA] should retain a certified appraiser to determine fair market value of the real property prior to its sale.”
Opinion Letter from Charles W. Goehringer, Jr., Attorney, Germer Gertz, L.L.P., to Jerry Clark, Sabine River Authority
of Texas, at 1 (May 1,2005) (submitted as part of Request Letter, on file with Opinion Committee, also available at
http://www.oag.state.tx.us);     see also TEX. WATERCODEANN. $49.226(c) (Vernon Supp. 2004-05). In this regard, we
add that the SRA may also wish to consider whether a land sale comports with the Texas Constitution. See TEX. CONST.
art. III., 3 5 50-52 (limiting the legislature’s and political subdivisions’ authority to aid individuals and private entities).
Certainly a land sale for fair market value could not be challenged as a gratuitous transaction.          CJ: Walker v. City of
Georgetown, 86 S.W.3d 249, 260 (Tex. App.-Austin 2002, pet. denied) (“[Tlhe lease entered into here was supported
by valuable consideration.      As such, it was not a gratuitous donation of public funds or a thing of value.“) (considering
challenge to municipal real property lease under article III, section 52). We also note that section 49.226 does not
exempt a district from the requirements of the Open Meetings or Public Information Acts.
Mr. Jerry Clark - Page 4                      (GA-0371)




                                       SUMMARY

                        In the event the Sabine River Authority board of directors
               determines that land is “surplus and is not needed” by the river
               authority, section 49.226 of the Water Code authorizes the river
               authority to sell the land by private sale. Because the transaction is
               governed by section 49.226, public sale requirements prescribed by
               section 272.001 of the Local Government Code would not apply.
               Thus, the Sabine River Authority may sell such surplus real property
               to an adjoining landowner without holding a public sale.




BARRY R. MCBEE
First Assistant Attorney General

NANCY S. FULLER
Chair, Opinion Committee

Mary R. Crouter
Assistant Attorney General, Opinion Committee
