Does the Texas colonias subdivision law apply when a school district leases teacher housing on its grounds?

TX AG Opinion DM-0485: Does the colonias law cover a school district's teacher housing?

Plain-English summary

The Webb Consolidated Independent School District runs schools in Bruni and Oilton, two communities with housing shortages. To recruit teachers from outside those communities, the district has long placed manufactured homes on school property and leased them to some teachers under residential lease agreements at a nominal rent, treating the housing as a fringe benefit. The district planned to add more homes but had run into difficulty getting utility service, because there was concern it might be a "subdivider" regulated under the colonias statute, Local Government Code chapter 232, subchapter B. The District Attorney, Joe Rubio, asked the Attorney General whether subchapter B applies to these teacher-housing leases.

The Attorney General concluded the leases are subject to subchapter B. The statute applies to land subdivided into four or more lots intended primarily for residential use in the jurisdiction of an "affected county." Webb County is an affected county, the homes sit outside any municipality's limits, and the opinion assumed four or more leases and a location outside municipal extraterritorial jurisdiction. The key question was whether the district is "subdividing." The opinion concluded it is. The district's residential lease conveys to each teacher the right to occupy a manufactured home on a distinct tract (the lease refers to the property by lot, block, and subdivision, limits parked vehicles, and requires yard upkeep), so the district is dividing the surface area of land into "lots" intended for residential use. The district is a legal entity that owns the land, which makes it a "subdivider" under the statute's definition.

The opinion also found the district subdivides "lots as part of a common promotional plan in the ordinary course of business." A "common promotional plan" is any plan to offer lots for sale or lease when the land is contiguous or part of the same area, and the district itself described renting the homes as part of a scheme to provide residential quarters for its employees on its own property. The phrase "in the ordinary course of business" might just refine "common promotional plan," or it might exempt certain gratuitous transfers, but either way the leases qualify: they are part of teachers' compensation, not gifts, and the gift exception (for subdivisions incident to a conveyance of land as a gift between related persons) does not apply. Because the district provides housing as a recurring fringe benefit under a form lease, the leases are part of a common promotional plan in the ordinary course of business. The bottom line: subchapter B applies, so the district must satisfy its requirements (such as preparing a plat with water and sewer information and obtaining county approval) before subdividing four or more such lots.

Currency note

This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The colonias provisions in Local Government Code chapter 232, subchapter B, have been amended repeatedly since 1998, including changes to the definitions and platting requirements. Confirm the current statute before relying on any specific rule here.

Who this opinion affected (as of 1998)

School districts providing employee housing in affected counties: The opinion told them that leasing four or more homes on district land for residential use could make the district a regulated "subdivider" under the colonias statute, with platting and county-approval obligations.

Webb Consolidated ISD specifically: The opinion meant its teacher-housing leases fell under subchapter B, which bore on its difficulty obtaining utility service for the manufactured homes.

Utilities and county officials: The opinion clarified that the district's leases were subdivisions under subchapter B, which is relevant to the statute's restriction on connecting utilities to non-compliant subdivided land.

Common questions

Does the colonias law apply to a school district's teacher housing?
Yes, on these facts. The opinion concluded that leasing four or more manufactured homes on school land for teachers to live in is "subdividing" under Local Government Code chapter 232, subchapter B, and the school district is a "subdivider."

Why is leasing homes considered "subdividing"?
The opinion explained that the district's lease gives each teacher the right to occupy a home on a distinct tract, referring to the property by lot, block, and subdivision, so the district is dividing the surface of the land into "lots" intended for residential use.

Does it matter that the rent is nominal and the housing is a fringe benefit?
No. The opinion concluded the leases are part of teacher compensation and are not gratuitous, so the statute's gift exception does not apply, and providing housing as a recurring fringe benefit under a form lease is a common promotional plan in the ordinary course of business.

What does the district have to do if subchapter B applies?
The opinion described subchapter B's requirements, such as preparing a plat with a description of water and sewer facilities and obtaining county approval, before subdividing four or more residential lots.

Background and statutory framework

The opinion assumed, without deciding, that an independent school district may provide employee housing on school grounds under a lease, incident to its authority to manage school property and to employ and compensate teachers (citing Education Code chapter 11, subchapter D, and section 13.155, and noting Landrum v. Centennial Rural High Sch. Dist., 146 S.W.2d 799 (Tex. Civ. App.-Austin 1940, writ dism'd), and Adams v. Miles, 300 S.W. 211 (Tex. Civ. App.-San Antonio 1927, writ granted), which treated a "teacherage" as a school building).

Subchapter B requires subdividers to meet special conditions before subdividing land, including preparing a plat with a description of water and sewer facilities (Local Gov't Code § 232.023) and obtaining county approval (§§ 232.024, 232.028), and it bars utilities from serving subdivided land unless conditions are met (§ 232.029). It applies "only to land that is subdivided into four or more lots that are intended primarily for residential use in the jurisdiction of an affected county" (§ 232.022(a)). Land is in a county's jurisdiction if it is in the county, outside municipal corporate limits, and outside municipal extraterritorial jurisdiction as determined under chapter 42 (§ 232.022(b)).

The statute defines a "lot" as a parcel into which land intended for residential use is divided; "subdivide" as dividing the surface area of land into lots intended primarily for residential use; "subdivider" as an entity that owns an interest in land and directly or indirectly subdivides it into lots as part of a common promotional plan in the ordinary course of business; and "subdivision" as land subdivided into lots for sale or lease (§ 232.021). A "common promotional plan" is any plan to offer lots for sale or lease when the land is contiguous or part of the same area (§ 232.021(3)). The Attorney General applied these definitions to conclude the district divides its land into residential lots, is a land-owning legal entity and therefore a "subdivider," and leases under a common promotional plan in the ordinary course of business. The gift exception in section 232.022(a) (for a subdivision incident to a conveyance of land as a gift between related persons) did not apply because the leases were part of teacher compensation, not gratuitous.

Citations

Statutes:

• Tex. Local Gov't Code §§ 232.021, 232.022, 232.023, 232.024, 232.028, 232.029; ch. 42
• Tex. Educ. Code ch. 11, subch. D; §§ 11.151, 13.155

Cases:

• Landrum v. Centennial Rural High Sch. Dist., 146 S.W.2d 799 (Tex. Civ. App.-Austin 1940, writ dism'd)
• Adams v. Miles, 300 S.W. 211 (Tex. Civ. App.-San Antonio 1927, writ granted)

Secondary authority:

• Black's Law Dictionary 804 (5th ed. 1979)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0485
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1998/dm0485.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General, State of Texas

DAN MORALES, ATTORNEY GENERAL

November 9, 1998

The Honorable Joe Rubio
District Attorney
49th Judicial District
P.O. Box 1343
Laredo, Texas 78042-1343

Opinion No. DM-485

Re: Whether the colonias statute, Local Gov't Code ch. 232 subch. B, applies to employee housing provided by the Webb Consolidated Independent School District (RQ-902)

Dear Mr. Rubio:

On behalf of the Webb Consolidated Independent School District (the "school district"), you ask about the application of the colonias legislation, [Footnote: See Act of May 28, 1995, 74th Leg., R.S., ch. 979, 1995 Tex. Gen. Laws 4895, 4895.] codified as Local Government Code chapter 232, subchapter B ("subchapter B"), to employee housing provided by the school district. Specifically, you ask whether subchapter B applies to the school district's lease of manufactured homes on school grounds to teachers. We conclude that the leases you describe are subject to subchapter B.

Your letter sets forth the following facts: The school district operates schools in Bruni and Oilton, communities with housing shortages. Teachers are generally hired from outside the communities. In order to attract teachers, the school district has "traditionally provided housing for some of its teachers in manufactured homes situated on school district property." Teachers sign residential lease agreements with the school district and pay a nominal rental fee to the school district. The school district states that it "does not . . . profit from such rental payments and deems these quarters akin to a fringe benefit for teachers." The school district is now making plans to place additional manufactured homes on its property. [Footnote: We assume, but do not decide, that an independent school district has the authority to provide employee housing on school grounds pursuant to a lease arrangement incident to its general authority to control and manage school property and to employ and compensate teachers. See generally Educ. Code ch. 11, subch. D (powers and duties of board of trustees of independent school district); id. § 13.155 (consolidated school district is an independent school district); see also Landrum v. Centennial Rural High Sch. Dist., 146 S.W.2d 799, 802 (Tex. Civ. App.--Austin 1940, writ dism'd) (concluding that "teacherage" is school building) (citing Adams v. Miles, 300 S.W. 211 (Tex. Civ. App.--San Antonio, 1927, writ granted)).]

Subchapter B requires subdividers to comply with certain special conditions before subdividing land, such as preparing a plat, with an attached description of water and sewer facilities, see generally Local Gov't Code § 232.023, and obtaining county approval of the plat, see id. §§ 232.024, .028. Section 232.029 prohibits a utility providing water or sewer services, electricity or gas from serving or connecting any subdivided land unless certain conditions are met. Apparently, the school district has had difficulty obtaining utility services for its manufactured homes because there is some concern that the school district is a "subdivider" subject to subchapter B.

Local Government Code section 232.022 provides that subchapter B "applies only to land that is subdivided into four or more lots that are intended primarily for residential use in the jurisdiction of an affected county." Id. § 232.022(a). For purposes of this opinion, we can break this provision regarding the scope of subchapter B into two general requirements: For land to be subject to subchapter B, it (1) must be located "in the jurisdiction of an affected county" and (2) must be "subdivided into four or more lots that are intended primarily for residential use."

With respect to the threshold, first requirement -- that the land be located "in the jurisdiction of an affected county" -- you inform us that Webb County is an "affected county" subject to subchapter B. See id. § 232.021(1) (defining the term "affected county"). You have not provided us with complete information regarding whether the land at issue is within the jurisdiction of the county, however. For the purposes of subchapter B, land is considered to be within the jurisdiction of a county "if the land is located in the county, outside the corporate limits of municipalities, and outside the extraterritorial jurisdiction of municipalities, as determined by" Local Government Code chapter 42. Id. § 232.022(b). You suggest that the school district's manufactured homes are located on property outside the corporate limits of any municipality. We will assume that the manufactured homes are located on property outside the extraterritorial jurisdiction of municipalities.

With respect to the second requirement -- that the land must be "subdivided into four or more lots that are intended primarily for residential use" -- we assume that the school district contemplates entering into four or more leases. The most crucial question for our purposes is whether the school district is subdividing. Again, under section 232.022(a), applicability of subchapter B to the school district's conduct depends upon whether the land at issue "is subdivided into four or more lots." Id. § 232.022(a) (emphasis added). In addition, subchapter B's platting requirements apply to "[a] subdivider of land." Id. § 232.023(a).

The subchapter defines the terms "lot," "subdivide," "subdivider," and "subdivision" as follows:

(7) "Lot" means a parcel into which land that is intended for residential use is divided.

(12) "Subdivide" means to divide the surface area of land into lots intended primarily for residential use.

(13) "Subdivider" means an individual, firm, corporation, or other legal entity that owns any interest in land and that directly or indirectly subdivides land into lots as part of a common promotional plan in the ordinary course of business.

(14) "Subdivision" means an area of land that has been subdivided into lots for sale or lease.

Id. § 232.021. We conclude that the school district's lease of manufactured homes to teachers falls within the definition of "subdivide" and that the school district is a "subdivider," for the following reasons.

"Subdivide" means "to divide the surface area of land into lots intended primarily for residential use." Id. § 232.021(12). Your letter contends that the school district has not divided the surface area of land. The residential lease used by the school district, however, appears to convey to a teacher the right to occupy a manufactured home on a distinct tract of land. See Letter from Joe Rubio, District Attorney, 49th Judicial District, to Opinion Committee, Office of Texas Attorney General (Jun. 18, 1996), Exhibit A, entitled "RESIDENTIAL LEASE," paras. 2 (referring to property by lot, block, and subdivision), 5 (requiring tenant to limit number of vehicles parked on property), 15 (requiring tenant to maintain "the yard including the shrubbery"). Based on the terms of this lease, we believe that the school district is dividing the surface area of land. In addition, it is clear from your letter that the parcels of land are leased to the teachers as residences and are thus "intended for residential use" and constitute "lots" within the meaning of subchapter B. See Local Gov't Code § 232.021(7).

In addition, the school district falls within the definition of "subdivider." Again, the term "subdivider" is defined as "an individual, firm, corporation, or other legal entity that owns any interest in land and that directly or indirectly subdivides land into lots as part of a common promotional plan in the ordinary course of business." Id. § 232.021(13). The school district is a legal entity [Footnote: A "legal entity" is an "entity, other than a natural person, who has sufficient existence in legal contemplation that it can function legally, be sued or sue and make decisions through agents . . . ." Black's Law Dictionary 804 (5th ed. 1979). The trustees of a consolidated independent school district constitute a body corporate and in the name of the district may acquire and hold real and personal property and sue and be sued. See Educ. Code §§ 11.151(a) (powers and duties of board of trustees of independent school district), 13.155 (consolidated school district is an independent school district).] that owns an interest in land. [Footnote: "All rights and titles to the school property, whether real or personal, shall be vested in the trustees and their successors in office." Id. § 11.151(c). Your letter indicates that the manufactured homes are located on property owned by the school district.] As discussed above, it is subdividing land into lots.

We also believe that the school district is subdividing land into "lots as part of a common promotional plan in the ordinary course of business." Id. The statute defines a "common promotional plan" as "any plan or scheme of operation undertaken by a . . . subdivider . . . to offer for sale or lease lots when the land is . . . contiguous or part of the same area of land." Id. § 232.021(3). You state that "the school district has rented out the manufactured homes as part of a scheme to provide residential quarters for its employees." The manufactured homes are "situated on school district property." Thus, the school district appears to have a "plan or scheme" to lease lots that are "part of the same area of land." The phrase "in the ordinary course of business" is not defined by the statute. The phrase may merely further refine the term "common promotional plan." Alternatively, the language "in the ordinary course of business" may have been intended to except certain gratuitous transfers from the scope of subchapter B. See id. § 232.022(a) ("This subchapter does not apply if the subdivision is incident to the conveyance of land as a gift between persons related to each other . . . ."). The leases at issue are part of teachers' compensation from the school district and are not gratuitous. [Footnote: Your letter states that teachers living in the homes pay a nominal rental fee and also describes the housing as a fringe benefit.] Furthermore, your letter states that the school district "has traditionally provided housing for some of its teachers in manufactured homes situated on school district property." Given that the school district provides housing to its employees as a fringe benefit for rent pursuant to a form residential lease agreement, we believe that the school district's leases are "part of a common promotional plan within the ordinary course of business," however one defines the latter phrase.

SUMMARY

Local Government Code chapter 232, subchapter B, applies to the Webb Consolidated Independent School District's lease of manufactured homes on school grounds to teachers.

Yours very truly,

DAN MORALES
Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

SARAH J. SHIRLEY
Chair, Opinion Committee

Prepared by Mary R. Crouter
Assistant Attorney General