Can a transit authority use its special economic-development power to pay for streets, drainage, or a library?

Texas AG Opinion JM-952: When Do Streets and Libraries Count as Transit "Economic Development"?

Plain-English summary

Texas has a detailed law, article 1118x, that lets metropolitan areas set up rapid transit authorities. Buried in that law is a special power: a qualifying transit authority can include "regional economic development facilities" as part of a transit station or terminal complex, and can raise money for them. The idea is that a transit hub can anchor projects that create jobs and boost the local economy, things like convention centers, entertainment venues, or sports facilities.

A state senator asked the Attorney General a practical follow-up. Could that same economic-development power reach ordinary public works: drainage projects, streets and other infrastructure, or a library? Those things clearly help a local economy. Does that make them "regional economic development facilities"?

The Attorney General's answer turned on a single word in the statute: "within." The law authorizes these facilities only when they are located within a station or terminal complex. So the economic benefit of a project is not the deciding factor. What matters is location. A drainage project, a street improvement, or a library that sits outside the permitted footprint of the transit complex cannot be a "regional economic development facility," no matter how much it would help the area. Built inside the complex, on the other hand, such a project could qualify.

That footprint is not large. A related subsection caps the complex, for these purposes, at land no more than 1,500 feet (500 yards) from the center point of the complex, and the land has to be in an adopted master plan. So the window for a drainage project or a library to qualify is narrow, but the Attorney General would not say it was impossible as a matter of law. It depends on the specific facts.

Pulling it together, the Attorney General laid out four requirements for a project to count as a regional economic development facility under this statute: it has to be located at a station or terminal complex; it has to aim at providing jobs or improving economic conditions generally; it has to be dedicated to lawful purposes; and it has to meet the statute's requirements for funding and approval. Whether any given project checks all four boxes is a question of fact.

The opinion is also a small window into how a bill becomes law in the crush at the end of a session. The substance of this economic-development provision started life as a separate San Antonio and Bexar County transit measure (Senate Bill 1536). When that bill stalled, its language was grafted onto another bill, House Bill 2008, in the last days of the 1987 session so it could reach the governor in time.

Currency note

This opinion was issued in 1988. 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.

Article 1118x, V.T.C.S., has since been repealed and recodified into the Transportation Code as part of the statutes governing metropolitan rapid transit authorities, and the provisions on economic development and station complexes have been amended. The population thresholds and dates in the version quoted here reflect 1987 law. Anyone analyzing a transit authority's power to fund a specific project today should work from the current Transportation Code rather than the article 1118x language cited in this opinion.

Who this opinion affected (as of 1988)

Metropolitan rapid transit authorities: The opinion told them the economic-development power is tied to the station or terminal complex, not to a project's general economic benefit.

San Antonio and Bexar County officials: The provision at issue grew out of a San Antonio transit and economic-development measure, and the opinion clarified how far the resulting power reaches.

Local governments seeking transit-funded public works: The opinion made clear that streets, drainage, or a library outside the transit complex footprint cannot be funded as regional economic development facilities.

Common questions

Can a transit authority pay for a library or street improvements as economic development?
Only if the project is located within a transit station or terminal complex and meets the statute's other requirements. Projects outside the complex footprint do not qualify, regardless of their economic benefit.

Why does location matter more than the economic benefit?
Because the statute authorizes regional economic development facilities only if they are located within a station or terminal complex. The Attorney General read that as a hard limit, so a project's economic value cannot substitute for being inside the complex.

How big is the permitted complex?
For these facilities, the statute bars acquiring land more than 1,500 feet (500 yards) from the center point of the complex, and the land must be in an adopted master plan, so the qualifying area is limited.

What are all the requirements for a facility to qualify?
It must be located at a station or terminal complex, must aim at providing jobs or improving economic conditions generally, must be dedicated to lawful purposes, and must meet the statutory requirements for funding and approval. Whether a specific facility qualifies depends on its own facts.

Background and statutory framework

Article 1118x, V.T.C.S., is a lengthy, detailed statute originally enacted in 1973 to help the state's urban areas remedy problems such as traffic congestion and air pollution resulting in part from a lack of mass transit systems. It authorizes metropolitan areas, upon a vote of the electorate, to establish rapid transit authorities structured and operated in accordance with the act (City of Humble v. Metropolitan Transit Authority, 636 S.W.2d 484 (Tex. App. - Austin 1982, writ ref'd n.r.e.), appeal dismissed sub nom. Archer v. Metropolitan Transit Authority, 464 U.S. 802 (1983)). Section 6C(e) was added by Acts 1987, 70th Leg., ch. 804, which also amended other sections to complement it.

Section 6C deals with an authority's acquisition of station or terminal complexes. Subsection (a) declares such acquisitions to be public and governmental functions exercised for a public purpose and matters of public necessity for public use and benefit. Subsection (b) gives an authority power to acquire lands and interests in lands adjacent or accessible to stations and other mass transit facilities and to lease or transfer them to others subject to restrictions. Subsection (c) requires that any such acquisition be part of, or contained within, a complex needed for successful operation of the system and designated as such by an approved comprehensive transit plan. Subsection (d) provides that a station or terminal complex must include adequate provisions for the transfer of passengers and may include provisions for commercial, residential, recreational, institutional, and industrial facilities, except that no land or interest in land more than 1,500 feet from the center point of the complex, or not included in a master plan of development adopted by the board, may be acquired for the facilities (V.T.C.S. art. 1118x, section 6C(d)).

Subsection (e), the focus of the question, authorizes, in a station or terminal complex of an authority created before January 1, 1980 in which the principal city had a population of less than 1,200,000 according to the most recent census, the inclusion of "regional economic development facilities" if approved by both the board of the authority and the governing body of the principal city. Those facilities are defined as facilities that will lead to the creation of new jobs, maintain existing jobs, or generally improve the conditions under which a local economy may prosper, and which include, but are not limited to, facilities used primarily for conventions, entertainment, special events, professional and amateur sports, or other lawful purposes. The remainder of subsection (e) deals with the authority's power to institute a tax to pay for such facilities, the mechanics and limitations on the use of the funds, and the agreements the authority might make.

Although the power to include regional economic development facilities is bestowed by a separate subsection, such facilities are authorized only if located within a station or terminal complex. Consequently, drainage projects, street and other infrastructural improvements, or library facilities located outside the permitted expanse of the complex could not be considered regional economic development facilities within the meaning of the statute, whether or not they would lead to the creation of new jobs, maintain existing jobs, or generally improve the conditions under which a local economy may prosper. Because subsection (d) limits the expanse of the complex acquired for commercial, residential, recreational, institutional, or industrial facilities to not more than 500 yards from the center point, the opportunity for drainage projects, street and other infrastructural improvements, or library facilities to qualify is limited, but the Attorney General could not say as a matter of law that they could not qualify if located within the complex; each situation depends on its own facts.

The Attorney General set out the criteria: to qualify as regional economic development facilities under section 6C(e), such facilities must (1) be located at a station or terminal complex; (2) be aimed at providing jobs or improving economic conditions generally; (3) be dedicated to lawful purposes; and (4) meet statutory requirements for funding and approval. The opinion's footnotes recount the legislative history: the substance of the provision originated as Senate Bill 1536, introduced by Senator Tejeda as a vehicle for an agreement among San Antonio's transit authority, the city council, and the Bexar County delegation to allow a voter-approved half-cent sales tax raise dedicated to economic development projects tied to mass transit; when that bill moved too slowly, its language was substituted into House Bill 2008 (originally a Corpus Christi economic development finance measure) late in the 1987 regular session, and a conference committee resolved the two houses' disagreement before the close of the legislative day. The opinion addressed only statutory construction and did not consider constitutional provisions such as article III, section 52-a of the Texas Constitution.

Citations

Statutory and constitutional authority:

• Article 1118x, V.T.C.S. (metropolitan rapid transit authorities; section 6C(d), (e) on station or terminal complexes and regional economic development facilities)
• Article III, section 52-a, Texas Constitution (economic development; noted but not analyzed)

Cases:

• City of Humble v. Metropolitan Transit Authority, 636 S.W.2d 484 (Tex. App. - Austin 1982, writ ref'd n.r.e.) (Texas appellate court; article 1118x transit authorities)
• Archer v. Metropolitan Transit Authority, 464 U.S. 802 (1983) (U.S. Supreme Court; appeal dismissed for want of a substantial federal question)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-952
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0952.pdf

Original opinion text

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

September 9, 1988

Honorable Hugh Parmer
Chairman
Committee on Intergovernmental Relations
Texas State Senate
P.O. Box 12068
Austin, Texas 78711

Opinion No. JM-952

Re: Whether certain improvements may constitute "regional economic development facilities" within the meaning of article 1118x, V.T.C.S. (RQ-1296)

Dear Senator Parmer:

You have asked whether

drainage projects, street and other infrastructural improvements, and library facilities can be considered 'regional economic development facilities' as defined in section (6C)(e), article 1118x, V.T.C.S., as added by House Bill No. 2008, 70th Legislative Session.

Article 1118x, V.T.C.S., is a very lengthy, very detailed statute originally enacted in 1973 to help the state's urban areas remedy problems such as traffic congestion and air pollution which resulted in part from a lack of mass transit systems in those areas. City of Humble v. Metropolitan Transit Authority, 636 S.W.2d 484 (Tex. App. - Austin 1982, writ ref'd n.r.e.), appeal dismissed sub nom. Archer v. Metropolitan Transit Authority, 464 U.S. 802 (1983). Generally, it authorizes metropolitan areas, upon a vote of the electorate, to establish rapid transit authorities to be structured and operated in accordance with the act. Section 6C(e) was added to the statute by Acts 1987, 70th Leg., ch. 804, at 2796,[1] which also amended other sections of the act to complement the section 6C(e) provisions.

Section 6C deals with acquisition of station or terminal complexes by an authority. Subsection (a) thereof declares such acquisitions to be "public and governmental functions, exercised for a public purpose, and matters of public necessity for public use and public benefit." Subsection (b) gives an authority power to acquire lands and interest in lands "adjacent or accessible to stations and other mass transit facilities, developed or to be developed by the authority" and to lease or transfer them to others subject to certain restrictions. Subsection (c) provides that any such acquisitions must be part of, or contained within, a complex needed for successful operation of the system and designated as such by an approved "comprehensive transit plan." Subsection (d) states that a station or terminal complex "may include adequate provisions for the transfer of passengers," and "may include provisions for commercial, residential, recreational, institutional, and industrial facilities, except that no land or interest in land that is more than 1,500 feet in distance from the center point of the complex or that has not been included in a master plan of development adopted by the board may be acquired for the facilities." V.T.C.S. art. 1118x, section 6C(d). (Emphasis added.)

In addition, subsection (e) of section 6C, the focus of your question, authorizes, in a station or terminal complex "of an authority created before January 1, 1980, in which the principal city had a population of less than 1,200,000" according to the most recent census, the inclusion of "regional economic development facilities" if approved by both the board of the authority and the governing body of the principal city. "Regional economic development facilities" are defined by the subsection as

facilities which will lead to the creation of new jobs, maintain existing jobs or generally improve the conditions under which a local economy may prosper, and which include, but are not limited to, facilities used primarily for conventions, entertainment, special events, professional and amateur sports, or other lawful purposes,[2]

The remainder of subsection (e) deals with the power of the authority to institute a tax to pay for such facilities, the mechanics of doing so, and the limitations upon the use of the funds so raised, and with the type of agreements the authority might make to implement the realization of "regional economic development facilities."

Although the power to include regional economic development facilities within a station or terminal complex is bestowed upon the authority by a separate subsection of section 6C, such facilities are only authorized if located "within" such a station or complex. Consequently, drainage projects, street and other infrastructural improvements, or library facilities located outside the permitted expanse of the station or terminal complex, could not be considered "regional economic development facilities" within the meaning of the statute, whether or not they would "lead to the creation of new jobs, maintain existing jobs or generally improve the conditions under which a local economy may prosper."

Inasmuch as subsection (d) limits the expanse of such a station or terminal complex acquired for commercial, residential, recreational, institutional or industrial facilities to not more than 500 yards from the center point of the complex, the opportunity for drainage projects, street and other infrastructural improvements, or library facilities to qualify as regional economic development facilities is accordingly limited, but we cannot say that as a matter of law they could not be considered as such if they were located within the complex. Each situation will depend on its own particular facts. The criteria are that regional economic development facilities:

(1) must be located at a station or terminal complex;

(2) must be aimed at providing jobs or improving economic conditions generally;

(3) must be dedicated to lawful purposes; and

(4) must meet statutory requirements for funding and approval.

SUMMARY

To qualify as "regional economic development facilities" pursuant to section 6C(e) of article 1118x, V.T.C.S., such facilities must be located at a station or terminal complex, must be aimed at providing jobs or improving economic conditions generally, must be dedicated to lawful purposes, and must meet statutory requirements for funding and approval. Whether a particular facility qualifies will depend upon the facts peculiar to it.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Bruce Youngblood
Assistant Attorney General

[1] The legislation has an interesting history. The content of House Bill No. 2008 originated under the style of Senate Bill No. 1536, introduced in the Senate on May 18, 1987, by Senator Tejeda. The bill was referred to the Senate Committee on Intergovernmental Relations, where it was taken up in public hearing on May 19. At that public hearing, Senator Tejeda explained that Senate Bill No. 1536 was to serve as a legislative vehicle in case some agreement could be worked out between San Antonio's transit authority ("VIA"), the San Antonio City Council, and the Bexar County delegation to the legislature. The bill would allow a one-half-cent raise in the sales tax in San Antonio, subject to voter approval. The proceeds of that tax, some $150 million, would be dedicated to economic development projects undertaken in conjunction with mass transit facilities. Hearings on Senate Bill No. 1536 before the Senate Committee on Intergovernmental Relations, 70th Legislature (May 19, 1987). The committee approved Senate Bill No. 1536 by a vote of 6-0, and the bill was passed unamended by the full Senate on May 22. The bill was then sent to the House of Representatives, where it was referred to the Committee on Urban Affairs. The House Committee on Urban Affairs considered Senate Bill No. 1536 in a formal meeting on May 27, 1987. There is no record of the discussion that took place at that meeting, but the members present did approve several important changes to the bill. See Bill Analysis, Tex. S.B. 1536, 70th Leg. (1987). The committee approved its substitute for Senate Bill No. 1536 by a vote of 12-0, and reported it back to the full house. By this time, however, the regular session was drawing to a close, and there was a growing concern within the Bexar County delegation that Senate Bill No. 1536 was moving too slowly to ever reach the Governor's desk. A simple solution was found in House Bill No. 2008, which was then sitting in the Senate. House Bill No. 2008 was originally intended to create an economic development finance agency in Corpus Christi. It passed the House on May 6, but had become stalled in the Senate, reportedly due to the ill health of Senator Truan. On June 1, on motion of Senator Armbrister, the Senate suspended the rules and took up House Bill No. 2008. Senator Tejeda immediately offered an amendment to strike all below the enacting clause and substitute therefor the language of Senate Bill No. 1536, as amended by the House. The amendment was approved by a viva voce vote, and after one further amendment, the bill was passed by a vote of 31-0. See Senate Journal of Texas, 70th Leg., Reg. Sess., 2643-48 (1987). The bill was sent to the House of Representatives that same day. The House refused to concur with the Senate amendment, but a conference committee resolved the disagreement, and both houses managed to approve the conference report before the close of the legislative day.

[2] See Tex. Const. art. III, section 52-a, added November 3, 1987. Because your question involves only matters of statutory construction, we do not consider constitutional provisions affecting the legislation.