Can a Texas city reimburse a resident for the cost of a successful zoning board appeal?

Plain-English summary

San Angelo had an unusual question. A property owner wanted to build a frac-sand transloading facility in the central part of the city, and the city's director of development services read the zoning ordinance to allow it as a matter of right. Neighbors appealed that interpretation to the zoning board of adjustment, and one of the appellants spent his own money preparing evidence (DVDs, photos, and documentation) showing the health and safety effects of frac-sand transloading facilities. The board found the evidence persuasive, reversed the director, and disallowed the project. The board and the city council concluded that the reversal had produced a substantial health and safety benefit to the community, and the city wanted to know whether it could pay that appellant back for his costs without violating the Texas Constitution.

The AG concluded it probably could not. Two sources of law were in play. Chapter 211 of the Local Government Code, which governs zoning boards of adjustment, simply does not address the cost of an appeal, so it neither authorizes nor forbids reimbursement. The real constraint is article III, section 52(a) of the Texas Constitution, which the AG described as an absolute prohibition on a political subdivision gratuitously giving public money to an individual.

That prohibition has a well-known limit: a payment is not a gift if the government gets something back. Courts use a three-part test drawn from the Texas Municipal League case. The transfer must accomplish a public purpose rather than benefit a private party, the city must keep control over the funds to ensure the purpose is achieved, and the city must receive a return benefit. The AG noted that the city itself decides, in the first instance and subject to judicial review, whether a particular expenditure meets that test.

On the facts the city described, though, the AG concluded the proposed payment looked more like an after-the-fact reward than a public-purpose expenditure. The city was under no legal obligation, by contract, order, or other law, to reimburse the appellant, and while his appeal may have incidentally benefited the community, paying a claim that creates no governmental liability is the sort of gift the Constitution forbids. So the AG concluded section 52(a) would likely prohibit the reimbursement to the extent it amounts to a gratuitous payment of public funds.

Currency note

This opinion was issued in 2016. 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. Chapter 211 of the Local Government Code and the case law applying article III, section 52(a) may have developed since 2016, so confirm current law before relying on these specifics.

What the opinion meant for those who asked

The City of San Angelo and Texas municipalities (as the opinion described it): The opinion described chapter 211 as silent on the costs of a zoning appeal, and described article III, section 52(a) as likely prohibiting reimbursement of a private appellant's costs to the extent the payment is gratuitous.

Zoning boards of adjustment and city councils (as the opinion described it): The opinion described the political subdivision as deciding, in the first instance and subject to judicial review, whether an expenditure satisfies the three-part public-purpose test, but described the proposed reimbursement as resembling an after-the-fact reward without return consideration.

Citizens who appeal zoning decisions (as the opinion described it): The opinion described a private party's appeal costs as the party's own, with no legal obligation on the city to repay them.

Common questions

Can a Texas city pay back a resident who won a zoning appeal?
The AG concluded that article III, section 52(a) of the Texas Constitution would likely prohibit it, to the extent the payment is a gratuitous gift of public funds.

Does the zoning law say anything about paying appeal costs?
No. The AG noted that chapter 211 of the Local Government Code does not address the costs of an appeal to a zoning board of adjustment, so it neither authorizes nor bars reimbursement.

When is paying public money to a private person not an illegal gift?
The AG explained that a payment is not a gift if the government receives return consideration, applying a three-part test: the transfer must serve a public purpose, the government must retain control over the funds, and it must receive a return benefit.

Who decides whether a payment serves a public purpose?
The AG said the political subdivision decides in the first instance, subject to judicial review, whether a particular expenditure satisfies the three-part test.

Why did the AG treat this reimbursement as a gift?
Because the city had no legal obligation to pay, and the AG read the described reimbursement as an after-the-fact reward to a private party rather than a public-purpose expenditure with return consideration.

Background and statutory framework

A municipality may appoint a zoning board of adjustment to hear appeals alleging error in an administrative official's enforcement of zoning rules (Tex. Loc. Gov't Code §§ 211.008, 211.009). The AG noted that chapter 211 grants authority to adopt zoning ordinances and rules but does not address the costs of an appeal, so it does not resolve the City's question as a statutory matter.

The controlling provision is article III, section 52(a) of the Texas Constitution, which the AG described as an absolute bar on a political subdivision gratuitously granting public funds to an individual (Bexar Cty. v. Linden, 220 S.W. 761, 762 (Tex. 1920)). A payment escapes that bar only if it is not gratuitous, that is, if the government receives return consideration in a quid pro quo transaction, evaluated under the three-part test from Texas Municipal League: public purpose, public control over the funds, and a return benefit (Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002)). Because paying a claim that generates no governmental liability is a prohibited gift (State v. City of Austin, 331 S.W.2d 737, 742 (Tex. 1960); Tompkins v. Williams, 62 S.W.2d 70, 71 (Tex. Comm'n App. 1933, judgment adopted)), the AG concluded that reimbursing the appellant would likely violate section 52(a) to the extent it is gratuitous.

Citations

Constitutional and statutory provisions:

• Tex. Const. art. III, § 52(a) (prohibition on gratuitous grants of public funds to individuals)
• Tex. Loc. Gov't Code § 211.008 (appointment and appeals to a zoning board of adjustment)
• Tex. Loc. Gov't Code § 211.009 (powers of a zoning board of adjustment)

Cases:

• Bexar Cty. v. Linden, 220 S.W. 761, 762 (Tex. 1920)
• Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002)
• State v. City of Austin, 331 S.W.2d 737, 742 (Tex. 1960)
• Tompkins v. Williams, 62 S.W.2d 70, 71 (Tex. Comm'n App. 1933, judgment adopted)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0056
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2016/kp0056.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

January 8, 2016

The Honorable Chris Taylor Opinion No. KP-0056
Tom Green County Attorney
Criminal Justice Center Re: Whether state law authorizes a
122 West Harris municipality to reimburse an appellant for
San Angelo, Texas 76903 costs incurred in a successful appeal to a
zoning board (RQ-0037-KP)

Dear Mr. Taylor:

You ask on behalf of the City of San Angelo (the "City") whether state law authorizes a municipality to reimburse an appellant for costs incurred in a successful appeal to a zoning board. [1] The City's Brief states that the City has appointed a zoning board of adjustment (the "Board") under section 211.008 of the Local Government Code. Brief at 1. A section 211.008 board may "hear and decide an appeal that alleges error in an order, requirement, decision, or determination made by an administrative official in the enforcement of" chapter 211, subchapter A, or an ordinance adopted thereunder. TEX. LOC. GOV'T CODE § 211.009(a)(1). The Brief informs us that a property owner asked for a ruling on whether City ordinances allowed commercial development of the owner's property in central San Angelo as a frac-sand transloading facility. Brief at 1. The Brief states that the Board's director of development services interpreted a City zoning ordinance as permitting the proposed commercial use as a matter of right. Id. The Brief further states that several citizens living near the proposed development appealed the director's interpretation of the ordinance to the Board, and one of the appellants incurred expense in preparing "DVDs, pictures, documentation and other physical evidence demonstrating the adverse health and safety effects of frac sand transloading facilities." Id. at 1-2. The Brief asserts that the Board found the evidence persuasive and reversed the director's interpretation. Id. at 2. The Brief states that the Board "and City Council have determined that reversal of the Director's interpretation of the ordinance and disallowance of the proposed development was of a substantial health and safety benefit to the community." Id. The City asks whether the Board or the City Council may authorize reimbursement of the appellant's expenses without violating article III, section 52 of the Texas Constitution or chapter 211 of the Local Government Code. Id.

Chapter 211 does not address the costs of an appeal to a zoning board of adjustment, although the chapter does grant authority to the municipal governing body or the zoning board of adjustment, as appropriate, to promulgate zoning ordinances, regulations, rules, and orders. See generally TEX. LOC. GOV'T CODE §§ 211.001-.033. Chapter 211 does not resolve the City's question as a statutory matter.

Article III, section 52(a) of the Texas Constitution prohibits a political subdivision such as a municipality from gratuitously granting public funds to an individual. TEX. CONST. art. III, section 52(a). The prohibition is absolute, although the constitution provides for limited exceptions not pertinent here. See Bexar Cty. v. Linden, 220 S.W. 761, 762 (Tex. 1920) ("The giving away of public money, its application to other than strictly governmental purposes, is what the provision is intended to guard against. The prohibition is a positive and absolute one ...."). Payment of public funds by a political subdivision is not gratuitous, however, if the political subdivision "receives return consideration," i.e., the payment is part of a quid pro quo transaction. Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002). Whether a proposed payment complies with article III, section 52(a) may be determined according to a three-part test enumerated in Texas Municipal League, which provides that the political subdivision

making the transfer must (1) ensure that the transfer is to "accomplish a public purpose, not to benefit private parties; (2) retain public control over the funds to ensure that the public purpose is accomplished and to protect the public's investment; and (3) ensure that the political subdivision receives a return benefit."

Tex. Att'y Gen. Op. No. KP-0029 (2015) at 2 (quoting Tex. Mun. League Intergov'tl Risk Pool, 74 S.W.3d at 384).

The political subdivision must decide, in the first instance and subject to judicial review, whether a particular expenditure satisfies the three-part test in Texas Municipal League. Tex. Att'y Gen. Op. No. KP-0007 (2015) at 2. However, the Brief's description of the contemplated "reimbursement" is more consistent with an after-the-fact reward or gratuity than an expenditure that would achieve a municipal public purpose or entitle the City to return consideration. While the private party's appeal may have had incidental "benefit to the community," the Brief does not suggest that the City is under any legal obligation, whether by contract, order, or other law, to reimburse the private party's appellate costs. "[T]he use of public money to pay a claim predicated on facts which generate no [governmental] liability constitutes a gift or donation in violation of our Constitution." State v. City of Austin, 331 S.W.2d 737, 742 (Tex. 1960); see also Tompkins v. Williams, 62 S.W.2d 70, 71 (Tex. Comm'n App. 1933, judgment adopted). Thus, article III, section 52(a) of the Texas Constitution would likely prohibit a municipality from paying a private party's costs incurred in a successful appeal to a zoning board to the extent that such payment constitutes a gratuitous payment of public funds.

SUMMARY

Article III, section 52(a) of the Texas Constitution would likely prohibit a municipality from paying a private party's costs incurred in a successful appeal to a zoning board to the extent that such payment constitutes a gratuitous payment of public funds.

KEN PAXTON
Attorney General of Texas

CHARLES E. ROY
First Assistant Attorney General

BRANTLEY STARR
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee

[1] See Letter from Honorable Chris Taylor, Tom Green Cty. Att'y, to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (July 15, 2015) ("Request Letter") and attached letter from Daniel Valenzuela, San Angelo City Manager at 1 (July 3, 2015) ("Brief"), https://www.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs.