Please take a moment to take a two question survey, with a chance to provide your specific comments, to help us provide the information that you need in your municipal law practice. Please click on the following link to take the survey:

http://www.zoomerang.com/survey.zgi?p=WEB2269H9EFSTV

The TCAA Fall Seminar in conjunction with the TML Annual Conference is tentatively scheduled for November 8, 2007, in Dallas. The TCAA Board will pick speakers for that agenda at its June 13, 2007, Board meeting. If you are interested in presenting, please send your submission to Scott Houston by April 27, 2007, at legalgovt@tml.org.

Does your city or county regulate sexually oriented businesses (SOBs)? If so, you may be interested in a study that is being commissioned by TCAA. In its 2003 decision in Encore Videos v. City of San Antonio, 330 F.3d 288 (5th Cir. 2003), the Court of Appeals for the Fifth Circuit created a new distinction between sexually oriented businesses that provide on-site entertainment (e.g., strip clubs) and those businesses that sell or rent sexually oriented material exclusively for consumption elsewhere (e.g., adult book and video stores). Because the City of San Antonio did not rely on studies specifically addressing the effects of retail-only SOBs, the court held that the city’s regulations could not be applied to an adult video store. The result is that retail-only businesses may be immune from regulations that cities and counties have relied on for decades, unless local governments can produce evidence specifically demonstrating the adverse effects of such businesses. To that end, TCAA is commissioning a study from nationally-recognized experts on the negative effects of retail-only SOBs. For more information, please go to www.texascityattorneys.org, and click on the "Adult Business Study" link on the front page.

2007 South Padre Conference: Come join us for the best of both worlds: Earn MCLE credit while at the beach! The TCAA Summer Conference in South Padre Island will be held at the Radisson Resort on June 13-15, 2007.

Special thanks to this year’s sponsors:

• Banowsky & Levine, P.C.
• Bickerstaff Heath Pollan Caroom, L.L.P.
• Brown & Hofmeister, L.L.P.
• Davidson & Troilo, P.C.
• Denton, Navarro, Rocha & Bernal, P.C.
• Doyen Sebesta, LTD, LLP
• Law Offices of Wm. M. McKamie, P.C.
• Lloyd, Gosselink, Blevins, Rochelle & Townsend, P.C.
• Olson & Olson, L.L.P.
• Ross, Banks, May, Cron & Cavin, P.C.
• Russell & Rodriguez, LLP
• Strasburger & Price, L.L.P.
• Taylor, Olson, Adkins, Sralla & Elam, L.L.P.
• TML Intergovernmental Risk Pool

To register for the conference or for more information, please go to www.texascityattorneys.org.

TCAA Galen Sparks Award for Outstanding Public Service by an Assistant City Attorney: TCAA has several programs that are designed to bring recognition to the unique qualities of those who practice municipal law in Texas. In particular, nominations are being accepted for the Galen Sparks Award for Outstanding Public Service by an Assistant City Attorney, which will be awarded in South Padre this June. Please take a moment to nominate an assistant city attorney who has made significant achievements. For more information, please go to www.texascityattorneys.org.

Contract City Attorneys and the IRS: The Employee vs. Independent Contractor Conundrum, Devala A. Janardan, International Municipal Lawyers Association: The City of Henderson (City) is a small municipality in the heart of Texas. With a population of 13,000, it is large enough to need the services of an attorney, but not large enough to keep one as part of its permanent staff. Henderson does what a large number of similarly-sized municipalities do: instead of hiring an attorney as a permanent employee, it hires outside attorneys as independent contractors to provide services to the City on a retainer basis. Over the past year, the City and its attorney, Mr. David P. Brown, have been part of an all too common struggle with the Internal Revenue Service (IRS) to reclassify Mr. Brown as a Henderson City employee, rather than an independent contractor. Read more.

Municipal Attorney Job Openings: For the most recent postings, please click here.

Regulatory Takings: City of San Antonio v. El Dorado Amusement Company, No. 06-0481 in the Supreme Court of Texas. TML and TCAA argued that the City of San Antonio was within its authority to modify the zoning of a tract to prohibit the sale of alcoholic beverages, and that any loss in value to the owner was not sufficient to constitute a taking under applicable federal and state precedent. The Petition for Review was filed on June 12, 2006, briefing on the merits has been submitted by both parties, and a decision on the petition is pending.

Note: Included cases are from the period beginning on the 10th of the previous month through the 10th of the current month.

Sexually Oriented Businesses: H and A Land Corp., Reliable Consultants, Inc., (Dreamer’s), et al. v. City of Kennedale, No. 05-11474 (5th Cir., February 22, 2007). Reliable Consultants, Inc., a sexually oriented business, sued the City of Kennedale, arguing that the city’s sexually oriented business ordinance was not narrowly tailored and did not allow the business adequate opportunities to relocate. The trial court held that the city failed to produce sufficient evidence that the ordinance was narrowly tailored to further a substantial government interest. The city argued that case studies, opinion surveys of land use appraisers, and public comment were sufficient evidence that the ordinance was narrowly tailored. The Fifth Circuit Court of Appeals held that the city produced sufficient evidence that the ordinance was narrowly tailored to further a substantial government interest, and remanded the case to the trial court for a determination of whether the ordinance unreasonably limited alternative avenues of communication. Note: Please see “Does your city or county regulate sexually oriented businesses (SOBs)?” elsewhere in this issue for more information.

Employment: City of McAllen v. Michael Zellers, et al., No. 13-06-470-CV (Tex. App.—Edinburg, March 1, 2007). The city appealed the trial court’s denial of its plea to the jurisdiction on the grounds that, by failing to comply with the city’s grievance procedures, police officers who filed suit claiming that the city failed to pay them for “standby” duty deprived the court of jurisdiction. The court held that there was no statutory basis for the city’s plea to the jurisdiction, and dismissed the appeal for lack of jurisdiction.

Gas Well Regulations: City of Mont Belvieu v. Enterprise Products Operating, LP, No. 14-05-01197-CV (Tex. App.—Houston [14th dist.], February 27, 2007). The city appealed the trial court’s grant of Enterprise’s plea to the jurisdiction, which was based on preemption of the city’s drilling permit ordinance by state law. The court held that while preemption may operate as an affirmative defense to some of the city’s pleas, it does not deprive the trial court of jurisdiction over it. In addition, the court held that forum preemption does not apply in this case because the Texas Railroad Commission (RRC) does not have exclusive jurisdiction over salt dome facilities. The trial court therefore has jurisdiction to determine whether, and to what extent, the ordinances at issue are preempted by the legislature’s grant of regulatory authority to RRC, and thus whether the city is entitled to the relief it sought.

Whistleblower Act: City of Colorado City v. Connie Ponko, 11-06-00225-CV (Tex. App.—Eastland, March 8, 2007). The cty appealed the trial court’s denial of the City’s plea to the jurisdiction, arguing that Ponko did not satisfy the statutory prerequisites to filing suit under the Whistleblower Act. The court held that because the city did not have any grievance procedure in place, Ponko filed her claim within the permissible period when no grievance procedures exist. The court affirmed the trial court’s denial of the city’s plea to the jurisdiction.

Sovereign Immunity: City of Galveston v. State of Texas, No. 04-0890 (Tex., March 2, 2007). The State of Texas sued the City of Galveston for damages to Texas Department of Transportation facilities related to the rupture of a city water line. The city filed a plea to the jurisdiction arguing that it was protected by sovereign immunity. The trial court granted the jurisdictional plea, but the court of appeals reversed, holding that a city does not have immunity from suit by the state. The Supreme Court of Texas held that, because the legislature has not stated otherwise, a city is immune from a state suit, and dismissed the state’s claim.

Sovereign Immunity: City of Sweetwater v. Allan Waddell, The Sweetwater Professional Fire Fighters Assoc., et al., No. 05-1033 (Tex., March 9, 2007) (per curiam); City of Dallas v. Dora Saucedo-Falls, et al., No. 05-0973 (Tex., March 9, 2007) (per curiam). The Supreme Court of Texas remanded both cases back to the trial court, in separate opinions, based on the Court’s holding in Tooke v. City of Mexia.

Sovereign Immunity: City of Houston v. Steve Williams, et al., No. 06-0179 (Tex., February 23, 2007) (per curiam). Firefighters sued the City of Houston to recover amounts deducted from payments they received upon termination of employment. The city filed a plea to the jurisdiction based on sovereign immunity. The Supreme Court of Texas held that the case should be remanded to the trial court to be reviewed under new Sections 271.151-.160 of the Local Government Code, which may govern whether immunity was waived.

Workers’ Compensation: John D. Hagberg v. The City of Pasadena, No. 01-05-00466-CV (Tex. App.—Houston [1st Dist.], February 15, 2007). Hagberg tried to recover damages from the city in a workers’ compensation suit. The city lost at the Texas Workers’ Compensation Commission (Commission) and was granted a nonsuit at the trial level. Hagberg appealed, claiming that he should have received his attorney’s fees because the city was not successful in overturning the Commission’s award at the trial court. The court of appeals granted Hagberg his attorney’s fees, holding that he was the prevailing party under Section 408.221 of the Labor Code.

Sovereign Immunity: The City of Keller v. Wilson, No. 02-00-183-CV (Tex. App.—Fort Worth, March 1, 2007). The Wilsons sued the city for inverse condemnation and water code violations. The Supreme Court of Texas remanded this case back to the court of appeals after holding there was insufficient evidence on the inverse condemnation claim. The city argued that it is immune from suit on a Texas Water Code claim. The court of appeals agreed and held that the city is immune from suit and has not waived its immunity, dismissed the claim and vacated the trial court’s original judgment for the Wilsons.

Annexation: In re Spiritas Ranch Enterprises, L.L.P., No. 02-06-463-CV (Tex. App.—Fort Worth, February 22, 2007). The Town of Little Elm began annexation procedures against Spiritas Ranch’s land under Local Government Code Section 43.052(h)(1). Spiritas Ranch asked for inclusion in the three year annexation plan, instead of being fast-tracked under Section 43.052(h)(1). The city rejected this request, and Spiritas Ranch requested that the city arbitrate the issue under Section 43.052(i). The city placed the arbitration issue and the annexation issue on the agenda for discussion at the council meeting. The day before the council meeting, Spiritas Ranch filed suit against the city, seeking a temporary restraining order and declaratory relief from the trial court that its land not be annexed by the town because its land is not in the town’s three year annexation plan. The trial court denied the request for a temporary restraining order. Spiritas Ranch then requested a temporary restraining order from the court of appeals. The court of appeals held that the trial court abused its discretion in not ordering the temporary restraining order, and remanded the case to the trial court.

Sovereign Immunity: City of Garden Ridge v. Curtis Ray, No. 03-06-00197-CV (Tex. App.—Austin, February 15, 2007) (mem. op.). Ray sued the City of Garden Ridge for damages allegedly caused by the city’s construction and maintenance of a drainage culvert. The city filed a plea to the jurisdiction, which the trial court denied. The court of appeals reversed the trial court, and granted the plea to the jurisdiction, holding that Ray’s claim did not show any intentional act by the city, and therefore his claims are barred by sovereign immunity.

Economic Development: San Antonio Building & Construction Trades Council v. City of San Antonio, No. 04-05-00675-CV (Tex. App.—San Antonio, February 21, 2007). The City of San Antonio helped to finance, through a non-profit corporation and with empowerment zone bonds, a hotel built by a private developer. The Trades Council and others sued the city, seeking a declaratory judgment that Chapter 2258 of the Government Code requires the employees working on the convention center hotel to be paid prevailing wages. The court of appeals held that the funds that the city’s non-profit corporation handled were not public funds being used to finance a public construction project, and therefore the convention workers’ wages were not subject the prevailing wage provisions of Chapter 2258.

Note: Included cases are from the period beginning on the 10th of the previous month through the 10th of the current month.

Opinion No. GA- 0519 (Public Information Act): concludes that the social security number (SSN) of a living person is confidential and subject to mandatory exception from required disclosure under section 552.147(a) of the Public Information Act (PIA), and concludes that distributing confidential information under the PIA is a criminal offense.

Note: this opinion created so many problems, particularly among county clerks, that on Wednesday, February 28, 2007, the attorney general suspended the application of the opinion for 60 days. In addition, the legislature immediately began to consider a bill that would modify the 2005 statute that led to the attorney general’s opinion (H.B. 2061).

Opinion No. GA- 0520 (Swimming Pools): concludes that a city is a “person” for purposes of the Amusement Ride Safety Inspection and Insurance Act (Act) in Occupations Code chapter 2151. Whether a particular pool slide is an amusement ride subject to the Act and whether the slide is a Class A or Class B amusement ride is for the Commissioner of Insurance to determine in the first instance. A city that operates a pool slide determined to be a Class B amusement ride under the Act must purchase insurance coverage only in an amount sufficient to cover the municipality's potential liability under the Texas Tort Claims Act.

Opinion No. GA- 0522 (Economic Development): concludes that land and improvements for the specifically listed purposes in section 4B(a)(2) of the Development Corporation Act (Act) constitute projects eligible for tax exemptions. Additionally, any other land and improvements that the Westworth Redevelopment Authority's (Authority) board of directors determines promote or develop business enterprises in accordance with section 4B(a)(3) of the Act are such eligible projects. But whether a particular property or improvement constitutes a "project" under the section 4B(a) standards is a question of fact.

Under the terms of section 4B(k) of the Act, projects used for private commercial purposes would be eligible for tax exemption. A court could determine that section 4B(k), when applied to exempt from ad valorem taxes such projects that do not meet the established public purpose use test, is unconstitutional as applied.

The Tax Code permits the Tarrant County Appraisal District and a taxing unit in which a particular property designated by the Authority as a section 4B(k) project is located to challenge the property's tax-exempt status.

Opinion No. GA- 0526 (Sex Offender Restrictions): concludes that state law does not preempt a home-rule city's ordinance prohibiting registered sex offenders from living within a specified distance from locations where children typically congregate. Whether a particular ordinance is permitted by the Texas Constitution is a question that must be determined by a court after considering all of the relevant facts applicable to a specific ordinance; to date, however, no court has found that a statutory residence restriction violates any federal constitutional provision. Note: the opinion also held that a general law city is not granted the authority under current state law to create such an ordinance.

Opinion No. GA- 0527 (Eight Liners): concludes that a stored-value card enabling the purchase of merchandise is a medium of exchange within the definition of cash and therefore does not constitute a "noncash merchandise prize" within the exception of section 47.01(4)(B) of the Penal Code. Eight-liner machines rewarding play with such a stored-value card are gambling devices.

Opinion No. GA- 0530 (State Employee Proviso): concludes that whether a particular state employee is a schoolteacher for purposes of Article XVI, Section 40, of the Texas Constitution depends upon whether the employee is employed to instruct students in a school setting, which may include an athletic facility, as a result of which participants receive credit toward fulfilling their curriculum requirements. A home-rule city may adopt reasonable ordinances delimiting expenses for which the city may reimburse city council members consistent with Article XVI, Section 40(b)(1). To the extent that reimbursement for various expenses constitutes a gift or grant of public funds for purely private purposes, it would contravene Article III, Section 52, of the Texas Constitution.

You can view attorney general opinions at www.oag.state.tx.us . On the same site, you can also sign up to receive e-mail updates of opinion requests and newly-released opinions.

TCAA members may use the information herein for any purpose. No other person may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas City Attorneys Association.

Texas City Attorneys Association
1821 Rutherford Lane, Suite 400
Austin, Texas 78754
www.texascityattorneys.org