Intergovernmental Relations Presented By: J. Greg Hudson THOMAS, HUDSON & NELSON L.L.P. 114 West 7 th, Suite 900 Austin, Texas 78701 (512) 495-1441 Presented.

Intergovernmental Relations


Presented By:J. Greg Hudson

THOMAS, HUDSON & NELSON L.L.P.114 West 7th, Suite 900

Austin, Texas 78701(512) 495-1441


THOMAS, HUDSON & NELSON L.L.P.114 West 7th, Suite 900

Austin, Texas 78701(512) 495-1441

Texas Leadership InstituteDecember 4, 2001

Interlocal AgreementsInterlocal Agreements

ObjectivesObjectives

• Outline the Legal Authority for Interlocal Agreements

• Describe the Minimum Requirements Interlocal Contracts

• Provide Examples of Common Interlocal Agreements

• Outline the Legal Authority for Interlocal Agreements

• Describe the Minimum Requirements Interlocal Contracts

• Provide Examples of Common Interlocal Agreements

Something’s Got To Give

or

What’s My Poor County Going to Do?

Something’s Got To Give

or

What’s My Poor County Going to Do?

ConsiderInterlocalContracts!

ConsiderInterlocalContracts!

Examples of Interlocal Agreements:Examples of Interlocal Agreements:

• Administrative Services• Tax Collection• Law Enforcement & Fire Protection• Public Health Services• Insurance (Liability & Employee Benefits)• Public Works• Juvenile Services (Detention & Education)• Solid Waste Disposal

• Administrative Services• Tax Collection• Law Enforcement & Fire Protection• Public Health Services• Insurance (Liability & Employee Benefits)• Public Works• Juvenile Services (Detention & Education)• Solid Waste Disposal

Advantages of Interlocal AgreementsAdvantages of Interlocal Agreements

Cost Savings/Economies of Scale from Pooled Resources:

• Shared Facilities

• Equipment

• Training

• Personnel

• Purchasing Power

Cost Savings/Economies of Scale from Pooled Resources:

• Shared Facilities

• Equipment

• Training

• Personnel

• Purchasing Power

Drawbacks of Interlocal Agreements:Drawbacks of Interlocal Agreements:

• Loss of Some Control

• Limited Remedies when Dispute/Unforeseen Circumstances Arrive

• Loss of Some Control

• Limited Remedies when Dispute/Unforeseen Circumstances Arrive

Interlocal Cooperation ActInterlocal Cooperation Act

• Enacted 1971, Now Chapter 791 of Texas Government Code

• “Purpose Is to Increase the Efficiency and Effectiveness of Local Governments by Authorizing Them to Contract, to the Greatest Possible Extent, With One Another and With Agencies of the State”

• Enacted 1971, Now Chapter 791 of Texas Government Code

• “Purpose Is to Increase the Efficiency and Effectiveness of Local Governments by Authorizing Them to Contract, to the Greatest Possible Extent, With One Another and With Agencies of the State”

Government Code, Section 791.011 - General Contracting AuthorityGovernment Code, Section 791.011 - General Contracting Authority

• Provides the General Contracting Authority for “a Local Government to Contract or Agree With Another Local Government to Perform Governmental Functions and Services”

• Provides the General Contracting Authority for “a Local Government to Contract or Agree With Another Local Government to Perform Governmental Functions and Services”

“Local Government” Defined“Local Government” Defined

• County, Municipality, Special District or Other Political Subdivision of This State or a State that Borders This State

• County, Municipality, Special District or Other Political Subdivision of This State or a State that Borders This State

New Mexico

OklahomaArkansas

LouisianaTexas

• Combination of Two or More of Those Entities

Section 791.003(4&5) Political Subdivision

Section 791.003(4&5) Political Subdivision

• Any Corporate and Political Entity Organized Under State Law

• Scope of the Functions and Services Contemplated in 791.003(3) Includes Virtually Everything That a Local Government Can Do

• Any Corporate and Political Entity Organized Under State Law

• Scope of the Functions and Services Contemplated in 791.003(3) Includes Virtually Everything That a Local Government Can Do

Separate Administrative AgenciesSeparate Administrative Agencies

• Parties May Create a Separate Administrative Agency (Government Code, Section 791.13)

• Example: Self-Insurance Pools

• Administrative Agency Is Authorized to Employ Personnel and Provide the Necessary Administrative Services to Perform the Contract

• Parties May Create a Separate Administrative Agency (Government Code, Section 791.13)

• Example: Self-Insurance Pools

• Administrative Agency Is Authorized to Employ Personnel and Provide the Necessary Administrative Services to Perform the Contract

Buildings, Streets, Roads and FacilitiesBuildings, Streets, Roads and Facilities

• Legislature Provided Approval for Counties to Construct, Improve or Repair a Building, Road or Other Facilities by Entering Into Interlocal Agreements

• Legislature Provided Approval for Counties to Construct, Improve or Repair a Building, Road or Other Facilities by Entering Into Interlocal Agreements


§791.032 Construction, Improvement, and Repair of Streets in Municipalities

• With the approval of the governing body of a municipality, a local government may enter into an interlocal contract with the municipality to finance the construction, improvement, maintenance, or repair of streets or alleys in the municipality, including portions of the municipality’s streets or alleys that are not an integral part of or a connecting link to other roads or highways.

§791.032 Construction, Improvement, and Repair of Streets in Municipalities

• With the approval of the governing body of a municipality, a local government may enter into an interlocal contract with the municipality to finance the construction, improvement, maintenance, or repair of streets or alleys in the municipality, including portions of the municipality’s streets or alleys that are not an integral part of or a connecting link to other roads or highways.


• State Law Requires That the Commissioners Court Must Give “Specific Written Approval for the Project”

• State Law Requires That the Commissioners Court Must Give “Specific Written Approval for the Project”


Specific Written Approval Needs To:

• Be Given in a Document Other Than the Interlocal Agreement

• Describe the Type of Project to Be Undertaken

• Identify the Project’s Location

Specific Written Approval Needs To:

• Be Given in a Document Other Than the Interlocal Agreement

• Describe the Type of Project to Be Undertaken

• Identify the Project’s Location

Buildings, Roads and FacilitiesBuildings, Roads and Facilities

• Approval Must Be Given in the Manner Prescribed

• If Approval Does Not Follow the Requirements Just Prescribed, the Texas Government Code Forbids Any Local Government From Accepting or Offering Payment

• Approval Must Be Given in the Manner Prescribed

• If Approval Does Not Follow the Requirements Just Prescribed, the Texas Government Code Forbids Any Local Government From Accepting or Offering Payment

Compensation for ServicesCompensation for Services

• Amended in 1989, to Provide That the Party Who Performs an Interlocal Agreement Must Receive a Fair Compensation for the Services Provided

• It Is Important to Demonstrate the Fairness of the Compensation

• Amended in 1989, to Provide That the Party Who Performs an Interlocal Agreement Must Receive a Fair Compensation for the Services Provided

• It Is Important to Demonstrate the Fairness of the Compensation

What is a Contract?What is a Contract?

• An Identifiable “Offer and Acceptance”

• A “Meeting of the Minds”

• An Identifiable “Offer and Acceptance”

• A “Meeting of the Minds”

• Governed by the “Four Corners Rule”• Governed by the “Four Corners Rule”

Minimal RequirementsMinimal Requirements

• Contracts Must:• Be Authorized by the Governing Body of

Each Party to the Contract

• State the Purpose, Terms, Rights and Duties of the Contracting Parties

• Specify that Each Party Paying for the Performance of Governmental Functions or Services Must Make Those Payments From Current Revenues Available to the Paying Party

• Contracts Must:• Be Authorized by the Governing Body of

Each Party to the Contract

• State the Purpose, Terms, Rights and Duties of the Contracting Parties

• Specify that Each Party Paying for the Performance of Governmental Functions or Services Must Make Those Payments From Current Revenues Available to the Paying Party

Contract LengthContract Length

• An Interlocal Agreement Is Not Designed to Be Perpetual

• May Be Renewed Annually

• To Avoid Re-signing Each Year, Local Governments Can Make Agreements Automatically Renewable Unless One of the Parties Gives Written Notice Otherwise

• An Interlocal Agreement Is Not Designed to Be Perpetual

• May Be Renewed Annually

• To Avoid Re-signing Each Year, Local Governments Can Make Agreements Automatically Renewable Unless One of the Parties Gives Written Notice Otherwise

Practical ConsiderationsPractical Considerations

• When Writing:

• Clearly Specify What Is to Be Done

• Decide Who Is Going to Contribute Resources

and Who is Going to Do Specific Tasks

• Define All Terms

• Include a Reference to Any Applicable Statutory Language

• When Writing:

• Clearly Specify What Is to Be Done

• Decide Who Is Going to Contribute Resources

and Who is Going to Do Specific Tasks

• Define All Terms

• Include a Reference to Any Applicable Statutory Language

Checklist for Interlocal ContractChecklist for Interlocal Contract

• Identify the Parties

• Authorized by the Governing Bodies of These Local Governments

• Identify the Source Law

• Identify What Is to Be Contracted

• Identify the Parties

• Authorized by the Governing Bodies of These Local Governments

• Identify the Source Law

• Identify What Is to Be Contracted


• Specify Who Is to Perform and How

• Specify the Time to Perform

• Specify the Terms of the Contract (Is Annual Renewal Addressed?)

• Specify Any Early Termination Provisions

• Specify Who Is to Perform and How

• Specify the Time to Perform

• Specify the Terms of the Contract (Is Annual Renewal Addressed?)

• Specify Any Early Termination Provisions


• Specify Payment Provisions and Restrict Funds to Current Revenues

• Address Any Other Necessary Terms, Rights or Duties of the Parties

• Address Adequate Compensation/Consideration

• Meet the Separate Evidence of Approval Test, Where Required

• Specify Payment Provisions and Restrict Funds to Current Revenues

• Address Any Other Necessary Terms, Rights or Duties of the Parties

• Address Adequate Compensation/Consideration

• Meet the Separate Evidence of Approval Test, Where Required

Know What You Are Getting Your City or County Into

Know What You Are Getting Your City or County Into

• Read and Understand the Contract Before You Vote

• Ask for an Explanation of Contract Terms in “Plain English”

• In Contract Law, the Deal You Make is the Deal You Get !

• Read and Understand the Contract Before You Vote

• Ask for an Explanation of Contract Terms in “Plain English”

• In Contract Law, the Deal You Make is the Deal You Get !

How Can My City or CountyAvoid Headaches?

How Can My City or CountyAvoid Headaches?

• Problem-solve like an optimist

• Draft the contract like a pessimist

• Problem-solve like an optimist

• Draft the contract like a pessimist

• Anticipate change/build in flexibility

• Include reasonable termination provisions See

H.B. 2760

• Build in mediation/arbitration provisions

• Accurately and honestly estimate costs

• Don’t reinvent the wheel




THOMAS, HUDSON & NELSON L.L.P. 114 W. 7TH , Suite 900

Austin, Tx. 78701(512) 495-1441


THOMAS, HUDSON & NELSON L.L.P. 114 W. 7TH , Suite 900

Austin, Tx. 78701(512) 495-1441

Texas Leadership InstituteDecember 4, 2001

Intergovernmental Relations Presented By: J. Greg Hudson THOMAS, HUDSON & NELSON L.L.P. 114 West 7 th, Suite 900 Austin, Texas 78701 (512) 495-1441 Presented.

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