## Facts

- Maple Run at Austin Municipal Utility District (a municipal utility district formed under Texas Water Code ch. 54) was created in 1983 to provide water and wastewater services in an area within the City of Austin’s extraterritorial jurisdiction.
- As required for creation within the extraterritorial jurisdiction, the district obtained the City’s consent and entered a consent agreement contemplating eventual annexation and cooperation toward that end.
- The district issued municipal bonds to finance utility facilities, but service revenues were low compared to outstanding debt, leading to financial distress.
- In 1995, the Legislature enacted Texas Local Government Code § 43.082 (effective in 1995 and expiring December 31, 1996), allowing certain municipal utility districts in a city’s extraterritorial jurisdiction to dissolve and requiring the adjacent municipality to assume the district’s assets and liabilities.
- The statute used highly specific debt-related and other criteria; the parties stipulated Maple Run was the only district qualifying and that the Legislature intended the statute to apply only to Maple Run.
- After Maple Run indicated its intent to dissolve under § 43.082 (which would shift its obligations to Austin), landowner James G. Monaghan and others sued, alleging the statute was an unconstitutional local/special law.
- The trial court declared § 43.082 unconstitutional and enjoined enforcement; Maple Run appealed directly to the Supreme Court of Texas.

## Issues

1. Whether Texas Local Government Code § 43.082 violated Article III, § 56 of the Texas Constitution by operating as an unconstitutional local or special law where a general law could be made applicable.
2. Whether § 43.082’s narrow, debt-based classification created an impermissible closed class effectively singling out one readily identifiable municipal utility district for unique treatment.

## Decision

- The Supreme Court of Texas affirmed the trial court’s judgment.
- The Court held § 43.082 unconstitutional as an invalid local law under Article III, § 56 of the Texas Constitution.
- The Court concluded the statute’s criteria and short sunset date created a closed class designed to reach only Maple Run, rather than a legitimate, open-ended classification.
- The injunction against enforcement of § 43.082 remained in effect.

## Legal Principles

- The Legislature may create classifications for legislative purposes, including classifications based on financial characteristics, but a classification must be genuine and not a device to legislate for a single political subdivision.
- A statute is not saved from the local-law prohibition by facially general wording if, in operation, it targets one named or readily identifiable entity.
- For classification-based legislation to avoid Article III, § 56 invalidity, the class must be reasonably related to the statute’s purpose and open to additional entities that may later satisfy the criteria.
- A combination of highly specific qualifying criteria and temporal limits may show the Legislature created a closed class, supporting a finding that the enactment is a prohibited local or special law.

## Conclusion

The Texas Supreme Court invalidated § 43.082 because its tightly drawn criteria and expiration date created a closed class intended to apply only to Maple Run, making the statute an unconstitutional local law under Article III, § 56.


Maple Run at Austin Municipal Utility District v. Monaghan, 931 S.W.2d 941 (Tex. 1996)