Special-purpose district: Information from Answers.com

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1 Overview
2 Public Foundation
3 Sovereign Power
4 Definition of a Government
5 Boards
6 Autonomy
7 Examples
8 See also
9 References
10 External links
11 Further reading

Overview

There are two types of special-purpose districts in the United States: school districts and special districts. Special districts typically have "district" or "authority" in their name; however, not all entities so named are special districts. (Some are taxing districts with no board, some are geographic areas, and the like.)

Special districts are a type of district differing from the general-purpose districts of municipalities, counties, and townships in that they only serve one or a few special purposes and do not provide a broad array of services.1 Special districts may provide any function that the state deems to be a public purpose. This includes fire protection, sewer service, transit service or to manage water resources, among many other possible functions.2 They are common in the United States of America, where more than 35,000 districts play an important role in providing government services in every U.S. state.1 The U.S. Census Bureau keeps counts and data on these districts.

Special districts are founded by some level of government in accordance with state law and exist in all states. Special districts are legally separate entities with at least some corporate powers. Districts are created by legislative action, court action, or public referendum and are governed by a board of directors, commissioners, supervisors, or the like. Special-purpose districts provide specialized services to those persons who live within the designated geographic area and may contract to provide services outside their area. They often cross the lines of towns, villages, and hamlets but less frequently cross city or county lines. Increasingly, however, regional special districts are being created that may serve a large portion of a state or portions of more than one state.

Each district is governed by a board that may be appointed by public officials, appointed by private entities, popularly elected, or elected by benefited citizens (typically property owners). Sometimes, one or more public officials will serve ex officio on the board. Also, the board of a private entity may serve as the board of a special district (however, such a board could not be given the power to set a tax). In the New England states, special districts are often run in the same town hall fashion as other local governments. The board of a special district serves primarily as a managing board and often appoints a chief executive for day-to-day operations and decision making and policy implementation. Most districts have employees, but some districts exist solely to raise funds by issuing bonds and/or by providing tax increment financing. The boards of special district must have administrative autonomy from any other government (excluding ministerial limitations).1

Special districts must possess fiscal autonomy in addition to administrative autonomy.1 Districts must be able to set their own budget without line item modification by another government. The authorizing legislation may give them the power to tax, issue bonds, or set fees; and/or the authorizing legislation may establish revenues via taxes or fees on behalf of the district; and/or the authorizing legislation may require contributions by participating local governments. They often are empowered to tax residents of the district, usually by a property tax but sometimes an excise or sales tax, for the services that they provide.

Indian nations may create special districts pursuant to state law and frequently serve on the boards of special districts. This can be confusing. For example, Indian housing authorities may be created under federal, tribal, or state law. Only those created under state law as independent governments count as special districts.

The state of California leads the nation in the number of special districts with Illinois close behind.1 Note that the states may have different definitions of a special district than the U.S. Census Bureau. Also, some types of entities that are listed as special districts by the Census Bureau are classified as such for data collection purposes. Further, definitions of special districts established by organizations representing accountants or economists differ from the Census Bureau definition because the Census Bureau definition is based on American law while the accounting definition is not.

The legal thinking behind special districts is complex. The fundamental concepts were set by Chief Justice John Marshall in the 1819 in the landmark case of Dartmouth v. Woodward.3 Concepts tackled by the courts include: the nature of public versus private entities, the delegation of sovereign power, the nature of civil office, public accountability, public control, the identification of inherent governmental functions, the nature of state actors, and the like.

The distinction between public and private is entirely based on American law. The distinction between special district and dependent agency is based more on tradition and logic. A governmental entity consists of public foundation and a delegation of sovereign power.

Public Foundation

Public Foundation Decided

The landmark case defining the most important concepts of the definition of a government is the opinion of Chief Justice John Marshall of the Supreme Court of the United States in Dartmouth College v. Woodward in the year 1819. At that time, colleges, libraries, hospitals, and the like were mostly provided by wealthy philanthropists. The states tended to view these as not only donations to the public welfare but donations to the state. The states felt that they could amend the charters or take the property for other uses. A number of cases concerning these issues came to court. Chief Justice Marshall firmly and eloquently set things straight. States continued to challenge the matter for a while, but the Supreme Court repeatedly upheld the Dartmouth case.

In Dartmouth, the state of New Hampshire attempted to amend the private charter of a college. Chief Justice Marshall defined the primary differences between a public and private entity by establishing the following:

Public corporations are only those that are founded by a government for public purposes and where the whole interests belong to the government. (Private entities can be said to be created by a government but not founded).
Private charters cannot be altered or revoked except for nonuse or misuse whereas public charters can be altered or revoked upon the will of the state legislature.
A public entity must have a delegation of sovereign power: “Are the trustees . . . public officers, invested with any portion of political power, partaking in any degree in the administration of civil government, and performing duties which flow from the sovereign authority?”

Understanding private charters is helpful. The basic concepts for a private entity were well said in Dillon on Corporations 4th edition as quoted by the Supreme Court of Indiana in Downing v. Indiana State Board of Agriculture (1891):

They cannot be compelled to accept a charter or incorporating act. The assent of the corporation is necessary to make the incorporating statute operative, but, when assented to, the legislative grant is irrevocable, and it cannot, without the consent of the corporation, be impaired or destroyed by any subsequent act of legislation unless the right to do was reserved at the time.

Private entities can alter their own charters or decide to go out of business at any time. Public entities cannot. A public entity can only dissolve as the state has permitted. The state, however, may enlarge, abridge, or withdraw the powers given a public entity at any time. The state retains ultimate control of public entities; ultimate control is the power to abolish the authorizing legislation and, thus, the entity, at will. (If repeal requires a referendum, this does not remove ultimate control. The state in all things is carrying out the will of the people, in theory. A referendum is merely directly assessing the will of the people.)

Additional Supreme Court decisions on the topic of public and private charters include:

Miller v. State, 82 U.S. 478, 21 L. Ed. 98 (1872).
Pennsylvania College Cases, 80 U.S. 190, 20 L. Ed. 550 (1871).
Shields v. Ohio, 95 U.S. 319, 24 L. Ed. 357 (1877).
Terrett v. Taylor, 13 U.S. 43, 3 L. Ed. 650 (1815).

Public Foundation Defined

The definition of public foundation derives from Dartmouth, related decisions, and the most fundamental principle of a republic, that government must represent all of the people, to yield the standards for public foundation. Public foundation means that:

creation must represent all of the people in a governmental area, congressional district, or standard taxing district,
creation does not require the entity’s consent,
the entity can be dissolved by a government without cause (nonuse or misuse) unless provision is placed in the creating legislation or charter specifying otherwise, and
the charter is subject to alteration by a government in a manner not specified in the charter and without the consent of the entity unless provision is placed in the creating legislation or charter specifying otherwise.

Creation Defined

Creation that represents all of the people is one of the following:

creation by a governmental entity by constitutional amendment; executive order; interstate compact; special act; passage of a general law; or passage of a general law followed by ordinance, resolution, joint exercise of powers agreement, or court order
creation by initiative

Only entities founded either directly by all of the people or by representatives of all of the people are governmental. That is, only the people through initiative, governmental entities, or civil officers acting in their official capacity can found governmental entities. Individuals employed by a governmental entity but acting on their own cannot found a governmental entity. However, the founding governmental entities or officers may act in their official capacity in conjunction with private individuals.

For special districts, it is the fact that the people are creating the entity directly or that a government is creating the entity pursuant to a state legislative directive that matters, not the law under which the entity was created. Governments may create a public entity as a nonprofit corporation, either under the public or private nonprofit corporation laws. The creation of these entities would include evidence of foundation that represents all of the people in addition to the creation of a corporation under the state’s corporation laws.

Some special districts are created upon petition of a small group of property owners and provide services only to those property owners. Such entities are often referred to as private governments. An example of such an entity is a district that provides irrigation services only to property owners in a designated area. The district is created upon petition of the property owners and only the property owners are permitted to vote in the creating referendum. If these were the sole requirements, the entities would, in fact, be private. The entities become public when an act of government, as described above, is required for the creation of the entity. This is the fundamental difference between a private homeowners’ association and a public entity providing extra services to a neighborhood or similar area. The public districts are public because they have public foundation.

Consent Not Required

When private persons or groups found an entity, the entity is created only with the founders’ consent. When a governmental entity founds an entity, the consent of private persons is not required.

Alteration or Revocation of the Charter

For the charters of private entities, the United States Constitution (article 1, section 10) forbids the states “to pass any law impairing the obligation of contracts." The Dartmouth decision established that private charters could not be altered or revoked except for nonuse or misuse. Many states wanted more control so they passed laws or constitutional amendments giving themselves the general right to alter or revoke at will. The courts have established, however, that the alteration or revocation of private charters or laws authorizing private charters must be reasonable and cannot cause harm to the members (founders, stockholders, and the like). If the state has given itself the general right to alter or revoke private charters, the state can still give up its rights to alter or revoke at will by limiting itself in the authorizing legislation or charter.

Concerning the charters of public entities, the states have always had entire freedom. They have always had the power to alter or revoke the laws authorizing public entities at will because the entities exist only by the grace of the sovereign power and because no harm is done to private individuals. For public entities, changes to the authorizing legislation always affect all existing entities as well as subsequently created entities. The state can, however, give up its rights to alter or revoke the authorizing legislation at will by specifying such in the charter.

Generally, the charters of public entities created by a local government pursuant to a state law can only be altered or revoked if the authorizing state legislation permits it. However, some public entities are created under a municipality’s broad general powers. The charter of such an entity can be altered or revoked at any time by the municipality.

Private corporations generally have the right to surrender their franchises at will, in addition to being subject to dissolution for cause. (The exception is that trustees of an eleemosynary corporation may not surrender the franchise at will.) Public corporations may dissolve only as directed by the authorizing legislation or charter, by state act, or by the direct will of the people through a referendum. In other words, private corporations can quit at any time while public corporations must continue unless they meet the requirements of the law for dissolution.

Conversion Between Public and Private Foundation

Public entities may be reincorporated as private entities and vice versa. When an entity reincorporates, the entity is completely dissolved and an entirely new entity is created under a different law. It may not appear that way and may seem like the old board and old functions just keep going. But, legally, the old entity does not exist and the new entity is classified strictly on the foundation and powers authorized by the law under which it is now incorporated.

Historically, reincorporations were common for libraries and universities. Many libraries and universities in this country were founded as private entities, back when local governments seldom ventured outside essential governmental functions, and were later converted to public.

As an example, in Nevada, the Henderson District Public Libraries and the Boulder City Library District were converted from private corporations to county library districts by special acts in 1956. When these conversions took place, the previous entities ceased to exist. The new entities are entirely separate from the previous entities and are governmental.

Entities can also convert from public to private. For example, up until the end of 2004, Oregon permitted certain special districts (particularly water districts) to convert to private entities. The original creation was dissolved, and the entity would recreate itself as a private corporation.

A special district can be reincorporated, but it cannot be sold. Only the assets can be sold. Sometimes special districts sell their assets and dissolve. This is common with hospital authorities. The authority sells the hospital, not itself, and this should not be confused.

When a special district dissolves, the public assets are sometimes given to private nonprofit charitable organizations. This is considered a valid public purpose. Public assets can also be given to private profit making enterprise if it serves a public purpose, as judged by the state.

Method of Establishment

The method of establishment is not the same as the manner of foundation. The method of establishment is the specific procedures for creating the entity or entities. The method of establishment includes the procedures for founding the entity; there may, however, be additional requirements besides the passage of a law or ordinance to create an entity or class of entities. Petition by voters or property owners may be required to initiate the process. Petition by a public entity may be required. The establishment may require voter or landowner approval; this may be always required or only upon voter petition. The establishment by a local government may require state review or approval. An application may be required to be filed with a state official or agency. Public hearings may be required; public hearings are always required for the establishment of special assessment districts by local governments. An interlocal agreement might be required. Sometimes more than one method of establishment is authorized.

The board administering an entity may be founded along with the entity, or it may be founded in a separate law. The board also may be privately founded. This will be discussed in detail later.

Back when Dartmouth was issued, there were few special districts and the methods of creating special districts and the types of boards assigned to them were generally straightforward. In fact, the identification of special districts was fairly simple up until the 1970s. There are now a wide variety of what are referred to as quasi-public entities and public-private partnerships. Despite the wide variety of boards, the manner of foundation is always the key to determining whether an entity is public or private.

Public foundation is important because the state has great control over public entities and relatively little control over private entities. The state can freely hand out sovereign power to public entities including the power to tax and can allow the public entities to act autonomously with little supervision. The state can do this because it maintains ultimate control over public entities (the power to repeal the authorizing law at any time). The state can also give delegations of sovereign power to private entities but not the power to tax and all such delegations must be closely controlled.

Court decisions and attorney general opinions discussing public and private entities:

Allen v. McKean, 1 F. Cas. 489 (1833).
Bliss v. Pathfinder, 122 Neb. 203, 240 N.W. 291 (1932).
Brock v. Chicago Zoological Society, 820 F.2d 909 (7th Cir. 1987).
Carmichael v. Southern Coal and Coke Company, 301 U.S. 495, 57 S. Ct. 868, 81 L. Ed. 1245 (1937).
Charles River Bridge v. Warren Bridge, 36 U.S. 420, 9 L. Ed. 773 (1837).
Collector v. Day, 78 U.S. 113, 20 L. Ed. 122 (1870).
Colorado Association of Public Employees v. Board of Regents, 804 P.2d 138 (Colo. 1990).
Dartmouth College v. Woodward, 17 U.S. 518, 4 L. Ed. 629 (1819).
Downing v. Indiana State Board of Agriculture, 129 Ind. 443 (1891).
Fletcher v. Peck, 10 U.S. 87, 3 L. Ed. 162 (1810).
Flint v. Stone Tracy Company, 200 U.S. 107, 31 S. Ct. 342, 55 L. Ed. 389 (1911).
Florida v. Knowles, 16 Fla. 577 (1878) (see counsel’s comments about visitors)
Greenwood v. Freight Company, 105 U.S. 13, 26 L. Ed. 961 (1881).
Helvering v. Powers, 293 U.S. 214, 55 S. Ct. 171, 79 L. Ed. 291 (1934).
Jefferson Branch Bank v. Skelly, 66 U.S. 436, 17 L. Ed. 173 (1862).
Leavenworth County v. Miller,7 Kan. 479 (1871).
Loan Association v. Topeka, 87 U.S. 655, 22 L. Ed. 45 (1874).
Louisville v. University of Louisville, 54 Ky. 642 (June 1855).
McCulloch v. Maryland, 17 U.S. 316, 4 L. Ed. 579 (1819).
Memphis v. Railroad Commissioners, 112 U.S. 60, 5 S. Ct. 299 (1884).
Meriwether v. Garrett, 102 U.S. 472, 26 L. Ed. 197 (1880).
Michigan v. United States, 40 F.3d 817 (6th Cir. 1994).
Miller v. State, 82 U.S. 478, 21 L. Ed. 98 (1872).
Niles v. Commissioner, 20 B.T.A. 949 (1930).
Ohio v. Neff, 52 Ohio St. 375, 40 N.E. 720 (1895).
Opinion No. 19, 1996 Mont. AG LEXIS 7.
Opinion No. 84-405, 1984 Cal. AG LEXIS 12.
Opinion No. 84-134, 1984 Okla. AG LEXIS 17.
Opinion No. 1007, 1994 Minn. AG LEXIS 2.
Opinion No. 2003-24, 2003 Fla. AG LEXIS 37.
Pearson v. Murray, 169 Md. 478, 182 A. 590 (1936).
Penobscot Boom Corporation v. Lamson, 16 Me. 224 (1839).
People v. Morris, 13 Wend. 325 (1835).
Polk v. Edwards, 626 So. 2d 1128 (La. 1993).
Regents v. Williams, 9 G. & J. 365 (1838).
Shields v. Ohio, 95 U.S. 319, 24 L. Ed. 357 (1877).
State v. Smith, 357 So. 2d 505 (1978).
Suncrest Lumber v. North Carolina Park Commission, 29 F.2d 823 (4th Cir. 1928).
Terrett v. Taylor, 13 U.S. 43, 3 L. Ed. 650 (1815).

Sovereign Power

Sovereign Power Defined

Sovereign power is the most fundamental concept behind the classification of a government. Excluding territories, there are three types of sovereign power in the United States. These are the federal government, the tribal governments, and the states. Similar entities may be created by different sovereign powers. For example, Indian housing authorities may be created under federal, tribal, or state law.

Local governments are not sovereign powers. Local governments exist by the grace of the state’s sovereign power. Interestingly, the courts find that the states theoretically should not be allowed to delegate their sovereign power to local governments, but this practice is accepted as necessary to the administration of state government. Entities, such as local waterworks agencies, created under local laws are really created under state laws, that is, the sovereign power of the state. No local law can exist except by the grace of the state. Thus, public entities are classified based on the authorizing state law and the particulars established by any local ordinances passed pursuant to the state law.

What is sovereign power? It is the power of the king. Even in a republic, we have kings of sorts. The federal government is a king. The states are kings. The tribal governments are kings.

Sovereign entities have certain basic historic powers, that is, powers that are limited to sovereign entities: police powers (with the power to arrest), the power to tax, and power of eminent domain. Kings, emperors, and the like have long kept these powers to themselves. This is accepted as common law, that is, law created by custom.

These powers may be delegated to local governments, including special districts and school districts. If an entity has public foundation and a delegation of police or taxing power, then it is a governmental entity. The power of eminent domain, however, is not evidence of a delegation of sovereign power when identifying governments.

Eminent domain is not useful for identifying governments because, while this is a traditional sovereign power, it has, for some time, been extended to private utilities, railroads, and, historically, mills. (Not so long ago, mills could swamp your land if they pleased.) The thinking behind this is: A private company is providing a valuable public service and, so, it is valid to aid the company in performing this service by allowing them to take private property. In return, the company will provide even more public service for the most benefit to all. The good of the many outweighs the good of the one for this situation--an essential concept for the continuation of society.

In addition to police powers and the power to tax, certain other powers have been established by the courts as evidences of sovereign power. These powers are called inherent or essential governmental functions. These include the provision of fire fighting, courts, and public schooling, and the administration of public buildings and government finances. Police powers also are considered an essential governmental function.

Court decisions discussing delegations of legislative power:

Atlantic Coast Line Railroad Company v. Public Service Commission, 245 S.C. 229, 139 S.E.2d 911 (1965).
Bourque v. Dettore, 589 A.2d 815 (1991).
Dangel v. Williams, 11 Del. Ch. 213, 99 A. 84 (1916).
Federal Radio Commission v. Nelson Brothers Bond and Mortgage Company, 289 U.S. 266, 53 S. Ct. 627, 77 L. Ed. 1166 (1933).
Fink v. Cole, 302 N.Y. 216, 97 N.E.2d 873 (1951).
Hunter v. McHugh, 202 La. 97, 11 So. 2d 495 (1942).
Jackson v. Guilford County Board of Adjustment, 275 N.C. 155, 166 S.E.2d 78 (1969).
Lee v. Delmont, 228 Minn. 101, 36 N.W.2d 530 (1949).
Matz v. J. L. Curtis Cartage Company, 132 Ohio St. 271, 7 N.E.2d 220 (1937).
Novak v. Poughkeepsie, 57 Misc. 2d 927, 293 N.Y.S.2d 780 (1968).
Picone v. Commissioner, 241 N.Y. 157, 149 N.E. 336 (1925).
Plantation v. Bremen, 227 Ga. 1, 178 S.E.2d 868 (1970).
Small v. Moss, 279 N.Y. 288, 18 N.E.2d 281 (1938).
Wayman v. Southard, 23 U.S. 1, 6 L. Ed. 253 (1825).
Wisconsin Inspection Bureau v. Whitman, 196 Wis. 472, 220 N.W. 929 (1928).

Public Versus Private Functions

Clearly, the provision of courts and the administration of public buildings and government finances are limited to public entities. But, there are private police forces, fire fighters, and schools. The courts have extensively discussed this. A great deal of law is based on custom. Police, fire fighting, and schools mostly started out as private. With time, these came to be viewed as functions for which the state governments must take responsibility. But the courts have found that there is no reason to forbid private entities from conducting these activities.

So how does one identify an entity providing fire protection, for example, as private or public? The manner of foundation determines this. If a fire district is publicly founded, then it is subject to the laws concerning public entities. Privately founded volunteer fire fighting departments, however, are subject to private corporate law. A fire district, as a public entity, may be permitted to set taxes. A private fire department may not. However, a taxing district may be publicly founded to provide funding to the private fire department. This transfer of public funds to a private entity is considered valid because it serves a public purpose - an essential governmental function at that.

Supreme Court decisions discussing public functions include:

Brush v. Commissioner, 300 U.S. 352, 57 S. Ct. 495, 81 L. Ed. 691 (1937).
Carmichael v. Southern Coal and Coke Company, 301 U.S. 495, 57 S. Ct. 868, 81 L. Ed. 1245 (1937).
Green v. Frazier, 253 U.S. 233, 40 S. Ct. 499, 64 L. Ed. 878 (1920).
Loan Association v. Topeka, 87 U.S. 655, 22 L. Ed. 45 (1874).
Milheim v. Moffat Tunnel Improvement District, 262 U.S. 710, 43 S. Ct. 694, 67 L. Ed. 1194 (1923).
Olcott v. Supervisors, 83 U.S. 678, 21 L. Ed. 382 (1872).

Police Powers

Traditionally, police powers meant police, courts, jails, and such. If one goes back to the days of kings, the kings held the police power and could delegate it as they saw fit. In our day, the states hold the police power and can delegate it as they see fit. But police power no longer means just police and judges. The courts have increasingly interpreted police powers to mean anything that promotes comfort, safety, morals, health, and prosperity. The states interpret their police powers as allowing any function they wish to deem as for the public good.

For the purpose of identifying governments, one uses only well-established legal theory. The definition of police power for identifying a government is traditional peace keeping through laws, courts, and police forces. It also must be a general power that affects the general public and not limited to specific functions or facilities, and it must include the power to enact and enforce laws, rules, or regulations that affect the general public, not merely carry out the requirements of another entity. In other words, we are talking about raw sovereign power here, not incidental power.

Essential Governmental Functions

This is the definition of an essential governmental function as derived from court decisions:

An essential governmental function is the employment of immediate and direct control over persons or things that must be exercised by a sovereign power or a public arm of a sovereign power in the required performance of a constitutional duty vital to the state’s separate and independent existence and for the benefit of the state’s entire population.

An essential governmental function is a function that is either a historic attribute of sovereignty or that must be performed by the state. These functions are those that the state must do and always remains responsible for even if the state engages another entity to perform the function for it. Certain functions, named above, are well established by the courts as essential governmental functions and accepted by all courts as evidence of a delegation of sovereign power.

The provision of free public education is a fairly new addition to the list of essential governmental functions. The Supreme Court of the United States has repeatedly declared since the 1950s that the provision of free public education is an essential governmental function.

Court decisions discussing essential governmental functions:

Allen v. Regents, 304 U.S. 439, 58 S. Ct. 980, 82 L. Ed. 1448 (1938).
Barrett v. United Hospital, 376 F. Supp. 791 (1974).
Commissioner v. Harlan, 80 F.2d 660 (8th Cir. 1935).
Flint v. Stone Tracy Company, 200 U.S. 107, 31 S. Ct. 342, 55 L. Ed. 389 (1911).
Frey v. Woodworth, 2 F.2d 725 (E.D. Mich. 1924).
Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985).
Liggett and Myers Tobacco Company v. United States, 82 Ct. Cl. 328 (1936).
Ohio v. Helvering, 292 U.S. 360, 54 S. Ct. 725, 78 L. Ed. 1307 (1934).
Seattle v. Poe, 4 F.2d 276 (W.D. Wash. 1925).
Standiford v. Salt Lake City Corporation, 605 P.2d 1230 (1980).
United States v. King County, 281 F. 686 (9th Cir. 1922).

More Delegations of Sovereign Power

In addition to the power to set taxes and the power to perform an essential governmental function, there are two other evidences of a delegation of sovereign power: the power to issue federally tax-exempt debt and the power to act for the state in an official capacity.

The power to issue federally tax-exempt debt as a sovereign power is based on the historic concept of sovereign immunity from taxation. Immunity of functions from taxation is an inherent quality of sovereignty. When the federal government grants tax exemption to a debt issuance, it is recognizing the debt to be financing public functions.

The Internal Revenue Service grants tax exemption to bonds that are considered to be for the public good regardless of whether the bonds are issued by a private or public entity. Many private entities qualify to issue debt that is exempt from federal income tax, but this does not make them public because they are not publicly founded.

The power to act for the state in an official capacity is also known as civil office. It includes the power to levy taxes, the power to issue federally tax-exempt bonds, and the power to perform a function that is essentially governmental as discussed above. It also includes the power to make laws, rules, or decisions on behalf of the state; the power to determine the disposition of public property; the power to incur financial obligations on behalf of a state or a political subdivision of the state; and the power to act in cases involving the business or political dealings between the government and the public, where the latter must act through an official agency.

Definition of a Government

Now that we have examined public foundation and sovereign power, we can present the definitions of a public entity and a governmental entity:

A public entity is an organization that was publicly founded and has governmental character through either its own possession of sovereign power or through administration by a public entity possessing sovereign power.

A government is an organization that was publicly founded and has governmental character through the possession of sovereign power and, in addition, possesses fiscal and administrative autonomy.

Rarely, entities are publicly founded but do not possess a delegation of sovereign power. While not meeting the definition of a public entity, these entities are public because the state maintains ultimate control over them through the manner of (public) foundation. Typically such entities have a board elected by property owners and can collect assessments but have no other powers.

Delegations of sovereign power are important because, when combined with public foundation, the entity is governmental. Delegations of sovereign power to a private entity do not make it public. An entity that is publicly founded and possesses a delegation of sovereign power is public regardless of the nature of the board.

Boards

Civil Office

The definition of civil office is germane to the definition of a government. Numerous federal and state court cases have established this concept and have formulated the five elements of civil office. The following requirements for civil office have appeared in numerous court decisions and attorney general opinions:

Civil office must be created by the constitution or the legislature or be created by a municipality or other body through authority conferred by the legislature;
civil office must possess a delegation of a portion of the sovereign power of government;
the powers conferred and the duties to be discharged must be defined, directly or impliedly, by the legislature or through legislative authority;
the duties must be performed independently and without control of a superior power other than the law, except a subordinate office may be placed under the general control of a superior office or body; and
civil office must have some permanency and continuity and not be only temporary or occasional.

Thus, civil office (public office) is created by the constitution, state law, or authority conferred by state law; it involves a delegation of sovereign power; the officers act autonomously without control of a superior power other than the law; and the duties, compensation, and tenure are fixed by law (directly or impliedly); and the office must have some permanency. A delegation of sovereign power is the power to act for the state. For the purpose of defining civil office, sovereign power is evidenced by any of the following:

popular election or officials popularly elected and serving ex officio
the power to set taxes
the power to issue federally tax-exempt bonds
the power to perform a function that is essentially governmental (courts, fire protection, police protection, administration of government buildings or maintenance of government offices, administration of government finances, or provision of free public education)
the power to make laws, rules, or decisions on behalf of the state
the power to determine the disposition of public property
the power to incur financial obligations on behalf of a state or a political subdivision of the state
the power to act in cases involving the business or political dealings between the government and the public, where the latter must act through an official agency

The first evidence of civil office, selection of officials by popular election, inherently demonstrates a delegation of sovereign power (a direct delegation of power by the people). The next three evidences on the list are pure historic sovereign powers. The final four criteria are situations where the officials are acting for the state. Note that when an entity’s officers are making decisions or determinations within the limits of a decision or determination made by a government, this is not evidence of civil office. Civil officers must be able to act freely within the limits set by law.

Counties and municipalities always have elected officials, and, thus, civil office always exists for these entities. Dependent agencies lack the power to act autonomously and are under the control of civil officers. Special districts may possess a delegation of sovereign power either through civil office or public administration (discussed below).

It should be clarified that public employment and civil office are not the same. Public employment is not relevant to the classification of governments. Public employment may be created by law or contract, does not involve a delegation of sovereign power, and is subject to direction from civil officers.

Court decisions and attorney general opinions discussing civil office:

Adams v. McCaughey, 21 R.I. 341, 43 A. 646 (1899).
Advisory Opinion to the Governor, 63 So. 2d 321 (Fla. 1953).
Alworth v. County of Lackawanna, 85 Pa. Super. 349 (1925).
Barney v. Hawkins, 79 Mont. 506, 257 P. 411 (1927).
Coyle v. Gray, 12 Del. 44, 30 A. 728 (1884).
Dartmouth College v. Woodward, 17 U.S. 518, 4 L. Ed. 629 (1819).
Eason v. Majors, 111 Neb. 288, 196 N.W. 133 (1923).
Green v. Bookwalter, 207 F. Supp. 866 (1962).
Hadley v. Junior College District, 397 U.S. 50, 90 S. Ct. 791, 25 L. Ed. 2d 45 (1970).
Hall v. Wisconsin, 103 U.S. 5, 26 L. Ed. 302 (1880).
Helvering v. Powers, 293 U.S. 214, 55 S. Ct. 171, 79 L. Ed. 291 (1934).
Leymel v. Johnson, 105 Cal. App. 694, 288 P. 858 (1930).
Marks v. Frantz, 179 Kan. 638, 298 P.2d 316 (1956).
Montgomery v. Enslen, 107 Ala. 372, 18 So. 157 (1894).
Oklahoma City v. Century Indemnity Company, 178 Okla. 212, 62 P.2d 94 (1936).
Opinion No. 03-52, 2003 Okla. AG LEXIS 48.
Opinion No. 84-205, 1985 Cal. AG LEXIS 1.
Opinion No. 87-1101, 1988 Cal. AG LEXIS 4.
Opinion No. 2000-144, 2000 Ark. AG LEXIS 207.
Opinion No. U98-8, 1998 Ga. AG LEXIS 22.
Palm Beach County Health Care District v. Everglades Memorial Hospital, 658 So. 2d 577 (Fla. 1995).
Pickett v. Truman, 333 Mo. 1018, 64 S.W.2d 105 (1933).
Pope v. Commissioner, 38 F.2d 1006 (6th Cir. 1943).
Richie v. Philadelphia, 225 Pa. 511, 74 A. 430 (1909).
Scholle v. Maryland, 90 Md. 729, 46 A. 736 (1900)
United States v. Hartwell, 73 U.S. 385, 18 L. Ed. 830 (1868).
Vallelly v. Board of Park Commissioners, 16 N.D. 25, 111 N.W. 615 (1907).
Wingate v. Valle, 41 Mo. 29 (1867).
Zimmerman v. Dammann, 201 Wis. 84, 228 N.W. 593 (1930).

Public Administration

A board with public administration also is evidence of a delegation of sovereign power. Public administration is evidenced when the board is appointed by civil officers, thus receiving a delegation of the power to act for the state. Appointed board members of dependent agencies are public employees subject to the administration of the appointing civil officers (for these, a control is present). Special districts also can have appointed boards but must have administrative and fiscal autonomy.

Elected Officials

Elected boards are typically entirely elected. The officials may be popularly elected or may be elected by corporate members, stockholders, or by other benefitted citizens (such as property owners). If an entity is public and has an elected board, it is usually a special district. Election is power directly handed from the people.

Popularly elected means the electors represent everyone legally entitled to vote in a governmental area, congressional district, or standard taxing district. An election must be popular to be a delegation of sovereign power. Usually, election by corporation members, property owners, or stockholders (benefitted citizens) would not include everyone legally entitled to vote in a governmental area, congressional district, or standard taxing district and, thus, is not evidence of a delegation of sovereign power.

A board elected by benefitted citizens does not qualify as a delegation of sovereign power, but the entity will be governmental if other evidence of a delegation is found. Many such entities can levy taxes.

Appointees

Which government the board members represent is important when determining if one is dealing with a state or local dependent agency. These are the possible situations:

State appointees are often appointed by the governor. But this is not always straightforward. Here are the variations:

The law may require that the appointees be selected at large (from anywhere in the state) or may require that they be selected from specified localities or from localities meeting specified requirements. These appointees represent the entire state.
The law may require that the governor select appointees from among local officials. These are representatives of the local governments, not the state.
The law may require that the governor select appointees from lists of nominees by local governments or with the approval of local governments. These are representatives of the local governments.
The law may require theat the governor select appointees from recommendations by a legislative delegation. These are considered to represent the local governmental areas.
The law may require that the appointees be selected from lists of nominees by private entities. These appointees are considered to represent the entire state.

State appointees also may be appointed by the state senate president or house speaker or by the state court. Typically, these are appointed at large or from among local officials. Another possibility is a grand jury empaneled by the court may make the appointments.

All or some of a board may consist of appointees by local public officials (including by school districts, special districts, and dependent agencies). The appointees may be selected at large, from lists of nominees by private entities, or from lists of nominees by a local court; these are considered to represent the appointing government. Appointees may be selected from nominees by another government; these are considered to represent the nominating government. Appointments made by the legislative delegation for the area are considered local appointments. A local government may appoint an advisory board that then appoints the board; these are considered to represent the local government.

Ex Officio Board Members

A board may consist wholly or partially of officials of the state government. Typically, these might be the governor, lieutenant governor, attorney general, comptroller, state treasurer, senate president, house speaker, senators, or representatives. These are all state representatives.

A board may consist wholly or partially of officials of a local government. These may be parent government officials, dependent agency officials, or hired officials (such as a city manager). The serving officials may be named in the authorizing legislation; for example, the mayor of a specific city may serve. These are representatives of the local government.

Unless a law specifically excludes ex officio members, appointed members may, in fact, be ex officio.

Private Representatives

Private entities may appoint some or all of the members of a publicly founded board. The Court of Appeals of Maryland stated in Scholle v. Maryland (1900) that, when a state legislature creates an office, it may “designate by whom and in what manner the person who is to fill the office shall be appointed.” This case has been cited in numerous state supreme court decisions. A good discussion can be found in Marks v. Frantz, 179 Ky. 638 (1956) concerning the appointment of board members from lists by private entities along with citations of numerous supporting cases.

The requirements for civil office are concerned with state sanctioning and state delegation of power. If the state decides that private entities may appoint board members, this is still governmental if there is evidence of civil office (a delegation of power) along with public foundation.

In fact, a private board may appoint the entire (publicly founded) board of a special district, as long as there is evidence of civil office and public foundation and the state retains ultimate control. Ultimate control means the state has the power to revoke the law and abolish the entity, thus retaining control. Note that the separation of public versus private is solely concerned with the state retaining ultimate control, not with control by local governments. Only the state is a sovereign entity, thus, only the state is required to retain ultimate control.

An example of where the state lost control and the courts ruled the situation to be invalid is found in Palm Beach County Health Care District v. Everglades Memorial Hospital (Fla. 1995): A law authorized health care districts (public) to replace the district with a private hospital board that was self perpetuating and for the public hospitals involved to enter into leases with these private boards. The leases gave the private boards control over public funds. The state had no power to end these leases or abolish the boards.

Private Board Over a Taxing District

A local government may create a taxing district and allow a privately founded board to manage the funds. The Supreme Court of Pennsylvania tersely stated the doctrine behind this in Sharpless v. Mayor (1853):

But the right to tax depends on the ultimate use, purpose, and object for which the fund is raised and not on the nature or character of the person or corporation whose intermediate agency is to be used in applying it. A tax for a private purpose is unconstitutional, though it pass through the hands of public officers, and the people may be taxed for a public work, although it be under the direction of an individual or private corporation.

Boards Elected by Benefitted Citizens (Private Governments)

This is a complex topic. The critical thing to know is that an entity with a board elected by benefitted citizens must have both public foundation and a delegation of sovereign power through the nature of the powers possessed to be a governmental entity. These entities typically have the power to tax.

The following is a discussion of the basic principles the Supreme Court and other courts have given as validating the constitutionality of special districts with boards composed of representatives elected by benefitted citizens:

Elective bodies performing general governmental functions over an entire geographic area are subject to popular election (called the one-person one-vote requirement). Counties and municipalities are always subject to the one-person one-vote rule. The courts have found that entities engaged in education, such as school boards and junior college districts, are subject to the one-person one-vote rule because education is a vital government function of interest to all in the community. Special districts may or may not be subject to the one-person one-vote rule.

Entities with a special limited purpose and a disproportionate effect (burden and benefit) on a definable group of constituents are exempt from this requirement and may use voting schemes that give influence only to those considered affected. The constitutionally decisive fact is that the voting scheme must reflect the narrow primary purpose legally authorized. Another way of phrasing this is the allocation of voting power may be proportional to the financial impact if the result is relevant to the objectives. The vote can be dependent on the number of acres owned because this reflects the relative risks incurred and the distribution of benefits and burdens, as long as the function reflects the entity’s limited purpose. The Supreme Court has held that it is reasonable to conclude that the land owners would not agree to creating the district unless they can control the allocation of resources, that is, without voting power apportioned to the value of their land.

A special limited purpose supplements and does not replace the general government’s services. The function must be such that the entity cannot meaningfully alter the conduct of persons in the district (cannot impose general taxes, cannot enact or enforce laws, and cannot engage in police powers such as making arrests). Only the land owners may be subject to taxation or eminent domain. The size of the special district’s finances and its economic effect are irrelevant as long as the function is narrow.

Compelling state interest also is a valid reason for violating the one-person one-vote rule. State interest would mean an interest of all of the people of the state. The courts are careful to distinguish when methods of election exclude persons with direct interests or include persons with remote interests. The courts in particular find that there must be some compelling interest for placing voting power in the hands of property owners alone.

There have been dissenting opinions. The primary concern is these decisions are contrary to the basic tenent of suffrage for all. Another concern is that the tenants may ultimately pay for the improvements, which would cause the improvements to effectively be a taking of one person’s property and giving that property to another.

A related topic is that legislation may authorize a special district to have a popularly elected or appointed board but the petition for creation may be initiated by land owners. “Landowner voting may in some circumstances be necessary in the formative stages of a governmental district to ensure the development proceeds. However, to be constitutional, such a voting scheme must transfer voting power in a coherent and correlative fashion to residents as they populate the developing district, at least if the district has somewhat general governmental powers.” (Bjornestad)

Court decisions discussing private governments:

Avery v. Midland County, 390 U.S. 474, 88 S. Ct. 1114, 20 L. Ed. 2d 45 (1968).
Ball v. James, 451 U.S. 355, 101 S. Ct. 1811, 68 L. Ed. 2d 150 (1981).
Bjornestad v. Hulse, 229 Cal. App. 3d 1568, 281 Cal. Rptr. 548 (1991).
Board of Estimate v. Morris, 489 U.S. 688, 109 S. Ct. 1433, 103 L. Ed. 2d 717 (1989).
Browning v. Hooper, 269 U.S. 396, 46 S. Ct. 141, 70 L. Ed. 330 (1926).
Hadley v. Junior College District, 397 U.S. 50, 90 S. Ct. 791, 25 L. Ed. 2d 45 (1970).
Hellebust v. Brownback, 824 F. Supp. 1511 (D. Kan. 1993).
Kessler v. Grand Central District Management Association, 158 F.3d 92. (2d Cir. 1998).
Reynolds v. Sims, 377 U.S. 533, 84 S. Ct. 136, 12 L. Ed. 2d 506 (1964).
Salyer Land Co. v. Tulare Lake Basin Water Storage District, 410 U.S. 719 (1973).

Why Civil Office and Public Administration Matter

From a theoretical standpoint, these concepts matter because the presence of civil office or public administration is a delegation of sovereign power. From a practical standpoint, the importance comes when determining if the entity is a government or dependent agency.

Autonomy

Governments have autonomy in addition to meeting the criteria for a public entity. Autonomy means the freedom to act without interference from another government. This excludes normal ministerial compliance checks and limitations on tax rates (a tax rate must have a legislated limit to be legal).

Fiscal Autonomy

Funding may come from an entity’s own revenue powers or from other sources. Fiscal autonomy is the power to control the money. An entity does not even have to use the power; autonomy merely requires the legal right to use the power. Some entities receive substantial funding from a government and have no need to use their own revenue powers.

There are four evidences of fiscal autonomy. The first is the power to control the funds coming in regardless of source, and the latter three are revenue powers granted by the authorizing legislation. The four powers are:

the power to determine its own budget
the power to set a tax without approval or the receipt of tax monies without the control of a government
the power to issue debt without statutory or regulatory limitations
the power to set fees and charges for services or facilities

Administrative Autonomy

Administrative autonomy is the ability to make decisions without control from another government. Certain situations indicate that the law intends that the board act of its own accord. Public entities with boards selected by private entities or privately founded boards inherently have administrative independence. Other types of boards that can function autonomously are:

officials who are popularly elected or elected by benefitted citizens
officials who are appointed by or nominated by one local government
officials who are appointed or ex officio and represent two or more state or local governments
officials who are appointed by the state but represent a local area and have local revenue powers

If the entity was created by a local government, however, administrative autonomy only applies to entities for which the primary function is nonessential. For nonessential functions, it is assumed that, in the absence of evidence to the contrary, the creating or appointing government has little influence over the organization’s operations.

An entity can, however, engage in an essential function (courts, fire protection, police protection, administration of government buildings or maintenance of government offices, administration of government finances, or provision of free public education) and have administrative autonomy if the performance of the essential function is an incidental power. For example, airport districts often have police forces. The primary function is provision of an airport; providing a police force is incidental.

Essential Functions and Autonomy

Everything changes over time. Counties and municipalities have some control over appointed boards because the county or municipal officers can always not re-appoint a member. However, the elected boards making the appointments are subject to re-election. Unless the function provided by the entity is an essential governmental function or the authorizing legislation provides a control, the link between the entity and the appointing official is tenuous.

Some elaboration is needed on the concept of why local governments cannot delegate essential governmental functions to a special district. The courts find that states, as sovereign entities, should technically not be permitted to give away their sovereign powers. However, political subdivisions (counties, municipalities, and townships) are necessary for state administration. These subdivisions have limited authority to delegate the powers delegated them. They cannot give away responsibility for their fundamental purpose for being (to provide essential governmental functions). They may hire or create an entity to conduct these functions for them, but they retain accountability. Where an entity is created to conduct an essential governmental function and, thus, accountability is retained, the entity can only be a dependent agency.

Controls

In addition, the creating law may impose controls on the authorized entity that make it dependent on the state or a local government. An example is that the state may set it up so that the board serves at the pleasure of the appointing officials. Another example is the creating law may state that the creating government may dissolve the entity at anty time. Entities with such controls are dependent agencies.

Also, some types of entities are inherently dependent on a government. For example, entities created for the primary purpose of setting up a lease-purchase agreement (frequently seen for highway development) are inherently dependent (usually on the state). Another example of inherent dependence is when an entity is created for the sole purpose of raising revenue such as a racing or gambling commission.

Entities created under interlocal cooperation acts are inherently joint agencies of the creating governments. However,these should not be confused with similar entities that require an agreement as part of their creation but that are not created under an interlocal cooperation act.

Why Autonomy Matters

An entity that is publicly founded and possesses a delegation of sovereign power is a governmental entity. To be a government, rather than a dependent agency, also requires the power to act without interference from another government. Special districts are entities that are given sovereign powers, often the power to tax, and then set free to do basically as they please within their authorized functions and powers. Some special districts have elected officials, whom the people can vote out. Other special districts have appointed officials who cannot be voted out.

It should be noted that some special districts in practice function like dependent agencies. The reality is that politics are always at work. The way things work in a particular city or town is based on historical circumstances, custom, bureaucracy, and personalities. Some officials of special districts are not aware of all of the powers their charge possesses especially because the law changes.

Examples

All of the following examples have been found by the U.S. Census Bureau to be special districts. See the Census of Governments Government Organization publications at a depository library or visit http://www.census.gov and select Governments Division. This list is alphabetically by state.

Alabama Municipal Electric Authority (Alabama - special act)
Regional electrical authorities (Alaska - general law)
Drainage districts (Arizona - general law)
Fire ant abatement districts (Arkansas - general law)
Lower San Joaquin Levee District (California - special act)
Ambulance districts (Colorado - general law)
Pomperaug Valley Water Authority (Connecticut - special act)
Tax ditches (Delaware - general law)
Daytona Beach Racing and Recreational Facilities District (Florida - special act)
Airport authorities (Georgia - special acts)
Office of Hawaiian Affairs (Hawaii- constitutional amendment)
Auditorium districts (Idaho - general law)
Chicago Transit Authority (Illinois - special act)
Northwest Indiana Regional Development Authority (Indiana - special act)
Library districts (joint or regional) (Iowa - general law)
Industrial districts (Kansas - general law)
Louisville-Jefferson County Air Pollution Control District (Kentucky - general law with special application)
Abbeville Film and Visitors Commission District (Louisiana - special act)
Cemetery districts (Maine - special acts)
Water and sewer authorities (Maryland - general law)
Goose Pond Maintenance District (Massachusetts - special act)
Recreation authorities (Michigan - general law)
Metropolitan Mosquito Control District (Minnesota - special act)
Lighting districts (Mississippi - special acts)
Jackson County Sports Complex Authority (Missouri - special act)
County rail authorities (Montana - general law)
Omaha Metropolitan Utilities District (Nebraska - general law with special application)
Housing authorities (New Hampshire - general law)
Port authorities - 1948 law (joint or regional) (New Jersey - general law)
Cotton boll weevil control districts (New Mexico - general law)
Hyde Park Fire and Water District (New York - special act)
Research Triangle Regional Public Transit Authority (North Carolina - special act)
Vector control districts (North Dakota - general law)
New community authorities (Ohio - general law)
Public library systems (Oklahoma - general law)
Geothermal heating districts (Oregon - general law)
Philadelphia Regional Port Authority (Pennsylvania - special act)
East Providence Special Development District Commission (Rhode Island - special act)
Myrtle Beach Air Base Redevelopment Authority (South Carolina - executive order)
Television translator districts (South Dakota - general law)
Utility districts (Tennessee - general law)
Palacios Seawall Commission (Texas - special act)
Irrigation districts (Utah - general law)
Vermont Public Power Supply Authority (Vermont - special act)
Jail authorities (Virginia - general law)
Hydroelectric resources authorities (Washington - general law)
Hatfield-McCoy Regional Recreation Authority (West Virginia - special act)
Local professional baseball park districts (Wisconsin - general law)
Resort districts (Wyoming - general law)

References

1. U.S. Census Bureau 2007 Census of Governments Governments Organization.
2. U.S. Census Bureau 2006 Government Finance and Employment Classification Manual.
3. Dartmouth College v. Woodward, 17 U.S. 518, 4 L. Ed. 629 (1819).

	Ridgefield School District (Washington)
	Joliet Regional Port District
	Public utility district

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