Best planning and implementation toolbox

Local Government Corporation:

Purpose of Tool:
A local government corporation (LGC) is a corporate entity formed by a municipality or county to act on behalf of the government. LGCs are present throughout the United States for funding transportation, water and sewer infrastructure, economic development ventures, and other projects that will benefit the public. For transportation improvements, Chapter 431 of the Texas Transportation Code sets specific guidelines for the creation and operation of LGCs within the State. These entities are formed specifically to promote and develop transportation facilities and systems.

Benefits of Using Tool:
There are numerous benefits to creating an LGC. By creating a separate corporation, the local government is protected from lawsuits or claims that may be brought against the LGC. In addition, an LGC limits the financial risk that a local government would otherwise take on, particularly if it invests in new or emerging technology. Finally, by creating an LGC, local elected officials can concentrate on other local issues and allow the LGC to focus on its specific goals and objectives.

Steps Involved to Use Tool:
The following section presents the procedure for forming an LGC in Texas.
1. The local government adopts a resolution supporting the formation of the LGC, as well as articles of incorporation that specify details such as the name, duration, purpose, and number of directors in the LGC.
2. The Secretary of State of Texas approves the resolution and articles of the LGC and issues a certificate of incorporation.
3. The LGC board, consisting of three (3) or more non-compensated directors, appoints advisory directors to promote the transportation facilities and services. The advisory directors, however, do not vote on the board and are also are not compensated for their participation.
4. The LGC board adopts bylaws to guide its operation and governance.

Upon its formation, the LGC may work directly with property owners, state and local governments, and elected officials to promote and develop the improvements. The LGC may employ a staff and consultants to provide technical expertise and skills. In the case of transportation improvements, this may include activities such as conducting planning studies, preparing right-of-way reports, compiling environmental documentation, and preparing preliminary or final engineering plans. In addition, the LGC may present these plans and findings to local elected officials, government agencies, and the general public. The LGC may be given authority by the local government to construct, approve, and supervise project construction.

Special Requirements to Use Tool:
In Texas, transportation projects developed by an LGC (as formed under Chapter 431 of the Texas Transportation Code) must be part of the federal or state highway system; projects that are on a local transportation network are not permitted.

Specials Resources Needed to Use Tool:
Depending on the structure of the LGC, numerous resources may be utilized to help the corporation operate in an efficient and effective manner. The LGC may choose to employ staff or consultants with the necessary expertise to develop the projects. In addition, it is highly beneficial to develop a business plan that lays out the structure of the LGC to help guide the board.

Communities / Agencies that Have Used Tool:
In 2004, the City of Lewisville, Texas acquired land along with mineral rights. In 2005, the City formed the Lewisville LGC to make contracts with mineral exploration companies. The intent of the mineral exploration is to attract other companies and create a commercial and industrial market for large, undeveloped tracts of land.  Contact:

Claude King - City Manager
151 W. Church Street
Lewisville, Texas 75057
(972) 219-3400 

The City of Dallas authorized the creation of the Dallas Convention Center Hotel Development Corporation to finance some of the costs of developing a privately-owned hotel on City-owned land. The goal of the project was to enhance economic development in the area. The advantage of the LGC is that it has the authority to issue tax-exempt bonds to be repaid from the revenue of the hotel projects, thereby minimizing the debt liability of the City itself.  Contact:

Mary K. Suhm - City Manager
1500 Marilla Street
Room 4EN
Dallas, Texas 75201
(214) 670-3296 

Metrics to Use to Monitor Tool Effectiveness:
Because each LGC is formed for unique and varying reasons, there are no standard metrics to determine how LGCs affect quality of life.

List of Resources to Obtain Additional Info:
- Launching and Maintaining a Local Government Corporation (PDF) : 
- Texas Transportation Code – Chapter 431. Texas Transportation Corporation Act (PDF): 
- City of Lewisville LGC: 
- Dallas Convention Center Hotel Development Corporation: