GALVESTON - Both sides in a clash over millions of dollars in tourism money and governing power found victory Thursday in a Texas Attorney General opinion.

The non-binding opinion issued Wednesday answered three questions the Park Board of Trustees in February posed to the Texas Attorney General in effort to back the city off what leaders asserted was a money grab and encroachment on authority of an independent board to manage aspects of tourism.

The city and park board within minutes of each other issued statements saying the opinion was “consistent” with their positions on the park board’s power and interpretation of hotel occupancy tax law.

“The opinion from the Office of the Attorney General Ken Paxton is consistent with the park board’s position that it has operated legally and within its powers as a separate government entity from the city of Galveston with the ability to house and manage HOT funds as well as disburse those funds ‘without further authorization’ once the park board’s budget has been approved and the funds have been allocated by the Galveston City Council,” the park board said in its statement.

“The opinion brings clarity to the park board’s ability to house HOT funding as well as its authorities as an institution.”

The city meanwhile said the Attorney General’s opinion was consistent with its position all along.

“While the city could not directly contravene a statute, the city could pass ordinances in harmony with the statutes,” according to its statement.

“That was the position taken by the city in its brief to the AG.”

The opinion essentially states the city can’t enact ordinances that contradict or undermine powers granted the park board through state law, but the city could remove parks or facilities from the park board’s management and control.

Less decisively, the opinion said the state’s tax code contains no framework for municipal control of hotel tax money once it’s allocated to the park board and couldn’t conclude whether the law authorizes the city to exercise control over the money. It left that power to contractual agreements between the city and the park board.

The opinion was the culmination of nearly a year of feuding between the city and park board over who controls revenue from the hotel occupancy tax, a 15 percent tax assessed on people who rent hotel rooms and short-term rentals. It amounts to 15 cents on every dollar charged for a room or rental.

Last year, as tourism soared, the hotel occupancy tax generated $30 million, along with conflict about who should control the windfall.

For years, the park board collected the revenue and kept it in its own accounts. No one took issue with that until October last year, when District 3 Councilman David Collins said the city and board for years had inadvertently violated state laws and the local charter by not keeping the money in city accounts.

City council members in December approved ordinances transferring $14 million from park board accounts on the argument that was neccessary to comply with state law and the charter.

The ordinances also required the park board to submit annual budgets for city council approval and to submit frequent expense reports.

The fight over the money and the park board’s autonomy inspired a battle of legal opinions.

The park board commissioned an opinion from the Texas Hotel & Lodging Association. The nation’s largest hotel trade association argued the park board could legally keep the tax revenue in its own accounts.

The city rejected that opinion and a similar one from Houston law firm Hunton Andrews Kurth.

City Manager Brian Maxwell at the time told The Daily News the park board should seek answers from the Texas Attorney General’s Office. The park board in February did, asking three questions:

• May the city by ordinance, absent an agreement, limit the park board’s powers granted by the state?”

• May the city lawfully exercise control over the park board’s use of HOT funds after the funds are appropriated to the park board?

• May the city lawfully remove previously designated parks and facilities from the park board’s control?

The park board sees validation in the attorney general’s conclusion the city can’t exercise control over hotel occupancy tax funds once allocated to the park board unless otherwise agreed to by contract.

Chairman Jason Hardcastle said Thursday he hoped the opinion would give the park board more leverage in ongoing contract negotiations. Hardcastle also hoped it returned the relationship between the two entities to a contractual one rather than one in which the city council dictates policy and procedure.

But he also hoped it wouldn’t reignite inflammatory rhetoric the two entities traded for months and reached crescendo in May when the park board CEO Kelly de Schaun departed after 12 years, some of which were the most successful in the history of island tourism industry.

De Schaun had accused the city of attempting to take control of the park board and its money. The city accused de Schaun of treating the public’s money as if it belonged to the park board.

Some good things have come from debate about the park board’s roles and responsibilities, Hardcastle said. And he agreed the park board should operate in a transparent, accountable way, he said.

But the system ordinances demand — requiring the park board to collect hotel occupancy taxes, submit them to the city and then ask the city to return the money to fund park board operations — is inefficient, he said.

Hardcastle argues the opinion gives the park board better leverage in contract negotiations and hoped it would lead to a less bureaucratic system, he said.

“I think this is a victory not only for the park board, but for the city of Galveston and residents,” Hardcastle said. “The overarching goal from the outset was to provide clarity for two organizations that disagreed on their roles and responsibilities and I think we did get that clarity.”

City Attorney Don Glywasky said Thursday a contract between the two entities would control collection and allocation of hotel occupancy taxes. The contract remains to be hammered out.

Glywasky was pleased with the attorney general opinion, he said.

“I’m delighted with the opinion,” he said. “It is entirely consistent with what the city has been saying the entire time.”

Laura Elder: 409-683-5248; laura.elder@galvnews.com