Untitled Texas Attorney General Opinion ( 2009 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
June 29, 2009
The Honorable Jeff Wentworth Opinion No. GA-0724
Chair, Committee on Jurisprudence
Texas State Senate Re: Authority of local taxing units or central
Post Office Box 12068 appraisal districts to collect special assessments
Austin, Texas 78711 imposed in public improvement districts
(RQ-0774-GA)
Dear Senator Wentworth:
You ask whether a central appraisal district or a local taxing unit, such as a county, may
contract to collect assessments imposed by a public improvement district ("district").! The Public
Improvement District Assessment Act (the "Act"),2 Local Government Code chapter 372, subchapter
A, authorizes a municipality to establish a district to help finance public improvements within the
district's boundaries. See TEx. Loc. GOV'T CODE ANN. § 372.003 (Vernon 2005). The municipal
governing body "shall apportion the cost of an improvement to be assessed against property" in the
district "on the basis of special benefits accruing to the property because of the improvement."
Id § 372.015(a). The governing body levies and collects assessments, also known as "special
assessments," on property within the district. See id §§ 372.016, .017, .018(b). If a land ownerin
the district does not pay the assessment against his property, "[a]n assessment ... , with interest, the
expense of collection, and reasonable attorney's fees, if incurred, is a first and prior lien against the
property assessed, superior to all other liens and claims except liens or claims for state, county,
school district, or municipality ad valorem taxes." Id § 372.018(b). The lien "maybe enforced by
the governing body in the same manner that an ad valorem tax lien against real property may be
enforced by the governing body," and "[d]elinquent installments of the assessment shall incur
interest, penalties, and attorney's fees in the same manner as delinquent ad valorem taxes." Id.
You first inquire whether Tax Code section 6.24 authorizes a contract between a municipality
and a central appraisal district or a local taxing unit to collect special assessments imposed in a
public improvement district. See Request Letter at 1,3. Section 6.24 is found in the Property Tax
Code, Texas Tax Code title 1, which applies to local entities authorized to impose ad valorem taxes
IRequest Letter at 1 (available at http://www.texasattorneygeneral.gov).
2TEX. Loc. Gov'T CODE ANN. § 372.001 (Vernon 2005).
The Honorable Jeff Wentworth - Page 2 (GA-0724)
on property.3 See TEX. TAX CODE ANN. §§ 1.01 (short title), 1.02 (applicability of title 1 to taxing
units), 1.04(12) (defining "taxing unit" as a political unit of the state authorized to impose ad
valorem taxes) (Vernon 2008). Section 6.24 of the Tax Code authorizes the governing body ofa
taxing unit to contract with another taxing unit or with an appraisal district board "to perform duties
relating to the assessment4 or collection of taxes." Id. § 6.24(a) (footnote added); see also id.
§ 6.24(b) (procedure for county contracts). Section 6.24, read in its statutory context, relates to the
assessment and collection of ad valorem taxes. See TEx. GOV'T CODE ANN. § 311.011(a) (Vernon
2005) (words and phrases shall be read in context). An "appraisal district" appraises property in the
district "for ad valorem tax purposes of each taxing unit that imposes ad valorem taxes on property
in the district." TEx. TAX CODE ANN. § 6.01(b) (Vernon 2008). Accordingly, section 6.24
authorizes contracts to perform duties relating to the assessment or collection of ad valorem property
taxes.
A special assessment, such as an assessment within the Act, is imposed under the taxing
power, but it is not an ad valorem property tax. See City of Wichita Falls v. Williams, 26 S.W.2d
910,911-13 (Tex. 1930). An ad valorem property tax is imposed throughoutthe taxing jurisdiction
for the general support of its government, while a special assessment is imposed only upon the
property that is specially benefitted by the improvement, and its amount is based on the special
benefits accruing to the property. See id.; Henry v. Kaufman County Dev. Dist. No.1, 150 S. W.3d
498,504-05 (Tex. App.-Austin 2004, pet. dism'd by agr.); see also City ofHouston v. Blackbird,
394 S.W.2d 159, 162 (Tex. 1965) (amount of assessment for paving improvements cannot exceed
benefit to property owner). Special assessments are not ad valorem taxes within the Texas
Constitution. See City of Wichita Falls, 26 S.W.2d at 915; Higgins v. Bordages, 31 S.W. 52, 54-55
(Tex. 1895). Moreover, "it has been uniformly held that the word taxes, whether used in an act of
the legislature, or the charter of a company exempting it from taxation, does not embrace such local
assessments, unless there be something in the statute or charter to indicate such an intention." City
ofCisco v. Varner, 16 S.W.2d 265,266 (Tex. Comm'n App. 1929,judgm't affd); see Allen v. City
of Galveston, 51 Tex. 302, 320 (1879). Nothing in section 6.24 indicates that the Legislature
intended it to encompass special assessments. An assessment imposed under the Act is accordingly
not a tax within Tax Code section 6.24. Based on the plain language of section 6.24, we conclude
3"An ad valorem tax is levied against property on its value." State v. Wynne, 133 S. W.2d 951,957 (Tex. 1939).
4The Legislature has defmed the term "assessment" in the Property Tax Code as "a function described by
Chapter 26, Tax Code, performed by an employee of a political subdivision or by a person acting on behalf of a political
subdivision to determine an amount of ad valorem tax for the political subdivision." TEX. Occ. CODE ANN. §
1151.002(2) (Vernon 2004) ( defining "assessment" for purposes ofthe Property Taxation Professional Certification Act,
Id. § 1151.001-.253 (Vernon 2004 & Supp. 2008». See also Bexar County v. Connell Leasing Co., 611 S.W.2d 496,
498 (Tex. Civ. App.-San Antonio 1981, no writ) (defming "assessment" in Texas Constitution article VIII, section 15
as "the sum that has been ascertained as the apportioned part of the tax to be charged against the particular piece of
property," and that it "includes the procedure on the part of officials by which the property is listed, valued, and fmally
the pro rata tax declared").
The Honorable Jeff Wentworth - Page 3 (GA-0724)
that section 6.24 does not authorize contracts between a municipal governing body and another
taxing unit or an appraisal district board to collect special assessments imposed under the Act. 5
You also ask whether authority other than Tax Code section 6.24 would permit a central
appraisal district or a local taxing unit to collect assessments imposed by a municipality on property
in a public improvement district. See Request Letter at 1,2. Government Code chapter 791, the
Interlocal Cooperation Act, authorizes a local government to contract with another local government
"to perform governmental functions and services in accordance with this chapter." TEx. GOy'T
CODE ANN. § 791.011(a) (Vernon Supp. 2008), see id. §§ 791.001-.033 (Vernon 2004 & Supp.
2008); Ben Bolt-Palito Blanco Consolo Indep. Sch. Dist. v. Tex. Political Subdivisions Prop.lCas.
Joint Self Ins. Fund, 212 S.W.3d 320 (Tex. 2006) (addressing self insurance pools authorized by
chapter 791 and other statutes). A local government includes a "county, municipality, special
district, junior college district, or other political subdivision of this state or another state." TEX.
GOy'TCODEANN. § 791.003(4)(A)(Vernon Supp. 2008). The term "[g]overnmental functions and
services" is defined as "all or part of a function or service" in any of several areas listed in section
791.003(3). Id. § 791.003(3). The list does not expressly include collecting assessments, and no
judicial decision or attorney general opinion has considered whether chapter 791 authorizes contracts
for collecting special assessments. The language of chapter 791 is, however, broad enough to
include contracts to collect assessments. The statute authorizes contracts for "administrative
functions," defined as "functions normally associated with the routine operation of government,
including tax ... collection." Id. § 791.003(1); see also id. § 791.003(1) (defining "administrative
functions"); see also id. § 791.003(3)(K) (administrative functions are governmental functions). In
our opinion, the collection of assessments, like the expressly-mentioned tax collection, is a function
"normally associated with the routine operation of government." Id. § 791.003(1). In addition, the
statute authorizes local governments to contract for "other governmental functions in which the
contracting parties are mutually interested." Id. § 791.003(3)(N). This broad category could include
the collection of special assessments.
An interlocal contract under chapter 791 may "provide a governmental function or service
that each party to the contract is authorized to perform individually." Id. § 791.011(c)(2); see Tex.
Att'y Gen. Op. No. GA-O 150 (2004) at 2 (Interlocal Cooperation Act permits an agreement whereby
the peace officers of one local government serve as law enforcement officers of another local
government that has law enforcement authority). Thus, a municipality could not contract with an
appraisal district board for collection of assessments. We believe, however, that a court would find
that the Interlocal Cooperation Act authorizes a municipality to contract with another local
government for collecting special assessments imposed in a public improvement district. The local
government must also have authority to collect assessments for public improvements. Whether a
particular local governmental entity has the required authority may be determined by examining the
applicable law.
5you also ask if a contract under Tax Code section 6.24 for collection of special assessments would have to be
approved by the comptroller. See Request Letter at 5. In view of our answer to your fIrst question, we need not address
this question.
The Honorable Jeff Wentworth - Page 4 (GA-0724)
SUMMARY
A special assessment to finance a public improvement is
imposed only upon the property that is specially benefitted by the
improvement, and its amount is based on the special benefits accruing
to the property. A special assessment is imposed under the taxing
power, but it is not an ad valorem property tax within the Texas
Constitution, nor does the term "taxation" in statutes ordinarily
include special assessments.
Tax Code section 6.24 authorizes contracts between a
municipal governing body and another taxing unit or an appraisal
district board to collect ad valorem taxes, but it does not authorize
contracts to collect special assessments imposed under the Public
Improvement District Assessment Act, Local Government Code
chapter 372, subchapterA.
Pursuant to the Interlocal Cooperation Act, a municipal
governing body may contract for the collection of a special
assessment it imposes in a public improvement district with another
local governmental entity that is authorized to collect assessments for
public improvements.
ANDREW WEBER
First Assistant Attorney General
JONATHANK. FRELS
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
Susan L. Garrison
Assistant Attorney General, Opinion Committee