Untitled Texas Attorney General Opinion ( 1989 )

THE ATTORNEY GENERAL
OF TEXAS
Honorable Mark W. Stiles Opinion No. JM-1060
Chairman
County Affairs Committee Re: May an attorney who
Texas House of Representatives serves on the board of
P. 0. Box 2910 directors of an appraisal
Austin, Texas 78769 district contract with a
participating taxing unit
to collect delinquent taxes
(RQ-1650)
Dear Representative Stiles:
You ask whether a private attorney who is a director.of
an appraisal district may contract to collect delinquent
taxes for a taxing unit that participates in the appraisal
district. We will first consider whether the attorney would
be disqualified by statute frcm serving on the appraisal
district board.
An appraisal district is established in each county to
appraise property for ad valorem tax purposes of the taxing
units in the district, which include the county, cities,
school districts, and any other political unit that imposes
ad valorem taxes on property. Tax Code 5 6.01: seeid.
F, 1.04(12) (defining "taxing unit"). The five member board
of directors of the appraisal district is elected by the
governing bodies of the county, the cities, and the school
districts in the appraisal district. Id. § 6.03. Section
6.03 of the Tax Code, which sets out the eligibility
requirements for directors of the app~raisal district,
includes the following restriction:
An individual . . . is not ineligible because
of membership on the governing body of a
taxing unit or because the individual is an r
elected official. However, an emolovee of a
taxing unit that narticioates in the district
is not elisible to serve on the board unless
the individual is also a member of the
governing body or an elected official of
a taxing unit that participates in the
district. (Emphasis added.)
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Honorable Mark W. Stiles - Page 2 (JM-1060)
Id. 5 6.03(a).
Section 6.30(c) of the Tax Code authorizes contracts
between a taxing unit and an attorney to enforce the
collection of delinquent taxes. In our opinion, an attorney
who contracts under this provision is an independent
contractor and not an employee of the taxing unit. An
independent contractor contracts to do a specific piece of
work for another, furnishes and controls his assistants, and
does the work without being subject to the other's orders on
its details. Halliburton v. Texas Indemnitv Ins. co., 213
S.W.2d 677 (Tex. 19481. Section 6.30(a) refers to the
attorney as ‘a "privatei attorney. See'aenerally Attorney
General Opinion JM-14 (1983) (county may not contract with
county attorney under section 6.30(a) of the Tax Code).'
Attorney General Opinion V-137 (1947) determined that
the predecessor of section 6.30 did not authorize a commis-
sioners court to hire individuals v to
collect delinquent taxes on a commission basis. The county
had authority to arrange for delinquent tax collections on
a commission basis only by contract pursuant to the pre-
decessor of section 6.30. &at 2. An attorney who
contracts to collect delinquent taxes for a taxing unit is
not an employee of that unit and is therefore not dis-
qualified from service on the board of directors under the
quoted provision of section 6.03(a).
You ask whether the contract creates a conflict of
interest .for the director of the appraisal district, because
the board of directors establishes policy for the chief
appraiser's determinations of taxable values and exemptions
and the contracting attorney may eventually derive a fee
based on those values. We will outline the process of tax
appraisal and collections to provide a context for our
discussion of your question.
The Tax Code contemplates a three-step process:
appraisal, assessment, and collection of taxes. See
Attorney General Opinion JM-35 (1983). The appraisal
district participates in this process only during the first
step. The district board of directors establishes an
appraisal office and appoints a chief appraiser who
determines the value of property and decides whether
applicants for exemptions are entitled to them. Tax Code
s 6.05, chs. 11, 22, 23, 25; see cenerally Attorney General
Opinion JM-499 (1986). The appraisal district board also
appoints the board which reviews the appraisal records
prepared by the chief appraiser. Tax Code 55 6.41, 25.22,
41.01. If the appraisal review board finds that the
appraisals do not comply with law, it directs the chief
p. 5521
Honorable Mark'w. Stiles - Page 3 (JM-1060)
appraiser to make the necessary corrections. Id. 55 41.01,
41.02; see Attorney General Opinion JM-981 (1988).
When the appraisal records have been approved by the
appraisal review board, they constitute the appraisal roll
for the district. Id. 5 25.24. The chief appraiser
certifies the relevant part of the appraisal role to the
assessor for each taxing unit participating in the district.
Id. 5 26.01. The governing body adopts a tax rate, and the
assessor computes the tax owed on each property and sends a
tax bill to the property owner. Id. 55 26.05, 26.09, 31.01.
If the tax is not paid on time, the taxing unit may
file suit to collect it. Id. s 33.41. The governing body
of the taxing unit may contract with an attorney to enforce
the collection of its delinquent taxes for a total compensa-
tion not to exceed 20 percent of the amount of delinquent
tax, penalty, and interest collected. Tax Code § 6.30(c).
Chapter 171 of the Local Government Code1 deals with
conflicts of interest of "local public officials," including
directors of an appraisal district. Local Gov't Code
§ 171.001(1). A local public official commits an offense if
he knowingly participates in a vote or decision on a matter
involving a business entity in which he has a substantial
interest if "the action on the matter will have a special
economic effect on the business entity that is distinguish-
able from the effect on the public." Acts 1987, 70th Leg.,
ch. 362, § 4, at 1799 (amending article 988b, section 4,
V.T.C.S., now codified as section 171.004 of the Local Gov't
Code.)2 A local public official who has such an interest.in
1. Former article 98833, V.T.C.S., was recodified as
chapter 171 of the Local Government Code by the 70th session
of the Legislature. Acts 1987, 70th Leg., ch. 149. The
same session of the legislature adopted amendments to former
article 988b, V.T.C.S., without reference to the repeal and
recodification of that provision. The amendments are
preserved and given effect as part of the code provision.
Gov't Code 5 311.031(c).
2. Section 171.003 (a)(l) of the Local Government Code
bars a local public official from knowing participation in a
vote or decision "on a matter involving a business entity"
in which he has 'Iasubstantial interest if it is reasonably
forseeable that an action on the matter would confer an
(Footnote Continued)
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Honorable Mark W. Stiles - Page 4 (JM-1060)
a business entity must file an affidavit describing that
interest and abstain from participation in the matter.
Local Gov't Code 5 171.004.
The attorney's law firm is a business entity within
chapter 171 of the Local Government Code. Id. 5 171.001.
Presumably, he has a *'substantial interest" in his firm.
Chapter 171 of the Local Government Code will apply to the
attorney's participation in decisions of the appraisal
district if action by the board on a matter "will have a
special economic effect on the business entity that is
distinguishable from the effect on the public." The issue
before us is whether the appraisal district board's actions
in establishing appraisal policy will have a special
economic effect on the law firm of the attorney who holds
the delinquent tax collection contract because tax bills are
based on property values and tax rates and the attorney's
fee is usually a percent of the amount of delinquent tax,
penalty, and interest collected. Tax Code 5 6.30; see also
Attorney General Opinion JM-857 (1988).
Our summary .of the tax appraisal and collections
process shows that officials and boards other than the
appraisal district board make decisions~that affect property
valuation. You indicate that the board establishes policy
implemented by the chief appraiser in determining taxable
values and exemptions, but the board's policy and the chief
appraiser's determinations must also comply with Tax Code
provisions. See oenerallv Attorney General Opinion JM-499
(1986). The chief appraiser's decisions are reviewed by the
appraisal review board, which may order him to make changes.
Members of the appraisal review board are appointed by the
appraisal district board for two year terms of office. Tax
Code § 6.41. Directors of the appraisal district and
employees of the appraisal office are among the persons
disqualified from service on the appraisal review board.
Id. The county appraisal district and the appraisal review
(Footnote Continued)
economic benefit to the business entity." Senate Bill 1131
of the 70th Legislature inserted the language "or real
property" after "business entity" in this provision. Acts
1987, 70th Leg., ch. 323, § 1, at 1733. House Bill 1948 of
the 70th Legislature adopted a new standard for the circum-
stances which barred a local public official with a sub-
stantial interest in a matter from participating in board
action. Acts 1987, 70th Leg., ch. 362, at 1799. These
amendments can be harmonized by adopting the standard of
House Bill 1948, which also applies to real property. w
Gov't Code 55 311.025(b), 311.031(c).
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Honorable Mark W. Stiles - Page 5 (JM-1060)
board are separate and distinct bodies. To&e Sauare
&.soc. v. Anoelina Countv Aonraisal Dist., 709 S.W.2d 776,
778 (Tex. App. - Beaumont 1986, no writ) (notice of appeal
served on the district board does not constitute notice to
the review board). The appraisal district board does not
control the property values submitted to the taxing units.
The appraisal board's participation in the taxing
process ends when the chief appraiser certifies the
appropriate part of the appraisal roll to each taxing unit
in the district. Thus, it has no part in establishing the
second main determinant of tax bills -- the tax rate adopted
by the governing body of each taxing unit. Moreover, the
board's appraisal policies must necessarily be consistent
with law, and the board would seem to lack power to increase
appraised values in order to increase fees for collecting
delinquent taxes. Board actions in adopting appraisal
policies should have only a minor and predictable effect on
the value of tax collections contracts within the district.
We conclude, as a matter of law, that under the Tax Code
provisions we have discussed, the board's actions in esta-
blishing policies for property appraisals do not "have a
special economic effect" on an attorney who has contracted
under section 6.30 of the Tax Code to collect delinquent
taxes for a local taxing unit. Therefore, chapter 171 of
the Local Government Code does not require the director to
recuse himself from the board's decisions on appraisal
policy.
Under other circumstances, however, the attorney's
interest in a contract for delinquent tax collections might
require him to recuse .himself. For example, if the
appraisal district board of directors contracts with a
taxing unit to collect its taxes under section 6.24 of the
Tax Code, a director who collects delinquent taxes for the
same taxing unit may have to recuse himself from some board
actions related to the district's contract. See also Tax
Code 5 6.26 (election to require that appraisal district
collect property taxes for all taxing units).
You ask whether the office of director of an appraisal
district is incompatible with the duties, loyalties, and
responsibilities of a private attorney collecting delinquent
taxes for a participating taxing unit. In Letter Advisory
No. 87 (1974), this office stated that the common law
doctrine of incompatibility does not apply to an independent
contractor who works for a public agency pursuant to con-
tract. Moreover, our discussion of chapter 171 of the Local
Government Code is relevant to your question about incom-
patility. The lack of connection between the functions of
the appraisal district board and the taxing unit's collec-
tion of delinquent taxes would probably also prevent the two
P. 5524
Honorable Mark W. Stiles - Page 6 (JM-1060)
positions from being incompatible. See oenerallv Attorney.
General Opinion JM-203 (1984) (discussing common law
doctrine of incompatibility).
The attorney is subject to the Texas Code of Profes-
sional Responsibility, which includes provisions relevant to
the conflicting loyalties which might arise in cases like
the one you present. Disciplinary Rule 2-103 provides in
part:
(A) A lawyer shall not recommend employ-
ment, as a private practitioner, of himself,
his partner, or associate to a non-lawyer who
has not sought his advice regarding employ-
ment of a lawyer, except as follows: [Excep-
tions omitted.]
Supreme Court of Texas, Rules Governing the State Bar of
Texas art. X, 5 9 (Code of Professional Responsibility) DR
2-103 (1982). Disciplinary Rule E-101, which relates to
action as a public official, provides in part:
(A) A lawyer who holds public office
shall not:
. . . .
(3) Accept any thing of value from
any person when the lawyer knows or it is
obvious that the offer is for the purpose
of influencing his action. as a public
official.
Id. DR E-101 (1971).
Finally, section 39.03 of the Penal Code provides:
(a) A public servant commits an offense
if, in reliance on information to which he
has access in his official capacity and which
has not been made public, he:
(1) acquires or aids another to
acquire a pecuniary interest in any
property, transaction, or enterprise that
may be affected by the information.
Neither the disciplinary rules nor the Penal Code provision
prohibit the dual service you inquire about, but they are
directed at curtailing the abuses that might arise under
those circumstances.
P. 5525
C
Honorable Mark W. Stiles - Page 7 (JM-1060)
SUMMARY
An attorney who has contracted with a
taxing unit to collect its delinquent taxes
is not an lVemployee" under section 6.03(a) of
the Tax Code and is not ineligible under that
provision to be a director of the appraisal
district which includes that taxing unit.
An appraisal district director's
contract to collect delinquent taxes for a
local taxing unit does not require him to
recuse himself pursuant to chapter 171 of the
Local Government Code from participation in
board actions establishing policy to be
implemented by the chief appraiser.
The common law doctrine of incompatibility
does not bar a director of an appraisal
district from contracting under section 6.30
of the Tax Code with a local political
subdivision to collect its delinouent taxes.
JIM MATTOX
Attorney.General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLHY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Susan L. Garrison
Assistant Attorney General
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