Untitled Texas Attorney General Opinion

QiXfice of the 5!lttornep @enera Mate of Qexae DAN MORALES Al-ronNLY GENERAL Jmuaiy25,19% Mr. Ray Far&es Opiion No. DM,374 of&e OfGeneral ColuLwl The University of Texas System Re: Whether the El Paso County Water 201 west seventh street Jmprovement District No. 1 may, pursuant Austin, Texas 787013981 to chapter 55, subchapter N of the Water code,assessrtaxonthe~tbasis against land belonging to the Permanent University Fund (IQ-71 5) Dear Mr. Farabee~ You have requested our opinion as to whether land belong@ to the permanent University Fund’is subject to taxation on a be&t basis under chapter 55, subchapter N of the water code. You state that, since 1977, the El Paso County water Improvement District No. 1 (the ‘dist&t”) has been levying rmesmats, penalties, and interest on three tracts of land belonging to the Permanent University Fund and located in El Paso County? You tkther inform us that the three tracts of land are leased out for grazing purposes, but that neither the bosrd of regents of The University of Texas System (the “university”) nor the lessee has requested water from the ditict.~ Furthermore, you state that the land never has rcmived water service from the district. We understsnd that the district is a political subdivision6f the state, orgsnized and existing pursuant to article XVI, section 59 of the Texas Constitution. Chapter 55 of the Water Code pertains to water improvement districts. Section 55.022 authorizes the commissioners court of a county to create one or more water improvement districts in the h4r.RayFambee - Page 2 (DM-374) county.4 A water improvement district operating under article XVl, section 59 of the Texas Constitution, such as the district, may be created for three purposes: 1. To provide for irrigation of land within the district’s boundaries. 2. To knish water for domestic, power, and commemialpurposes. 3. To cooperate with the United States under the federal reclamation laws for the purpose of (a) constructing irrigation and drainage facilitiesn#xssary to kaintain the inigabiity of the land, (b) purchasing extendm& operat& or mainta&g the consttucted fkcihies; or (c) assuming indebtedness to the United States on account of district lands. Water Code 5 55.161. Section 55.651(a) of the Water Code authorizes a water improvement district that operates under the provisions of article XVI, section 59 of the consthution to ask, at the time the district is created or before it issues bondq the district’s voters whether the district wilt levy, assess, and collect taxes on the ad valorem or on the beneSt basis. Upon the electorate’s approval of taxation on the be&t basis, and as soon as practicable after the district has adopted the plan for improvements to be constructed, the board of directors of a water improvement district must appoint three disinterest~ commissioners to “view the land in the district which will be atlbcted by the district’s reclamation plans. . . and [to] assess the amount of the benefit and damages that will accrue to the land . . from the construction of the improvamnts Id. 5 55.662. Following a hearing, the mnmissioners must issue a final order statin the amount of berm&s or damages assessed on each tract of land. Id. 8 55.668. i If the voters of the district previously have approved it, the beneSts for tax purposeswillbefixed”as~cqu~sumoneachrcreofLandthatisirrigatedortobe irrigated by gravity flow from the canal system of the district” (the %niform acreage valuation”). Id. 8 55.670. A district using the uniform acreage valuation for taxation need not ascemin the value of an improvement to a partiadar tract of land.s Id. 08 55.670, .673. In addition, sn owner of nonirrigable land may have his or her land excluded from thedistrict. Id 5 55.672. p. 2031 Mr.RayFarabee - Page 3 (DM-374) We uuderstand from the district’s briefthat the district derives most of its revenue from taxes assessed on the benefit basis and that it has adopted the uniform acreage valuation for taxation.6 You believethat the district may not levy taxes on the benefit basis against the hmd belongingto the Permsnent University Fund. You argue first that, if taKation on the beneflt basis is in fkct a qwial or local asses- the district, you belim,musttuIveexpressauthoritytolevythe wsasment against the lands of the Public University Fund. Because the district lacks such specik authority, you assert that the district may not collect the benetit assessment against the Permanent University Funds land. If,ontheotherhand,thebene6t assessmentisatax,weunderstandyoutocontend that,underarticleVJ§ion16oftheTexasConstitutionasweUassection1l.ll(b)of the Tax Code, the land is exempt from all taxes except county taxes. The diict avers that taxation on the benefit basis is indeed a tax, not a special assessment. Futiermore, the district believes that because the university leases the land for grazing purposes, the land is not used for a public purpose and, pursuant to section 11.1l(e) of the Tax Code, is not exempt from the tax. .Seealso Water Code 8 55.676 (providing that *[iIn a district that levies taxes on a benetit basis, the rate of taxation and the ususment and collection oftaxes shall be governed by the law taking to ad valorem taxes to the extent applicable”). Asapreliminarymaner,wewillQcMlinethedistinctionbamenatax~da special assessment. Broadly spealdng, the terms “tax” and “taxes” encompass evety burden, including a special assessment, that a govemmental body, by virtue of the taxing power. lawiblly may impose upon the citizen. 84 C.J.S. 7”rion 8 1, at 32 (1954); accord Annot.. 90 AL.R 1137, 1137 (1934). In a narrower sense, however, taxes and special assessments are distinguishable. &mot., 90 A.L.R at 1137; see &o Attorney p. 2032 Mr. RayFsmbee - Page 4 (DM-374) General Opinions M-1035 (1989) at 3 (citing Civ of Wichirp Falfs v. Williams, 26 S.W.Zd910,911 (Tex. 1930)). N-523 (1986) at 1. Taxes, as the term is generally used, are public burdens imposed generAllyon the inhabitants of the whole state, or some civil division therwc for govemmental purposes, without reference to peculiar benefits to particuhu individuals or property. Assessments have reference to impositions for improvements which are specially bene!kid to particular individuals or property and which are r~,in proportion to the particular benefits supposed to be Annot., 90 ALR at 1137. Thus, a tax is collected for the purpose of raising revenue, to be used for public or governmental purposes, and is unrelated to any special benefit the taxpayer may receive fkomthe expmdiie of the funds. See Conlen Groin & Mercuntile. Inc. v. Texas Grain Sorghum producers Bd., 519 S.W.2d 620.623 (Tar. 1975); Attorney General opinions JM-1035 (1989) at 3 (and csses cited therein), O-1861 (1940) at 4 (citing Clegg v. State, 42 Tex. 605,608 (1875)); 84 C.J.S. T&on 0 1, at 33 (1954). A special assessment, on the other hand, is imposed upon property that will benetit from a proposed improvement, levied upon an individual property owner in proportion to the benefit the property is expected to derive from the improvement, and designed to cover the wsts of the improvement. Attorney Gem& Opiion JM-iO35 (1989) at 2 (quoting City of Wichiia Falls v. Willimrp, 26 S.W.2d at 911); see a&o 6A C.J.S. Assement 571-72 (1975). We believe that we need not determine here whether taxation on the be&t basis under section 55.651(a) of the Water Code is a tax or a special assessmentbecausewe conclude that the district may not impose either a tax or a special assessment on the land.7 If the benefit assessment is a tax, we look to article VII. section 16 of the constitution and its statutory counterpart, section 11.l l@) of the Tax Code. Both provide that land of the Permanent University Fund is taxable for county purposes. This office determined in Attorney General Opinion JM-1049 that land comprising the state permanent university iimd is taxable for county purposes only. Attorney Genera) opinion JM-1049 (1989) at 7. p. 2033 Mr. Ray Farabee - Page 5 (DM-374) Article VIII, section 2(a) of the Texas Constitution authorizes the legislature to, “by general laws, exempt from taxation public property used for public purposes.” Under article VIlI, section 2(a). public property leased to a private individual to carry on a business is not used for public purposes. Article VIII, section 2(a) is not applicable to land of the Permanent University Fund, however. See State v. Universi~ of Iiousmn, 264 S.W.2d 153,154-55 (Ten. Cii. App.-Galveston 1954, writ ref’d n.r.e.); Attorney General Opiion MW-430 (1982) at 2-3; see aka Attomq Genersl Cpiions JM-1049 (1989) at 7, o-1861 (1940) at 5. Thelegi&ureenactedsection 11.11 oftheTaxCodepursuanttotheauthority article VIII, section 2(a) grants it. Attorney General Opiion DM-272 (1993) at 3. Section 11.11 provides for the tsmtion of public property, and it states in pertinent part as follows: (a) Except as provided by Subsections (b) and (c) of this sectioq property owned by this state or a poUtic.rJsubdiision of this state is exempt from taxation if the property is used for public pWQOSU. (b) Land owned by the Permanent University Fund is taxable for county purposes. . . . ... (d) Property owned by the state that is not used for public purposes is taxable. Property owned by a state agency or institution is not used for public purposes if the propetty is rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the performance of the duties and functions of the state agency or institution. . . (e) It is provided. however, that property that is held or dedicated for the support, maintenance,or benefit of an instiion of higher education as deiked in Chapter 61, Texas Education Code, but is not rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the perfomutnce of the duties and timctions of the state or instiMion . . . isnottmrable.~. , This ofiw d&nnined that section 11.1l(b) is an exception to the generat principles set out in section 11.1l(a), (d). Attorney General Opiion I’M-1049(1989) at 7-8. We do not believe that subsection (e) applies to land owned by the Permanent University Fund.’ Article VII, section 16 of the Texas Constitution makes taxable for county purposes only *although~uorocyGmerslOpinionJM-1049quoted section Il.ll(e) of the Tax Cd, the @lliOtldidllOtdi6ClWthCSCCUW. P. 2034 Mr. Ray Farabee - Page 6 (DM-374) land belonging to the Permanent University Fund. In our opinion, section 11, 11(b) of the Tax Code wrresponds to article VII, section 16 of the wnstitution. Land owned by the Permanent University Fund is taxable only in accordance with subsection (b); subsections (e), as well as wbsections (a) and (d), are inapplicable. To wnstrue subsection (b) as wmplementary of subsections (a), (d), and (e). so that all Pemtanent University Fund land is subject to rll county taxes and, if the hnd is not used for a public purpose, to all other taxes, would wntravene article VII, section 16 of the wnstitution.s Furthermore, as we have stated above, article VII& section 2 is inapplicable to lands of the Permanent University Fund. Additionally, as we have stated above, the land is not subject to truution on the benefit basis if the tax is in thct a special assessment. In Mrurrick Corm@Waer Cantrol & ImpmvementDistrict No. 1 v. State, 456 S.W.2d 204 (Tex. Cii. App.-San Antonio 1970, writ refd), the court of civil appeals considered whether the sovereign is liable to pay specirl assessments levied against state land? It is generally held that, in the absence of ckar legislative authorization, a political subdivision of the State has no power to levy a special assessment against State property. We adopt this view at least in a case where, as here, the sovereign is neither making nor wntemplating any use of the allegedly benefited land and has wither received nor requested the services rendered by the assessing agency.” P. 2035 Mr. Ray Farabee - Page 7 (DM-374) Id. at 207 (footnote added); see ako Attorney General Opinions JM-1035 (1989) at 8-9 (discussing Maverick Caun~ Water Cantrol & lmpravement District No. I), JM-535 (1986) at 2-3 (same), MW-551 (1982) at 2-3 (same). In this case. we find no clear legislative statement authorizing the district to exact a benefit assessment against lands held by the Permanent University Fund. C! Attorney General Opinion JM-1035 (1989) at 10-13 (concluding that Water Code section 26.176(b) clearly authorizes local government to impose capital rewvery fee on land Texas A&M University owned). Furthermore, we do not understand that the state is nuking or wntetnphtting any use of the land and has received or requested district services.ts We therefore conclude that, whether taxation on the benefit basis under section 55.651(a) of the Water Code is considered a tax or a special assessment, the district may not levy a “tax. . . on the benefit basis,” see Water Code 4 55.651(a), against the three tracts of land owned by the Permanent University Fund. SUMMARY WhetherthewaX.. . on the benefit basis” authorized by chapter 55. subchapter N of the Water Code is a tax or a special assessment, the El Paso County Water Improvement District No. 1 may not levy such a tax against land owned by the Permsnent University Fund. DAN MORALES Attorney General of Texss JORGE VEGA Fii Assistant Attorney Genera) SARAH J. SHIRLEY Chair, Opiion Committee Prepared by Kymberly K. Oltrogge Assistant Attorney General 12In~evtnt,whethathesratekusingmyorPUdthekodwithintbcdimicSorwhc(hertbc nuchssreccivcdorrrqucacddirtriarcniarucitJuadfsathrtnrrina~~~fortbccpinion process. See, eg., ~tmney Gautd Opiions DM-98(1992)at 3. H-56(1973)at 3, M-187(1968)at 3, O-2911(1940)at 2. P. 2036