DAN MORALES 

Al-ronNLY GENERAL 

QiXfice of the 5!lttornep @enera 

Mate of Qexae 

Jmuaiy25,19% 

Mr. Ray Far&es 

of&e OfGeneral ColuLwl 

The University of Texas System 

201 west seventh street 

Austin, Texas 787013981 

Opiion No. DM,374 

Re: Whether the El Paso County Water 

Jmprovement District No. 1 may, pursuant 

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 subdivision 6f 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 commemial purposes. 

3. To cooperate with the United States under the federal reclamation laws for the 

purpose of (a) constructing irrigation and drainage facilities n#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 

land . . from the construction of the improvamnts 

the mnmissioners must issue a final order statin 

assessed on each tract of land. Id. 8 55.668. 

i 

and damages that will accrue to the 

Id. 5 55.662. Following a hearing, 

the amount of berm&s or damages 

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 believe that the district may not levy taxes on the benefit 

basis against the hmd belonging to the Permsnen t 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 

11.1 l(e) of the Tax Code, is not exempt from the tax. .See also 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.Zd 910,911 (Tex. 1930)). N-523 (1986) at 1. 

Taxes, as the term is generally used, are public burdens imposed 

generAlly on 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 go vernmental purposes, and is unrelated to any special benefit the 

taxpayer may receive fkom the 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.rJ subdiision 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 11.1 l(b) is an exception to the generat principles set 

out in section 11.1 l(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 ~uorocy Gmersl Opinion JM-1049 quoted section Il.ll(e) of the Tax Cd, the 

@lliOtldidllOtdi6ClWthCSCCUW. 

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Mr. Ray Farabee - Page 6 (DM-374) 

land belonging to the Permanent University Fund. In our opinion, section 1 1 , 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 

& Impmvement District 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.” 

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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