DAN MORALES

Al-ronNLY GENERAL 

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Mr. Ray Far&es of&e OfGeneralColuLwl The Universityof Texas System 201 west seventh street Austin, Texas 787013981 Opiion No. DM,374
Re: Whether the El Paso County Water JmprovementDistrict No. 1 may, pursuant to chapter 55, subchapter N of the Water code,assessrtaxonthe~tbasis against land belonging to the Permanent UniversityFund (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 levyingrmesmats, penalties,and interest on three tracts of landbelongingto the PermanentUniversityFund and located in El Paso County? You tkther informus that the three tracts of land are leased out for grazing purposes, but that neitherthe 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 existingpursuant 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 commissionerscourt of a county to create one or more water improvementdistricts in theh4r.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 irrigationof landwithinthe district’ sboundaries. 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) constructingirrigationand drainagefacilitiesn#xssary to kaintain the inigabiity of the land, (b) purchasing extendm& operat& or mainta&g the consttucted fkcihies; or (c) assumingindebtednessto the United States on account of district lands. Water Code 5 55.161.
Section 55.651(a) of the Water Code authorizes a water improvementdistrictthat 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 wiltlevy, assess, and collecttaxes on the ad valoremor on the beneStbasis. 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 improvementdistrict 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. Followinga 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 districtusingthe uniformacreagevaluationfor 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 nonirrigableland may have his or her land excluded from thedistrict. Id 5 55.672.

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We uuderstand from the district’ sbriefthat the district derives most of its revenue from taxes assessedon 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 againstthe hmdbelongingto the Permsnen t UniversityFund. 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 landis exemptfrom alltaxes except county taxes.
The diict avers that taxation on the benefit basis is indeed a tax, not a special assessment. Futiermore, the district believesthat 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. .Seealso Water Code 8 55.676 (providingthat *[iIn a district that leviestaxes on a benetit basis, the rate of taxation and the ususment and collectionoftaxes shallbe governedby 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, includinga special assessment,that a govemmentalbody, 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

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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 generAlly on the inhabitantsof 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 collectedfor the purpose of raisingrevenue, to be used for public or governmentalpurposes, and is unrelated to any specialbenefit the taxpayer may receive fkomthe expmdiie of the funds. See Conlen Groin &Mercuntile. Inc. v. Texas Grain Sorghumproducers Bd., 519 S.W.2d620.623 (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 individualproperty 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 determinehere whether taxation on the be&t basis under section 55.651(a) of the Water Code is a tax or a special assessmentbecausewe concludethat the district may not imposeeither a tax or a specialassessmenton the land.7 If the benefit assessmentis a tax, we look to articleVII. section 16 ofthe 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 comprisingthe state permanent university iimd is taxable for county purposes only. Attorney Genera)opinion JM-1049 (1989) at 7.

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Article VIII, section 2(a) of the Texas Constitution authorizes the legislature to,

“by general laws, exemptfrom taxation publicproperty used for publicpurposes.” 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 applicableto land of the PermanentUniversityFund, however. See State v. Universi~ ofIiousmn, 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 11.11provides for the tsmtion of publicproperty, and it states in pertinent part as follows: (a) Except as provided by Subsections (b) and (c) of this

sectioq property ownedby 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 ownedby a state agency or institution is not used for publicpurposes if the propetty is rented or leased for compensation to a private businessenterprise to be used by it for a purpose not related to the performanceof 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 benefitof 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) appliesto land owned by the PermanentUniversity Fund.’ Article VII, section 16 of the Texas Constitutionmakes taxable for county purposes only
*although ~uorocyGmerslOpinion

JM-1049 quotedsection Il.ll(e) of the Tax Cd, the @lliOtldidllOtdi6ClWthCSCCUW.

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land belongingto the PermanentUniversityFund. In our opinion, section 11 ,11 (b) of the Tax Code wrresponds to article VII, section 16 of the wnstitution. Land owned by the PermanentUniversityFund is taxable only in accordancewith 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 allPemtanent UniversityFund land is subject to rll county taxes and, if the hnd is not used for a publicpurpose, 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 UniversityFund. Additionally, as we have stated above, the land is not subject to truution on the benefitbasis if the tax is in thct a specialassessment. 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 consideredwhether the sovereign is liable to pay specirl assessmentslevied against state land?

It is generally held that, in the absence of ckar legislative authorization, a political subdivisionof the State has no power to levy a specialassessmentagainst State property. We adopt this view at least in a case where, as here, the sovereignis neither makingnor wntemplating any use of the allegedlybenefitedland and has wither received nor requested the services rendered by the assessing agency.”

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Id. at 207 (footnote added); see ako Attorney General OpinionsJM-1035 (1989) at 8-9 (discussing Maverick Caun~ Water Cantrol & lmpravementDistrict 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 heldby the PermanentUniversityFund. C! Attorney General OpinionJM-1035 (1989) at 10-13 (concludingthat Water Code section 26.176(b) clearly authorizes local government to impose capitalrewvery 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 considereda 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 ownedby the PermanentUniversityFund.

SUMMARY
WhetherthewaX..

. on the benefitbasis” authorizedby chapter 55. subchapterN of the Water Code is a tax or a special assessment, the El Paso County Water ImprovementDistrict No. 1 may not levy such a tax againstland ownedby the PermsnentUniversityFund.

DAN MORALES Attorney Generalof Texss
JORGEVEGA Fii Assistant Attorney Genera)
SARAHJ. SHIRLEY Chair, Opiion Committee Prepared by KymberlyK. 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.

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