JIM MATTOX Attorney General

Supreme Court Building P. 0. BOX 12548 Austin. TX. 78711. 2548 51214752501 Telex 9101874-1387 Telecopier 5W475-0288

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An Equal OppOrtunityI Affirmative Action Employer 

# The Attorney’ General of Texas

March lg.'1986

Bowsable Guy Jarm?o Gray CriminalDistrictAttorney P. 0. Box 1329 opinionNo. JM-453

Re: Applicabilityof article 2351a-6, Jasper, Texas 7!i951 V.T.C.S., to thewithdrawal of a city from a rural firepreventiondistrict

Dear Mr. Gray:

You ask for the opinion of this office concerning the right of a city within a nmal fire prevention district to withdraw from the district. You a&r:tse us that the Jasper County Rural Fire Prevention District Ho. 4. composed of a portion of Jasper County. was created under the provisf(ms of article III. section 48-d, of the Texas Constitution and a.rticle2351a-6, V.T.C.S. The city of Jasper was included in the original boundaries of the district. In 1983, the voters of the proposed district, including the voters of the city of Jasper,voted in xcordance with the provisions of article 2351a-6 to confirm the organ:Lz:ation of the district and to authorize the levy of
a tax not to exceed three cants on the $100 valuation of property. V.T.C.S. art. 235l.er6, $12.
Except for the issuanceofbonds or noteswhich are authorizedby sections 12A-12G of article 2351a-6, a rural fire prevention district may not contract :Eor an indebtedness in any one year in excess of funds then on hand or in excess of an amount which may be satisfied out of current rrrenues for the year. V.T.C.S. art. 2351a-6, 512. A fire prevention di:strictis authorized to issue bonds and notes that
are payable from and secured by liens on and pledges of ad valorem taxes, or revenueiI, income, or receiptsof the district,or a combination of taxes, revenues, incoma,and receipts. V.T.C.S. art. 2351a-6, 512A(a). The sta!:ute provides that ifbonds or notes are payable from ad valorem texes, **the** Board of Fire Commissioners,at the time of the authorization of the bonds or notes, shall levy a tax sufficient to pay the principal of and intereston thebonds or notes and to provide
reserve funds. Sets. 12A(j), (k). Bonds or notes secured by taxes may not be authorbreduntil approvedby the voters of the district at an election for that purpose. Seci 12B. Section 14a of the act provides for expansionof the area of a district. Effective September 1. 1985, section 14bwas added to the act to authorize the exclusion of a city from a Eire prevention district's territory. Section 14b provides that

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(a) The governing body of a city that has an area within its corporate or extraterritorial jurisdiction includedwithin a rural fire prevention districtmy, on agreeing to provide fire protection to the area as provided by Section 8B of this Act, or if the area is designated au industrial distrLct under Section 5, Municipal AnnexationAct (Article970a.Vernon's Texas Civil Statutes), notif!,the secretary of the board of fire commissione:rsin writing that the area is excluded fromthe district's territory.
(b) On receipt of the notice under Subsection (a) of this section. the board shall cease to provide further :rarviceto the area, exclude the
area by order from the district, and redefine the district'sboundaries.
Subsequently, on October 28, 1985, the city of Jasper notified the Jasper County Rural Fire District No. 4 that the cityhad adopted
a resolution to exclude the arca within its corporate and extraterritorial jurisdiction from the fire prevention district's territory.

You first inquirewhether section 14b of article 2351a-6 applies only to rural fire prevent:Londistricts created after September 1, 1985. We believe that whwl section 14b became law on September 1, 1985, it became applicable on that date to all rural fire prevention districts createdand then existingunder article 23518-6.

Where the legislaturemakes no exceptions to the provisions of a statute, it is presumed that the legislature intends no exceptions. It is well settled that ~zxceptionsin statutes are not ordinarily implied. See Spears v. City of San Antonio, 223 S.W. 166, 169 (Tex. 1920); Stubxv. Lowrey's II:&, 253 S.W.2d 312, 313 (Tex.Civ.App. - Eastland 1952, writ ref'd n.r.e.). We find nothing in the act to indicate that the legislature intended section 14b to apply only in the case of rural firepreventiondistricts createdafter September 1, 1985.

Your second question <asksfor which year a withdrawal notice under article 2351a-6, section 14b, becomes effective for tax purposes. It is our opinLon that a city'swithdrawal from a district subsequent to January 1 hat no effect on the assessment or collection of taxes by the district for the year in which the withdrawal occurs andwould be effective on.Ianuary 1 of the year followingwithdrawal. The status of property for taxation is fixed on January 1 of each year. See Hedgecroft v. City of Houston, 239 S.W.2d 828, 830 (Tex.

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Civ. App. - Galveston 1951). rev'd on other grounds, 244 S.W.2d 632 (Tex. 1951);Attorney GeneralOpinionO-4589 (1942).

The board of a rural firepreventiondistrict shallannually levy and cause to be assessed and collected a tax on all properties, real and personal, situated within the district and subject to district taxation in an amount not to exceed three cents on the $100valuation **for** the support of the di:jtrictand for the purposes authorized by article 2351a-6. Sec. 12. Real property is taxableby a taxingunit if located in the unit on January 1. Tax Code 921.01. Except for railroad rolling stock, tr.ngiblepersonal property is taxable by a taxing unit on January 1, iC it is located in the unit on January 1 for more than a tanporary period or it normally is located in the unit, evan though it is outside the unit on January 1, if it is outside the unit only temporarily. Tax Code 921.02.

Your third questionasks, if article 2351a-6, section 14b. is not applicable,must the withdrawal be by a majority vote in an election of those living within thlecorporate limits and extraterritorial jurisdictionof the city. Article 2351a-6providesboth for expansion of an existing rural fire p,cevantion district and for dissolution of such a district. sees. lQf1,19-22. Except for section 14b, which became effective on September 1, 1985, the act contains no provisions which authorize thewithdrawal of any territory from an axistingrural fire prevention district. The act requires ratification of the annexation of territory to a district by a majority vote of the electorsat a separateelectionheld in the existingdistrict andby a majority vote of the electors at a separate election held in the territory proposed to be added. Sec. 14a(S)(s). The act also requires an election to :onfirm the dissolution of a rural fire prevention district. Sec. 21. But neither section 14b. which provides for the exclusion of corporate limits and extraterrltorial jurisdiction from the boundaries of an existing fire prevention district,nor any otherprovisionof article 2351a-6 containseither a requirementor authority for an electionby the voters residing in a territory that will be uithdrawn from an existing district. We conclude that the act doe11not authorize an election to confirm or accomplish the withdrawal of any territory from the boundaries of an existingrural fire prevantiondistrict.

You adviseus that the firepreventiondistrictmade purchasesof equipment and incurred InddMedness based on its ability to pay with its existing taxbase, and that thewithdrawal of citypropertyvalues from the tax base jeopardizes the district's ability to repay its previously incurred indebtedness. Your lastquestion is:

What protection does the district have in this situation?

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Since the legislatureexpreszsly provided that, except for the issuance of authorizedbonds or notes, no indebtednessmay be contractedin any oneyear in excess of funds ,then on hand orwhich may be satisfiedout of current revenues for ,:heyear, we assums that the district's
concern involves its abilj.tyto repay indebtedness incurred by the issuance of bonds or notes. Hence, the issue includes the protection ofbondholders of the district.

A statute authorizing a bond issue and providing the means for its repaymentconstitutespart of a contractwith bondholders thatmay be enforced by bondholders. See Cochran County v. Mann, 172 S.W.2d 689, 690 (Tex. 1943). Subllequz legislation that removes the source of repayment tobondholderswithout substitutionof somethingof equal efficacy mav imnair the ohl~inationof contract and. therefore. come

_ - _ under constitutionalcondauiation. See U.S. Coast.-art. I. 510, cl. 1; Tex. Const. art. I, 116; City of rEnsas Pass v. Keeling, 247 S.W. 818. 821 (Tex. 1923); Burn, v. Dillcp District, 295 S.W. 1091. County Line Independent School 6% (Tex.Comm'nApp. 1927, ludgmt adopted); Attorney GeneralOpinionO-1205 (1939). The-courtshave said that the **most** certain test of whetha:ran imoairmant of a contract has occurred iswhether the value of the!ccntra& has been diminished. See Dallas County Levee ImprovementD:ietrict No. 6 v. Rugel, 36 S.W.2d 188, 189 (Tax. Comm'n App. 1931, :u.dgmtadopted). In Determan v. City of Irving,Texas, 609 S.W.2d 565 (Tex.Civ. App. - Dallas 1980,no writ), **the** court found **that** a charteramendmentlimiting the taxingauthority of a city lessened the securityofbondholders and constituted impairmant of the obligation of coattact. It is, however, the bondholders who have standing to raise the question of impairment of the obligation of contract. See U.S. - -- Trust Co. v. New Jersey, 431 U.S. 1 (1977).

In the case of the e?+amsion of a rural fireprevention district that has outstanding debt,3**or** taxes, article 2351a-6 requires the voters of proposed additional territory to agree to assume the additional territory'sproportian of the debts or taxes. Sec. 14a(S)(h). Followingvoter approval to dissolvea rural firepreventiondistrict, article 2351a-6 requires the:board to continue levying and collecting
a tax on the property in th'e district until all outstanding debts of the district are paid. Sec. 22. Article 2351a-6 containsno express provision forpayment of tbe excluded territory'spro rata shareof an axisting district indebtedness. Cf. Water Code S953.268, 54.731 (on payment of pro rata share of axiszg district indebtedness,excluded territory and irs taxpayers are released from liability to the district and payment of taxes). It is our opinion that article 2351a-6,
as recently amended to allthorizethe exclusion of a city from a district, is not facially unconstitutional. In particular situations where the obligationof contract tobondholderswould be impaired, the statutemay be unconstitutionalas applied without the collection of taxes from the excluded arca to pay its pro rata share of obligations

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tobondholders that are in existenceat the time the city iswithdrawn from the district. SeeAttorney GeneralOpinionMW-337 (1981). -
SUMMARY
Section 14b of article 2351a-6,V.T.C.S., applies to all rural fire prevention districts. A city's withdrawal from a ,mral.fire prevention district is effective for tax :purposes on January 1 of the year following withdrawal. Article 2351a-6 does not require or author::ze an electionby voters of a city to confirmor accomplishwithdrawal of the city from
a district. A statute authorizinga bond issue and providing the mems for its repayment constlrutes part of a contnm with bondholders that may be enforcedby bondholders.

JIM MATTOX Attorney General of Texas

JACKHIGHTOWER FirstAssistantAttorneyGmeral

MARYKELLER ExecutiveAssistantAttommy General

ROBERT GRAY SpecialAssistantAttorney General

RICR GILPIN Chairman,Opinion Coumlttetr
Preparedby Nancy Sutton AssistantAttorney General

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