ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

September 30, 2010 

The Honorable Kurt Sistrunk 

Galveston County Criminal District Attorney 

600 59th Street, Suite 1001 

Galveston, Texas 77551-4137 

Dear Mr. Sistrunk: 

Opinion No. GA-0805 

Re: Proper method of appraising the value of 

residence homesteads damaged by Hurricane Ike 

in 2008 (RQ-0851-GA) 

You ask about the proper method of appraising the value of residence homesteads damaged 

by Hurricane Ike in 2008. 1 

Section 23.23 of the Tax Code provides, in relevant part: 

(a) Notwithstanding the requirements of Section 25.18 and 

regardless of whether the appraisal office has appraised the property 

and determined the market value of the property for the tax year, an 

appraisal office may increase the appraised value of a residence 

homestead for a tax year to an amount not to exceed the lesser of: 

(1) the market value of the property for the most recent tax 

year that the market value was determined by the appraisal office; or 

(2) the sum of: 

(A) 10 percent of the appraised value of the property for 

the preceding tax year; 

(B) the appraised value ofthe property for the preceding 

tax year; and 

(C) the market value of all new improvements to the 

property. 

TEx. TAX CODE ANN. § 23.23(a) (West Supp. 2010). Thus, under this provision, a particular 

residence homestead may not be appraised for a particular tax year at an amount that exceeds by 

'Request Letter (available at http://www.texasattorneygeneral.gov). 
The Honorable Kurt Sistrunk - Page 2 (GA-0805) 

more than ten percent of the property's appraised value for the preceding tax year plus "the market 

value of all new improvements to the property." Id. § 23.23(a)(2)(C). 

Subsection (e) of section 23.23 provides the following: 

(e) In this section, "new improvement" means an improvement to 

a residence homestead made after the most recent appraisal of the 

property that increases the market value of the property and the value 

of which is not included in the appraised value of the property for the 

preceding tax year. The term does not include repairs to or ordinary 

maintenance of an existing structure or the grounds or another feature 

of the property. 

Id. § 23.23(e). Prior to its 2007 amendment, subsection (e) provided that the term "new 

improvement" does not include "ordinary maintenance of an existing structure or the grounds or 

another feature of the property." Tex. Att'y Gen. Op. No. GA-0091 (2003) at 2; see Act of June 1, 

1997, 75th Leg., R.S., ch. 1039, § 47, 1997 Tex. Gen. Laws 3897, 3918. A 2003 opinion of this 

office declared that the term '''new improvement' includes repairs made following a natural disaster 

because the repairs are not 'ordinary maintenance.'" Tex. Att'y Gen. Op. No. GA-0091 (2003) at 

8. The Eightieth Legislature amended subsection (e) to its present version by adding the words 

"repairs to or." See Act of May 22,2007, 80th Leg., R.S., ch. 1355,2007 Tex. Gen. Laws 4644, 

4644-45. As a consequence, under the amended version of subsection (e), the term "new 

improvement" does not "include repairs ... to an existing structure." 

In 2009, because of extensive damage to structures in several coastal counties, the Legislature 

amended subsection (t), which now provides: 

(t) Notwithstanding Subsections (a) and (e) and except as provided 

by Subdivision (2), an improvement to property that would otherwise 

constitute a new improvement is not treated as a new improvement if 

the improvement is a replacement structure for a structure that was 

rendered uninhabitable or unusable by a casualty or by wind or water 

damage. For purposes of appraising the property under Subsection 

(a) in the tax year in which the structure would have constituted a 

new improvement: 

(1) the appraised value the property would have had in the 

preceding tax year if the casualty or damage had not occurred is 

considered to be the appraised value of the property for that year, 

regardless of whether that appraised value exceeds the actual 

appraised value of the property for that year as limited by Subsection 

(a); and 

(2) the replacement structure IS considered to be a new 

improvement only if: 
The Honorable Kurt Sistrunk - Page 3 (GA-0805) 

(A) the square footage of the replacement structure 

exceeds that of the replaced structure as that structure existed before 

the casualty or damage occurred; or 

(B) the exterior of the replacement structure is of higher 

quality construction and composition than that of the replaced 

structure. 

TEx. TAX CODE ANN. § 23 .23(f) (West Supp. 2010). As a result of the enactment of subsection (f), 

a residence homestead that has been "rendered uninhabitable or unusable by a casualty or by wind 

or water damage" is treated for appraisal purposes in a special manner. 

In construing a statute, our primary objective, like that of the courts, is "to ascertain and give 

effect to Legislature's intent." City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 

2006). Legislative intent is best "expressed by the statute's language and the words used, unless the 

context necessarily requires a different construction or a different construction is expressly provided 

by statute." Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009). "Unambiguous statutory 

language is interpreted according to its plain language unless such an interpretation would lead to 

absurd results." Id. 

Subsection (f) is triggered when a "replacement structure" has been built to replace a 

residence that was "rendered uninhabitable or unusable by a casualty or by wind or water damage." 

TEx. TAX CODE ANN. § 23.23(f) (West Supp. 2010). The statute declares that such a "replacement 

structure" is not considered a "new improvement" under subsection (e), and it sets forth the 

parameters for "appraising the property under Subsection (a) in the tax year in which the structure 

would have constituted a new improvement." Id. The statute does not define the terms 

"uninhabitable" or "unusable." 

Subsection (f) establishes a formula to be applied to the replacement structure for purposes 

of appraising the property under subsection (a). First, under subdivision (f)(1), the property is 

assessed at "the appraised value the property would have had in the preceding tax year if the casualty 

or damage had not occurred." Id. That value is then used in calculating the maximum appraised 

value for the current tax year. Id. Second, the replacement structure is considered to be a "new 

improvement" under the subsection (a) calculation only if it meets the requirements of subdivision 

(f)(2). Id. With this background, we tum to the three scenarios you pose. 

Scenario 1 

A homestead has an appraised value of$300,000 on January 1,2008. 

The homestead is partially damaged by Hurricane Ike in September 

2008. As a result, the homestead's value on January 1, 2009 is 

appraised by the CAD at $150,000. During 2009, renovations restore 

the homestead to its pre Hurricane Ike status. 

Request Letter at 4. 
The Honorable Kurt Sistrunk - Page 4 (GA-0805) 

In this scenario, you have not indicated that the structure was "rendered uninhabitable or 

unusable," and we will, for purposes of your question, presume that it was not. Because the structure 

was not "rendered uninhabitable or unusable," subsection (f) is not applicable. If the renovations 

to the property are reasonably determined to constitute "repairs to" an existing structure, the 

renovations, by virtue of subsection ( e), fall outside the definition of "new improvement." In that 

case, the appraised vaiue of the property for the 2010 tax year is calculated under subsection (a) in 

the following manner: $150,000 (the 2009 appraised value); plus a maximum of$15,000 (the cap 

established by subsection (a)(2). If on the other hand the renovations are reasonably determined not 

to constitute "repairs to" an existing structure, such renovations must be treated as a "new 

improvement." In that event, the appraised value for tax year 2010 is calculated under subsection 

(a) in the following manner: $150,000 (the 2009 appraised value); plus a maximum of$15,000 (the 

cap established by subsection (a)(2)); plus "the market value of all new improvements to the 

property." Whether the renovation of any particular structure constitutes mere "repairs" or a "new 

improvement" is a fact question whose resolution is inappropriate to the opinion process? 

Id at 4-5. 

Scenario 2 

A homestead has an appraised value of$300,000 on January 1,2008. 

The homestead is extensively damaged by Hurricane Ike in 

September 2008 and is uninhabitable. As a result, the homestead's 

value on January 1,2009 is appraised by the CAD at $100,000. The 

homestead is restored to its pre Ike condition in 2009. 

In this scenario, the structure has been rendered uninhabitable by storm damage. As a result, 

the replacement structure will be valued in accordance with subsection (t). The determination of the 

appraised value for tax year 2010 is calculated, pursuant to subdivision (t)(l) by assuming a value 

that the property "would have had [in 2009] if the casualty or damage had not occurred," and using 

such value in the subsection (a) calculation. It is unclear what the Legislature intended by its use of 

the phrase "would have had." Because the appraisal district is statutorily charged with the duty of 

"appraising property in the district," the appraisal district should, in the first instance and in 

accordance with subdivision (f)(I), determine the value that the property "would have had [in 2009] 

'Attorney General Opinion GA-0091 considered the argument that the tenn "ordinary maintenance" was 

synonymous with the tenn "repairs," but rejected that contention largely because the word "maintenance" was modified 

by the word "ordinary." Tex. Att'y Gen. Op. No. GA-0091 (2003) at 5. This construction has been snperseded by the 

Legislature's 2007 amendment of subsection (e), which specifically excluded "repairs" from the definition of "new 

improvement." See id at 2-3. Opinion GA-0091 also noted that section 11.26 of the Tax Code, which limits the 

appraised value of renovated homesteads owned by the elderly or disabled, requires that the appraiser detennine whether 

a structure has been totally, or only partially, destroyed. The opinion suggested that, if"the value of the damage totaled 

less than half of the homestead's original value, an appraiser reasonably could fmd that the homestead was repaired" 

rather than fully reconstructed. I d at 7. In view of the present language of section 23 .23( e), this suggestion should not 

necessarily be regarded as persuasive. In any event, as we have noted, a determination of whether any particular 

renovation constitutes a "repair" or a "new improvement" is a question of fact. 
The Honorable Kurt Sistrunk - Page 5 (GA-0805) 

if the casualty or damage had not occurred. ,,3 See TEx. TAX CODE ANN. § 6.01 (b) (West 2008) ("The 

[appraisal] district is responsible for appraising property in the district for ad valorem tax purposes 

of each taxing unit that imposes ad valorem taxes on property in the district. "). 

In addition to the calculation used by the appraisal district in determining the value a 

particular property "would have had" in 2009, subsection (a) of section 23.23 authorizes an appraisal 

district to "increase the appraised value of a residence homestead for a tax year not to exceed the 

lesser of: (I) the market value of the property for the most recent tax year that the market value was 

determined by the appraisal office"; or (2) the sum of (A) the value the property "would have had" 

in 2009 as determined by the appraisal district; (B) 10 percent of that value; and (C) the market value 

of all new improvements to the property." Because you have indicated in this scenario that there 

were no "new improvements" to the property in 2010, the appraisal district may add to its appraised 

value for tax year 2010 a maximum often percent of the value the property "would have had" in 

2009, as determined by the appraisal district. 

Scenario 3 

A homestead has an appraised value of$300,000 on January 1,2008. 

The homestead is extensively damaged by Hurricane Ike in 

September 2008 and is uninhabitable. As a result, the homestead's 

value on January 1, 2009 is appraised by the CAD at $100,000. The 

homestead is renovated; but in making the renovations, the owner 

changes the exterior of the structure or increases the square footage 

of the homestead. . . . . 

Request Letter at 5. 

In this scenario, the structure has been rendered uninhabitable by storm damage. When the 

structure is replaced, either the square footage is increased or the exterior of the replacement 

structure is of higher quality construction and composition than was the previous structure. In such 

a situation, the determination of the 2010 appraised value under subsection (a) is governed first by 

the application of subdivision (f)(I), which establishes the appraised value for tax year 2009 at the 

value that the property "would have had [in 2009] if the casualty or damage had not occurred," and 

then by the application of subdivision (f)(2), which requires that the replacement structure be treated 

as a "new improvement." TEx. TAX CODE ANN. § 23.23(f)(1)-(2)(West Supp. 2010). As a result, 

the calculation of the 2010 appraised value is determined by subsection (a): the value that the 

property "would have had [in 2009] if the casualty or damage had not occurred; plus a maximum 

often percent of that value under subsection (a); plus "the market value of all new improvements 

to the property" that are described by subdivision (f)(2). 

'Under your second scenario, it does not appear that the replacement structure will be considered a "new 

improvement" under subdivision (1)(2). 
The Honorable Kurt Sistrunk - Page 6 (GA-0805) 

SUMMARY 

Calculation of the 2010 appraised value of a residence 

homestead damaged by Hurricane Ike in 2008 and renovated to its 

pre-storm status is determined by section 23 .23(f) of the Tax Code so 

long as the structure was "rendered uninhabitable or unusable." lfthe 

structure was not rendered uninhabitable or unusable, calculation of 

the 2010 appraised value is dependent upon whether the renovations 

may reasonably be said to constitute a mere "repair" or a "new 

improvement" under section 23.23(e). lfthe structure was rendered 

uninhabitable or unusable, calculation of the 2010 appraised value is 

dependent upon the appraised value the property would have had in 

2009 but for the storm damage, together with the market value of all 

new improvements to the property as described by subdivision (f)(2). 

DANIEL T. HODGE 

First Assistant Attorney General 

DAVID J. SCHENCK 

Deputy Attorney General for Legal Counsel 

NANCY S. FULLER 

Chair, Opinion Committee 

Rick Gilpin 

Assistant Attorney General, Opinion Committee