ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

The Honorable Joseph C. Pickett 

Chair, Committee on Defense and 

Veterans' Affairs 

Texas House of Representatives 

Post Office Box 2910 

Austin, Texas 78768-2910 

Dear Representative Pickett: 

December 10,2012 

Opinion No. GA-0981 

Re: Authority of a county to form a transportation 

reinvestment zone, collect an ad valorem tax 

increment, and pledge and assign all or part of the 

increment to secure bonds to pay the cost of a 

transportation project (RQ-1 071-GA) 

You ask whether a county is authorized to form a transportation reinvestment zone ("TRZ") 

for a transportation project, collect an ad valorem tax increment, and pledge and assign all or part 

of the tax increment receipts to secure bonds to pay the cost of a transportation project. 1 You also 

seek clarification of Attorney General Opinion GA-0953. Request Letter at 1. 

You ask specifically about section 222.107 of the Transportation Code, which appears in 

chapter 222, subchapter E, concerning toll facilities. See TEX. TRANSP. CODE ANN. §§ 222.101-.110 

(West 2011 & Supp. 20 12). Section 222.107 authorizes a county to create a TRZ for a pass-through 

toll project under section 222.104. See id. § 222.107(b) (county TRZs); id. § 222.104 (pass-through 

tolls). A county commissioners court may designate an area as a TRZ "after determining that an area 

is unproductive and underdeveloped" and that action under section 222.107 would further specified 

statutory purposes. !d. § 222.107(c); see also id. § 222.105(2) (statement of statutory purposes, 

including the "facilita[tion of] the improvement, development or redevelopment of property"). 

The order designating a TRZ must also designate an ad valorem tax increment base year. !d. 

§ 222.107(f)(2), (4)-(5). When the county collects ad valorem taxes thereafter, it may pay an amount 

representing the county's TRZ tax increment, less certain amounts, into an ad valorem tax increment 

account. !d. § 222.107(h)(l); see also id. § 222.107(a) (providing the formula for establishing a 

county's ad valorem tax increment for a particular year). Finally, subsection (i-1) provides that "[i]n 

the event a county collects a tax increment, it may issue bonds to pay all or part of the cost of a 

transportation project and may pledge and assign all or a specified amount of money in the tax 

increment account to secure those bonds." !d. § 222.107(i-1). 

1 See Letter from Honorable Joseph C. Pickett, Chair, Comm. on De f. and Veterans' Affairs, to Honorable Greg 

Abbott, Tex. Att'y Gen. at 1-2 (July 16, 2012), http://www.texasattorneygeneral.gov/opin ("Request Letter"). 
The Honorable Joseph C. Pickett - Page 2 (GA-0981) 

Thus, section 222.1 07 sets forth a statutory scheme that, so long as it is consistent with the 

Texas Constitution, would allow a county to form a TRZ, collect an ad valorem tax increment, and 

pledge an amount of money in the tax increment account to secure bonds issued to pay a 

transportation project's costs. However, because section 222.1 07 (i -1) purports to authorize a county 

to issue ad valorem tax increment bonds secured with a pledge of the ad valorem tax increment 

account, we must consider the issue we reserved in Attorney General Opinion GA-0953-the 

potential constitutional limitations on a county's authority to engage in ad valorem tax increment 

bond financing. See Tex. Att'y Gen. Op. No. GA-0953 (2012) at 2.2 

In Attorney General Opinion MW-337, this office determined that the Tax Increment 

Financing Act of 1979 (the "1979 Act"), on its face, violated the constitutional requirement that 

"[t]axation shall be equal and uniform." Tex. Att'y Gen. Op. No. MW-337 (1981) at 5; see TEX. 

CONST. art. VIII,§ 1 (a). The opinion determined that by authorizing a taxing authority to pledge the 

future increase in ad valorem taxes over a set base level-the tax increment-to the payment of tax 

increment project costs, the 1979 Act caused an unequal distribution of the ad valorem tax burden. 

Tex. Att'y Gen. Op. No. MW-337 (1981) at 5. The opinion observed that all of the value of property 

outside of the tax increment district would be taxed to pay the general expenses of the taxing 

authority while only a portion of the value of property inside the district would be taxed for those 

purposes. !d. Consequently, the opinion determined, the 1979 Act was unconstitutional absent an 

enabling constitutional amendment. !d. 

In 1981, the Legislature proposed and the voters approved an amendment to article VIII, 

section 1-g(b) of the Texas Constitution, which now provides as follows: 

The legislature by general law may authorize an incorporated city or 

town to issue bonds or notes to finance the development or 

redevelopment of an unproductive, underdeveloped, or blighted area 

within the city or town and to pledge for repayment of those bonds or 

notes increases in ad valorem tax revenues imposed on property in the 

area by the city or town and other political subdivisions. 

TEX. CONST. art. VIII, § 1-g(b) (emphasis added). The plain text of the amendment enabled the 

Legislature to grant the authority to issue tax increment bonds to incorporated cities and towns, but 

it did not extend the Legislature's enabling authority to counties. See Collingsworth Cnty. v. Allred, 

2

Your request letter suggests that, because we answered your question in Attorney General Opinion GA-0953 

on statutory grounds, we implicitly determined that no constitutional authorization is necessary for a county to issue tax 

increment bonds. See Request Letter at I. Your suggestion is inaccurate. In GA-0953 , we determined that because a 

county lacks statutory authority to engage in tax increment bond financing of improvement under chapter 3 1 I of the 

Tax Code, it was not necessary to consider potential constitutional impediments to the exercising of that authority. Tex. 

Att'y Gen. Op. No. GA-0953 (2012) at 2. Following the practice of the courts we generally consider "c nstitutional 

questions [only] when we cannot resolve issues onnonconstitutional grounds." In re B.L.D., 113 S. W .3d 340, 349 (Tex. 

2003). Nothing in GA-0953 suggests that a county with statutory authority to issue ad valorem tax increment bonds may 

do so in the absence of clear constitutional authority. 
The Honorable Joseph C. Pickett - Page 3 (GA-0981) 

40 S. W .2d 13, 15 (Tex. 1931 )(observing rule of constitutional construction thatthe statement of one 

thing implies exclusion of others). More recently, in 2011, the Legislature proposed a constitutional 

amendment that would have enabled it to enact laws authorizing counties to issue ad valorem tax 

increment financing bonds, but the amendment was rejected by the voters. See Tex. H.R.J. Res. 63, 

82d Leg., R.S. (2011). 

The article VIII, section 1 (a) requirement of equal and uniform taxation applies to counties. 

See Parker Cnty. v. Spindletop Oil & Gas Co., 628 S.W.2d 765,767 (Tex. 1982). We are not aware 

of any basis for determining that a county is authorized by the Texas Constitution to issue bonds 

secured by a pledge of an ad valorem tax increment. Consequently, we conclude that a county's 

issuance of tax increment financing bonds secured by a pledge of the county's ad valorem tax 

increment would be subject to constitutional challenge as violating the equal and uniform taxation 

requirements in article VIII, section 1(a) ofthe Texas Constitution. 
The Honorable Joseph C. Pickett - Page 4 (GA-0981) 

SUMMARY 

A county's issuance of tax increment financing bonds secured 

by a pledge of the county's ad valorem tax increment would be 

subject to constitutional challenge as violating the equal and uniform 

taxation requirements of article VIII, section l(a) of the Texas 

Constitution. 

DANIEL T. HODGE 

First Assistant Attorney General 

JAMES D. BLACKLOCK 

Deputy Attorney General for Legal Counsel 

JASON BOATRIGHT 

Chairman, Opinion Committee 

William A. Hill 

Assistant Attorney General, Opinion Committee