### ATTORNEY GENERAL OFTEXAS GREG ABBOTT

February 9,2007

The Honorable Royce West Chair, Committee on Intergovernmental Relations Texas State Senate Post Office Box 12068 Austin, Texas 7871 l-2068 Opinion No. GA-05 14 Re: Whether acity may designate as areinvestment zone under Tax Code section 311.005(a)(5) an area that is not “unproductive, underdeveloped, or blighted” ifno bonds or notes are issued to finance the area’s development or redevelopment (RQ-0442-GA)
Dear Senator West: The late Senator Frank Madla, your predecessor as Chair of the Senate Committee on Intergovernmental Relations, asked whether acity may designate asareinvestment zone under Tax Code section 311,005(a)(5) an area that is not “unproductive, underdeveloped, or blighted” within the meaning ofarticle VIII, section l-g(b) ofthe Texas Constitution ifno bonds or notes are issued to finance the area’s development orredevelopment.’ See TEX.CONST.art. VIII, 5 l-g(b); TEX.TAX CODEANN. 5 311.005(a)(5) (Vernon Supp. 2006). Article VIII, section 1-g ofthe Texas Constitution permits the Legislature to authorize taxing units to grant tax exemptions or tax relief and permits the Legislature to authorize cities and towns to finance improvements to promote development:

(a) The legislature by general law may authorize cities, towns, and other taxing units togrant exemptions orother relieffrom advalorem taxes onproperty located in a reinvestment zone for the purpose of encouraging development orredevelopment and improvement ofthe property. (b) The legislature by general law may authorize anincorporated city or town to issue bonds or notes to Jinance the development or redevelopment ofan unproductive, underdeveloped, or blighted area within the city or town and to pledge for repayment ofthose bonds or

‘See Letter from the late Honorable Frank Madla, Chair, Committee on Intergovernmental Relations, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas, at 1 (Feb. 6, 2006) (on file with the Opinion Committee, also availableal http:/lwww.oag.state.tx.us) [hereinafier Request Letter].The Honorable Royce West - Page 2 (GA-0514)

notes increases in advalorem tax revenues imposed onproperty inthe area by the city or town and other political subdivisions.
,TEx. CONST. art. VIII, 5 l-g (emphasis added), Tax Code chapter 311, the Tax Increment Financing Act (“chapter 31l”), enacted pursuant to article VIII, section l-g, authorizes a city to designate an area meeting certain criteria as a reinvestment zone and to finance the improvement ~ofproperty in the zone directly with tax increments or the proceeds ofbonds ornotes payable from the tax increments. See TEx. TAX CODE ANN. 5s 311.001 (Vernon 2002), 311.003, ,004, ,014 (Vernon Supp. 2006). “Tax increments” are generally the portion ofthe taxes derived by ataxing unit due to the difference between the appraised value of all taxable property in the reinvestment zone for that year less the appraised value ofthe property when the zone was established.. See id. 5311.012 (Vernon 2002). In other words, they are the taxes attributable to the increased value ofthe real property in the zone due to its develbpment. See id. Your predecessor asked about atax increment financing reinvestment zone authorized and established under chapter 311. He suggested that if no bonds or notes are issued to finance the development of property in atax increment financing reinvestment zone established under section 311.005(a)(S), then article VIII, section l-g(b) and its requirement that an area be unproductive, underdeveloped, orblighted do not apply to the zone. See Request Letter, supra note 1,at 1-2; TEX. TAX CODE ANN. § 311.005(a)(5) (Vernon Supp. 2006) (providing for petition requesting that area be designated as a reinvestment zone). Instead, he suggested, the designation of such an area is. governed by article VIII, section l-g(a) authorizingtheLegislature to grant exemptions orother relief from ad valorem taxes on property located in areinvestment zone. See Request Letter, szdpranote 1,at l-2. I. Legal Background A. Constitutional amendment required for tax increment financing The Tax Increment Financing Act of 1979 (the “1979 Act”); apredecessor of chapter 311, was determined to be facially unconstitutional by this office in Attorney General Opinion MW-3 37. See Tex. Att’y Gen. Op. No. MW-337 (1981). This office determinedthat the 1979 Actviolated the requirement of article VIII, section 1(a) ofthe Texas Constitution that “[tlaxation shall be equal and uniform” by “causing an unequal distribution of the ad valorem tax burden.” Id. at 5; see TEX. CONST. art. VIII, 5 l(a). The 1979 Act limited the use ofapart ofthe ad valorem tax revenues-the tax increments-to improving property within the tax increment district rather than for the general support ofthe city. See Tex. Att’y Gen. Op. No. MW-337 (1981) at 5. “[Tlhe earmarking oftaxincrement revenue topay forimprovements within the tax increment zone meant that property within the zone was not contributing its fair share to the city’s general fund.” HOUSE STUDY GROUP, DAILY

‘See Act of May 28, 1979,66th Leg., R.S., ch. 695, 1979 Tex. Gen. Laws 1661, 166147.The Honorable Royce West - Page 3 (GA-05 14)

FLOORREPORT,HOUSECOMM.ONCONSTITUTIONALAMENDMENTS,BILLANALYSIS, Tex. S.J.Res. 867th Leg., 1st C.S. (1981) (referring to 1979 Act). Article VIII, section l-g was adopted in 1981, and the adoption ofarticle VIII, section l-g(b) ensured that the Tax Increment Financing Act of 1981,codified atchapter 311,3did not contravene the constitutional mandate that taxation be equal and uniform. See TEX. CONST. art. VIII, 5 l(a); City 

### ofEl Paso Y.El Paso Cmty. Coil. Dist., 729 S.W.2d 296,298 (Tex. 1986) (“The reason for proposing the amendment [providing for participation bypolitical subdivisions in the tax increment financing plan] was to provide aconstitutional basis for the [Tax Increment Financing] Act.“). The Tax Increment Financing Act of 1981 took effect upon the voters’ approval of this amendment to the Texas Constitution.4 

### B. Chapter 311 overview and criteria for tax increment reinvestment zone Under chapter 311, amunicipal governing body may designate by ordinance “acontiguous geographic area in the jurisdiction of the municipality .-to be a reinvestment zone to promote development or redevelopment of the area ifthe governing body determines that development or redevelopment would not occur solely through private investment in the reasonably foreseeable future.” TEX. TAX CODE ANN. 5 311.003(a) (Vernon Supp. 2006); see also id. 5 311.003(b)+c) (procedures for adopting and contents ofauthorizing ordinance). The reinvestment zone ordinance must, among other things, establish a tax increment fund’ for the zone, which is used to finance improvements within the zone. See id. $5 311,004(a)(6), .014(b). The ordinance must include fmdings that “improvements in the zone ,will significantly enhance the value of all the taxable real property in the zone and will be ofgeneral benefit to the municipality” and that “the area meets the requirements of Section 311.005.” Id. § 311,004(a)(7)(A)-(B). Section 311.005(a) provides that in order to be designated as a reinvestment zone, an area must satisfy the following criteria:

(1) substantially arrest or impair the sound growth of the municipality or county creating the zone, retard the provision of housing accommodations, orconstitute aneconomic orsocial liability and be amenace to the public health, safety, morals, or welfare in its present condition and use because of the presence of:

‘The Tax Increment Financing Act of 1981 was repealed andrecodifiedas chapter31 1oftheTax Code in 1987. See Act of May 1, 1987,7Oth Leg., RX, ch. 191, $5 1 (adding title 3 to the Tax Code), 12 (repealing former article 1066e, Revised Civil Statutes), 13 (providing that “no substantive change in the law isintended by this Act”), 1987 Tex. Gen.Laws 1410,1413-21,1466.

“SeeAct ofAug. 10, 1981,67th Leg., lstC.S., ch. 4;s 4, 1981 Tex. Gen. Laws45,52 (“This Acttakes effect only ifthe constitutional amendment proposed by S.J.R. No. 8,67th Legislature, 1stCalled Session, 1981, isadopted.“).

‘After areinvestment zone’s creation and forthe zone’s duration, participating taxing units that tax real property in the reinvestment zone, with certain exceptions, must pay the tax increment into the tax increment fund. See TEX.TAX CODEANN. 5 311.013 (Vernon Supp. 2006).The Honorable Royce West - Page 4 (GA-0514)

(A) a substantial number of substandard, slum, deteriorated, or deteriorating structures; (B) the predominance of defective or inadequate sidewalk or street layout; (C) faulty lot layout in relation to size, adequacy, accessibility, or usefulness; (D) unsanitary or unsafe conditions; (E) the deterioration of site or other improvements; (F) tax or special assessment delinquency exceeding the fair value of the land; (G) defective or unusual conditions oftitle; (H) conditions that endanger life or property by fire or other cause; or (I) structures, other than single-family residential structures, less than 10percent ofthe square footage ofwhich has been used for commercial, industrial, orresidential purposes during the preceding 12years, ifthe municipality has apopulation of 100,000 or more; (2) be predominantly open and, because of obsolete platting, deterioration of structures or site improvements, or other factors, substantially impair or arrest the sound growth ofthe municipality or county; (3) be in a federally assisted new community located in the municipality or county or in an area immediately adjacent to a federally assisted new community; or (4) Deleted by Acts 1989, 71st Leg., ch. 1106, 5 27. (5) be an area described in a petition requesting that the area be designated as areinvestment zone, ifthe petition is submitted to the governing body of the municipality .or county by the owners of property constituting at least 50 percent ofthe appraised value ofthe property in the area according to the most recent certified appraisal roll for the county in which the area is located. Id. 5 311.005(a).The Honorable Royce West - Page 5 (GA-0514)

While subsections (a)(l), (2), and (3) of section 311.005 set out certain “unproductive, underdeveloped, or blighted” required conditions for land eligible to be included in a proposed reinvestment zone, subsection(s)(5) containsno similar requirements. Compare id. 5311.005(a)(S), with id. 5 311.005(a)(l)-(3). But see Tex. Att’y Gen. Op. No. JC-0152 (1999) at 6 (construing section 311.005(a)(5) to permit the designation of only those areas that the city determines are “unproductive, underdeveloped, or blighted” within the meaning of article VIII, section l-g(b)). ~11. Analysis ~ As we have already noted, your predecessor suggested that when no bonds or notes are issued, article VIII, section 1-g(b) and itsrequirement that an areabe unproductive, underdeveloped, orblighted do not apply to an area designated as atax increment financing reinvestment zone under section 311.005(a)(S) because the designation ofsuch anarea Canbe governed by article VIII, section l-g(a) instead. See Request Letter, supra note 1, at l-2. This suggestion is premised on the view that both subsections (a) and @)ofsection 1-gauthorize tax increment financing reinvestment zones and that subsection (b)‘s criteria apply only ifthe financing occurs through the issuance ofbonds or notes. But, as our analysis will show, section l-g(a) permits the Legislature to authorize tax exemptions orother tax relief. Only section 1-g(b) permits the Legislature to authorize tax increment financing, which does not involve tax exemption or tax relief. A. Literal language of section l-g(a) and (b) Inconstruing article VIII, section 1-g(a) and (b),we first consider the literal text and itsplain meaning. See Stringer v. Cendunt Mortgage Corp., 23 S.W.3d 353, 355 (Tex. 2000) (stating that when interpreting the state constitution, a court looks at its literal text and gives effect to its plain language). Additionally, we construe its words as they are commonly understood. See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000) (stating that courts rely on the constitution’s literal text and construe its words as they are generally understood).

1. Section l-g(a) Article VIII, section 1-g(a) permits the Legislature to “authorize cities, towns, and other taxing units to grant exemptions or other relief from ad valorem taxes on property located in a reinvestment zone for the purpose of encouraging development.” TEX.CONST.art. VIII, 5 l-g(a). Subsection (a) does not mention tax increments or their use. Based on the literal language, section l-g(a) only authorizes tax exemption or other tax relief. See Stringer, 23 S.W.3d at 355.
Tax exemption means that no taxes are due orpaid. See William Cluirmont, Inc. v.State, 261 N.W.2d 780, 784 (N.D. 1977) (stating that “the word ‘exempt’ is used to signifythat no tax is payable in the first instance”); BLACK’SLAWDICTIONARY1474 (7th ed. 1999) (defining “taxexempt” as “[nlot legally subject to taxation”). No court or attorney general opinion has construed the term “tax relief’ as used in article VIII, section l-g(a). Based on established principles of statutory construction, however, we must presume that the term means something related to eliminating or reducing ad valorem taxes. See Spradlin, 34 S.W.3d at 580; BLACK’S LAWThe Honorable Royce West - Page 6 (GA-0514)

DICTIONARY1293 (7th ed. 1999) (defining “relier’ as “[alid or assistance given to those in need, esp., financial aid provided by the state”). But tax increment financing does not involve exempting property from ad valorem taxation or providing other relief from such taxation. See TEX.TAXCODEANN. $5 311.012 (Vernon 2002) (determination oftax increment amount), 311.014 (Vernon Supp. 2006) (use oftax increment fund). Under atax increment financing scheme, acity designates aspecific area as areinvestment zone, and

“[&]ny increase in ad valorem tax revenues from land within the zone is then committed to the purchase ofproperty, improvement of approved property, or retirement of revenue bonds issued to provide funding for the approved projects.” City ofElPaso, 729 S.W.2d at 296. Thus property in’ the reinvestment zone does not escape taxation or enjoy reduced taxation; rather, the tax is imposed on the entire value of the property, but a portion of the tax revenues derived from the property is dedicated to improving the reinvestment zone property rather than for the general support of the taxing authority. See TEX.CONST.art. VIII, 5 l-g(b) (authorizing use of “increases in ad valorem tax revenues imposed on property in the area by the city or town and other political subdivisions” to make property improvements); TEX.TAXCODEANN. $5 311.012 (Vernon 2002) (determination of tax increment amount), 311,013 (Vernon Supp. 2006) (collection and deposit oftax increment), 311.014 (use oftax increment fund) (Vernon Supp. 2006); see also Tex. Att’y Gen. LO-89-03 1,at .3(stating that property in atax increment reinvestment zone does not escape taxation; tax isimposed on the entire value of the property). If the reinvestment zone property were to be exempted or otherwise provided tax relief, there would be no or little tax increments to fund the improvements.

2. Section l-g(b) Section l-g(b), on the other hand, specifically references tax increments, linking its use to bonds or notes: It authorizes a~“cityor town to issue bonds or notes to finance the development of an unproductive, underdeveloped, or blighted area” and to pledge to those bonds or notes “increases in ad valorem tax revenues imposed on property in the area by the city ortown and other political subdivisions,” namely, the tax increments. TEX.CONST.art.VIII, § 1-g(b); see also HOUSE COMM.ONCONSTITUTIONAL AMENDMENTS,

BILLANALYSIS,Tex. S.J. Res. 8,67th Leg., 1st C.S. (1,981) (“‘tax increments’ (i.e.[,] increases in tax revenues due to enhancement of taxable property”)). The specific reference to bonds and notes is not unusual in that the issuance of such obligations is the common method for obtaining funds to finance the up-front develbpment ofthe area; the tax increments are available only after and as aresult of the development. See BLACK’S LAWDICTIONARY1474 (7th ed. 1999) (defining “tax increment financing” as “[a] technique used by amunicipality to finance commercial developments [usually] involving issuing bonds to finance land acquisition and other up-front costs, and then using the additional property taxes generated from the new development to service the debt”); see also ANALYSESOFPROPOSEDCONSTITUTIONAL AMENDMENTS

APPEARINGONNOVEMBER3, 1981,BALLOT,TEX.LEG. COUNCIL,INFORMATION REPORT NO. 8l-3, at 3 (Sept. 1981)(“The increases inproperty taxes resulting from redevelopment are called tax increments and occur because of the increases in taxable values of redeveloped property.“).The Honorable Royce West - Page 7 (GA-0514)

By its terms, section 1-g(b) specifically permits the Legislature to authorize tax increment financing but only in an area that is “unproductive, underdeveloped, or blighted.” See TEX.CONST. art. VIII, 5 l-g(b); Stringer, 23 S.W.3d at 355; Walker Y.Baker, 196 S.W.2d 324,327 (Tex. 1946) (stating that when the constitution grants apower, and where the manner of exercising that power is prescribed, it is implied that the prescribed manner excludes all others).

3. Financing method Our conclusion that only section 1-g(b) authorizes tax increment financing means that its criteria apply regardless of whether the tax increment reinvestment zone property is financed with bond or note proceeds or by some other method. A city need not issue bonds or notes to finance improvements in a tax increment reinvestment zone. See TEX. TAX CODEANN. §§ 311.OlO(b), .013(b), ,014 (Vernon Supp. 2006); City of El Paso, 729 S.W.2d at 296. A city may finance improvements in areinvestment zone either (1) directly with tax increment revenues, or(2)indirectly with the proceeds ofbonds ornotes orother agreements secured by the tax increment revenues. See TEX.TAX CODEANN. $5 311.010(b) (Vernon Supp. 2006) (authorizing agreements pledging tax increment fund revenues to pay project costs), 311.013(b) (requiring taxing units to deposit tax increments into tax increment fund), 311.014 (authorizing payment ofbonds or project costs from tax increment fund); see also City ofEl Paso, 729 S.W.2d at 296 (“Any increase in ad valorem tax revenues from land within the zone is then committed to the purchase ofproperty, improvement of approved property, or retirement of revenue bonds [or notes] issued to provide funding for the approved projects.“). Thus chapter 311permits but does not require a city to issue bonds or notes to make or finance improvements. See TEX.TAXCODEANN. § 311,015 (Vernon Supp. 2006) (“A municipality creating areinvestment zone may issue tax increment bonds or notes, the proceeds of which may be used to pay project costs .,.I’)(emphasis added); Tex. Att’y Gen. Op. No. JM-758 (1987) at 3 (stating that the act allows a city to implement project plans by a number of methods other than issuance ofbonds, including direct expenditures oftax increment funds). But a city generally cannot make significant improvements in areinvestment zone without undertaking some type of financing. Even ifbonds or notes are not issued, it is still necessary to obtain~the lump sum from another source to make the improvements because the tax increments come into existence and are available annually only after the tax value of the reinvestment zone property increases as a result of making the improvements. See TEX.TAXCODEANN. 5 311.012 (Vernon 2002) (determination of amount of tax increment); City ofEl Paso, 729 S.W.2d at 296 (describing tax increment financing). As we understand it, while no bonds or,notes will be issued in this instance, the improvements will nevertheless be financed over time: The developers of the reinvestment zone property will pay for the improvements, and the city designating the reinvestment zone will, pursuant to apromissory note or similar agreement; repay the developer’s loan with the available tax increments.6

‘See Memorandum Brief from Michael D. Bernard, City Attorney, City of San Antonio, to Honorable Greg Abbott, Attorney General of Texas, at 4-5 (Apr. 10,2006) (on file with the Opinion Committee).The Honorable Royce West - Page 8 (GA-0514)

Thus, based on the literal text, section l-g(a) authorizes tax exemption and tax relief, and section l-g(b) authorizes tax increment financing. Because the use of tax increments does not. involve exempting property from taxation orproviding other relieffrom taxation, section 1-g(a) does not authorize tax increment financing. Tax increment financing and tax increment reinvestment zones are authorized only by section l-g(b), and its use is limited to an area that is “unproductive, underdeveloped, or blighted.” B. Legislative history The amendment’s legislative history and the circumstances surrounding its adoption support the construction that section I-g(a)‘s tax exemption or tax relief scheme is distinct from section 1-g(b)‘s tax increment financing scheme. See Republican Party ofTex. v.Die&, 940 S.W.2d 86,89 (Tex. 1997) (stating that acourt construing a constitutional provision may consider, in addition to the literal text, “the purpose of the constitutional provision, the historical context in which it was written, the collective intent, ifitcan be ascertained, ofthe framers and the people who adopted it”); Kirby Lumber Corp. v.HardinZndep. Sch. Dist., 351 S.W.2d 310,312 (Tex. 1961) (“Constitutional provisions must be construed in the light of conditions existing atthe time of adoption, and it does not lie within the power of the Legislature to change their meaning, or to enact laws in contlict~ therewith.“). The Sixty-seventh Legislature, which proposed article VIII, section l-g in Senate Joint Resolution 8, also adopted the Tax Increment Financing Act of 1981 and the Property Redevelopment and Tax Abatement Act (codified atchapter 312ofthe Tax Code) implementing the constitutional amendment7 ATexas Legislative Council analysis ofthe proposed amendment states that the amendment “would authorize the use of tax increment financing to encourage the redevelopment of property in economically distressed areas” and would also authorize “the local adoption of exemptions from property taxation to encourage redevelopment.” ANALYSESOF PROPOSEDCONSTITUTIONALAMENDMENTSAPPEARINGONNOVEMBER~, ~~S~,BALLOT,TEX. LEG. COUNC~, INFORMATIONREPORTNO.81-3, at 4 (Sept. 1981) (emphasis added). And the analysis further explains:

Senate Bill 17,the Property Redevelopment and Tax Abatement Act, implements Subsection (a) ofSection l-g. It would authorize cities or towns to exempt all or part of the value of residential, commercial, orindustrial property incertain designated reinvestment zones. To qualify for the exemption, the property would have to be economically impaired, bepredominantly open orotherwise impaired so as to arrest redevelopment, or be located in or adjacent to areas qualifying for certain federal assistance.

‘SeeTex. S.J. Res. S,67thLeg., 1st C.S., 1981 Tex. Gen. Laws295;ActofAug. 10, 1981,67thLeg., lstC.S., ch. 4, 1981 Tex. Gen. Laws 45,45-53 (Senate Bill 16); Act,ofAug. 10, 1981,67thLeg., lstC.S., ch. 5, 1981 Tex. Gen. Laws 53,53-57 (Senate Bill 17).The Honorable Royce West - Page 9 (GA-0514)

Senate Bill 16, the Texas Tax Increment Financing Act of 1981, will also take effect if the proposed amendment is adopted. This act would implement Subsection (b)ofSection l-g, authorizing a city or town to designate an area within its jurisdiction as a reinvestment zone, redevelop property in the zone, and finance the redevelopment by bonds ornotes payable solely from tax increments from the reinvestment zone. Id. at4-6 (emphasis added). Similarly, the bill analysis from the House Committee on Constitutional Amendments states that: The implementing.legislation for subsection (b) of SJR 8, SB 16,

. would allow cities or towns to designate areas which are deteriorating or unproductive as “reinvestment zones” and finance redevelopment projects in these zones through tax increment financing. The implementing legislation for subsection (a) of SJR 8, SB 17, authorizes cities or towns to create reinvestment zones for the purpose ofresidential or industrial tax abatement. The city or town must find that the area is deteriorating or unproductive before designating it as a reinvesttient zone. HOUSECOMM.ONCONSTITUTIONALAMTNDM!ZNTS,BILLANALYSIS, Tex. S.J. Res. 8,67thLeg., 1st C.S. (1981) (emphasis added);see also SENATEFINANCECOMM.,BILLANALYSIS,T~~.C.S.S.J. Res. 867th Leg., 1st C.S. (1981) (stating that the first part of the amendment “is new and is offered as a preparatory step to making Texas businesses and low income citizens eligible for Federal Tax breaks under the Kemp-Garcia bill,” and the second part repeats the failed 1977 constitutional amendment authorizing tax increment financing). In sum, the Legislature that adopted both article VIII, section l-g(a) and (b) and the implementing legislation, intended subsection (a)to authorize tax exemption ortax relief such asthe tax abatements authorized in the Property Redevelopment and Tax Abatement Act, codified atTax Code chapter 312, and subsection (b) to authorize tax increment financing as provided in the Tax Increment Financing Act of 1981,codified at Tax Code chapter 311. See Kirby Lumber Corp., 351 S.W.2d at 312; see also City of El Paso, 729 S.W.2d at 298 (construing the term “political subdivisions” in article VIII, section l-g(b) consistent with the 1981 implementing legislation to include school districts because “the reason for proposing the amendment was to provide a constitutional basis for the [Tax Increment Financing] Act”).The Honorable Royce West - Page 10 .(GA-0514)

III. Conclusion
Because only section l-g(b) of the Texas Constitution enables the use oftax increments to make improvements in aparticular area-the reinvestment zone-as authorized under chapter 311, its “unproductive, underdeveloped, or blighted” requirement applies to any designation of an area as atax increment fmancing reinvestment zone, including an area subject to petition under Tax Code section 311.005(a)(5). Therefore, we conclude that a city may not designate an area as a reinvestment zone under Tax Code section 311.005(a)(5) unless the area is “unproductive, underdeveloped, or blighted” even ifits plan oftax increment financing does not include issuance ofbonds or notes. Given our construction that only Texas Constitution article VIII, section 1-g(b) permits tax increment financing, we do not consider whether the “unproductive, underdeveloped, or blighted” requirement applies to areinvestment zone designated under section l-g(a).The Honorable Royce West - Page 11 (GA-0514)

SUMMARY A city may not designate an area asareinvestment zone under Tax Code section 311.005(a)(S) unless the area is “unproductive, underdeveloped, or blighted” within the meaning of article VIII; section 1-g(b) ofthe Texas Constitution, even ifthe area’s plan oftax increment financing does not include issuance of bonds or notes.

KENT C. SULLIVAN First Assistant Attorney General
ELLEN L. WITT Deputy Attorney General for Legal Counsel NANCY S. FULLER Chair, Opinion Committee Sheela Rai Assistant Attorney General, Opinion Committee