**Ausnnr. TEXAB**  78711
March 22,1976

The Honorable Bill Clayton Speaker **of** the House State Capitol Austin, Texas 78701 Opinion **No.** H-799
Re: Method of assessing irrigatedagricultural land.
Dear Speaker Clayton:
You requested our opinion concerning the taxation of irrigated land under articleVIII, section l-d of the Texas Constitution. Article VIII, section l-dprovides in relevant part: (a) All land owned by naturalpersons which is designated for agriculturaluse in accordancewith the provisions of this Section shallbe assessed for all tax purposes on the considerationof only those factors relative to such agriculturaluse. 'Agriculturaluse'means the raising of livestock or growing of crops, fruit, flowers, and other productis of the soil under natural conditions as a .businessventurx profit, which business is the primary occupation and source of income of the owner. (Emphasisadded). Specifically,you ask (1)whether the term "natural conditions" as used in section l-d obligates a taxing authority to~value land that uses irrigationor has irrigationpotential differently from land that does not have water for irrigation and is considered to~be dry land and (2)if irrigated land is not valued differently,what definition of "natural conditions" would be constitutional under the FourteenthAmendment to the United States Constitution7

. .,

p.3370The Honorable Bill Clayton - page 2 (H-799)

Land eligible for assessmentunder section l-d is taxed according to its value, but the value is one determined on the assumption t~hatthe land can be used only for agricultural purposes. p c Real, 466 S.W.Zd 1 (Tex.Civ: App. -- San Antonio 197 ,writ ref'd.n.r.e.1. The possibility that the landmay be worth more if used for other purposes, e.g., subdivided for a housingdevelopment, may not be considered. King v. Real, supra at 7. Such a~scheme of "preferential asse6sment"i.s intended to encouraae continued use of land for agriculture by providing tax relief to certain owners of ranch or farm landwho otherwisemight sell the land or convert it to a more intensiveuse because of an inability to pay higher taxes resulting from landvalues inoreasedby nearby residential, industrial,or resort growth. See Klit aard v. Gaines, 479 S.W.Zd 765, 760 (Tex.Civ. App. ==--AGZXZ-D72;- writ ref'd n.r.e.); Braden, The Texas' Constitution:An Annotated and ComparativeAnalysis,Art. VIII at 15-17 (Preliminary Edition 1974); U.S. Dept. of Agriculture, State Programs for the DifferentialAssessment of Farm and Ooen Soace Land (1974):

Ca u a Ind. School Dist 5i5 S~i426 32 (Tex

.. &% ~-%&9~w~f~~.e.) (Rehearinggra;tedr arguments heard January 7, 1976); SanMarco6 Consolidated Ind. School Dist. v. Nance, 495 S.W.2dm (Tex.Clv. App. --Au'stin -writ reFd n.r.e. at 502 S.W.Zd 694, 1974); Driscoll Foundation v. Nueces Count Beaumont iSz!& writ ref,derred: ~;";:~ ‘,.'~~, ~:;;;."pp.--

In the dryer regions of Texas, irrigation is a factor relative to the use of land for agriculturalpurposes. See Mud Creek Irr. A r. 6Manuf,.Co. ~-Vivian, 74 Tex. 170,11 s.w.-nm.-iin9 1884).

-7-- Your firstauestion is whether, in those regions in‘which irrigation is-important, the term "natural conditions" in sectionl-d requires that land with water for irrigationbe valued for tax purposes as though the water is not present. The precise meaning of any word must be determined from the context in which it is used.: 53 Tex.Jur.2d Statutes 9 147. In section l-d, the "naturalconditions" restriction is part of the definition of "agriculturaluse." In turn, "agricultural use" is importantboth'.aea qualification for preferential assessment under section l-d and as the ba'sis for the ao.$ualassessment. Unless land is "designated for

p.3371The Honorable Bill Clayton. - page 3 **(H-799)**

agricultural use”, it is not valued for tax purposes "on the consideration of only those factors relative to such agricultural use." In the context of your first question, this means that if "naturalconditions" requires eligible land to be assessed only on its "dry"value, it also requires that no landmay qualify under section l-d unless "designated" **for** use as dry land. Irrigated landwould be ineligible. No rational basis for such a distinction is apparent. In our opinion, such a constructionwould be contrary to the purpose **of** articleVIII, section l-d, and could create a constitutionally questionable classification. See Kahn v. Shevin, 416 U.S. 351 (1974). Therefore, in thosedryrezons of Texas where irrigation is a factor relative to the use of land for agricultural purposes, irrigationor the potential for irrigation should be considered in determining the value of land under section l-d. Having concluded that irrigated land is valued as such and not as dry land,we need not answeryour second question concerning the constitutionalityof possiblemeanings of the “natural conditions" restriction. S, U M.**M** A R Y Under articleVIII, section l-d of the Texas Constitution, irrigation or the potential for irrigation is a factor relative to the agriculturaluse of land and may be considered in determining the value of laM,,forpurposes of taxation. Very truly yours,

p., **3372**The Honorable Bill Clayton - page 4 **(H-799)**

APPROVED:

-&.: ',
DAVID M. KENDALL, FirstAssistant

Opinion Committee jwb

p. **3373**