ATTORNEY GENERAL OF TEXAS GREG ABBOTT

The Honorable JeffWentworth Chair, Committee on Jurisprudence Texas State Senate Post Office Box 12068 Austin, Texas 78711

Dear Senator Wentworth: June 29, 2009

Opinion No. GA-0724

Re: Authority of local taxing units or central appraisal districts to collect special assessments imposed in public improvement districts (RQ-0774-GA)

You ask whether a central appraisal district or a local taxing unit, such as a county, may contract to collect assessments imposed by a public improvement district ("district").! The Public ImprovementDistrictAssessmentAct (the "Act"),2Local GovernmentCodechapter372, subchapter A, authorizes a municipality to establish a district to help finance public improvements within the district's boundaries. See 

## TEx. Loc. GOV'T CODE ANN. § 372.003 (Vernon 2005). The municipal governing body "shall apportion the cost ofan improvementto be assessed against property" in the district "on the basis of special benefits accruing to the property because ofthe improvement." 

### Id § 372.015(a). The governing body levies and collects assessments, also known as "special assessments," on property within the district. See id §§ 372.016, .017, .018(b). Ifa land ownerin the district does notpaythe assessment againsthis property, "[a]n assessment

... ,withinterest, the expense ofcollection, andreasonable attorney's fees, ifincurred, is a first and prior lien againstthe property assessed, superior to all other liens and claims except liens or claims for state, county, school district, or municipality ad valorem taxes." 

### Id § 372.018(b). The lien "maybeenforced by the governing body in the same manner that an ad valorem tax lien against real property may be enforced by the governing body," and "[d]elinquent installments of the assessment shall incur interest, penalties, and attorney's fees in the same manner as delinquent ad valorem taxes." 

### Id.

Youfirst inquirewhetherTax Code section6.24 authorizes acontractbetweenamunicipality and a central appraisal district or a local taxing unit to collect special assessments imposed in a public improvement district. See Request Letter at 1,3. Section 6.24 is found in the Property Tax Code, Texas Tax Codetitle 1, which applies to local entities authorized to impose ad valoremtaxes

IRequest Letter at 1 (available at http://www.texasattorneygeneral.gov).
2TEX. Loc. Gov'T CODE ANN. § 372.001 (Vernon 2005).The Honorable JeffWentworth

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onproperty.3 See TEX. TAX CODE ANN. §§ 1.01 (short title), 1.02 (applicability oftitle 1 to taxing units), 1.04(12) (defining "taxing unit" as a political unit of the state authorized to impose ad valorem taxes) (Vernon 2008). Section 6.24 ofthe Tax Code authorizes the governing body ofa taxing unitto contract with anothertaxing unit or with an appraisal district board "toperform duties relating to the assessment 4 or collection of taxes." Id. § 6.24(a) (footnote added); see also id. § 6.24(b) (procedure for county contracts). Section 6.24, read in its statutory context, relates to the assessment and collection ofad valorem taxes. See 

### TEx. GOV'T CODE ANN. § 311.011(a) (Vernon 2005) (words and phrases shall beread in context). An "appraisal district" appraises property in the district "for ad valorem tax purposes ofeachtaxing unit that imposes ad valorem taxes on property in the district." 

### TEx. TAX CODE ANN. § 6.01(b) (Vernon 2008). Accordingly, section 6.24 authorizes contractsto performdutiesrelatingto the assessment orcollectionofad valoremproperty taxes.

A special assessment, such as an assessment within the Act, is imposed under the taxing power, but it is not an ad valorem property tax. See City ofWichita Falls v. Williams, 26 S.W.2d 910,911-13 (Tex. 1930). Anad valorempropertytax is imposedthroughoutthetaxingjurisdiction for the general support of its government, while a special assessment is imposed only upon the property that is specially benefitted by the improvement, and its amount is based on the special benefits accruing to the property. See id.; Henry 

### v. Kaufman County Dev. Dist. No.1, 150 S.W.3d 498,504-05 (Tex. App.-Austin 2004, pet. dism'dby agr.); see also City of Houston v. Blackbird, 394 S.W.2d 159, 162 (Tex. 1965) (amount ofassessment for paving improvements cannot exceed benefit to property owner). Special assessments are not ad valorem taxes within the Texas Constitution. See City of Wichita Falls, 26 S.W.2d at 915; Higgins v. Bordages, 31 S.W. 52, 54-55 (Tex. 1895). Moreover, "ithas been uniformly held that the word taxes, whether used in an act of the legislature, orthe charter ofa company exempting itfrom taxation, does not embrace such local assessments, unless there be something inthe statute or charter to indicate such an intention." City of Cisco v. Varner, 16 S.W.2d 265,266 (Tex. Comm'nApp. 1929,judgm'taffd); seeAllen v. City ofGalveston, 51 Tex. 302, 320 (1879). Nothing in section 6.24 indicates that the Legislature intended itto encompass special assessments. An assessment imposedunderthe Actis accordingly not a tax within Tax Code section 6.24. Based onthe plain language ofsection 6.24, we conclude

3"Anadvaloremtax is levied againstproperty on its value." State v. Wynne, 133 S.W.2d951,957 (Tex. 1939).

4The Legislature has defmed the term "assessment" in the Property Tax Code as "a function described by Chapter26, Tax Code, performedby an employee ofa political subdivision orby a person acting onbehalfofa political subdivision to determine an amount of ad valorem tax for the political subdivision." TEX. Occ. CODE ANN. § 1151.002(2)(Vernon2004) (defining "assessment"forpurposes ofthePropertyTaxationProfessionalCertificationAct, Id. § 1151.001-.253 (Vernon 2004 & Supp. 2008». See also Bexar County v. ConnellLeasing Co., 611 S.W.2d 496, 498 (Tex. Civ. App.-SanAntonio 1981, no writ) (defming "assessment" in Texas Constitution article VIII, section 15
as "the sum that has been ascertained as the apportioned part ofthe tax to be charged against the particular piece of property," and that it "includes the procedure onthe part ofofficials bywhich the property is listed, valued, and fmally the pro rata tax declared").The Honorable JeffWentworth

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that section 6.24 does not authorize contracts between a municipal governing body and another taxing unit or an appraisal district board to collect special assessments imposed under the Act. 5

You also ask whether authority other than Tax Code section 6.24 would permit a central appraisal district or a local taxing unitto collect assessments imposedby a municipality onproperty in a public improvement district. See Request Letter at 1,2. Government Code chapter 791, the Interlocal CooperationAct, authorizes a local governmentto contractwithanother local government "to perform governmental functions and services in accordance with this chapter." 

### TEx. GOy'T CODE ANN. § 791.011(a) (Vernon Supp. 2008), see id. §§ 791.001-.033 (Vernon 2004 & Supp. 2008); Ben Bolt-Palito Blanco Consolo Indep. Sch. Dist. v. Tex. Political Subdivisions Prop.lCas. Joint Self Ins. Fund, 212 S.W.3d 320 (Tex. 2006) (addressing selfinsurance pools authorized by chapter 791 and other statutes). A local government includes a "county, municipality, special district, junior college district, or other political subdivision ofthis state or another state." TEX. GOy'TCODEANN. § 791.003(4)(A)(Vernon Supp. 2008). The term "[g]overnmental functions and services" is defined as "all or part ofa function or service" in any ofseveral areas listed in section 791.003(3). Id. § 791.003(3). The list does not expressly include collecting assessments, and no judicialdecisionorattorneygeneral opinionhas consideredwhether chapter791 authorizes contracts for collecting special assessments. The language of chapter 791 is, however, broad enough to include contracts to collect assessments. The statute authorizes contracts for "administrative functions," defined as "functions normally associated with the routine operation of government, including tax

... collection." Id. 

### § 791.003(1); see also id. 

### § 791.003(1) (defining "administrative functions"); see also id. 

### § 791.003(3)(K) (administrative functions are governmental functions). In
our opinion, the collection ofassessments, like the expressly-mentionedtax collection, is a function "normally associated with the routine operation ofgovernment." Id. § 791.003(1). In addition, the statute authorizes local governments to contract for "other governmental functions in which the contractingparties are mutually interested." Id. § 791.003(3)(N). Thisbroad category could include the collection ofspecial assessments.

An interlocal contract under chapter 791 may "provide a governmental function or service that each partyto the contract is authorized to perform individually." Id. § 791.011(c)(2); see Tex. Att'yGen. Op. No. GA-O 150 (2004) at 2 (Interlocal CooperationActpermits an agreementwhereby the peace officers of one local government serve as law enforcement officers of another local government that has law enforcement authority). Thus, a municipality could not contract with an appraisal district board for collection ofassessments. We believe, however, that a court would find that the Interlocal Cooperation Act authorizes a municipality to contract with another local government for collecting special assessments imposedin a public improvement district. The local government must also have authority to collect assessments for public improvements. Whether a particular local governmental entityhas the required authority may be determined by examiningthe applicable law.

5youalso ask ifa contract under Tax Code section 6.24 for collection ofspecial assessments would have to be approvedbythe comptroller. See Request Letter at 5. In view ofour answerto your fIrst question, we need not address this question.The Honorable JeffWentworth

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### SUMMARY

A special assessment to finance a public improvement is imposed only upon the property that is specially benefitted by the improvement, andits amountis basedonthe specialbenefitsaccruing to the property. A special assessment is imposed under the taxing power, but it is not an ad valorem property tax within the Texas Constitution, nor does the term "taxation" in statutes ordinarily include special assessments.
Tax Code section 6.24 authorizes contracts between a municipal governing body and another taxing unit or an appraisal district board to collect ad valorem taxes, but it does not authorize contracts to collect special assessments imposed under the Public Improvement District Assessment Act, Local Government Code chapter 372, subchapterA.

Pursuant to the Interlocal Cooperation Act, a municipal governing body may contract for the collection of a special assessment it imposes in a public improvement district with another local governmental entitythatis authorizedto collectassessments for public improvements.

ANDREW WEBER First Assistant Attorney General

JONATHANK. FRELS Deputy Attorney General for Legal Counsel

NANCY S. FULLER Chair, Opinion Committee

Susan L. Garrison Assistant Attorney General, Opinion Committee