OFFlCE OF THE ATTORNEY GENERAL. STATE OF TEXAS 

JOHN CORNYN 

December 8, 1999 

The Honorable Chris Harris 

Chair, Committee on Administration 

Texas State Senate 

P.O. Box 12068 

Austin. Texas 7871 l-2068 

Opinion No. JC-0155 

Re: Whether individual whose property is 

subject of tax abatement agreement may serve as 

member of city council that granted the 

abatement, and related questions (RQ-0102-K) 

Dear Senator Harris: 

The Property Redevelopment and Tax Abatement Act, chapter 3 12 of the Tax Code, allows 

the governing body of a municipality to enter into a tax abatement agreement with the owner of 

taxable real property located in a reinvestment zone, under certain circumstances, for the purpose 

of economic development of the property. See TEX. TAX CODE ANN. 5 3 12.204 (Vernon 1992 & 

Supp. 1999). Property that is owned or leased by a member of the municipality’s governing body, 

however, is not eligible for a tax abatement agreement. See id. § 312.204(d) (Vernon 1992). You 

ask about the application ofthis provision to an individual “who has an ownership in a company that 

has received a municipal tax abatement.” Letter from Honorable Chris Harris, Chair, Committee 

on Administration, Texas State Senate, to Honorable John Comyn, Texas Attorney General (received 

Aug. 20, 1999) (on tile with Opinion Committee) [hereinafter “Request Letter”]. 

Chapter 3 12 of the Tax Code removes property owned by a member of a governmental body 

from eligibility for a tax abatement from that body: “Property that is in a reinvestment zone and that 

is owned or leased by a member of the governing body of the municipality or by a member of a 

zoning or planning board or commission ofthemunicipality is excluded from property tax abatement 

or tax increment financing.” TEX. TAX CODE ANN. 5 312.204(d) (Vernon 1992). 

As a preliminary matter, we assume that the individual’s ownership interest is sufficient to 

make the individual an “owner” of the property for purposes of the Tax Abatement Act. This oftice 

concluded in Attorney General Letter Opinion 98-001 that the terms “owned” and “owner” in 

chapter 312 “refer to a property interest that includes at least some degree of control over the 

property and do not embrace a mere beneficial or equitable interest in property completely lacking 

such control.” Tex. Att’y Gen. LO-98-001, at 3. Thus, the opinion concludes that a person who 

owns legal title to property or who is the sole shareholder of a corporation who has the authority to 

dispose of corporate assets may be the owner of property for purposes of chapter 312, while the 

owner of a very small percentage of shares of a publicly held corporation is not. See id. In this case, 
The Honorable Chris Harris - Page 2 

we assume that the individual’s level of “ownership in a company,” as you describe it, makes the 

individual the owner of the property for purposes of chapter 312. See Request Letter. 

You first ask whether it is acceptable for the owner ofproperty that received a municipal tax 

abatement to be elected to and serve on the city council where the city council “reaffirms the 

abatement each year for the life of the original abatement.” Id. The Tax Abatement Act does not 

speak to the eligibility of a property owner to serve as a member of the governing body that grants 

a tax abatement. Rather, it removes property from tax-abatement eligibility if the property owner 

is a member of the governing body. Thus, although the property owner is not barred by chapter 3 12 

from being elected to the city council, the owner’s position on the council makes his property 

ineligible for a tax abatement agreement. 

You also ask whether property in a reinvestment zone continues to qualify for a municipal 

tax abatement once its owner is elected to the city council. We conclude that it does not. Section 

312.204(d) states that property owned by a member of the governing body of the municipality “is 

excluded from property tax abatement.” TEX. TAX CODE ANN. $3 12.204(d) (Vernon 1992). Read 

plainly, the statute provides that property owned by a member of the city council may not receive 

a municipal tax abatement. The statute makes no exception for tax abatement agreements already 

in effect when the property owner becomes a member of the governing body. Courts and this office 

normally construe conflict-of-interest provisions strictly, so as to avoid a conflict. See City of 

Edinburg Y. Ellis, 59 S.W.2d 99,99-100 (Tex. Comm’n App. 1933, holding approved); Tex. Att’y 

Gen. Op. Nos. E-0018 (1999) at 3; DM-310 (1994) at 3. The Texas Supreme Court has said, in a 

case involving a city council member’s pecuniary interest in a contract with the city, that laws 

prohibiting public officers from being interested in public contracts should be “scrupulously 

enforced.” Ellis, 59 S.W.2d at 100. Accordingly, we conclude that property may not continue to 

receive a municipal tax abatement once its owner is elected to the city council. 

Finally, you ask about the status of any votes made by the property owner since his election 

to the city council. Votes on the tax abatement agreement are a nullity, since the agreement became 

ineffective once the property owner became a member of the city council. Votes on matters 

unrelated to the tax abatement agreement or to the tax-abated property are not affected by the council 

member’s status as the owner of the property. However, votes the council member might have made 

on matters related to his property, if any such votes were made aside from votes on the tax abatement 

agreement, are governed by the conflict-of-interest provision in chapter 171 of the Local 

Government Code. 

Chapter 171 of the Local Government Code prohibits a local public official from 

participating in a vote on a matter involving a business entity or real property in which the official 

has a substantial interest if it is reasonably foreseeable that an action on the matter would confer a 

special economic benefit on the business entity or real property that is distinguishable from the effect 
The Honorable Chris Harris - Page 3 

on the public. See TEX. Lot. GOV’T CODE ANN. 5 171.004 (Vernon 1999). Chapter 171 defines 

what it means to have a “substantial interest” in a business or property: 

(a) For purposes of [chapter 1711, a person has a substantial interest 

in a business entity if: 

(1) the person owns 10 percent or more of the voting stock or 

shares of the business entity or owns either 10 percent or more or 

$15,000 or more of the fair market value of the business entity; or 

(2) funds received by the person from the business entity exceed 

10 percent of the person’s gross income for the previous year. 

(b) A person has a substantial interest in real property if the interest 

is an equitable or legal ownership with a fair market value of $2,500 

or more. 

Id. 5 171.002(a)(b). A public official who knowingly violates this prohibition commits a Class A 

misdemeanor. See id. 3 171.003(b). 

If the city council member about whom you ask has a substantial interest in the real property 

that is the subject of the tax abatement agreement, or in the business entity that owns the property, 

and it is reasonably foreseeable that an action on the matter would confer a special economic benefit 

on the business entity or property that is distinguishable from the effect on the public, then section 

17 1.004 of the Local Government Code requires the city council member to tile an affidavit stating 

the nature and extent of his interest and to abstain from participation in the matter. 

Votes made in violation of section 171.004 of the Local Government Code are voidable only 

if the measures on which the council member voted would not have passed without his vote: 

The finding by a court of a violation under this chapter does not 

render an action of the governing body voidable unless the measure 

that was the subject of an action involving a conflict of interest would 

not have passed the governing body without the vote of the person 

who violated the chapter. 

Id. 5 171.006. Thus, any actions taken by the city council that included the vote of the property 

owner in violation of section 171.004 are not void; they are voidable, but only under certain 

circumstances. Violations of section 171.004 are addressed by punishing the offender, not by 

voiding the council’s action. 
The Honorable Chris Harris - Page 4 

The city should also look to its own charter and ordinances to determine whether they place 

additional restrictions on a council member’s participation in matters affecting property owned by 

the member. Section 17 1.004 of the Local Government Code is cumulative of municipal charter 

provisions and municipal ordinances defining and prohibiting conflicts ofinterest. Id. 5 171.007(b). 

SUMMARY 

The Property Redevelopment and Tax Abatement Act, chapter 

3 12 of the Tax Code, does not bar a property owner from serving on 

the city council that granted a municipal tax abatement to the property 

owner. However, the owner’s position on the council makes his 

property ineligible to continue to receive a tax abatement. Section 

171.004 of the Local Government Code bars him from participating 

in a vote on a matter involving the property if he has a substantial 

interest in the property or in the business that owns the property, and 

if it is reasonably foreseeable that an action on the matter would 

confer a special economic benefit on the property that is 

distinguishable from the effect on the public. Votes made in violation 

of section 171.004 of the Local Government Code are voidable only 

if the measures on which the property owner voted would not have 

passed without his vote. 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK RENT ERVIN 

Deputy Attorney General - General Counsel 

ELIZABETH ROBINSON 

Chair, Opinion Committee 

Barbara Griffin 

Assistant Attorney General - Opinion Committee