OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

* r----J’ \ 

srty real or permnal bebelonging 0%010eio*4 to Di8tzllots aa& Authorlties~ orerted or lnoorporatad under law8 

emaoted gureuant to seotlon 59, Ae1010 xyx 

~of the Oomtitution~ provldwd thut If any 

i I 
Hr. Rio L. Ladner, Page 2 

meh Dl8trlot or AUthOrtty ha8 heretoion a@- 

qulred or does hereafter aoqulre property 

vhloh at tlm tZme of rooh aoqulsltlon la or 

was then rrnbjeot to taxation, and lm at the 

tltpe of it8 ao@.8ltlOn being ueod r0r genorating, trsnamlttiog, .and dlstrlbutlng eleotM.o energy or power, nuoh Dietriot or Authority rbmll at the flute8 pre8orlbed by lav 

for the payment of ad vaLoren taxen make a 

payment in llela of taxes to the stat. of Texan 

and to the ootmty, ,olty, and mob taxing dlstrlots vithln whlob muoh property 18 8ltUated; 

8uohpaymerltlnlleUoftaxe8 tobe in the 

amount vhlah would be roelimed by&my-~ an 

ad vslorem tmx at the ourrent rates for then 

aurrent tax year baaed oa the a88e88ed valus 

of 8uah property for the last ourrent tax 

year before beiae aaqubed by~tiohDi8trlot 

or Authority; provided further that no pmy-~ 

ment shall be made vlth nrpeot to nay propertp no longor ovned by 8ueh Dlmtrlat or Atithortty r0r generating, tranamlttlug, or dl.8.. 

trlbutlng eleotrio energy oe paver. Suoh payI mentti~lbu0ftaue88hbllbemadeoutof 

the revea~em reaeived by 8uah Dietrlot 0~ Authorlty from thagenerailon, tsanm=l88lon, or 

dlstrlbutlon of eleotrL0 paver and energy aad 

the liability Sor aama shall aonatltuts a llea 

Or OIV3WBb~OO OUIf In thO %WCUUiO8 Of 8UOh 

Dirtrlot or AuthorU~ snd 8hall be Oaxl8idered 

88 a part of the operating 0xpen864* speolriaally, -.- no paymelltll ehall be made in lleU or 

taa aa wtth nepeat to dmmm, dapl eltes, remorvolr axwa8, mnd water dlatributing or lrrlgation 8nteme. It ia the expresrred leglrlatlve 

lntent~ of thla Aot that suoh Dletrlots or Authorlt$O8 plake paykwnts fli llOt3 Of tsXe8 Only 

vlth respeot to propertier vhlah at the time 

oi their aaqt<lon vere on the ad valollaa 

tM X'OllS Of th@ St8t.O Of 'PeXm8 OZ' Of snf 

colilltp, city, or mny other taxins Distrlot of 

the State of Texas and vhbh at the time of 
Nr. Xl0 'Lr Ladner, Page 3 

the aOqui8ltloP mre being U8ed iOr. @UAeFatiryli: trummltting, or distrllnatlxq eleotrlo 

power ad energys pzwlded rudhor that it 

%S thO eXpl’O88Od lO&S~tf70 in-t tht W 

w-t8 w k &bb in l$OU Of -08 V&t& 

awpeet to dams, dam rlkr, re8er7olr areame 

gdwater dlstributlng or'lrrlgatlc8k sfstamw, 

.vw to any 8uoh Autho+y ~Oti DiEtriOt. 

-;uSO where aliy olty or town 80Qulre8 

real and personal property 1oeat.d OtItSldO 

Of it8 OOZPOIV&O imt8 and OUtSid Of thb 

~bounty ia wb.loh mtoh .Oity or toWL ir SitUated, exoept rural eleotrlfXaatlon llaes 

.mnedandoperatedbylt,andwhlchisor 

maybe used ln'the 8eneratlan, mauufaoturlag, ?: selling or .dls tributiag of ~eleotrlolty, 

Stuh'O1~ol? tOWZ$Shldl8SkO~~tinXim 

; ~0f:bi~OS QD EMUI t0 thw$t&O Of !~OX~S, the 

oeunty Oity, 'Bahool dlstrlots and muoh 

other io4ml taxing dl8trlots vithln whlah 

mo)r ~property A8 looated In. like asnner ai 

Mmiaebo*s.provided fO~~~8uOh D$&riOtS or 

that thb SUbrOotbn 

a~plloable to DUO8 PZ'OIHF~~ 

:&~Quired by a Oity or toWI% ,Sltt&!StOd OXN a 

oounty l.me. 

hnd prmlded further, that my .olty 

0~<9ovn, slaymake 8UOh .pmtS ,%a - of 

: tuer to the oounty Ia vh.toh .sald oZtp or, 

~~018 lOcUrtOd, ~rO?kbd th. Oiw OC tOl?Jl 

ele~t8 to maim mush payment by ordlnume 

.0~~~~80lUtiOll p888Od by 'the gOVeming body 

,Of.:D*Ld City Or tOU%’ (EZQbl&81lJ Added) 

-fouhsw lnqulred about the aonstltutionality 

of the -underliaed proviso ~to the seoond parafwaph 0r subdltZslom:Ik; purporting to oreapt olties and tow of a 

8~Oif%d0&88 fM th0 'psJnsnt8 inlb3U Of taXUS" 01860 

Whwe gene~y:impOeed by this Sub-diVisiOXl. 8iJaW th0 

pre7lso~~ir ln the nature of an exemption, ve turn our atLmtiOa to the Subject 0r the exemptlonL namely, the inpositian 0r a "payment in lieu of tares upon aities and 
Hr. Ala L. Ladnel;, Page 4 

tfnfns aoqulrlng property used In the gensratlan, mamaraoturing, melUng or distrlbutlng 0s eleotrlelt~, vhenever ruoh property la looatad in a oounty other than 

that 0s the olty or t0wn and vhenewr m0h property 18 

subject t0 t8Xatioll 8t tbO t-0 Of it8 6OprriSitiaQ bJ 

the mxIiOlpality. It will k notlood ~that in omputln8 

thy 8MUUt Of the80 "pynent0 in lieu Of ?i8~eS" the aUrWt ad YdON tu l'8tO k8 t0 b@ applied t0 th, 888e88Od 

tdur Of SUoh property iOr the l&St year pdOr t0 it8 W+ 

qui8ltlan W the oity or tovn, ~' ,' 

sO0tiQ.Zt 1 Of APti mn Pi .the %X&S cOI¶StitUtfon~&WOVidO8 in pa&: 

-oeOtlon 1.. - Taxotlon shall ~b’ eq&l and 

. All propecty In this State, whether 

owd by natural persons or oorpmatlom; other 

thau munlolpal, s&all bw Wed in.pmportl~ 

its value, ~Mlch aball be +aaertaiaed as m 

b:provldedb$lav. TheLeglslature.. . *may 

l IIe0.î o The prop eorf toountles,. y 0ltles 

. and tow,; owned. arul .hold oaly for publio pawpODUS, SU0h 88 ,pUbuO. bulldlnge SrUd thO Sit08 

.: thererori Plre en&nom mad the lltrnlture ~thereor,, aud all. property use& . or lntended~ for' oxtlngulshingfLn8, publlo 8rounda.W all other 

: .: ~; property dewted eroluslw4~ to the use and bene- 

:..' rit:or the public ShaJ. be exempt from famed 

I~ ~..oaXe snd'from taxation,, provided, nothIn here-, 

I in rhell~prevent the enfoxwement 0s the vendor8 

lien,, the~?neohaulo8 or builders lien, or other 

Unns nq-exlstlng.~ ,. 

In State v* city 0s 81 Paso, 135 'per. 359, 143 

S.Y. (26) 366, the SupreamCourt said vlth referenoq to 

the8S &N?OV181Oll8~ 
Mr. Rio L. Ladwr, Page 5 

l hm ua mlna ti0s otn he abow-quoted o o a - 

StitUtiOlUl pFOV18ionr diSOlO8e8 that N 

CQWtbtO t0 O%tb@t n\miOi~l OO~lF8tiOll8 flWl# 

0.d~ thW0 ObSS@S Of tUO8. %&OS0 8W ad 

V8b’681;UQS, OOO~&tlOll b.XS8,sndinO~ 

$a%es." 

RegudleSS Of I&O~~OP t-h0 wonts in 1iOU. Of 

tU08' imposed UpoP OitiOS aad~tWIi0 w 8. B. 520 be eQ)sI 

Sidsrrd M ad YjON tUO8 Ob U OO~tiorr t&WE, the 

mOti= Of SUOh WStOIhtS ObV%0~84 18 IMOOWti~tid. 

If ths PEyWI¶tS b0 ~~~mnd U ad vdOm ~uOS# whvr 

01~a~40rrend theaboveproylnion8eitherbybelngba8ed 

upon au utlffofal rather than aa aatual value 0s the, 

property or by be-- Zlltpo8ed upon the property of a:En+ 

nlolpal aorporatlcax. Llkevlu, if thements be ooaaldered u oOoUp&lOA tUtUS ,theytmUmn~r~p~b~ 

tlCULagskut tbs bp3Sfti~ Of this m Of tU Upon the 

aotlvltle8 of a muafofpal aorporatfoa. 

If it bs OOIitOndOd tht the80 pWIItCULt8 ~0 

neither ad valolur nor oooupatlon taxes, that Thor am 

some speoler or tertlu qald vhiah oanoponte u do 

Ol’dflW7 t&WE, OaO aCrOaOgl%Sh thO ~808 t.hOWOf, but 

aane8mpe the Umftatlons thereoni the uuvsr.to suah 

0ontentioB fs plaia. What cannot be don0 dlreotly oaanot be aeoapll8hed by lndlreotlon~ aotloa 1s 

~ltr efreot rathar~than by Its label. To ooao a 

udged by 

e thatmualofpal property owl0 

c 

for generating end aiStF;buting ~: 

eleotrlolt~ uamot be ~wub eat 

‘this typwand that a mudo& PA 

0s au o&~alorsm tar’ of 

lty oaunot be subjeoted to 

an oooupation tm ?3y visitor it8 aotlvltle8 in generat- 

%ng aud dlstrfbutlng eleatrlolty, yet at the 88xte tftne to 

aver that a legal exaot$on oslled a *payment ln lieu 0s ~' 

torus* maf bo had lrom naiol 8lit~es beaauaa 0s their 

ovaersaLp or 8wh property Ku3 theirelIfJagiagkr.SUdl 

aotlvitles uoulcl be to elevate form ovep rubetanoc and to 

point .the~980,to an e&Sy evaalan 0r the llmltatlonr * 

pored by our Carutltutlca upon the paves to t8x. 

Cotiequent~, you are rerpeoti\lllp advised 'that 

the pr6vlslon8 oontalned la theaeoond paragraph 0s SubdlYi8iOn k Of Sectlorr 1 Of H. B. 520 relating to the 

\. 

, 1 
I 

* 

Hr. Rfo L. Ladnor, Page 6 

1 exaation of *payment8 in lieu of tu08* fn?u altA@s 8ml 

tows under the alrowstanoes and la thememnertherela 

1 Set forth U@ tiObt%ve Of the 8bOw QAOtti pOPtlCUI8 Of 

our Con8tftutloa. As a matit of tbi8 oonolusion theM 

is noneedto enter into8 8e~uakdi8ou88laa10r the 

oonrt.ltutlanJit~of theprovz8oto thbpar&gmphab~ut 

vhbh you IaqvlMd. 

ThlseplnfoafslnaoltaytobeooMtruedu 

p&SSing UpOX& thO OOZl8titUtZbXMl%t~ Of th0 f%Mt m 

graphofsubalvlslon4arelatfq to theexaotlonorpay~ 

SWtS irr u.OU Of tUO8 frco thO diEtriOt a& 8UthOPitieS 

tbarelndesarlbed~ aeltherdeue espress may opinlozlherein 88 to the valldlty 0s the last prnsrsphorsub-dlvi81oa 

48 Mb&t&g t0 VOlUilkl7 OsyPleatS b OitfeS 8tld tOlfM~ 

‘Pnutlna that the r0mg0ing ratfefaotorlly enavers your lnqulry, vu are 

.