# The Attorney General of Texas
June 21, 1978 JOHN L.HILL Attorney General
Honorable W.E.Snelson Senator ofthe State ofTexas Capitol Building Austin, Texas 78711 Dear Senator Snelson: Opinion No.H- 1191 Re: Whether tax increment bonds can beissued without areferendum.

You have asked whether tax increment bonds may be issued by a city for the purpose of aiding the planning or the carrying out of an Urban Renewal Project under the management of an established Urban Renewal Agency duly created pursuant to a prior election authorizing urban renewal powers. Specifically you want to know whether, prior to the passage of the constitutional amendment on tax increment bonds, a city may issue these bonds on the basis of aprior election authorizing urban renewal rather than onthe basis ofan election specifically authorizing tax increment financing. These questions require consideration oftwo items ofrecent legislation passed by the 65th Legislature. First, the Texas Tax Increment Act of 1977, Senate Bill 635, Acts 1977,65th Leg., ch. 361,at 956, codified as article 1066d,V.T.C.S., authorizes municipalities to use tax increment financing for the redevelopment ofblighted commercial areas. Among the various powers conferred under section 4isthe general power to issue tax increment bonds. Section 8 deals more specifically with tax increment bonds and provides in pertinent part:

fb) Tax increment bonds issued under this Act, together with interest thereon and income therefrom, shall be exempt from all taxes. Bonds issued under this Act shall beauthorized byresolution or ordinance ofthe governing body.

... Other sections of the Act detail specific requirements concerning designation of development districts (section 5), computation of tax increments (section 6),allocation oftax collections andtax increments (section 7), and annual reports (section 9). Finally, section 13declares:

P. 4793Honorable W.E.Snelson - Page 2 (H-1191)

This Act takes effect only if and when the constitutional amendment proposed by S.J.R. No. 44, 65th Legislature, is adopted bythe qualified electors ofthis state. The proposed constitutional amendment referred to amends article 8of the Texas Constitution by granting to the Legislature the power to authorize municipalities to issue tax increment bonds notwithstanding section 1or section 14 of article 8. It further provides for an election on the amendment in November, 1978.The Legislature must be presumed to have carefully chosen the statutory language. Jessen Associates, Inc. v. Bullock, 531S.W.2d 593, 600 (Tex. 1975); Perkins v. State, 367S.W.2d 140,146(Tex. 1963). Therefore, webelieve section 13 compels the conclusion that a municipality has no authority to issue tax increment bonds under Senate Bill 635 prior to voter approval of the proposed constitutional amendment. Amendments to the Urban Renewal Law, article 12691-3,V.T.C.S., approved by the 65th Legis1atur.e inHouse Bill 2028, Acts 1977,65th Leg., ch. 850, at 2126- 33, contain provisions parallel to those appearing inthe Texas Tax Increment Act. Approval of the use of the tax increment method of financing is specifically provided for inthe following new section:

Sec. Sb. Acity may not use the tax increment method of financing prescribed by Sections 22a, 22b. 22c, and 22d of this Act unless a majority of the qualified voters ofthe city voting onthe question, whoown taxable property within the city that isduly rendered for taxation, approve that method of financing in an election held by the city. At anelection held under this section, the ballots shall provide for voting for or against the proposition: ‘Use of tax increment financing for urban renewal purposes.’ Anelection under this section may be held in conjunction with an election held under Section 5or 5a of this Act. This referendum shall not be necessary if the constitutronal amendment on tax increment financing isapproved bythe voters. (Emphasis added). The plain meaning of this section evidences the legislative intent that an election isrequired prior to approval ofthe constitutional amendment proposed by S.J.R. No. 44, 65th Legislature, to approve the tax increment method of financing set out inother sections of the Urban Renewal Law. This election may be separate

p. 4794Honorable W.E.Snelson - Page 3 (H-1191)

from or in conjunction with the election required under section 5or 5a to approve an urban renewal project, but the specific issue of whether the tax increment method offinancing istobeutilized must be presented. The wording inastatute is to be given its literal interpretation when that wording isclear and unambiguous. $%4,. C 180S.W.Pd906,,909
Since your questions do not raise the issue, we reserve comment on any constitutional problems including any which might be associated with the role of the county tax assessor-collector or with the issuance of tax increment bonds by cities with outstanding general obligation bonds. SUMMARY The Texas Tax Increment Act will not be effective unless the companion constitutional amendment is adopted in November, 1978. Prior to the passage of that amendment, the Urban Renewal Law, article 12691-3,V.T.C.S., requires that use oftax increment financing under that statute must be approved in anelection held bythe city.

pi i Attorney General ofTexas APPROVED: v

DAVIDM,KENDALL, First Assistant

C. ROBERT HEATH. Chairman Opinion Committee ’ jst

p. 4795