Court Opinion

ID: 4132162
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:23:42.034155+00
Date Added: 2024-06-11T14:34:15.317139
License: Public Domain

The Attorney                    General              of Texas
                          August      1,    1979

Honorable Joe Resweber                                   Opinion No. 11-12 2 0
Harris County Attorney
Harris County Courthouse                                 Re: Constitutionality    of Acts
Houston, Texas 77002                                     1977, 65th Leg., ch. 816, at 2065
                                                         (House Bill 1076) and constitu-
                                                         tionality of Acts 1977, 65th Leg.,
                                                         ch.     790, at 1975 (Senate Bill
                                                         1076) which relates to assessment
                                                         of property owned by nonprofit
                                                         associations for the use, benefit,
                                                         and enjoyment of their members.

Dear Mr. Resweber:

       You have requested our opinion regarding                  the constitutionality   of two
statutes enacted by the 65th Legislature.

      The first of them, article 7150& V.T.C.S., relates to, the assessment of
property owned by nonprofit associations for the use and benefit of their
members. In the typical-situation,    the owners of a residential subdivision or
condominium complex seek to attract         buyers by providing within the
development common areas which offer various recreational activities.        The
common areas are held in the name of a nonprofit tenants’ association, which
maintains the facilities and assesses membership fees.

       Article   7150 r    requires     that      all property     held by such a tenants’
association

             shall be assessed for tax purposes on the basis of a
             nominal value with respect to ail property taxes levied
             by the State of Texas or any political subdivision of
             the State of Texas.

Section 2. The statute      is based upon a recognition           that

             the valuation for tax purposes of the property . . .
             nominally held by such associations or corporations is
             actually reflected in the enhanced valuation of the

                                   P.      4002
llonorahle Joe I~eswc!hcr    -   Page 2        (H-1220)

             property owned by the individual members thereof, and to
             assess such nominally owned property on the basis of its fair
             market value would result in double taxation of such
             property. . . .

Section 1.

       In Attorney General Opinion H-1098.(1977), we held that nnother tax relief
statute, House Bill 22, was in contravention of article 8, section 1 of the Texas
Constitution    because it specifically   required a method of valuing certain
agricultural property which did not reflect. market value.   As we noted therein,
Texas courts have

             [oln numerous occasions . , . specifically indicated that it is
             settled that the Texas Constitution, unless amended by the
             people to provide otherwise, requires appraisal on the basis
             of market value.

Attorney General Opinion H-1098, and decisions cited therein.        Article 7150 1
likewise applies to a standard other than market value, &., “nominal value.” In our
opinion, the Texas Constitution     does not permit such a basis for evaluating
property.

       Of course, the easement will diminish the value of the servient estate and
increase the value of the dominant estate.       To the extent that the value of one
piece of property is reduced and the other is increased, the assessment is required
to reflect that fact. We do not believe, however, that then Legislature can mandate
that the value of the servient estate is necessarily nominal.

       By contrast, article 7150n, V.T.C.S., does not substitute some lesser standard
for that of market value. It merely requires that the assessor “shail consider no
factor other than those relative to the value of the land, as restricted.”    Section
3(b). (Emphasis added). This does not constitute a change in current means of
establishing market value.

       The important change which is made by the statute is the establishment of a
new means of restricting land. Article 7150n discusses the valuation of land which
is subject to a deed restriction or to a “restriction instrument.”   Deed restrictions
nre, of course, often utilized in the conveyance of land.          The act, however,
establishes criteria for the “restriction instrument.”    It can be filed only on land
which consists of at least five or more acres, and it must limit the use of the land
to recreational, park, or open space use. The restriction must apply for a term of
years, and it can be enforced in the same manner as a deed restriction by the
county attorney or by any person owning or having any interest in the restricted
property. The act encourages renewal of the restriction by levying a penalty if it

                                          p.     4883
Honorable Joe Resweber        -   Page 3        (H-1220)

expires or is violated.  The practical effect of the penalty provision is that the
owner will pay the amount of taxes due on an assessment based on market value
without restrictions plus double the amount of taxes due on the market value as
restricted.  This amount, i+, taxes on unrestricted market value plus double the
taxes on restricted market value, must be paid for the current year and for the
preceding five years.    Furthermore,  if the restriction is violated an additional
penalty is due for that year which is equal to the taxes due on the difference
between the market value without restrictions and the market value as restricted.

        In our opinion, article 7150n provides a means of restricting       the use of
property and adopts the constitutional   standard for valuing the property which is
restricted.    “Market value” remains the standard, but market value must be
ascertained in light of the relevant deed restrictions or restriction instruments.   As
we interpret article 7150n, the tax assessor is not required to ignore all factors
relating to the land’s value for purposes other than recreational or open space use.
The assessor must consider the effect any deed restriction or restriction instrument
has on the value of the property.       The permanence and enforceability        of the
restriction are factors for the assessor to consider. Presumably the value of land
burdened with a restriction will always be less than comparable land which is not so
burdened; however, the difference in the restricted and unrestricted value will
depend .on the permanence         and the enforceability    of the restriction.      By
interpreting article 7150n in this manner, we believe it meets the requirement that
land be valued according to its market value and is thus constitutional.

                                     SUMMARY

            Article 71501, V.T.C.S., which permits the assessment of
            certain property on a nominal basis, violates article 8,
            section 1 of the Texas Constitution.  Article 7150n, V.T.C.S.,
            which requires that property be assessed at market value but
            that certain deed restrictions be considered, is constitu-
            tional.

APPROVED:

DAVID M. KENDALL, First Assistant

                                           P.    4884
                                                           ’   ,

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Honorable Joe Resweber   -   Page 4      (H-1220)

Opinion Committee

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