Court Opinion

ID: 4132189
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:23:59.816702+00
Date Added: 2024-06-11T14:33:52.772003
License: Public Domain

The Attorney                 General of Texas
                                            June    21,    1978
JOHN L. HILL
Attorney General

                   Honorable W. E. Snelson                  Opinion No. H- 1191
                   Senator of the State of Texas
                   Capitol Building                         Re:    Whether tax increment bonds
                   Austin, Texas 78711                      can be issued without a referendum.

                   Dear Senator Snelson:

                          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 a prior election authorizing urban renewal rather than
                   on the basis of an election specifically authorizing tax increment financing.

                          These questions require consideration of two items of recent 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 of blighted commercial areas. Among the various powers
                   conferred under section 4 is the 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 be authorized by resolution or ordinance
                              of the governing body. . . .

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

                                                    P.    4793
Honorable 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 by the qualified electors of this state.

       The proposed constitutional amendment referred to amends article 8 of the
Texas Constitution     by granting to the Legislature     the power to authorize
municipalities to issue tax increment bonds notwithstanding section 1 or 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, 531 S.W.2d 593, 600 (Tex. 1975);
Perkins v. State, 367 S.W.2d 140, 146 (Tex. 1963). Therefore, we believe 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 in House Bill 2028, Acts 1977, 65th Leg., ch. 850, at 2126-
33, contain provisions parallel to those appearing in the Texas Tax Increment Act.
Approval of the use of the tax increment method of financing is specifically
provided for in the following new section:

           Sec. Sb. A city 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 of the city
           voting on the question, who own taxable property within the
           city that is duly rendered for taxation, approve that method
           of financing in an election held by the city. At an election
           held under this section, the ballots shall provide for voting
           for or against the proposition:       ‘Use of tax   increment
           financing for urban renewal purposes.’ An election under this
           section may be held in conjunction with an election held
           under Section 5 or 5a of this Act. This referendum shall not
           be necessary if the constitutronal        amendment    on tax
           increment financing is approved by the voters.

(Emphasis added).

       The plain meaning of this section evidences the legislative intent that an
election is required prior to approval of the constitutional amendment proposed by
S.J.R. No. 44, 65th Legislature, to approve the tax increment method of financing
set out in other sections of the Urban Renewal Law. This election may be separate

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

from or in conjunction with the election required under section 5 or 5a to approve
an urban renewal project, but the specific issue of whether the tax increment
method of financing is to be utilized must be presented. The wording in a statute is
to be given its literal interpretation when that wording is clear and unambiguous.
          C                                                      180 S.W.Pd 906,, 909
$%4,.

       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 of tax increment financing under that statute must
           be approved in an election held by the city.

                                              Attorney General of Texas
                                  pi    i
APPROVED:                         v

DAVID M,KENDALL, First Assistant

C. ROBERT HEATH. Chairman
Opinion Committee ’

jst

                                             p.   4795