Court Opinion

ID: 4130711
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:07:33.499597+00
Date Added: 2024-06-11T14:32:57.977256
License: Public Domain

July 27, 1987
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             Eonorable Carlos Valdez               Opinion No.   JM-758
             Nueces County Attorney
             901 Leopard, Room 206                 Re: Conditions under which taxing
             Corpus Christi, Texas   78401         units are required to make tax
                                                   increment fund payments beyond
                                                   three years

              Dear Mr. Valdea:

                  Your letter requesting an opinion from this office reads in part:

                           The Tax Increment Financing Act of 1981, article
                        1066e. V.T.C.S., among other things, provides the
                        authority and procedure for the establishment of a
                        reinvestment zone. Section 10(c) of said article
                        attempts to explain when a taxing unit is. not
                        required to pay a tax increment into the zone's
                        fund beyond a certain time limit.

                           , . . .

                           My question is: Under section 10(c) of article
                        10660, must the three conditions set out therein
                        exist before a taxing unit would not be required to
                        pay into the zone's fund or is the existence of any
                        one of the three conditions sufficient to satisfy
                        the requirement?

                     The Tax Increment Financing Act of 1981, declared constitutional
              by the Texas Supreme Court in City of El Paso V. El Paso Community
              College District, 729 S.W.Zd 296. 29 Tex. Sup. Ct. 3. 541 (Tex. 1986)
              Imotion   for rehearing overruled, 30 Tex. Sup. Ct. 3. 433 (May 13.
               198711. was desinned to take effect u1)on the adoption of an amendment
              adding article Vk,     section l-g, to the Texas Constitution. See Acts
               1981. 67th Leg., 1st C.S., ch. 4, 14, at 45. Cf. Attorney-&era1
              Opinion MW-337 (1981) (invalidity of earlier tax-%crement financing
              statute).

                   As explained by'the supreme court in City of El Paso v. El Paso
              Community College District, m:

                                         p. 3542
Eonorable Carlos Valdez - Page 2    (JM-758)

          Tax increment financing is designed to aid cities
          and towns in financing public improvements in
          blighted or underdeveloped areas. Under Article
          1066e, a municipality must designate a specific
          area which. in its opinion, meets the definitional
          requirements of a 'reinvestment zone.' To%. Rev.
          civ. Stat. Ann. art. 1066e 13(b) (Vernon Supp.
          1985). Any increase in ad valorem tax revenues
          from land within the zone is then committed to the
          purchase of property, improvement of approved
          property, or retirement of revenue bonds issued to
          provide funding for the approved projects.
729 S.W.2d at 296.

     Section 10(a) of article 1066e requires each taxing unit that
taxes real property within the designated "reinvestment zone" to pay
into the "tax increment fund" a certain portion of the taxes it
collects there. For definitions of "taxing unit" and "tax increment
fund," see subsections 2(6) and 2(9) of the statute. The obligation
of taxing units to contribute to the fund expires in a limited time,
however, unless certain events occur. -
                                      Id. )10(c).

     Section 10(c) of the statute reads:
                                                                         ?
             (c) A taxing unit is not required to pay a tax
          increment into the zone's tax increment fund
          beyond three years from the date the zone was
          created, or, if the zone was created before the
          effective date of this Act, beyond September 1.
          1986, unless the following conditions exist or
          have been met within three years from the date the
          sane was created, or prior to September 1, 1986,
          in those sones created before the effective date
          of this Act:

             (1) bonds have been issued for the zone under
          Section 11 of this Act;

             (2) the town or city has' acquired property
          within the aone pursuant to the project plan; or

              (3) construction of improvements pursuant to
           the project plan has commenced in the zone.

      Your question presents a matter of statutory construction, which
 obliges us to search for the intent of the legislature. 53 Tex.
 Jur.2d Statutes 1125 (1964). The act must be construed as a whole and
 in a harmonious and consistent manner. Lampson v. City of Beaumont.
 687 S.W.2d 788 (Tex. App. - Beaumont 1985, no writ).

                               p. 3543
honorable Carlos Valdez - Page 3       (JM-758)

     Section 10 of the 1981 act was extensively revised in 1983 to
read as it does now. Subsection (c) was added at that time. See Acts
1983. 68th Leg., ch. 554, at 3213, 3226. You suggest that thantent
of the changes may be to excuse a taxing'unit from making payments to
a tax increment fund unless within three years (1) bonds have been
issued, and (2) property has been acquired, end (3) ~construction of
improveme=   has commenced. Section 10(c) stzs    that a taxing unit
is not required to make payments "unless the following conditions
exist." That language suggests that a series in the conjunctive will
follow.   It is our conclusion that a series in the disjunctive
follows.

     We are of the opinion that the legislature intended to relieve
taxing units of the obligation to make payments to the tax increment
fund only if none of the three conditions have been met within the
time allowed.We     are led to this conclusion because the first
"condition" is the issuance of bonds, and an examination of the
remainder of the act discloses that, although the act permits cities
to issue bonds secured by the tax increment fund, they are not
required to do so. V.T.C.S. art. 1066e. 111.

     Section 9 of the act allows a city to implement project plans by
a number of means other than the issuance of bonds, including the
direct expenditure of tax increment funds. as provided in section 14
of the act.

     We think the powers set out in section 9 sufficiently illustrate
that cities and towns dare not compelled to issue bonds in developing
projects, but may choose other devices for that purpose.

     If the act does not require the issuance of bonds to further its
purposes. it could not have been the intent of the legislature that
taxing units could frustrate that purpose after three years simply
because a city had chosen to prosecute its project plan without
issuing bonds. Inasmuch as the issuance of bonds "under section 11"
is one of the three "conditions" of section 10(c), we do not believe
the legislature intended that all of them be met within the three year
period in order to obligate taxing units to continue making payments
to the tax increment fund.

     It is noteworthy that similar punctuation (with the disjunctive,
"or") is used in section 3(b) of the act (both versions) as well
as in section 10(c). -See Gov't. Code 6312.012(b) ("punctuation of a

      1. Two separate acts amended section 3(b) in 1983. See Acts
 1983. 68th Leg., ch. 554, 51. at 3213, 3216-17; Acts 1983. 68thLeg.,
 ch. 841. $5. at 4771. 4790-91.

                                   p. 3544
Eonorable Carlos Valdez - Page 4      (JM-758)

law does not control or affect legislative intent in enacting the
law"). Section 3(b) establishes the criteria an area must meet to be
designated as a reinvestment zone, and clearly means to list alterna-
tives.

     If our conclusion were in need of further buttress, it is
furnished by legislative history. The bill analysis for Senate Bill
No. 641 in the Sixty-eighth Legislature, which initiated the 1983
legislation adding section 10(c) to the Tam Increment Financing Act of
1981, states:

             Senate Bill 641 amends Article 1066e by
          tightening the definition of 'blighted' and
          requires a 'but for' test. It requires 60 days
          notice to affected taxing entities and more
          detailed preliminary plans. It gives counties and
          school boards as well as other taring entities
          representation on the board. It dissolves e zone
          if redevelopment does not begin within three
          years.   It prevents cities from involving more
          than 15% of a county or school districtls tar base
          in a sane and allows the county or school board or
          other entity to negotiate back .up to 15% of the
          increment. (Emphasis added).

Bill Analysis to S.B. No. 641. prepared for Rouse Coannitteeon Urban
Affairs, filed in Bill File to S.B. No. 641, Legislative Reference
Library. In.the portion of the bill analysis examining the proposed
legislation section-by-section, it says:

             Section 10. Allows taxing entities to collect
          their own tares in the zone and pay over their
          share into the tam increment fund. Allows entities
          to keep up to 15% of their increment as negotiated
          in the planning phase. Provides that the entities
          must deposit their share into the fund before the
          90th day after their delinquency date and sets
          a penalty for failure to do SO.        Deletes the
          old procedure whereby the city collected every
          entities' tames in the sane and returned the amount
          generated by the base to each entity. If the city
          has not commenced development in the sane within
          three years, the entities are no longer required
          to pay their increment into the fund and the zone
          dissolves. (Emphasis added).

     If any of the three "conditions" of section 10(c) are met,
development has commenced.

                                   p. 3545
Ronorable Carlos Valdez - Page 5     (~~-758)

                              SUMMARY

               Section 10(c) of the Tax Increment Financing
          Act of 1981 relieves taxing units of an obligation
          to make payments into a tax increment fund only if
          none of the three conditions listed there have
          been met within the time allowed.

                                         JIM     MATTOX
                                         Attorney General of Texas

MARY KELLER
Executive Assistant Attorney General

JUDGE ZOLLIE STKAKIRT
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Rick Gilpin
Assistant Attorney General

                               p. 3546