Court Opinion

ID: 4130409
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:03:56.849212+00
Date Added: 2024-06-11T14:34:16.526315
License: Public Domain

THE      ATTORNEY        GENERAL
                          OF TEXAS

Honorable Mark W. Stiles             Opinion No. JM-1060
Chairman
County Affairs Committee             Re: May an attorney who
Texas House of Representatives       serves on the board      of
P. 0. Box 2910                       directors of an appraisal
Austin, Texas   78769                district contract with a
                                     participating  taxing unit
                                     to collect delinquent taxes
                                     (RQ-1650)

Dear Representative   Stiles:

     You ask whether a private attorney who is a director.of
an appraisal   district may contract to collect delinquent
taxes for a taxing unit that participates in the appraisal
district. We will first consider whether the attorney would
be disqualified   by statute frcm serving on the appraisal
district board.

      An appraisal district is established in each county to
appraise property for ad valorem tax purposes of the taxing
units in the district, which include the county, cities,
school districts, and any other political unit that imposes
ad valorem taxes on property.     Tax Code 5 6.01: seeid.
F, 1.04(12) (defining "taxing unit"). The five member board
of directors of the appraisal district is elected by the
governing bodies of the county, the cities, and the school
districts in the appraisal district. Id. § 6.03.      Section
6.03 of the Tax Code, which sets out the eligibility
requirements   for directors   of the app~raisal    district,
includes the following restriction:

        An individual . . . is not ineligible because
        of membership   on the governing   body of a
        taxing unit or because the individual is an           r
        elected official. However, an emolovee of a
        taxing unit that narticioates in the district
        is not elisible to serve on the board unless
        the individual    is also a member of the
        governing body or an elected official of
        a taxing unit that      participates  in  the
        district.   (Emphasis added.)

                                     5520
Honorable Mark W. Stiles - Page 2 (JM-1060)

Id. 5 6.03(a).

      Section 6.30(c) of the Tax Code authorizes    contracts
between a taxing unit and an attorney to enforce          the
collection of delinquent taxes. In our opinion, an attorney
who contracts    under this provision   is an     independent
contractor and not an employee of the taxing unit.         An
independent contractor contracts to do a specific piece of
work for another, furnishes and controls his assistants, and
does the work without being subject to the other's orders on
its details. Halliburton v. Texas Indemnitv Ins. co., 213
S.W.2d 677   (Tex. 19481.   Section 6.30(a) refers to the
attorney as ‘a "privatei attorney.   See'aenerally   Attorney
General Opinion JM-14 (1983) (county may not contract with
county attorney under section 6.30(a) of the Tax Code).'

     Attorney General Opinion V-137 (1947) determined    that
the predecessor of section 6.30 did not authorize a commis-
sioners court to hire individuals v                        to
collect delinquent taxes on a commission basis. The county
had authority to arrange  for delinquent tax collections   on
a commission basis only by contract pursuant    to the pre-
decessor of section   6.30.   &at     2.   An attorney who
contracts to collect delinquent taxes for a taxing unit    is
not an employee of that unit and is therefore      not dis-
qualified from service on the board of directors under the
quoted provision of section 6.03(a).

     You ask whether the contract creates a conflict       of
interest .for the director of the appraisal district, because
the board of directors    establishes  policy for the chief
appraiser's determinations of taxable values and exemptions
and the contracting attorney may eventually     derive a fee
based on those values. We will outline the process of tax
appraisal and collections    to provide a context    for our
discussion of your question.

      The Tax Code     contemplates   a three-step    process:
appraisal,   assessment,  and   collection   of taxes.     See
Attorney   General Opinion JM-35     (1983).   The   appraisal
district participates in this process only during the first
step.    The district board of directors       establishes  an
appraisal   office and appoints     a chief appraiser      who
determines   the value of property and decides         whether
applicants for exemptions   are entitled to them. Tax Code
s 6.05, chs. 11, 22, 23, 25; see cenerally Attorney    General
Opinion JM-499 (1986).    The appraisal   district board also
appoints the board which reviews the appraisal         records
prepared by the chief appraiser. Tax Code 55 6.41, 25.22,
41.01.    If the appraisal    review board finds that the
appraisals do not comply with law, it directs the chief

                              p. 5521
Honorable Mark'w. Stiles - Page 3 (JM-1060)

appraiser to make the necessary corrections.  Id.  55 41.01,
41.02; see Attorney General Opinion JM-981 (1988).

     When the appraisal  records have been approved by the
appraisal review board, they constitute the appraisal   roll
for the district.     Id. 5 25.24.    The chief    appraiser
certifies the relevant part of the appraisal    role to the
assessor for each taxing unit participating in the district.
Id. 5 26.01. The governing body adopts a tax rate, and the
assessor computes the tax owed on each property and sends a
tax bill to the property owner. Id. 55 26.05, 26.09, 31.01.

     If the tax is not paid on time, the taxing unit may
file suit to collect it.   Id. s 33.41. The governing   body
of the taxing unit may contract with an attorney to enforce
the collection of its delinquent taxes for a total compensa-
tion not to exceed 20 percent of the amount of delinquent
tax, penalty, and interest collected. Tax Code § 6.30(c).

     Chapter 171 of the Local Government    Code1 deals with
conflicts of interest of "local public officials," including
directors  of an appraisal district.       Local Gov't Code
§ 171.001(1). A local public official commits an offense if
he knowingly participates in a vote or decision on a matter
involving a business  entity in which he has a substantial
interest if "the action on the matter    will have a special
economic effect on the business entity that is distinguish-
able from the effect on the public."    Acts 1987, 70th Leg.,
ch. 362, § 4, at 1799    (amending article 988b, section 4,
V.T.C.S., now codified as section 171.004 of the Local Gov't
Code.)2 A local public official who has such an interest.in

     1. Former article 98833, V.T.C.S.,   was recodified  as
chapter 171 of the Local Government Code by the 70th session
of the Legislature.   Acts 1987, 70th Leg., ch. 149.     The
same session of the legislature adopted amendments to former
article 988b, V.T.C.S., without reference to the repeal and
recodification  of that provision.     The amendments    are
preserved and given effect as part of the code provision.
Gov't Code 5 311.031(c).

     2. Section 171.003 (a)(l) of the Local Government Code
bars a local public official from knowing participation in a
vote or decision "on a matter involving a business    entity"
in which he has 'Iasubstantial interest if it is reasonably
forseeable that an action on the matter would confer an
                                         (Footnote Continued)

                              P. 5522
Honorable Mark W. Stiles - Page 4 (JM-1060)

a business  entity must file an affidavit describing that
interest and abstain   from participation in the matter.
Local Gov't Code 5 171.004.

     The attorney's   law firm is a business entity within
chapter 171 of the Local Government   Code. Id.   5 171.001.
Presumably, he has a *'substantial interest"   in his firm.
Chapter 171 of the Local Government Code will apply to the
attorney's   participation  in decisions  of the appraisal
district if action by the board on a matter    "will have a
special economic effect on the business     entity that is
distinguishable from the effect on the public."   The issue
before us is whether the appraisal district board's  actions
in establishing    appraisal policy will have a      special
economic effect on the law firm of the attorney who holds
the delinquent tax collection contract because tax bills are
based on property values and tax rates and the attorney's
fee is usually a percent of the amount of delinquent    tax,
penalty, and interest collected. Tax Code 5 6.30; see also
Attorney General Opinion JM-857 (1988).

      Our summary .of the tax appraisal      and collections
process shows that officials     and boards other than the
appraisal district board make decisions~that affect property
valuation.   You indicate that the board establishes    policy
implemented by the chief appraiser    in determining   taxable
values and exemptions, but the board's policy and the chief
appraiser's determinations   must also comply with Tax Code
provisions.   See oenerallv Attorney  General Opinion   JM-499
(1986). The chief appraiser's decisions are reviewed by the
appraisal review board, which may order him to make changes.
Members  of the appraisal review board are appointed by the
appraisal district board for two year terms of office.     Tax
Code § 6.41.     Directors of the appraisal      district  and
employees of the appraisal    office are among the persons
disqualified from service on the appraisal     review board.
Id. The county appraisal district and the appraisal     review

(Footnote Continued)
economic benefit to the business entity." Senate Bill 1131
of the 70th Legislature    inserted the language    "or real
property" after "business entity"  in this provision.    Acts
1987, 70th Leg., ch. 323, § 1, at 1733. House Bill 1948 of
the 70th Legislature adopted a new standard for the circum-
stances which barred a local public official with a sub-
stantial interest in a matter from participating in board
action. Acts 1987, 70th Leg., ch. 362, at 1799.         These
amendments can be harmonized   by adopting the standard     of
House Bill 1948, which also applies to real property.     w
Gov't Code 55 311.025(b), 311.031(c).

                              P. 5523
Honorable Mark W. Stiles - Page 5 (JM-1060)

board are separate and distinct bodies.        To&e   Sauare
&.soc. v. Anoelina Countv Aonraisal Dist., 709 S.W.2d 776,
778 (Tex. App. - Beaumont  1986, no writ) (notice of appeal
served on the district board does not constitute notice to
the review board).   The appraisal district board does not
control the property values submitted to the taxing units.

      The appraisal board's participation     in the taxing
process  ends when the      chief appraiser   certifies   the
appropriate part of the appraisal   roll to each taxing unit
in the district.   Thus, it has no part in establishing   the
second main determinant of tax bills -- the tax rate adopted
by the governing   body of each taxing unit. Moreover,    the
board's appraisal policies must necessarily     be consistent
with law, and the board would seem to lack power to increase
appraised values in order to increase fees for collecting
delinquent  taxes.    Board actions   in adopting appraisal
policies should have only a minor and predictable effect on
the value of tax collections contracts within the district.
We conclude, as a matter of law, that under the Tax Code
provisions we have discussed,   the board's actions in esta-
blishing policies   for property appraisals do not "have a
special economic effect" on an attorney who has contracted
under section 6.30 of the Tax Code to collect delinquent
taxes for a local taxing unit.     Therefore, chapter 171 of
the Local Government Code does not require the director    to
recuse himself   from the board's decisions     on appraisal
policy.

     Under other circumstances,    however, the attorney's
interest in a contract for delinquent tax collections   might
require him to recuse .himself.      For example,    if   the
appraisal district board of directors     contracts with a
taxing unit to collect its taxes under section 6.24 of the
Tax Code, a director who collects delinquent taxes for the
same taxing unit may have to recuse himself from some board
actions related to the district's   contract.  See also Tax
Code 5 6.26   (election to require that appraisal    district
collect property taxes for all taxing units).

     You ask whether the office of director of an appraisal
district is incompatible with the duties,    loyalties,  and
responsibilities of a private attorney collecting delinquent
taxes for a participating   taxing unit. In Letter Advisory
No. 87 (1974), this office stated that the common        law
doctrine of incompatibility does not apply to an independent
contractor who works   for a public agency pursuant to con-
tract. Moreover, our discussion of chapter 171 of the Local
Government Code is relevant to your question about incom-
patility.   The lack of connection between the functions  of
the appraisal district board and the taxing unit's collec-
tion of delinquent taxes would probably also prevent the two

                             P. 5524
Honorable Mark W. Stiles - Page 6 (JM-1060)

positions from being incompatible.   See oenerallv Attorney.
General Opinion JM-203      (1984) (discussing common   law
doctrine of incompatibility).

      The attorney is subject to the Texas Code of Profes-
sional Responsibility, which includes provisions relevant to
the conflicting loyalties which might arise in cases like
the one you present.   Disciplinary Rule 2-103 provides   in
part:

            (A) A lawyer shall not recommend  employ-
        ment, as a private practitioner, of himself,
        his partner, or associate to a non-lawyer who
        has not sought his advice regarding   employ-
        ment of a lawyer, except as follows:   [Excep-
        tions omitted.]

Supreme Court of Texas, Rules Governing the State Bar       of
Texas art. X, 5 9 (Code of Professional Responsibility)     DR
2-103 (1982).   Disciplinary Rule E-101, which relates      to
action as a public official, provides in part:

           (A) A lawyer     who   holds   public   office
        shall not:

           .   .   .   .

                 (3) Accept any thing of value   from
           any person when the lawyer knows or it is
           obvious that the offer is for the purpose
           of influencing his action. as a public
           official.

Id. DR E-101 (1971).

     Finally, section 39.03 of the Penal Code provides:

           (a) A public servant commits an offense
        if, in reliance on information to which he
        has access in his official capacity and which
        has not been made public, he:

                 (1) acquires or aids another     to
           acquire a pecuniary     interest in   any
           property, transaction, or enterprise that
           may be affected by the information.

Neither the disciplinary rules nor the Penal Code provision
prohibit the dual service you inquire about, but they are
directed at curtailing the abuses that might arise under
those circumstances.

                              P. 5525
C
    Honorable Mark W. Stiles - Page 7 (JM-1060)

                           SUMMARY

               An attorney who has contracted with a
            taxing unit to collect its delinquent    taxes
            is not an lVemployee" under section 6.03(a) of
            the Tax Code and is not ineligible under that
            provision to be a director of the appraisal
            district which includes that taxing unit.

                 An   appraisal    district     director's
            contract to collect delinquent   taxes for a
            local taxing unit does not require him to
            recuse himself pursuant to chapter 171 of the
            Local Government Code from participation     in
            board actions establishing    policy to     be
            implemented by the chief appraiser.

               The common law doctrine of incompatibility
            does not bar a director of an appraisal
            district from contracting under section 6.30
            of the Tax Code with a local political
            subdivision to collect its delinouent taxes.

                                       JIM     MATTOX
                                       Attorney.General   of Texas

    MARY KELLER
    First Assistant Attorney General

    LOU MCCREARY
    Executive Assistant Attorney General

    JUDGE ZOLLIE STEAKLHY
    Special Assistant Attorney General

    RICK GILPIN
    Chairman, Opinion Committee

    Prepared by Susan L. Garrison
    Assistant Attorney General

                                    P- 5526