BRUSNIAK'S 2001 PROPERTY TAX CASE LAW DIGEST

BRUSNIAK'S 2001 PROPERTY TAX CASE LAW DIGEST

Texas Supreme Court | Texas Court of Appeals | Texas Attorney General

UNITED STATES COURTS OF APPEALS

TAX ASSESSOR DOES NOT POSSESS QUALIFIED IMMUNITY FROM SUIT IF THE ASSESSOR VIOLATED A TAXPAYER'S CONSTITUTIONAL RIGHTS, THE CONSTITUTIONAL RIGHTS WERE CLEARLY ESTABLISHED AT THE TIME THE ASSESSOR ACTED, AND THE TAXPAYER CAN SHOW A GENUINE ISSUE OF FACT THAT THE CONDUCT VIOLATED THE TAXPAYER'S RIGHTS.

Conroe Creosoting Co. v. Montgomery County, Texas, 249 F.3d 337 (5^th Cir. 2001). [OPINION]

Tax assessor obtained a delinquent tax judgment against taxpayer for $74,448.08. The judgment recited that the value of the taxpayer's property was worth $803,670.00. The assessor ordered a seizure of all of the taxpayer's property, barred the taxpayer from re-entering its premises and that of an unrelated company, and ordered a complete dispersal of the taxpayer's assets even though a partial sale would have sufficed and the taxpayer had requested a partial sale. The assessor kept vehicles on display to drum up business for the foreclosure sale, but never sold them focusing instead on selling critical operating machinery and assets of the business. The taxpayer was never able to reopen its business and sued the assessor for violation of its substantive due process rights. The assessor sought dismissal of the suit contending that he had qualified immunity from such suits. The court disagreed ruling that the taxpayer had successfully passed a three part test which allowed it to proceed with its case, to wit, the taxpayer proved that (1) it had alleged a violation of a constitutional right; (2) that the constitutional right had been clearly established at the time the assessor acted; and (3) that it had created a record which demonstrated that the assessor had engaged in conduct that violated such established rights. The court ruled that to qualify as a violation of substantive due process rights, the conduct of the governmental official was required to be "so egregious, so outrageous, that it may fairly be said to shock the contemporary conscience." The court further found that the taxpayer had an established constitutional right to own and acquire realty and personalty, which the state official deprived it of, in a manner which "shocked the conscience." Accordingly, the court denied the assessor's claim to immunity from suit.

TEXAS SUPREME COURT

UNREGISTERED FOREIGN LIMITED PARTNERSHIP DOES NOT HAVE CAPACITY TO FILE SUIT AGAINST APPRAISAL DISTRICT TO CHALLENGE PROPERTY TAX ASSESSMENT.

Coastal Liquids Transportation, L.P. v. Harris County Appraisal District, 46 S.W.3d 880 (Tex. 2001). [OPINION]

A Delaware limited partnership had been conducting business in Texas since 1993. It did not register with the secretary of state's office until June 27, 1995, and the partnership adduced no evidence that it had paid the requisite late registration fees for the years in which it had conducted business on an unlicensed basis. It filed suit against the appraisal district for tax years 1994 and 1995 challenging the appraisal of its real property. Appraisal district sought dismissal of the suit due to the partnership's failure to register and timely pay its required fees. The Supreme Court ordered the dismissal of the suit concluding that the failure to timely register and pay the retroactive fees deprived the taxpayer of its legal capacity to maintain the suit. The court inferred that retroactive payment and registration would have provided the taxpayer with the necessary capacity to file and maintain the suit.

TAXING UNIT IS REQUIRED TO INCLUDE ALL UNENCUMBERED FUND BALANCES FROM ALL SOURCES IN ITS "TRUTH-IN-TAXATION" NOTICES; COMPTROLLER'S REGULATIONS WILL BE GIVEN DEFERENCE IF THEY ARE CLEAR AND IF THEY DO NOT CONFLICT WITH A STATUTE'S PLAIN LANGUAGE.

Gilbert v. El Paso County Hospital District, 38 S.W.3d 85 (Tex. 2001). [OPINION]

Taxpayers filed suit seeking declaratory and injunctive relief contending that the taxing unit was violating the "truth-in-taxation" provisions by failing to publish information regarding all unencumbered fund balances, including monies received from sources other than ad valorem taxation. Taxing unit contended that the Truth-in-Taxation guide published by the Comptroller's office did not require it to publish information on monies received from sources other than ad valorem taxes. The court ruled "that taxing units must report their entire unencumbered maintenance and operations and general fund balances, including money received from sources other than property taxes." It further ruled that before it would consider an administrative interpretation of a statute by the Comptroller's office, such construction needed to be clear prior to a legislative re-enactment of the statute, and that the administrative construction could not be in conflict with the statute's plain meaning and purpose."

TEXAS COURTS OF APPEALS

A PROPERTY OWNER'S FAILURE TO RECEIVE ANY BENEFIT FROM A TAXING DISTRICT DOES NOT INVALIDATE AD VALOREM TAX ASSESSMENTS UNLESS THE TAXPAYER CAN DEMONSTRATE THAT THE INITIAL INCLUSION OF THE PROPERTY WITHIN THE DISTRICT WAS ARBITRARY AND AN ABUSE OF POWER; A TAXPAYER MAY LEGALLY CHALLENGE A TAX RATE UNDER THE PRIVATE REAL PROPERTY RIGHTS PRESERVATION ACT AS BEING EXCESSIVE.

South West Property Trust, Inc. v. Dallas County Flood Control Dist. No. 1, No. 05-97-00399-CV (Tex. App.-Dallas, October 3, 2001, pet. withdrawn). (to be published). [OPINION]

The Texas Legislature created a flood control district and the district issued bonds approved by the attorney general for flood control purposes. The district levied ad valorem taxes to repay the bonds. A property owner within the district challenged on federal and state constitutional due process grounds the validity of the tax contending that it received no benefit from the district's expenditure of funds, that the district directors had used funds illegally and that the taxpayer's property had never been located within a flood plain. The court found the arguments without merit ruling a taxpayer could not challenge taxation on such a basis and was instead required to argue that the initial inclusion of the property within the flood control district by the Texas Legislature was palpably arbitrary and abusive. Without such a claim and evidence, the taxpayer could neither allege nor prove a constitutional violation. The taxpayer alternatively argued that pursuant to the Private Real Property Rights Preservation Act it was entitled to challenge the district's tax rate as constituting an illegal taking because the tax rate was higher than necessary to retire the district's bonds. The court agreed and ruled that it was the burden of the district to prove that its actions were mandated by either a federal or state law and that those actions were reasonably necessary to comply with those laws.

THE RIGHT TO RECEIVE AD VALOREM TAX REVENUES IS NOT A VESTED PROPERTY RIGHT AND THEREFORE CANNOT BE THE SUBJECT OF A CONDEMNATION PROCEEDING.

City of Houston v. Northwood Municipal Utility Dist. No. 1, 73 S.W.3d 304 (Tex. App.-Houston [1^st Dist.] 2001, pet. denied). [OPINION]

City approved a developer's petition for the creation of a municipal utility district. Bonds were issued which were secured by the ad valorem tax revenues which were to be collected on the property located within the district. Thereafter, the city purchased 30% of the property within the district and converted it to an exempt use. The district and bondholders sued the city claiming that it had engaged in an inverse condemnation and thereby illegally seized the district's anticipated ad valorem tax revenues. The court disagreed, ruling that ad valorem taxes, unlike restrictive covenants or other property interests which run with the land, are not vested property rights. Instead, they derive their status from statutory and constitutional provisions which provide for exemptions; hence, the interest owned by the district and bondholders was a mere expectancy of collection of the revenues and not a vested right capable of being condemned.

ASSIGNEE OF A CO-TENANT WHO PAYS DELINQUENT TAXES OWED BY THE OTHER CO-TENANT IS NOT A VOLUNTEER AND IS ENTITLED TO REIMBURSEMENT FROM THE CO-TENANT UNDER THE DOCTRINE OF SUBROGATION.

Martin v. Republic Land Technology, L.L.C., 63 S.W.3d 34 (Tex.App.-San Antonio 2001, pet. denied). [OPINION]

A property owner purchased a partial interest in a property at a sheriff's sale and thereby became a co-tenant with the original owner. Thereafter, the purchaser obtained a judicial decree of partition of the property but the decree failed to allocate the existing delinquent tax obligations. The purchaser agreed to sell the property to a third party free and clear of all liens and then assigned its interest in the property and contract to another. At the closing, the assignee was required to pay the delinquent property taxes on the entire property and thereafter sued the original owner to recover the portion of the taxes which it paid on the property still owned by the original owner. The original owner defended the suit contending that the assignee had no right to reimbursement for the tax payment since the assignee acted as a volunteer in paying those taxes. The court disagreed ruling that under these circumstances, the assignee "stood in the shoes of the [purchaser]" and since the original purchaser had contracted to deliver title to the property free and clear of all liens, the payment of the taxes did not make the assignee a volunteer and that the assignee could therefore claim reimbursement for those taxes under the doctrine of subrogation.

CONFLICT BETWEEN WATER CODE AND TAX CODE PROVISIONS AS TO THE AMOUNT OF ATTORNEY'S FEES RECOVERABLE IN DELINQUENT TAX COLLECTION SUIT IS RESOLVED IN FAVOR OF TAX CODE PROVISION; TAXPAYER MUST ASSERT AS AN AFFIRMATIVE DEFENSE AN ELECTION OF REMEDIES IF IT WISHES TO CONTEST RECOVERY OF ATTORNEY'S FEES.

Harris County Water Control and Improvement Dist. # 99 v. Duke, 59 S.W.3d 333 (Tex. App.-Houston [1^st Dist.] 2001, no pet.). [OPINION]

Water Control and Improvement District sued taxpayer for delinquent ad valorem taxes. The court found in favor of the district and awarded it attorney's fees in an amount equal to ten percent of the delinquent base tax due based upon a provision in the Texas Water Code which limited water district's attorney's fees to such amounts. The district complained that this award was erroneous and should have been based on the Texas Tax Code provision which authorizes an award of fifteen percent. The court agreed ruling that under conflict of law principles as set out in the Texas Code Construction Act, the Tax Code provisions were enacted subsequent to the provisions in the Water Code and were meant to override those conflicting sections. The taxpayer thereafter challenged the ability of the district to recover the statutory fifteen percent penalty because it had not lawfully adopted such a penalty under Texas Tax Code Section 33.07. While the court agreed with this argument, it nonetheless allowed the district to recover fifteen percent in attorney's fees under Texas Tax Code Section 33.48 which authorizes the recovery of reasonable attorney's fees in such collection suits. It ruled that the taxpayer could not complain of this alternate award since it had failed to raise the "election of remedies" claim as an affirmative defense to the suit.

A CORRECTED TAX BILL ISSUED SUBSEQUENT TO A MOTION TO CORRECT ERROR DOES NOT POSTPONE THE ORIGINAL TAX DELINQUENCY DATE; A TAX TENDER FOR LESS THAN THE FULL AMOUNT DUE IS INEFFECTIVE.

Richardson Independent School Dist. v. G.E. Capital Corp., 58 S.W.3d 290 (Tex. App.-Dallas 2001, no pet.). [OPINION]

Taxpayer failed to pay his taxes by the statutory due date, and the taxing unit refused to accept payment without penalties and interest. Taxpayer filed a motion to correct error under Texas Tax Code Section 25.25 with the appraisal district and ultimately obtained a reduction in value from the appraisal district. Thereafter, the taxing unit sent out a corrected tax bill with the corrected base levy but with full penalties and interest retroactive to the original delinquency date. The taxpayer claimed that the corrected tax bill postponed the delinquency date for the entire tax pursuant to Texas Tax Code Section 26.15. The court disagreed and ruled that Section 26.15 only pertains to corrections of the tax roll and does not alter the original delinquency date. It further ruled that the taxpayer's prior tender of its taxes without penalties and interest was ineffective since a tender must include all amounts due at the time of the tender.

A SUBSIDIARY OF A COMMUNITY HOUSING DEVELOPMENT ORGANIZATION WHICH OWNS AND OPERATES PROPERTY FOR THE EXEMPT PURPOSE QUALIFIES FOR EXEMPTION; FAILURE TO INCLUDE A STATUTORY DISSOLUTION CLAUSE IN NONPROFIT ORGANIZATIONAL DOCUMENTS IS NOT A BAR TO QUALIFICATION.

Orange County Appraisal Dist. v. Agape Neighborhood Improvement, Inc., 57 S.W.3d 597 (Tex. App.-Beaumont 2001, pet. denied). [OPINION]

A nonprofit subsidiary corporation sued the appraisal district over the denial of an exemption from ad valorem taxes. The nonprofit subsidiary owned property that was used to provide low-income housing; however, only its parent corporation had qualified and been granted status as a Community Housing Development Organization. The court found that the subsidiary was entitled to the exemption based on the stipulated facts that the nonprofit subsidiary was providing all of the statutory requisite services and that its parent was a qualified organization. The court refused to disallow the exemption on the grounds that the nonprofit corporation's organizational documents did not contain the statutory requisite dissolution clause, ruling that its status as a valid Texas nonprofit corporation had by reference to the appropriate statues incorporated those dissolution provisions into the organizational documents.

TAXPAYER MAY NOT UTILIZE SECTION 41.45(F) OF THE PROPERTY TAX CODE TO COMPEL A HEARING UNDER SECTION 25.25(B) SINCE NO MOTIONS OR PROTESTS ARE CONTEMPLATED UNDER SECTION 25.25(B); CHIEF APPRAISER MAY NOT INCREASE TAX LIABILITY UNDER SECTION 25.25(B).

Western Athletic Clubs, Inc. v. Harris County Appraisal District, 56 S.W.3d 269 (Tex. App.-Amarillo 2001, no pet.). [OPINION]

Taxpayer filed a motion to retroactively correct an appraisal of leasehold improvements under Section 25.25(b) of the Texas Property Tax Code for tax years 1983 through 1985. That section authorizes a chief appraiser to correct at any time "a name or address, a description of property, or a clerical error or other inaccuracy as prescribed by board rule that does not increase the amount of tax liability." The appraisal review board refused to act on the motion relying on the appraisal district's rules which provided that such decisions by the chief appraiser were final and nonreviewable by the appraisal review board. The taxpayer filed suit, pursuant to Section 41.45(f), to compel the appraisal review board to hold a hearing on its motion. The court refused to order a hearing, ruling that Section 25.25(b) does not "contemplate the filing or presentation of any motion or protest...[nor]...does it authorize the appraisal review board to change the appraisal roll." Additionally, it ruled that the taxpayer was not entitled to any relief because Section 25.25(b) "expressly provides that changes made by the chief appraiser may not increase the amount of tax liability...[and thus]... any decision of the chief appraiser could not adversely affect [the taxpayer's] tax liability."

TAX EXEMPTION DETERMINATIONS ARE NOT APPEALABLE UNDER SECTION 25.25(D).

Bexar Appraisal District v. Wackenhut Corrections Corp., 52 S.W.3d 795 (Tex. App.-San Antonio 2001, no pet.). [OPINION]

Taxpayer leased from the county a prison facility and operated it on behalf of the government. It failed to challenge the taxability of the facility during the normal appeals period, but sought a determination of exempt status under Section 25.25(d) of the Texas Property Tax Code contending that the property should have been valued at "zero" dollars since it was not taxable. The court disagreed ruling that the issue in a Section 25.25(d) hearing is the appraised or market value of the property and not whether an exemption should have been granted. Since there was no dispute as to the market value of the property, the court had no jurisdiction over this matter under Section 25.25(d).

A LIENHOLDER IN POSSESSION OF PERSONAL PROPERTY COLLATERAL ON JANUARY 1 FOR PURPOSES OF SELLING IT IN FORECLOSURE OF ITS LIEN IS NOT THE OWNER OF THE PROPERTY FOR PURPOSES OF PROPERTY TAXATION; PROPERTY TAX STATUTES ARE TO BE CONSTRUED STRICTLY AGAINST THE GOVERNMENT AND LIBERALLY IN FAVOR OF A TAXPAYER.

Comerica Acceptance Corp. v. Dallas Central Appraisal District, 52 S.W.3d 495 (Tex. App.-Dallas 2001, pet. denied). [OPINION]

Taxpayer bank had repossessed cars and boats pursuant to its security interest and was holding them for foreclosure sale on January 1. Appraisal district sought to assess these vehicles in the bank's name. The bank contended that it was not the owner of the vehicles. The appraisal district contended that the bank was the owner citing General Electric Capital Corp. v. City of Corpus Christi, 850 S.W. 2d 596 (Tex. App.-Corpus Christi 1993, writ denied). The court ruled in favor of the taxpayer and refused to follow the General Electric decision finding it to be void of meaningful analysis and unpersuasive. The court stated that it was required to construe the relevant property tax statutes strictly against the government and liberally in favor of the taxpayer, and given that no definition of owner was present in the tax code, the court would adopt a common definition of an owner which would not encompass a lienholder in possession of collateral for purposes of sale.

ROLLBACK TAX LIEN DOES NOT ARISE UNTIL THE CHIEF APPRAISER DETERMINES THAT THE USE OF AN AGRICULTURAL PROPERTY HAS CHANGED.

Compass Bank v. Bent Creek Investments, Inc., 52 S.W.3d 419 (Tex. App.-Fort Worth 2001, no pet.). [OPINION]

Purchaser bought property from a bank on December 29, 1995. On June 26, 1996, the chief appraiser determined that a change of use of the property from its agricultural status had occurred on June 26, 1996 and ordered a rollback of the taxes. (That date was the same date on which an appraisal district employee had conducted a field inspection and discovered no agricultural activity on the premises.) The purchaser sued the bank and presented evidence that the agricultural use had actually ceased in 1995 prior to the transfer of title and contended that such transfer violated the warranty against encumbrances which was contained in the deed. The court disagreed and ruled that under the provisions of the Property Tax Code, no rollback tax lien could arise until the chief appraiser determined that a change of use occurred, and absent proof of a determination by the chief appraiser that the change of use occurred prior to the date of transfer, no breach of warranty against encumbrances would arise.

FILING OF RENDITIONS IS MANDATORY; COURT MAY ISSUE INJUNCTION TO COMPEL SUCH FILING.

Robinson v. Budget Rent-A-Car, Inc., 51 S.W.3d 425 (Tex. App.-Houston [1^st Dist.] 2001, pet. denied). [OPINION]

(Opinion on motion for rehearing.) Chief Appraiser sued taxpayer for an injunction to compel the taxpayer to file a personal property rendition. Taxpayer argued that notwithstanding the statutory language which states that "a person shall render for taxation all tangible personal property used for the production of income," such filings are discretionary due to the legislature's failure to include statutory penalties for the failure to render. The court disagreed, ruling that under the Code Construction Act, the term "shall" constitutes a mandatory obligation, and that nothing can be inferred from the legislature's failure to include or enact a penalty for a taxpayer's failure to render. The court further ruled that such obligation was enforceable by injunction action filed by the county or district attorney.

TAXPAYER SUING FOR VIOLATION OF ABATEMENT AGREEMENT WAS REQUIRED TO EXHAUST ADMINISTRATIVE REMEDIES IN ORDER TO PURSUE SUCH CLAIMS; DECLARATORY JUDGMENT STATUTE CANNOT BE USED TO AVOID "EXCLUSIVITY" PROVISIONS OF THE TAX CODE; WITHOUT WAIVER OF IMMUNITY BY THE LEGISLATURE, CONTRACT AND TORT ACTIONS CANNOT BE PURSUED AGAINST GOVERNMENTAL ENTITIES.

City of Fort Worth v. Pastusek Industries, Inc., 48 S.W.3d 366 (Tex. App.-Fort Worth 2001, no pet.). [OPINION]

Taxpayer filed suit against taxing units claiming breach of contract, fraud, misrepresentation, negligence and breach of fiduciary duty by the taxing units in regard to a tax abatement agreement. The taxpayer alleged that it had sustained over $250,000 in damages in the form of overpaid taxes as a result of the government's misconduct. The court dismissed the lawsuit ruling that the remedies which the taxpayer was seeking were provided by the Texas Property Tax Code, and that the taxpayer could not avoid the exclusivity provisions of the Code by utilizing the Declaratory Judgment Act. The taxpayer's failure to exhaust its administrative and judicial remedies under the Code barred any suits for such relief. It further ruled that the government was immune from suit for breach of contract and tort, and that such actions could not be pursued without a lifting of the immunities by the Texas legislature.

TAXABLE SITUS AND STATUS OF AN AIRCRAFT ARE DETERMINED BY ITS USE IN THE YEAR PRECEDING JANUARY 1 AND NOT BY ITS STATUS ON THAT DATE; STATUTORY PROVISION WHICH DEFINES STORAGE OF AN AIRCRAFT AFTER REMOVAL FROM AIR SERVICE AS BEING "TEMPORARY" IS NOT UNCONSTITUTIONAL.

First Aircraft Leasing, Ltd. v. Bexar Appraisal District, 48 S.W.3d 218 (Tex. App.-San Antonio 2001, pet. denied). [OPINION]

Taxpayer leased an aircraft to various certificated air carriers from February 1992 to September 1995. From September 1995 to December 1996, the aircraft was located in Texas between leases and was in storage being repaired, inspected and maintained. The appraisal district claimed that the aircraft was fully taxable in Texas because it was not being used as a commercial aircraft on January 1, 1996.. It alternatively claimed that Section 21.05(c) of the Texas Tax Code, which provides that commercial aircraft that are removed from service for repair, storage or inspection are presumed to be in interstate commerce and not located in Texas for more than a temporary period, is an unconstitutional exemption. The court disagreed. It ruled that the taxable situs and taxable status of an aircraft is determined by the usage of the aircraft during the year preceding January 1. It stated, "[The appraisal district's] argument would take an aircraft out of Section 21.05's scope if the company that owned the aircraft leased it to a certified air carrier every day of the year, except on January 1. This is an absurd result not contemplated by the legislature." It further ruled that Section 21.05(c) does not provide an unconstitutional exemption, but rather provides a methodology for allocating to Texas the portion of the commercial aircraft's value that fairly reflects its usage in Texas.

MARKET VALUE NEED NOT BE PROVED IN CASES INVOLVING EQUALITY OF APPRAISAL UNDER SECTION 42.26(D); TAX COMPARABLES NEED TO BE ADJUSTED TO PUT THEM ON EQUAL FOOTING WITH THE SUBJECT PROPERTY; METHODOLOGY IS CONSTITUTIONAL; IF CONFLICT EXISTS, TAX EQUITY WILL PREVAIL OVER MARKET VALUATION.

Harris County Appraisal District v. United Investors Realty Trust, 47 S.W.3d 648 (Tex.App.-Houston [14^th Dist.] 2001, pet. denied). [OPINION]

Taxpayer purchased shopping center for $15,200,000. Appraisal district placed the property on the appraisal roll at $13,900,000. Taxpayer sued contending inequality of appraisal under Section 42.26(d) of the Texas Property Tax Code which allows for corrections to valuations to be made "if the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted." Taxpayer's expert witness prepared a report adjusting tax comparables from the appraisal roll and determined the equalized value of the property to be $10,239,163. He did not calculate or consider the market value of the property. Appraisal district contended that this methodology was illegal and unconstitutional because it did not take into account the actual market value of the property. The court ruled that the methodology was correct because Section 42.26(d) does not require independent appraisals to be performed on the comparable properties, only a comparison with the adjusted appraised values of comparable properties. Such adjustments should be made "to put the properties on equal footing." The court further held that the methodology was not unconstitutional because the appraisal district was required to value all property at its market value, but that if there was a conflict between market value and equity, "equal and uniform taxation must prevail."

Fairchild Aircraft, Inc. v. Bexar Appraisal District, 47 S.W.3d 577 (Tex. App.-San Antonio 2001, pet. denied). [OPINION]

Taxpayer leased an aircraft to an Argentine corporation from January 1995 to December 1996. The Argentine corporation was the equivalent of a certified air carrier under Argentine law. From January 1, 1997 to October 1997, the aircraft was located in Texas between leases and was in storage being repaired, inspected and maintained. The appraisal district claimed that the aircraft was fully taxable in Texas because it was not being used as a commercial aircraft on January 1, 1997. It alternatively claimed that Section 21.05(c) of the Texas Tax Code, which provides that commercial aircraft that are removed from service for repair, storage or inspection are presumed to be in interstate commerce and not located in Texas for more than a temporary period, is an unconstitutional exemption. The court disagreed. It ruled that the taxable situs and taxable status of an aircraft is determined by the usage of the aircraft during the year preceding January 1. It stated, "[The appraisal district's] argument would take an aircraft out of Section 21.05's scope if the company that owned the aircraft leased it to a certified air carrier every day of the year, except on January 1. This is an absurd result not contemplated by the legislature." It further ruled that Section 21.05(c) does not provide an unconstitutional exemption, but rather provides a methodology for allocating to Texas the portion of the commercial aircraft's value that fairly reflects its usage in Texas.

PARTY SERVING AS A CONDUIT FOR SALES OF MOTOR VEHICLES, WHO MERELY TRANSFERS LEGAL TITLE, IS NOT SUBJECT TO THE MOTOR VEHICLE INVENTORY TAX; SUCH INDIVIDUAL MAY NOT RECOVER ATTORNEY'S FEES FROM AN APPRAISAL DISTRICT UNDER THE PROPERTY TAX CODE.

Martin v. Harris County Appraisal District, 44 S.W.3d 190 (Tex. App.-Houston [14^th Dist.] 2001, pet. denied). [OPINION]

Individual served as a marketing agent for an out of state manufacturer of fire trucks. Under the terms of his contract, he had no authority to purchase the vehicles in question, nor did he maintain an inventory or carry these vehicles on his books. He did maintain various state motor vehicle licenses, including a general distinguishing number. Due to state regulations, the manufacturer was not allowed to transfer title to the fire trucks directly to its governmental purchasers. As a result, title was placed in the agent's name, who in term transferred the title to the ultimate purchaser. Appraisal district sought to tax all of the vehicles transferred under the motor vehicle inventory tax. The court refused such taxation concluding that no true "sales" had occurred, but that the agent "was no more than a conduit between the real seller and purchaser to pass bare legal title. In the absence of consideration flowing from the purchaser to [the agent] in exchange for the trucks, which also appears to be a necessary component of a sale...and in the context of applicable tax code provisions, [the agent's] transfers of title are not sales. Thus, we find [the agent's] transfers of bare legal title and his acting as a commissioned sales rep do not bring him within the purview of the tax code." The court refused to award the agent any attorney's fees because no issue of valuation was involved in this suit, and the tax code does not provide for awards of attorney's fees on issues of whether property is subject to taxation.

TAXPAYER WHO SETTLES VALUES INFORMALLY WITH APPRAISAL DISTRICT IS BARRED FROM SUBSEQUENTLY PURSUING MOTION TO CORRECT VALUATION UNDER SECTION 25.25(D).

Royal Production Co. v. San Jacinto County Central Appraisal District, 42 S.W.3d 373 (Tex. App.-Beaumont 2001, no pet.). [OPINION]

Taxpayer timely filed notices of protest challenging the values of its properties. It engaged in informal settlement agreements with the appraisal district and agreed upon values. It did not appear at the scheduled appraisal review board hearings on the notices of protest, and the agreed values were entered on the appraisal rolls. There was no indication that the agreement was ever reduced to writing. It subsequently filed motions to correct value which the appraisal review board dismissed based on the prior agreements. The court of appeals upheld the dismissals because the prior negotiations and agreements indicated that the parties had resolved the disputes.

AN ERRONEOUS LISTING OF A PROPERTY IN THE NAME OF A LESSEE IS NOT INDICATIVE OF ATTEMPTED TAXATION OF A LEASEHOLD ESTATE.

County of Dallas Tax Collector v. Roman Catholic Diocese of Dallas, 41 S.W.3d 739 (Tex. App.-Dallas 2001, no pet.). [OPINION]

A church entered into a long-term lease with a private developer which allowed the developer to construct a private office building and parking garage on a portion of the church grounds. The appraisal district cancelled the church's exemption of those grounds, and after suit, a settlement recognizing the taxability of the property was agreed upon by the church, the developer and the appraisal district. The appraisal district, however, listed the developer as the owner of the property on its records. After the developer defaulted on its leasehold obligations and on its obligation to pay the property taxes, the taxing units sued the church for the deficiency. The church defended the suit on the grounds that it was not the owner of the property because the taxable estate was the leasehold estate owned by the developer. It cited the appraisal listing of ownership as its proof. The court disagreed ruling that errors in ownership on an appraisal roll may be corrected, and that there was no other evidence to establish an underlying exempt estate, coupled with a taxable leasehold estate. Without such proof, the property was taxable to the church as the fee simple owner of the property.

TEXAS ATTORNEY GENERAL OPINIONS

A PRIVATE DELINQUENT TAX COLLECTION ATTORNEY MAY NOT MAKE DONATIONS OF PROPERTY OR SERVICES IF THE DONATION IN EFFECT REFUNDS A PORTION OF THE COMPENSATION WHICH THE ATTORNEY RECEIVES UNDER THEIR COLLECTION CONTRACT.

Op. Tex. Att'y Gen. JC-0443 (2001). [OPINION]

A private attorney is allowed to contract with a county to collect taxes and to receive as compensation, pursuant to Section 6.30 of the Texas Tax Code, a statutory collection penalty of up to twenty percent of the total taxes, interest and penalties which are collected. Such an attorney wished to make a donation of personnel, equipment or dollars back to the county to enhance the county's delinquent tax collection efforts. The Attorney General ruled that such a donation would be illegal if it "in effect refunds part of his or her compensation to the county" because the collection penalty is intended solely to provide compensation for the contract attorney.

MINERAL INTERESTS STRADDLING COUNTY LINES ARE TO BE DETERMINED BASED ON THE SURFACE PROPERTY WHICH IS LOCATED IN EACH COUNTY; IF THE MINERALS ARE EVENLY DISTRIBUTED, A SIMPLE ALLOCATION MAY BE MADE; OTHERWISE, SEPARATE VALUATIONS MUST BE PERFORMED.

Op. Tex. Att'y Gen. JC-0436 (2001). [OPINION]

Mineral estates which straddle county lines are required to be valued based upon the amount of surface area which is located in each county. If the minerals in the estate are evenly distributed, then it is appropriate for each appraisal district to simple take the ratio of each surface area and multiply it by the market value of the entire mineral interest; however, if the mineral interest is not evenly distributed, such an allocation would not be appropriate.

A PROPERTY OWNER HAS A RIGHT TO OBTAIN FROM AN APPRAISAL DISTRICT THE VALUATION INFORMATION THE APPRAISAL DISTRICT RECEIVED FROM A PRIVATE APPRAISAL FIRM USED TO VALUE THE OWNER'S PROPERTY; THE PROPERTY OWNER IS ENTITLED TO RECEIVE ADDITIONAL INFORMATION FROM THE PRIVATE APPRAISAL FIRM; THERE ARE NO PROHIBITIONS IN THE UTILITY DEREGULATION STATUTES AGAINST A PRIVATE APPRAISAL FIRM RELEASING VALUATION INFORMATION TO A UTILITY.

Op. Tex. Att'y Gen. JC-0424 (2001). [OPINION]

A property owner has a right to obtain from an appraisal district all data pertaining to the valuation its property which the district received from a private appraisal firm which was contracted to value the property except for any data which was provided under a confidentiality agreement or which data is made confidential by statute. Additionally, the taxpayer has a right to obtain additional information from the private appraisal firm such as "calculations, personal notes, correspondence and working papers" pertaining to its property which the firm was not required by law to provide to the appraisal district. There are no provisions in the utility deregulation statutes which bar a private appraisal firm from releasing such data to a utility.

RENTING A PORTION OF A RESIDENTIAL HOMESTEAD DISQUALIFIES THAT PORTION OF THE RESIDENCE FROM QUALIFICATION FOR THE HOMESTEAD TAX EXEMPTION; A TEMPORARY RENTAL OF THE ENTIRE HOMESTEAD DOES NOT CAUSE THE LOSS OF THE HOMESTEAD TAX EXEMPTION.

Op. Tex. Att'y Gen. JC-0415 (2001) [OPINION]

Pursuant to Section 11.13(k) of the Texas Tax Code, a property owner who rents a portion of the owner's homestead to another loses the homestead exemption on the rented portion since such use is incompatible with the owner's residential use; however, Section 11.13(k) preserves the tax exemption on the portion of the residence which the owner continues to occupy as his or her own home. The entire homestead exemption is lost if the entire residence is rented out, unless such rental is only temporary in which case the exemption would be retained.

UNPAID SPECIAL ASSESSMENTS MADE BY PUBLIC IMPROVEMENT DISTRICTS ARE NOT TAXES AND MAY NOT BE FORECLOSED AGAINST HOMESTEADS.

Op. Tex. Att'y Gen. JC-0386 (2001). [OPINION]

The Texas Local Government Code provides that delinquent special assessments for public improvement districts are to be collected in the same manner as delinquent property taxes. The attorney general was asked to rule on whether such delinquent assessments could be foreclosed against homesteads. The Attorney General ruled that they could not because special assessments are not property taxes and Article XVI, Section 50 of the Texas Constitution prohibits foreclosures of homesteads except to satisfy mortgages, property taxes and home improvement loans.

TAXING UNITS MAY NOT UTILIZE A BLANKET RESOLUTION TO INSTRUCT THE SHERIFF TO FOLLOW THE INSTRUCTIONS OF THEIR PRIVATE COLLECTION ATTORNEYS AS TO THE RESALE OF THEIR FORECLOSED PROPERTIES.

Op. Tex. Att'y Gen. JC-0377 (2001). [OPINION]

Certain taxing units issued blanket resolutions authorized their attorneys to direct the sheriff as to which of their "struck" properties were to be resold and when to conduct such sale. Section 34.05(c) of the Texas Property Tax Code requires the "taxing units to request the sheriff or constable to sell the property at public sale." The taxing untis requested that the Attorney General opine as to the legality of this procedure. They Attorney General ruled that such a practice could not be allowed because the government is not allowed to delegate its "legislatively entrusted authority to another entity" without the express permission of the legislature, and no such authority had been granted by the legislature.

THE COMPTROLLER MUST DEDUCT THE MARKET VALUE OF SCHOOL DISTRICT PROPERTY WHICH IS THE SUBJECT OF A TAX INCREMENT FINANCING AGREEMENT FROM ITS ANNUAL RATIO STUDY; THE CURRENT PROVISIONS FOR TAX INCREMENT FINANCING DISTRICTS ARE CONSTITUTIONAL; A MUNICIPALITY MAY NOT ADOPT A TAX INCREMENT FINANCING DISTRICT UNLESS IT HOLDS AN ELECTION FOR THAT PURPOSE.

Op. Tex. Att'y Gen. JC-0373 (2001). [OPINION]

The Attorney General ruled that the Comptroller of Public Accounts, in conducting it s annual ratio studies, is required to deduct from the market value of property taxable by a school district any property value that is the subject of a tax increment financing agreement. Additionally, he ruled that the current tax increment financing statute, unlike its predecessor, is constitutional because it was re-enacted subsequent to the adoption of Article VIII, Section 1-g of the Texas Constitution which authorized such financing. Cities must hold elections in order to implement tax increment financing districts.

EXEMPTIONS MAY BE GRANTED TO POLLUTION CONTROL EQUIPMENT ADDED TO BOTH EXISTING AND NEW FACILITIES; POLLUTION CONTROL PRODUCTION EQUIPMENT IS ENTITLED TO A PRORATED EXEMPTION FOR THE PORTION OF THE PROPERTY WHICH AIDS IN THE REDUCTION OF POLLUTION.

Op. Tex. Att'y Gen. JC-0372 (2001). [OPINION]

Taxpayers are entitled to receive exemption under Section 11.31 of the Texas Property Tax Code on pollution control equipment which is added to both existing facilities and new facilities. However, pollution control equipment which is a part of production equipment is only entitled to receive a partial exemption for the portion of the equipment which aids in the reduction of pollution.

COUNTY BAIL BOND BOARD MAY ACCEPT INDEPENDENT APPRAISALS FROM BONDSMEN IN LIEU OF APPRAISAL DISTRICT VALUATIONS.

Op. Tex. Att'y Gen. JC-0366 (2001). [OPINION]

When the statute codifying provisions pertaining to bail bondsmen was adopted, it deleted references to bondsmen proving their collateral through the use of independent appraisals. Instead, it included a reference to such proof being presented by current tax appraisal. A bail bond board requested the Attorney General to rule as to whether it could still accept independent appraisals in lieu of appraisal district valuations. The Attorney General ruled that it could accept such information if it wanted to do so in lieu of valuations set by an appraisal district, but that it did not possess the authority to order bondsmen to submit independent appraisals.

A TAXING UNIT MAY NOT VOLUNTARILY REDUCE ITS ADOPTED TAX RATE IN THE SAME TAX YEAR.

Op. Tex. Att'y Gen. JC-0360 (2001). [OPINION]

A taxing unit wished to voluntarily reduce its tax rate, in the same tax year, after it had adopted a tax rate as required by law, and after tax bills had been mailed. The attorney general ruled that the unit could not do so because there was no express statutory authority for such an action and such authority could not be implied. The only method by which the taxing unit's rate could have been lawfully altered would have been through a tax rollback election.

TAX ASSESSOR-COLLECTOR MAY UTILIZE INTEREST EARNED ON MOTOR VEHICLE TAX TO SUPPLEMENT OWN SALARY IF IT IS A LEGITIMATE COST OF ADMINISTRATION.

Op. Tex. Att'y Gen. JC-0348 (2001). [OPINION]

A county tax assessor-collector wished to utilize some of the interest earned on the motor vehicle inventory tax escrows to supplement the assessor's own salary. The attorney general ruled that the assessor could do so, if such supplementation proved to be a legitimate cost of administration for the program and if the supplementation served a public purpose. Such a determination would be subject to judicial review, and the county auditor would be allowed to audit such expenditures.

PENALTIES AND INTEREST ON PROPERTIES WHICH HAVE FAILED TO RECEIVE THE MANDATORY FIVE YEAR NOTICE DO NOT BEGIN TO ACCRUE UNTIL AFTER THE STATUTORY PERIOD FOR DELIVERY OF NEW NOTICE EXPIRES; ALL PRIOR PENALTIES AND INTEREST ARE CANCELLED.

Op. Tex. Att'y Gen. JC-0328 (2001). [OPINION]

Taxing units are required to provide a notice of delinquency to taxpayers whose property taxes have been delinquent more than one year in each year that is divisible by five. If the unit fails to do so, all penalties and interest are cancelled. By legislative amendment, the taxing units may reinstate penalties and interest by providing new notice. The Attorney General was asked when such new penalties and interest would begin to accrue. The Attorney General ruled that such penalties and interest would begin to accrue anew on the first day of the first month that begins at least twenty-one days after delivery of a proper new notice.