BRUSNIAK’S 2007 PROPERTY TAX CASE LAW DIGEST

By

John Brusniak, Jr.

(c) 2007 (All rights reserved. Reprinted with permission.)

UNITED STATES SUPREME COURT

FOREIGN GOVERNMENTS OWNING REAL PROPERTY IN THE UNITED STATES ARE NOT IMMUNE FROM SUITS TO COLLECT DELINQUENT REAL PROPERTY TAXES.

Permanent Mission of India to the United Nations v. City of New York, ___ U.S.___, 127 S. Ct. 2352 (2007). [OPINION]

Taxing unit sued to collect delinquent real property taxes owed on buildings owned by two foreign governments in the United States which were used to house diplomatic employees and their families. The governments claimed immunity from suit pursuant to the “Foreign Sovereign Immunities Act of 1976,” contending that the exception to immunity for suits involving “rights in immovable property” did not apply to property tax liens. The court disagreed, ruling that tax liens inhibit an owner’s right to convey property and thus implicate “rights in immovable property.”

TEXAS COURTS OF APPEALS

PROPOSAL OF THE SAME VALUE BY AN APPRAISAL DISTRICT AND A TAXPAYER AT AN APPRAISAL REVIEW BOARD HEARING CREATES AN AGREEMENT BETWEEN THE PARTIES AND RENDERS AN APPRAISAL REVIEW BOARD DETERMINATION UNAPPEALABLE TO DISTRICT COURT; DUE PROCESS RIGHTS ARE NOT VIOLATED BY RECOGNITION OF SUCH AN AGREEMENT.

Hartman v. Harris County Appraisal Dist., 01-06-01074-CV (Tex. App.–Houston [1st Dist.] October 11, 2007, pet. denied). (to be published). [OPINION]

Appraisal district appraised a property at a higher value than the price a taxpayer had recently paid for it. At an appraisal review board hearing, the taxpayer’s agent argued that the value of the property should be the purchase price. Thereafter, the appraisal district’s agent also recommended the purchase price to the review board The appraisal review board issued an Order Determining Protest at the purchase price, and the taxpayer appealed the decision to district court. On appeal, the court held that the recommendation of the same value by both parties constituted an agreement as to value pursuant to Section 1.111(e) of the Tax Code and as such was not appealable. The court held that the taxpayer’s rights to due process were not violated because the taxpayer had been given an opportunity to appear before the appraisal review board.

IF A PROPERTY TRANSFERS PRIOR TO A PROTEST DEADLINE AND BOTH THE PRIOR OWNER AND THE NEW OWNER FILE PROTESTS, ONLY THE NEW OWNER HAS STANDING TO PROCEED; AN APPRAISAL REVIEW BOARD DOES NOT HAVE JURISDICTION TO CONSIDER A BREACH OF A VALUATION AGREEMENT BETWEEN AN APPRAISAL DISTRICT AND A TAXPAYER; NOR MAY A TAXPAYER CHALLENGE A BREACH IN DISTRICT COURT UNDER CHAPTER 42 OF THE TAX CODE; A BREACH OF A VALUATION AGREEMENT MAY BE REVIEWED BY A DISTRICT COURT UNDER THE DECLARATORY JUDGMENTS ACT. VALUATION AGREEMENTS ARE NOT CONTRACTS, THEY ARE STATUTORY AGREEMENTS.

MHCB (USA) Leasing and Finance Corp. v. Galveston Central Appraisal District, No. 01-06-00529-CV (Tex. App. –Houston [1^st Dist.] September 20, 2007, pet denied). (to be published). [OPINION]

A refinery sold on March 9, 2004. The new owner’s representative executed a written valuation agreement with the appraisal district prior to the issuance of notices of appraised value. The appraisal district sent a notice of appraised value for the 2004 tax year at the agreed value, but after receiving political pressure sent a second valuation notice at a higher value. Both the prior owner and the new owner protested the breach of agreement and other matters to the appraisal review board. The appraisal review board denied the protests and raised the value further. Both parties appealed to district court under the Tax Code and sued for breach of the valuation agreement under the Declaratory Judgments Act. The appraisal district claimed that the district court had no jurisdiction to review the case because the parties were not entitled to appeal and because the appraisal district could not be sued for breach of contract due to sovereign immunity. The district court partially granted the motion to dismiss, and all parties appealed. The court of appeals held that the Tax Code only allows one party to protest a valuation determination, and that the Code specifically authorizes a new owner, who acquires a property prior to the protest deadline, to pursue a protest. Therefore, the protest and appeal to district court by the prior owner were without jurisdiction. The court further ruled that disputes pertaining to valuation agreements made between an appraisal district and a taxpayer could not be brought before an appraisal review board, and as a result could not be appealed to district court under Chapter 42 of the Tax Code. The Tax Code was previously amended to specifically deprive appraisal review boards of jurisdiction over valuation settlements. The court found that violations of valuation agreements could be brought before a district court under the Declaratory Judgments Act because such disputes do not involve breaches of contract, but rather breaches of statutory agreements. Sovereign immunity does not apply when the issue presented for resolution is whether an appraisal district has acted outside its statutory authority. Such disputes, involving governments, may be reviewed under the Declaratory Judgments Act.

LESSOR IS AN OWNER OF PROPERTY FOR PURPOSES OF AD VALOREM TAXATION UNLESS THE LESSEE IS RESPONSIBLE FOR ALL PAYMENTS UNDER THE AGREEMENT WITHOUT CONTINGENCY; THE FAILURE OF A LESSEE TO ACQUIRE EQUITY IN A LEASED ITEM IS ALSO AN INDICATION OF OWNERSHIP BY A LESSOR.

Excel Auto and Truck Leasing, L.L.P., v. Alief Independent School District, No. 01-04-01185-CV (Tex. App. – Houston [1^st Dist]. August 31, 2007, pet. denied). (to be published). [OPINION]

Taxing units sued a motor vehicle leasing company for delinquent taxes on its leased vehicle fleet. The company defended on the grounds that it was not the owner of the vehicles because the leases were not “true leases” but were in fact “security agreements.” The court disagreed finding that under the lease agreements the lessees were not responsible for making all payments under the agreement, regardless of contingency or circumstance, but in fact could return the vehicle to the lessor and be held responsible for only the payments accrued as of the date of the return. The court further held that the fact that the lessees were not acquiring equity in the vehicles was additional indicia of the ownership of the vehicles by the lessor.

ABSENT A CLAIM OF FRAUD, MUTUAL MISTAKE OF FACT OR DURESS, SOVEREIGN IMMUNITY BARS SUITS FOR RECOVERY OF ILLEGALLY COLLECTED PROPERTY TAXES.

Nivens v. City of League City, 245 S.W.3d 470 (Tex. App. –Houston [1^st Dist.] 2007, pet. denied). [OPINION]

Taxpayers sued a city for “money had and received” and breach of contract for overcharging ad valorem taxes under collection agreements with several municipal utility districts. In its defense, the city claimed sovereign immunity. The court agreed, holding that a governmental entity may not be sued to obtain a refund of illegally assessed property taxes absent a claim of fraud, mutual mistake of fact, or duress. Since the taxpayers failed to raise any of these issues in their pleadings, they were not entitled to proceed with their suit.

TAXPAYERS MAY APPEAL DENIALS OF SECTION 25.25 MOTIONS TO DISTRICT COURT.

Benson Chevrolet, Inc. v. Bexar Appraisal District, 242 S.W.3d 54 (Tex. App.–San Antonio 2007, no pet.). [OPINION]

Taxpayers failed to timely appeal omitted property notices within the 30 day period provided in Chapter 41 of the Texas Tax Code. They filed late appeals pursuant to Sections 25.25(c) and (d) of the Code. The appraisal review board denied the motions, and taxpayers appealed to district court. The appraisal district sought and obtained a dismissal of the suit, by contending that Section 42.25 of the Tax Code, which authorizes judicial challenges of claims of excessive appraisals, only applies to appeals brought from Chapter 41 protests and not to motions brought under Section 25.25. The appellate court reversed and reinstated the suit finding that Section 42.25 does not limit itself to claims brought under Chapter 41 of the Code.

TAXPAYER MAY NOT SEPARATELY CONTEST THE VALUATION OF LAND IN AN EQUITY CHALLENGE.

Covert v. Williamson Central Appraisal Dist., 241 S.W.3d 655 (Tex. App.–Austin 2007, pet. denied). [OPINION]

Taxpayer challenged the valuation of land underlying a car dealership, claiming that the appraisal district’s land valuation was unequal with the land value of other comparable properties. The appraisal district sought dismissal of the suit on the grounds that only an entire value (i.e., both land and improvements) can be challenged in an equity dispute. The district court agreed and dismissed the case. The appellate court upheld the dismissal finding that when determining whether a property has been equally appraised, the entire value must be considered. It held, “So long as that valuation is an equal and uniform assessment, we cannot support overturning it because the land component is valued too high or the improvement component too low.”

IN A TAX FORECLOSURE CASE, THE DEFINITION OF HOMESTEAD CONTAINED IN THE TAX CODE, NOT THE PROPERTY CODE, IS TO BE UTILIZED.

Hutson v. Tri-County Properties, LLC, 240 S.W.3d 484 (Tex. App.–Fort Worth 2007, pet. filed). [OPINION]

Taxpayer’s property was foreclosed for nonpayment of property taxes. Taxpayer asserted a right to redeem the property under the definition of homestead contained in the Texas Property Code and claimed that the Tax Code’s definition of homestead was unconstitutional because it conflicted with the Property Code definition. The appellate court disagreed ruling that the Texas Constitution does not require that the definitions of homestead for purposes of protection from debt and for purposes of property tax foreclosure to be the same. Therefore, the Tax Code’s definition was constitutional and redemption rights were governed under the Tax Code’s definition.

FOR PURPOSES OF QUALIFYING AN APARTMENT COMPLEX OWNED BY A LIMITED PARTNERSHIP FOR EXEMPTION, A CHDO IS NOT ITS EQUITABLE OWNER UNLESS IT OWNS A SUFFICIENT INTEREST IN THE ENTIRE ENTITY SO AS TO BE ABLE TO COMPEL TRANSFER OF TITLE TO ITSELF.

Harris County Appraisal District v. Primrose Houston 7 Housing, L.P., 238 S.W.3d 782 (Tex. App.–Houston [1^st Dist.] 2007, pet. filed). [OPINION]

A limited partnership sought an exemption for an apartment complex it owned. The general partner, in the limited partnership, was a Community Housing Development Organization, “CHDO.” It owned .01% of the limited partnership. The other 99.99% of the limited partnership was owned by a “for-profit” limited partner. The partnership claimed it was entitled to exemption because the CHDO was the equitable owner of the entity. The court disagreed, and held that unless the CHDO controlled a sufficient interest in the entire entity so as to be able to cause it to compel title to the property to itself, it could not be deemed to be the equitable owner of the property. With such an insignificant interest in the entire entity, the CHDO was not in a position to compel title, and as a result, the property could not qualify for exemption.

A NONSUIT OF A DELINQUENT TAX CASE AND SUBSEQUENT REFILING POST A 2001 LEGISLATIVE AMENDMENT DID NOT AUTHORIZE “FOR-PROFIT’ LIMITED PARTNERSHIPS WITH “CHDO” GENERAL PARTNERS TO QUALIFY APARTMENTS FOR EXEMPTION; ONLY NONPROFIT “CHDOs” QUALIFY UNDER THE EXPRESS LANGUAGE OF THE AMENDED STATUTE; THIS RESULT IS MANDATED BY THE TEXAS CONSTITUTION.

Jim Wells County Appraisal District v. Cameron Village, Ltd., 238 S.W.3d 769 (Tex. App. –San Antonio 2007, pet. filed). [OPINION]

In 2001, the legislature amended the Community Housing Development Organization “CHDO” exemption statute to state that “In addition to meeting ...[all of the other previously enacted exemption requirements]...the organization [owning an apartment complex] must ...control 100 percent of the interest in the general partner if the project is owned by a limited partnership.” A limited partnership, with a newly-installed CHDO general partner, sought exemption for an apartment project. It contended that the amendment eliminated the requirement of ownership of an apartment complex by an exempt CHDO and allowed exemptions to be granted to “for profit” limited partnerships with CHDO general partners. The court disagreed, finding that the legislature did not intend to expand the exemption eligibility requirements to “for profit” limited partnerships but only to impose additional restrictions on the exemption qualifications. CHDO exemptions are limited to non-profit CHDO entities which own apartment complexes. The court further held that this construction is required by Article VIII, Section 2 of the Texas Constitution which limits such exemptions to “institutions engaged primarily in public charitable functions.”

LEGISLATIVE DELETION OF STATUTORY TAXPAYER DEFENSES PROHIBITS THAT DEFENSE FROM BEING RAISED; A TAX BILL MISADDRESSED BY A TAXING UNIT DUE TO AN ERRONEOUS ADDRESS PROVIDED BY AN APPRAISAL DISTRICT, IS CONSIDERED TO HAVE BEEN TIMELY DELIVERED WHEN MAILED.

Houston Independent School District v. Old Farms Owners Association, Inc., 236 S.W.3d 375 (Tex. App.–Houston [1^st Dist.] 2007, pet. filed). [OPINION]

In mid 1997, a taxpayer sold a portion of a property. The appraisal district sent an erroneous address correction to the taxing unit. The taxing unit utilized the erroneous address in sending out its 1997 tax bill. The tax bill was returned as “undeliverable.” (The taxing unit, in prior years, had mailed tax bills to the taxpayer’s correct address.) The taxing unit sued to collect the tax in 1999, but nonsuited the case in 2000. The taxing unit refiled the suit in 2002. The taxpayer claimed, at trial, that all penalties and interest were waived pursuant to the provisions of Tax Code Section 33.04 as it existed up through September 1, 2001 and also because the taxing unit had never properly sent a tax bill to the taxpayer. The court disagreed, finding that an amendment to Section 33.04 which was enacted between the date of the nonsuit and refiling eliminated the defense which the taxpayer had raised. The court further ruled that the taxpayer had not overcome the taxing unit’s prima facie case because the taxing unit had fulfilled its legal duty by mailing a tax bill to the most recent address provided to it by the appraisal district, albeit an incorrect one.

REFINED PRODUCTS IN TANKS, DESIGNATED TO BE PLACED IN THE STREAM OF INTERSTATE COMMERCE AND AWAITING TRANSFER TO COMMON CARRIERS, ARE NOT EXEMPT FROM TAXATION.

Marathon Ashland Petroleum, L.L.C. v. Galveston Central Appraisal District, 236 S.W.3d 335 (Tex. App. –Houston [1^st Dist.] 2007, no pet.). [OPINION]

Taxpayer refines petroleum products and segregates them into tanks for transfer to common carriers for delivery outside the state of Texas. The products remain in the tanks for three to eights days while they are tested to insure that they meet regulatory requirements for shipment. The destination of the products is determined long before the products are refined, and almost never are the destinations of the products diverted to an “in-State” location. The products were appraised for taxation, and the taxpayer appealed claiming that the products were exempt under the Interstate Commerce Clause of the United States Constitution. The court disagreed and held that the products were taxable in Texas because they had not yet entered the stream of interstate commerce. Gathering and storage of products for purposes of shipment in interstate commerce does not qualify products for exemption. An interstate commerce exemption attaches when products are actually transferred to a common carrier for delivery outside the state.

NO STATUTORY TIME LIMIT EXISTS WITHIN WHICH A CHIEF APPRAISER MUST DETERMINE WHEN A CHANGE OF USE OF OPEN SPACE LAND HAS OCCURRED; PLATTED AND CONSTRUCTED STREETS WITHIN A SUBDIVISION, WHICH ARE LOCATED ON OPEN SPACE LAND, ARE SUBJECT TO A ROLLBACK TAX UNLESS THE CITY WITHIN WHICH THEY ARE LOCATED ACCEPTS THEIR DEDICATION PRIOR TO THE DATE ON WHICH THE CHANGE OF USE IS DETERMINED TO HAVE OCCURRED.

Panther Creek Ventures, Ltd. v. Collin Central Appraisal District, 234 S.W.3d 809 (Tex. App. –Dallas 2007, pet. denied). [OPINION]

An appraisal district issued a change of use of open space land determination on March 18, 2004. The notice declared that the change of use had occurred on January 1, 2000. Prior to January 1, 2000, the property owner had filed a plat (which had been accepted by the government) and constructed public streets on the property to the government’s code specifications. The taxpayer contended that the notice of rollback was ineffective because it had been issued too late. It contended that the rollback notice was required to be delivered within the statutory three year reappraisal period mandated by Section 25.18 of the Tax Code. It further argued that a rollback against the streets in the subdivision violated the statutory prohibition against tax rollbacks against governmental entities contained in Section 23.55(f)(3) of the Tax Code. The court disagreed. It held that the three year statutory reappraisal mandate did not apply to change of use determinations, but only to valuation determinations. It held that no specific statutory period for rendering of rollback determinations existed. The court further ruled that the rollback against the streets in the subdivision was appropriate because the city in which the streets were located had not finally accepted their dedication. Final certificates of acceptance of the streets were not signed by the city until after January 1, 2000.

CONCURRENCE BY APPRAISAL DISTRICT OF TAXPAYER’S PROPOSED VALUE AT APPRAISAL REVIEW BOARD HEARING CREATES AN AGREEMENT BETWEEN THE PARTIES AND RENDERS AN APPRAISAL REVIEW BOARD DETERMINATION UNAPPEALABLE TO DISTRICT COURT; DUE PROCESS RIGHTS ARE NOT VIOLATED BY RECOGNITION OF SUCH AN AGREEMENT.

Sondock v. Harris County Appraisal District, 231 S.W.3d 65 (Tex. App. –Houston [14^th Dist.] 2007, no pet.). [OPINION]

At an appraisal review board hearing, a taxpayer’s agent proposed a valuation of $880,000. The appraisal district concurred in the proposed valuation and recommended that the board adopt the value. The board agreed and entered an Order Determining Protest setting the value at $880,000. Taxpayer filed suit, appealing the valuation to district court. The district court dismissed the suit, and the court of appeals upheld the dismissal finding that the valuation was unappealable because it was based on an agreement between the parties pursuant to Section 1.111(e) of the Texas Tax Code. The court held that the valuation was based on an agreement (and not the result of a board determination) because an agreement had been reached prior to a determination being rendered by the appraisal review board. Agreements under Section 1.111(e) are not appealable. The court held that the taxpayer’s due process rights were not violated by the district court’s finding because the taxpayer had been accorded the opportunity to have a hearing before the appraisal review board.

OWNERS, WRONGFULLY OMITTED FROM DELINQUENT TAX FORECLOSURE SUITS, MUST SUE TO SET ASIDE FORECLOSURE JUDGMENT WITHIN ONE YEAR OR PAY TAXES IN THE INTERIM TO EXTEND THE LIMITATIONS PERIOD; THIS STATUTORY REQUIREMENT IS CONSTITUTIONAL AS IS THE PROVISION REQUIRING A CHALLENGING PARTY TO DEPOSIT THE CONTESTED TAX AMOUNTS INTO THE REGISTRY OF THE COURT AS A CONDITION PRECEDENT TO FILING SUIT.

John K. Harrison Holdings, LLC v. Strauss, 221 S.W.3d 785 (Tex. App. –Beaumont 2007, pet. denied). [OPINION]

A person purportedly took title to a lot from a prior owner by quitclaim deed in 2001. The property had been previously foreclosed by a taxing entity for nonpayment of property taxes in 1995 and a constable had conveyed title by tax sale deed to a third party in 1996. In 2003, the person sued to set aside the tax sale deed contending that the rightful owner had not been sued, or served with process, in the underlying tax foreclosure suit. The foreclosure purchaser defended on the grounds of limitations. The Tax Code provides that a person wishing to challenge a tax foreclosure must file suit within one year of the date on which a tax deed is recorded or pay taxes in the interim to toll the limitations period. The challenger is also required to deposit the contested tax amount into the registry of the court as a condition precedent to filing suit. The person in this suit did not comply with any of these provisions. As a result, the court held that the person did not have standing to contest the tax foreclosure deed. The person contended that these statutes were unconstitutional. The court disagreed, holding that these provisions were reasonable restrictions on the tax foreclosure challenge process, and as a result were valid.

CONTRACTUAL PROVISIONS RESTRICTING THE AMOUNT OF RENT WHICH MAY BE CHARGED TO LESSEES CONSTITUTE “INDIVIDUAL CHARACTERISTICS” OF A PROPERTY WHICH MUST BE CONSIDERED IN VALUING THE PROPERTY.

Western AH 406 Ltd. v. Central Appraisal District of Taylor County, 213 S.W.3d 544 (Tex. App. –Eastland 2007, pet. denied). [OPINION]

Taxpayer constructed an apartment complex under a contract with the United States Air Force. The agreement limited the amount of rent which could be charged to Air Force personnel and restricted the occupancy of the complex, giving priority to Air Force personnel. The appraisal district obtained a partial summary judgment blocking the use of any rental data at trial that differed from market rental rates for comparable apartments in the area. As a result, judgment was entered for the appraisal district by the trial court. On appeal, the judgment was reversed. The appellate court ruled that the agreement between the Air Force and the taxpayer constituted an “individual characteristic” of the property which was required to be considered in the property’s valuation pursuant to Section 23.01(b) of the Texas Tax Code. It further held that Rule 1-2(e) of the Uniform Standards of Professional Appraisal Practice mandated this result as well.

TEXAS ATTORNEY GENERAL OPINIONS

APPRAISAL DISTRICTS MUST CONTINUE TO DEFEND LITIGATION ON PROPERTIES PREVIOUSLY WITHIN AN APPRAISAL DISTRICT’S BOUNDARIES.

Op. Tex. Att’y Gen. No. GA-0590 (2007). [OPINION]

Although House Bill 1010 limited an appraisal district’s jurisdiction to properties located within its county’s boundaries, the appraisal district is required to continue to handle all challenges pre-dating the effective date of House Bill 1010. The appraisal district has a right to be reimbursed for the cost of handling the challenges by the taxing unit on whose behalf it is acting.

A PROPERTY TAX CONSULTANT WHO IS A “PERSON AUTHORIZED TO ACT ON BEHALF OF THE OWNER” MAY SIGN AND COMPLETE THE DESIGNATION OF AGENT FORM FOR THE PROPERTY OWNER.

Op. Tex. Att’y Gen. No. GA-0589 (2007). [OPINION]

A property tax consultant may be authorized to sign a fiduciary form under Section 1.111 of the Texas Tax Code by a taxpayer. If a consultant signs a form under such circumstances, it is valid.

THE TAX CODE DOES NOT RESTRICT THE RULE-MAKING AUTHORITY OF THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY TO ONLY POLLUTION CONTROL FACILITIES ASSOCIATED WITH ADVANCED CLEAN ENERGY PROJECTS.

Op. Tex. Att’y Gen. No. GA-0587 (2007). [OPINION]

House Bill 3732 amended Tax Code Sections 11.31 (k) and 26.045(f) by adding a list of specific facilities, devices, or methods that may qualify for pollution control exemption. The statutes do not limit the Texas Commission on Environmental Quality’s rule-making authority to those pollution control facilities, devices, or methods that are associated with advanced clean energy projects.

THE BASE TAX YEAR FOR A TAX FREEZE ADOPTED BY VOTERS FOR ELDERLY AND DISABLED TAXPAYERS IS THE YEAR IN WHICH THE ELECTION IS HELD.

Op. Tex. Att’y Gen. No. GA-0559 (2007). [OPINION]

The Attorney General ruled that a property tax freeze adopted at an election called by voters in 2005 created a base tax year of 2005 for all qualified voters notwithstanding the failure of the county and appraisal district to implement the election results until tax year 2006.

AN APPRAISAL DISTRICT AND AN APPRAISAL REVIEW BOARD MAY NOT UTILIZE THE SERVICES OF THE SAME “IN-HOUSE’ LEGAL COUNSEL BECAUSE IT VIOLATES THE PROHIBITIONS AGAINST EX PARTE COMMUNICATIONS; HOWEVER, VIOLATIONS OF THIS PROHIBITION ARE NOT CRIMINAL.

Op. Tex. Att’y Gen. No. GA-0556 (2007). [OPINION]

An appraisal review board may not utilize the services of an appraisal district’s “in-house” legal counsel because such communications violate the prohibitions against ex-parte communications between an appraisal district and an appraisal review board contained in Section 41.66(f) of the Tax Code. If such communications occur, they are not violative of the criminal prohibitions against ex-parte communications contained in Section 6.411 of the Tax Code.

TAXING UNITS MAY NOT WAIVE PENALTIES OR INTEREST UNLESS A WRITTEN REQUEST FOR WAIVER IS FILED WITHIN 181 DAYS OF THE DELINQUENCY DATE.

Op. Tex. Att’y Gen. No. GA-0548 (2007).. [OPINION]

An error of an appraisal district caused three years of tax bills to be misdelivered. Upon learning that taxes were due, the taxpayer paid the assessments in full within 21 days and requested a waiver of the penalties and interest pursuant to Section 33.011 of the Tax Code. The Attorney General ruled that the penalties and interest could not be waived because, by statute, all waiver requests are required to be filed within 181 days of the date on which the taxes became delinquent.

THE FACT THAT A BUILDING, OWNED BY A CHARITABLE ORGANIZATION, IS UNOCCUPIED DOES NOT, BY ITSELF, DISQUALIFY THE BUILDING FROM EXEMPTION; A CHIEF APPRAISER MAY NOT REINSTATE A REMOVED EXEMPTION EXCEPT AS A RESULT OF A PROTEST BROUGHT UNDER SECTION 41 OR AN APPEAL UNDER SECTION 42 OF THE TAX CODE; A TAX OFFICE MAY NOT REMOVE A PROPERTY FROM A TAX ROLL ON ITS OWN VOLITION.

Op. Tex. Att’y Gen. No. GA-0537 (2007). [OPINION]

A charitable organization maintained an exemption on a property for a period of ten years. A fire occurred and the building ceased to be occupied while repairs were being effected. The appraisal district removed the exemption from the property, but later (without protest from the taxpayer) reinstated the exemption while an opinion was sought from the attorney general as to the propriety of the removal of the exemption. The attorney general held that, lack of occupancy, by itself, was not sufficient to cause the removal of a charitable exemption, particularly when active repairs were being made to the property. However, the attorney general held that the appraisal district did not have the authority to reinstate the removed exemption because the taxpayer failed to timely protest the removal of the exemption. The attorney general further ruled that no statutory authority allows any taxing units to remove the building from their tax rolls.

PROPERTIES SPECIFICALLY IDENTIFIED IN §4(B) OF THE DEVELOPMENT CORPORATION ACT OF 1979 ARE ELIGIBLE FOR EXEMPTION AS ARE OTHER PROPERTIES WHICH A BOARD OF DIRECTORS OF A DEVELOPMENT CORPORATION MAY DETERMINE TO BE ELIGIBLE; DETERMINATIONS OF ELIGIBILITY ARE SUBJECT TO JUDICIAL REVIEW FOR ABUSE OF DISCRETION AND CONSTITUTIONALITY; APPRAISAL DISTRICTS AND TAXING UNITS MAY CHALLENGE THE QUALIFICATION OF PROPERTIES FOR EXEMPTION.

Op. Tex. Att’y Gen. No. GA-0522 (2007). [OPINION]

Land and improvement projects specifically identified in §4(B) of the Development Corporation Act of 1979 are eligible for exemption. A board of directors of a development corporation may determine that other land and improvements which promote economic development are also eligible for exemption. These determinations are subject to judicial review for abuse of discretion. Courts may also review these exemption determinations and rule whether those projects meet the Texas Constitution’s public purpose use test. Appraisal districts and taxing units have standing to challenge tax exemption eligibility determinations under the Act.

A TAX INCREMENT FINANCING DISTRICT MAY NOT BE CREATED UNLESS “UNPRODUCTIVE, UNDERDEVELOPED OR BLIGHTED” PROPERTY IS INCLUDED IN THE ZONE.

Op. Tex. Att’y Gen. No. GA-0514 (2007). [OPINION]

A city may not designate an area as a reinvestment zone unless the area is “unproductive, underdeveloped, or blighted” within the meaning of Article VIII, section 1-g(b) of the Texas Constitution even if the area’s plan for tax increment financing does not include the issuance of bonds or notes.