Untitled Texas Attorney General Opinion ( 1999 )

September 1, 1999
The Honorable David Dewhurst Opinion No. JC-0106
Commissioner
Texas General Land Office Re: Whether the movement of a structure Tom
1700 North Congress Avenue one location to another location on the piece of
Austin, Texas 78701-1495 property constitutes a “specific improvement or
repair” to the property for purposes of a tax
abatement agreement under the Property
Redevelopment and Tax Abatement Act, chapter
312 of the Tax Code (RQ-0038)
Dear Commissioner Dewhurst:
The Property Redevelopment and Tax Abatement Act, chapter 312 ofthe Tax Code, allows
a local taxing unit to enter into a tax abatement agreement with an owner of property located in a
reinvestment zone on the condition that the property owner “make specific improvements or repairs
to the property.” TEX. TAX CODE ANN. 5 312.204(a) (Vernon 1992). You ask whether the
movement of a structure from one location on a piece ofproperty to another location on the property
constitutes a “specific improvement or repair” to the property for purposes of the Act.
You tell us that local taxing units wish to offer incentives for property owners to remove
structures from public beaches. The Open Beaches Act declares it to be the policy of the state that
the public have “free and unrestricted right of ingress and egress” to and from public beaches. TEX.
NAT. REs. CODEANN. 5 61.01 l(a) (Vernon Supp. 1999). “It is an offense against the public policy
of this state for any person to create, erect, or construct any obstruction, barrier, or restraint that will
interfere with the free and unrestricted right of the public . to enter or to leave any public beach
or to use any public beach . .” Id. 5 61.013(a). The Attorney General or any county attorney,
district attorney, or criminal district attorney may tile suit to remove any barrier to the public’s right
to access and use a public beach. Id. 5 61.018.
Generally, the area constituting a public beach extends from the line of mean low tide to the
line of vegetation bordering the Gulf of Mexico. Id. § 61.001(S). You explain that some structures
have come to lie on public beaches because of erosion of the shoreline: “The shoreline of the Gulf
ofMexico in many coastal communities has been moving landward, and some homes that were once
landward of the public beach are now on it.” Letter from Honorable David Dewhurst, Land
Commissioner, to Honorable John Comyn, Attorney General (Mar. 8, 1999) (on file with Opinion
Committee) [hereinafter “Request Letter”]; see also Feinman v. State, 717 S.W.2d 106, 111 (Tex.
The Honorable David Dewhurst - Page 2 (JC-0106)
App.-Houston [ 1st Dist.] 1986, writ ref d n.r.e.) (holding that Open Beaches Act easement to public
beach is a rolling easement that moves if the vegetation line moves). These structures, you say,
interfere with the public’s access to the beaches, You recognize that the property owners may be
compelled under the Open Beaches Act to remove the structures. But, you tell us, local governments
would rather offer the property owners a tax incentive to move the structures voluntarily.
The Property Redevelopment and Tax Abatement Act, chapter 3 12 of the Tax Code, allows
a local taxing unit to enter into a tax abatement agreement with the owner of taxable real property
located in areinvestment zone. TEX.TAXCODEANN.$5 3 12.204, ,206, ,402 (Vernon 1992 & Supp.
1999). The property must be located in a reinvestment zone that has been properly designated as
such by the local government. See id. $5 3 12.201 (city designation ofreinvestment zone); 3 12.2011
(enterprise zone is reinvestment zone); 3 12.202 (criteria for reinvestment zone); 312.401 (county
designation of reinvestment zone).
The criteria for designating a county reinvestment zone require a finding that the designation
would enhance the economic development of the county, and not merely benefit the property owner:
“The commissioners court may not designate an area as a reinvestment zone until it holds a public
hearing on the designation and finds that the designation would contribute to the retention or
expansion of primary employment or would attract major investment in the zone that would be a
benefit to the property to be included in the zone andwould contribute to the economic development
of the county.” TEX.TAXCODEANN. 5 312.401(b) (Vernon 1992) (emphasis added).
The criteria for designating a municipal reinvestment zone similarly encompass the goal of
economic development and other benefits for the municipality:
(a) To be designated as a reinvestment zone under this sub-
chapter, an area must:
(1) substantially arrest or impair the sound growth of the
municipality creating the zone, retard the provision of housing
accommodations, or constitute an economic or social liability and be
a menace to the public health, safety, morals, or welfare in its present
condition and use because of the presence oE
(A) a substantial number of substandard, slum,
deteriorated, or deteriorating structures;
(B) the predominance of defective or inadequate
sidewalks or streets;
(C) faulty size, adequacy, accessibility, or usefulness of
lots;
The Honorable David Dewhurst - Page 3 (K-0106)
(D) unsanitary or unsafe conditions;
(E) the deterioration of site or other improvements;
(F) tax or special assessment delinquency exceeding the
fair value of the land;
(G) defective or unusual conditions of title;
(H) conditions that endanger life or property by fire or
other cause; or
(1) any combination of these factors;
.
(5) encompass signs, billboards, or other outdoor advertising
structures designated by the governing body of the municipality for
relocation, reconstruction, or removal for the purpose of enhancing
the physical environment of the municipality, which the legislature
declares to be a public purpose; or
(6) be reasonably likely as a result of the designation to
contribute to the retention or expansion ofprimary employment or to
attract major investment in the zone that would be a benefit to the
property and that would contribute to the economic development of
the municipality.
Id. $3 12.202(a). “The governing body [of a municipality] may not adopt an ordinance designating
an area as a reinvestment zone until the governing body has held a public hearing on the designation
and has found that the improvements sought are feasible and practical and would be a benefit to the
land to be included in the zone and to the municipality after the expiration of [a tax abatement
agreement].” Id. 5 312.201(d) (Vernon Supp. 1999).
For property that is within a reinvestment zone, a tax abatement agreement must be made “on
the condition that the owner of the property make specific improvements or repairs to the property.”
Id. § 312.204 (Vernon 1992). You ask whether the movement of a structure from one location on
a piece of property to another location on the property constitutes a “specific improvement or repair”
to the property for purposes of the Act. We do not know whether the property about which you ask
is within a reinvestment zone or whether it would qualify for inclusion in a reinvestment zone.
Moreover, whether a particular improvement or repair is consistent with chapter 312 involves
questions of fact that cannot be resolved in an attorney general opinion. Thus, we do not determine
whether a tax abatement agreement is possible for the property you describe. Instead, we address
The Honorable David Dewhurst - Page 4 (JC-0106)
your question only as a matter of statutory construction: whether moving a structure f?om one
location to another is an “improvement” or “repair” within the meaning of section 3 12.204 of the
Tax Code.
Chapter 312 does not define “improvement” or “repair.” Thus, we begin by looking at the
ordinary definitions of the terms. See TEX. GOV’T CODEANN. 5 311.01 l(a) (Vernon 1998). An
“improvement” in the most general sense is “[t]he turning of a thing to profit or good account;
profitable management or use; making the most of a thing for one’s own profit; realization of the
profits of anything.” VII THEOXFORDENGLISHDICTIONARY750 (2d ed. 1989). When used more
specifically in reference to real property, the term also includes buildings and other permanent
structures attached to land:
Improvement. A valuable addition made to property (usually real
estate) or an amelioration in its condition, amounting to more than
mere repairs or replacement, costing labor or capital, and intended to
enhance its value, beauty or utility or to adapt it for new or further
purposes. Generally has reference to buildings, but may also include
any permanent structure or other development, such as a street,
sidewalks, sewers, utilities, etc. An expenditure to extend the useful
life of an asset or to improve its performance over that of the original
asset.
BLACK’SLAW DICTIONARY
757 (6th ed. 1990); see also VII THEOXFORDENGLISHDICTIONARY
75 1
(2d ed. 1989) (“A piece of land improved or rendered more profitable by inclosure, cultivation, the
erection of buildings, etc. . [T]he buildings, fences, etc., themselves.“).
As the term “improvement” is understood in the general sense, almost any endeavor that
makes the property or the structures on it better than they were would constitute an improvement.
Moving a structure from one location on a piece of property to another location on the property
might constitute an improvement to the property overall, or to the specific structure itself, by
enhancing its value, extending its useful life, or otherwise making its condition better. A structure
placed on a formerly vacant part of the property certainly is an improvement, in the more narrow
sense, to that part of the property. Whether the relocation of a structure constitutes an improvement
to property must be determined, however, on the facts of the particular case.
A “repair” is “[t]he act of restoring to a sound or unimpaired condition” or the “[rlestoration
of some material thing or structure by the renewal of decayed or worn out parts, by refixing what has
become loose or detached.” XIII THEOXFORDENGLISHDIC~ONARY627 (2d ed. 1989). “The word
‘repair’ contemplates an existing structure or thing which has become imperfect, and means to
supply in the original existing structure that which is lost or destroyed, and thereby restore it to the
condition in which it originally existed, or as nearas may be.” BLACK’SLAW DICTIONARY1298 (6th
ed. 1990).
The Honorable David Dewhurst - Page 5 (JC-0106)
You tell us that the tax abatements would require the property owners to move structures, not
necessarily fix or restore them. While the act of moving the structures would not constitute a
“repair” in the ordinary sense, the agreement to move the structures might encompass fixing or
restoring them to a good condition once they are in their new location. Thus, an agreement to
remove a structure and relocate it on the property might, depending again upon the facts, constitute
a repair to property in the ordinary sense.
But we must also consider what constitutes an improvement or repair in the context of
chapter 312. See TEX. C&VT CODE ANN. 5 311.01 l(a) (Vernon 1998). Chapter 312 was enacted
in anticipation of an amendment to the Texas Constitution, ratified by voters in 1981, which permits
the legislature by general law to authorize local taxing units “to grant exemptions or other relief from
ad valorem taxes on property located in a reinvestment zone forthe purpose of encouraging
development or redevelopment and improvement of the property.” TEX. CONST. art. VIII, ?j l-g
(emphasis added). Pursuant to this constitutional authority, chapter 3 12 authorizes local taxing units
to enter into tax abatement agreements with owners of property located in reinvestment zones.
Chapter 3 12 requires taxing units to adopt guidelines and criteria for tax agreements before
entering into any such agreement. TEX. TAX CODEANN. $5 312.002(a), .401(a) (Vernon 1992 &
Supp. 1999). The substance of the criteria governing tax abatement agreements is a matter within
the discretion of the local entity making the agreement. Tex. Att’y Gen. Op. No. DM-456 (1997)
at 6. Chapter 3 12 imposes two limitations on the commissioners court discretion. First, the property
owner must agree to make specific improvements and repairs to the property. Second,
“improvements that form the basis of a tax abatement agreement must be consistent with the purpose
of the reinvestment zone designation.” Id.
Accordingly, not only must the subject of a tax abatement agreement be an improvement or
repair in the ordinary sense, it must also serve the economic development purposes of the
reinvestment zone, and benefit the public as well as the property owner. You believe that moving
a structure from a public beach to another location on the same property would constitute an
improvement for the purposes of chapter 3 12 because it would:
1) reduce the possibility that the structure would be damaged or lost
in a storm; 2) preserve the property as property tax base (which would
be lost if destroyed or condemned); 3) make the entire property more
marketable; and 4) improve the public’s access to and use of the
public beach.
Request Letter, supra, at 2.
We find nothing in chapter 3 12 that would preclude, as a matter of law, a local government
from granting a tax abatement to a property owner in return for the owner’s agreement to move a
structure from a public beach to another part of the owner’s property. However, whether any
particular endeavor would actually improve or repair property in the ordinary sense is a
The Honorable David Dewhurst - Page 6 (X-0106)
determination that must be made on the facts of that endeavor. Likewise, whether the improvement
or repair is consistent with the purpose of the reinvestment zone designation, a designation that must
benefit the public as well as the property owner, depends upon the particular facts at issue.
Consequently, we do not determine whether a tax abatement agreement is possible for any specific
property. Such determinations are for local governmental bodies to make in the good faith exercise
of their discretion.
SUMMARY
The movement of a structure from one location on a piece of
property in a reinvestment zone to another location on the property
may constitute a “specific improvement or repair” to the property for
purposes of a tax abatement agreement under Property
Redevelopment and Tax Abatement Act, chapter 312 of the Tax
Code, if it improves or repairs the property in the ordinary sense and
if the improvement or repair is consistent with the purpose of the
reinvestment zone designation.
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Attorney General of Texas
ANDY TAYLOR
First Assistant Attorney General
CLARK RENT ERVIN
Deputy Attorney General - General Counsel
ELIZABETH ROBINSON
Chair, Opinion Committee
Barbara Griffin
Assistant Attorney General - Opinion Committee