Untitled Texas Attorney General Opinion ( 1978 )

The Attorney General of Texas
June 21, 1978
JOHN L. HILL
Attorney General
Honorable W. E. Snelson Opinion No. H- 1191
Senator of the State of Texas
Capitol Building Re: Whether tax increment bonds
Austin, Texas 78711 can be issued without a referendum.
Dear Senator Snelson:
You have asked whether tax increment bonds may be issued by a city
for the purpose of aiding the planning or the carrying out of an Urban
Renewal Project under the management of an established Urban Renewal
Agency duly created pursuant to a prior election authorizing urban renewal
powers. Specifically you want to know whether, prior to the passage of the
constitutional amendment on tax increment bonds, a city may issue these
bonds on the basis of a prior election authorizing urban renewal rather than
on the basis of an election specifically authorizing tax increment financing.
These questions require consideration of two items of recent legislation
passed by the 65th Legislature. First, the Texas Tax Increment Act of 1977,
Senate Bill 635, Acts 1977, 65th Leg., ch. 361, at 956, codified as article
1066d, V.T.C.S., authorizes municipalities to use tax increment financing for
the redevelopment of blighted commercial areas. Among the various powers
conferred under section 4 is the general power to issue tax increment bonds.
Section 8 deals more specifically with tax increment bonds and provides in
pertinent part:
fb) Tax increment bonds issued under this Act,
together with interest thereon and income therefrom,
shall be exempt from all taxes. Bonds issued under
this Act shall be authorized by resolution or ordinance
of the governing body. . . .
Other sections of the Act detail specific requirements concerning
designation of development districts (section 5), computation of tax incre-
ments (section 6), allocation of tax collections and tax increments (section 7),
and annual reports (section 9). Finally, section 13 declares:
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Honorable W. E. Snelson - Page 2 (H-1191)
This Act takes effect only if and when the constitutional
amendment proposed by S.J.R. No. 44, 65th Legislature, is
adopted by the qualified electors of this state.
The proposed constitutional amendment referred to amends article 8 of the
Texas Constitution by granting to the Legislature the power to authorize
municipalities to issue tax increment bonds notwithstanding section 1 or section 14
of article 8. It further provides for an election on the amendment in November,
1978.
The Legislature must be presumed to have carefully chosen the statutory
language. Jessen Associates, Inc. v. Bullock, 531 S.W.2d 593, 600 (Tex. 1975);
Perkins v. State, 367 S.W.2d 140, 146 (Tex. 1963). Therefore, we believe section 13
compels the conclusion that a municipality has no authority to issue tax increment
bonds under Senate Bill 635 prior to voter approval of the proposed constitutional
amendment.
Amendments to the Urban Renewal Law, article 12691-3, V.T.C.S., approved
by the 65th Legis1atur.e in House Bill 2028, Acts 1977, 65th Leg., ch. 850, at 2126-
33, contain provisions parallel to those appearing in the Texas Tax Increment Act.
Approval of the use of the tax increment method of financing is specifically
provided for in the following new section:
Sec. Sb. A city may not use the tax increment method of
financing prescribed by Sections 22a, 22b. 22c, and 22d of
this Act unless a majority of the qualified voters of the city
voting on the question, who own taxable property within the
city that is duly rendered for taxation, approve that method
of financing in an election held by the city. At an election
held under this section, the ballots shall provide for voting
for or against the proposition: ‘Use of tax increment
financing for urban renewal purposes.’ An election under this
section may be held in conjunction with an election held
under Section 5 or 5a of this Act. This referendum shall not
be necessary if the constitutronal amendment on tax
increment financing is approved by the voters.
(Emphasis added).
The plain meaning of this section evidences the legislative intent that an
election is required prior to approval of the constitutional amendment proposed by
S.J.R. No. 44, 65th Legislature, to approve the tax increment method of financing
set out in other sections of the Urban Renewal Law. This election may be separate
p. 4794
Honorable W. E. Snelson - Page 3 (H-1191)
from or in conjunction with the election required under section 5 or 5a to approve
an urban renewal project, but the specific issue of whether the tax increment
method of financing is to be utilized must be presented. The wording in a statute is
to be given its literal interpretation when that wording is clear and unambiguous.
C 180 S.W.Pd 906,, 909
$%4,.
Since your questions do not raise the issue, we reserve comment on any
constitutional problems including any which might be associated with the role of
the county tax assessor-collector or with the issuance of tax increment bonds by
cities with outstanding general obligation bonds.
SUMMARY
The Texas Tax Increment Act will not be effective unless
the companion constitutional amendment is adopted in
November, 1978. Prior to the passage of that amendment,
the Urban Renewal Law, article 12691-3, V.T.C.S., requires
that use of tax increment financing under that statute must
be approved in an election held by the city.
Attorney General of Texas
pi i
APPROVED: v
DAVID M,KENDALL, First Assistant
C. ROBERT HEATH. Chairman
Opinion Committee ’
jst
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