                  Ausnnr.       TEXAB    78711

                            March 22, 1976



The Honorable Bill Clayton                Opinion   No.   H-799
Speaker of the House
State Capitol                             Re: Method of assessing
Austin, Texas 78701                       irrigated agricultural
                                          land.
Dear Speaker Clayton:
     You requested our opinion concerning the taxation of
irrigated land under article VIII, section l-d of the Texas
Constitution.
     Article VIII, section l-d provides in relevant part:

          (a) All land owned by natural persons
          which is designated for agricultural use
          in accordance with the provisions of this
          Section shall be assessed for all tax
          purposes on the consideration of only those
          factors relative to such agricultural use.
          'Agricultural use' means the raising of
          livestock or growing of crops, fruit, flowers,
          and other productisof the soil under natural
          conditions as a .business venturx    profit,
          which business is the primary occupation and
          source of income of the owner. (Emphasis added).
     Specifically, you ask (1) whether the term "natural
conditions" as used in section l-d obligates a taxing authority
to~value land that uses irrigation or has irrigation potential
differently from land that does not have water for irrigation
and is considered to~be dry land and (2) if irrigated land is
not valued differently, what definition of "natural conditions"
would be constitutional under the Fourteenth Amendment to the
United States Constitution7     . .,




                               p. 3370
The Honorable Bill Clayton - page 2 (H-799)


     Land eligible for assessment under section l-d is taxed
according to its value, but the value is one determined on
the assumption t~hatthe land can be used only for agricultural
purposes. p      c Real, 466 S.W.Zd 1 (Tex. Civ: App. -- San
Antonio 197 , writ ref'd.n.r.e.1. The possibility that the
land may be worth more if used for other purposes, e.g., sub-
divided for a housing development, may not be considered.
King v. Real, supra at 7. Such a~scheme of "preferential
asse6sment"i.s intended to encouraae continued use of land
for agriculture by providing tax relief to certain owners of
ranch or farm land who otherwise might sell the land or convert
it to a more intensive use because of an inability to pay
higher taxes resulting from land values inoreased by nearby
residential, industrial, or resort growth. See Klit aard v.
Gaines, 479 S.W.Zd 765, 760 (Tex. Civ. App. ==--AGZXZ-D72;-
writ ref'd n.r.e.); Braden, The Texas'Constitution: An Annotated
and Comparative Analysis, Art. VIII at 15-17 (Preliminary
Edition 1974); U.S. Dept. of Agriculture, State Programs for
the Differential Assessment of Farm and Ooen Soace Land (1974):
               Ca u a Ind. School Dist     5i5 S~i426 32 (Tex   ..
&%    ~-%&9~w~f~~.e.)                          (Rehearing gra;tedr
arguments heard January 7, 1976); San Marco6 Consolidated Ind.
School Dist. v. Nance, 495 S.W.2d m      (Tex.Clv. App. -- Au'stin
-writ       reFd n.r.e.    at 502 S.W.Zd 694, 1974); Driscoll
Foundation v. Nueces Count
                        f ,d erred: ~;";:~ ‘,.'~~, ~:;;;."pp.--
Beaumont iSz!& writ re
     In the dryer regions of Texas, irrigation is a factor
relative to the use of land for agricultural purposes. See
Mud Creek Irr. A r. 6 Manuf,.Co. ~-Vivian, 74 Tex. 170,11
                 1884). Your first auestion is whether, in
s.w.-nm.-iin9 -7--
those regions in‘which irrigation is-important, the term
"natural conditions" in sectionl-d requires  that land with
water for irrigation be valued for tax purposes as though
the water is not present.
     The precise meaning of any word must be determined from
the context in which it is used.: 53 Tex.Jur.2d Statutes 9
147. In section l-d, the "natural conditions" restriction
is part of the definition of "agricultural use." In turn,
"agricultural use" is important both'.aea qualification for
preferential assessment under section l-d and as the ba'sis
for the ao.$ualassessment. Unless land is "designated for




                            p. 3371
The Honorable Bill Clayton.- page 3     (H-799)




agricultural use”, it is not valued for tax purposes "on the
consideration of only those factors relative to such agri-
cultural use." In the context of your first question, this
means that if "natural conditions" requires eligible land to
be assessed only on its "dry" value, it also requires that
no land may qualify under section l-d unless "designated"
for use as dry land. Irrigated land would be ineligible.
No rational basis for such a distinction is apparent. In
our opinion, such a construction would be contrary to the
purpose of article VIII, section l-d, and could create a
constitutionally questionable classification. See Kahn v.
Shevin, 416 U.S. 351 (1974). Therefore, in thosedryrezons
of Texas where irrigation is a factor relative to the use of
land for agricultural purposes, irrigation or the potential
for irrigation should be considered in determining the value
of land under section l-d.
       Having concluded that irrigated land is valued as such
and not as dry land, we need not answer your second question
concerning the constitutionality of possible meanings of the
“natural   conditions" restriction.
                      S, U M. M A R Y

          Under article VIII, section l-d of the
          Texas Constitution, irrigation or the
          potential for irrigation is a factor
          relative to the agricultural use of land
          and may be considered in determining
          the value of laM,,for purposes of
          taxation.
                                 Very truly yours,




                          p.,   3372
The Honorable Bill Clayton - page 4   (H-799)




APPROVED:

        -&.:                                    ',

DAVID M. KENDALL, First Assistant




Opinion Committee
jwb




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