                                            GREG       ABBOT'S




                                              February 26, 2007


The Honorable Tim Curry                                Opinion No. GA-0522
Tarrant County Criminal District Attorney
401 West Belknap Street                                Re: Legal and tax status of land and improvements
Fort Worth, Texas 76196-0201                           leased by a development corporation--created
                                                       under Texas Revised Civil Statutes article 5 190.6,
                                                       section 4B-to private commercial enterprises and
                                                       used for private commercial purposes
                                                       (RQ-0490-GA)

Dear Mr. Cuny:

         You ask about the legal and tax-exempt status of land and improvements owned by the
Westworth Redevelopment Authority (the "Authority"), but leased to private commercial enterprises
and used for their private commercial purposes.' You inform us that the City of Westworth Village
established the Authority under section 4B of article 5190.6 of the Texas Revised Civil Statutes, the
Development Corporation Act of 1979 (the "Act"). See Request Letter, supra note 1, at 1-2. The
Authority executed agreements with the United States Department of Defense to redevelop parts of
former Carswell Air Force Base for nonmilitary, residential, and commercial uses. See id.at 2. As
part of that redevelopment effort, the Authority sold some properties to commercial enterprises. See
id But more recently the Authority has engaged in lease transactions: The Authority declares an
undeveloped property that it owns "to be for apublic 'project' and, therefore, tax-exempt" and leases
the property to a partnership comprising the Authority and a commercial developer, which then
subleases the property to private commercial enterprises. Id. at 2-3. "In some instances, these
subleases appear to contemplate 'build-to-suit' arrangements, whereby commercial enterprises
sublease the improvements, which, along with the underlying real property, remain titled in the
[Authority]." Id. The consequences of these transactions, you state, are twofold. See id. First,
because the partnership does not have to pay taxes on the land and improvements, the partnership
can sublease the property at more favorable rates than private developers that must include in their
lease rates the required taxes. See id. Additionally, local taxing units may lose substantial tax
revenues on arguably privately used properties. See id at 3-4.




         'See Letter from Honorable Tlm Curry, Tarrant County Criminal District Attorney, to Hol~orableGreg Abbott,
Attonley General of Texas, at 1, 6-7 (May 15, 2006) (on file with the Opi~iionCommittee, also available at
http:i/www.oag.state.tx.us) [hereinafter Request Letter].
The Honorable Tim Curry - Page 2              (GA-0522)



        You ask approximately eighteen questions related to the Authority's lease transactions and
the private commercial use of the leased properties. See id. at 6-7. We consolidate your legal
queries as follows:

               1. Whether the land and improvements leased by the Authority and
               used for private commercial purposes constitute "projects" under the
               terms of section 4B@) of the Act, which exempts certain section 4B
               projects from advalorem property taxes, and whether the Authority's
               board of directors has the discretion to make that determination.

               2. Whether section 4B(k) of the Act is constitutional insofar as
               applied to the leased projects used for private commercial rather than
               public purposes.

               3. Whether the Tarrant County Appraisal District, a taxing unit
               within which the projects are located, or a taxpayer may challenge the
               projects' tax exemptions. You also ask about the procedures for
               challenging the tax exemption.

See id. As a threshold matter, whether a particular property constitutes a "project" under the Act
involves factual determinations. See TEX.REV. CIV. STAT.ANN. art. 5190.6, $5 2(11), 4B(a)
(Vernon Supp. 2006); see also Tex. Att'y Gen. Op. No. JC-0362 (2001) at 5 ("the determinationof
whether a particular project will promote the economic development purposes of the Act is, in
general, a question of fact within the discretion of the board of directors of the development
corporation in the first instance"). Similarly, whether a particular property is exempt from taxation
depends on the facts of the particular situation. See, e g.,Tex. Tpk C o v. Dallas County,271
S.W.2d 400,402 (Tex. 1954). Because you do not ask about a particular property and because this
office does not determine questions of fact in an attorney general opinion, we can only summarize
here the general legal standards that must be applied to the facts of a particular case. See Request
Letter, supra note 1, at 1,6-7; see also,e.g.,Tex. Att'y Gen. Op. No. GA-0106 (2003) at 7 ("This
office cannot find facts or resolve fact questions in an attorney general opinion.").

I.      Statutory Background

        The stated purpose and intent of the Act is to promote economic development by providing
means to secure and retain business and commercial enterprises that will create jobs. See TEX.REV.
CIV. STAT.A m . art. 5190.6, 5 3 (Vernon Supp. 2006); see also TEX. CONST.art. 111, 5 52-a
(declaring economic and commercial development and diversification to be public purposes). To
that end, section4B of the Act authorizes eligible cities to create nonprofit development corporations
governed by that section to undertake and finance authorized "projects." See TEX.REV.CIV.STAT.
A m . art. 5190.6, 5 4B(a)-(b) (Vernon Supp. 2006). A section 4B development corporation has all
the powers granted by both the Act-under the general provisions and under section 4B-and the
Texas Non-Profit Corporation Act. Id. 5 23(a); see also id. 5 22 (stating that a development
"corporation is not intended to be and shall not be a political subdivision or a political corporation
The Honorable Tim Cuny - Page 3                           (GA-0522)



within the meaning of the constitution' and the laws of the state"). As relevant here, those powers
specificallyinclude selling or leasing "to auser all or any part of any project. . .upon suchterms and
conditions as its board of directors may deem advisable and not in conflict with . . . this Act." Id.
5 23(a)(3). And the term "user" specifically includes "anindividual, partnership, corporation, or any
other private entity, whether organized for profit or not for profit." Id. 5 2(15).'

        Section 4B(k) of the Act, which is at the crux of your request, exempts from ad valorem
property taxes, including taxes on leasehold interests, projects added to the definition of that term
by section 4B(a) and owned by a section 4B development corporation. See id. 5 4B(k). The statute
provides as follows:

                          The legislature finds for all constitutional and statutory
                   purposes thatprojects of the types added to the definition of that term
                   by Subsection (a) ofthis section are owned, used, and held for public
                   purposes for and on behalf of the eligible city incorporating the
                   corporation, and except as otherwise provided by this subsection:
                   Section 23(b) of this Act4 and Section 25.07(a), Tax Code: are not
                   applicable to leasehold or other possessory interests granted by the
                   corporation during the period projects are owned by the corporation
                   on behalf of the eligible city. Projects are exempt from taxation
                   under Section 11.11, Tax Code,for that period.

Id. (emphasis added) (footnotes added).




         'Section 2(15)as added by Act of May 20, 1999, 76th Leg., R.S., ch. 973,           5 1, 1999 Tex. Gen. Laws 3722,
3723.

          'The leasehold tax exemption does not apply to a development corporation created by a city in which the city
residents have not authorized the levy and collection of an additional sales and use tax for the benefit ofthe development
corporationpursuantto section4B. See TEX.REV. CIV. STAT. ANN. art. 5190.6,5 4B(k) (Vemon Supp. 2006). The City
of Westworth's residents have authorized an additional sales and use tax for the benefit of the Authority. See Request
Letter, supra note 1, at 4.

         "Section 23(b) provides that a development corporation shall not have the power to operate a project (unless
the project is a closed or realigned military installation or facility) as a business other than as a lessor, seller, or lender.
See TEX.REV.CIV.STAT.ANN.art. 5190.6,5 23(b) (Vemon Supp. 2006). And thus the user pursuant to any lease, sale,
or loan agreement is the owner of the project for tax purposes. See id

         'Tax Code section 25.07 generally requires a leasehold or possessory interest in real property that is exempt
from taxation to the owner of the encumbered property to be listed in the name of the possessory-interest owner if the
duration of the interest is at least one year. See TEX.TAXCODEANN.5 25.07(a) (Vernon Supp. 2006). "[Tlhe 'listing'
provided for in section 25.07 has the effect, in an appropriate instance, of imposing tax liability." County ofDallas Tax
Collector v. Roman Catholic Diocese, 41 S.W.3d 739,74445 (Tex. App.-Dallas 2001, no pet.).
The Honorable Tim Curry - Page 4



11.      Analysis

         A.     Whether the leased land and improvements used for private commercial purposes
                constitute section 4B(k) projects

       You first ask whether the land and improvements leased by the Authority and used forprivate
commercial purposes constitute section 4B(k) projects. See Request Letter, supra note 1, at 6.
Under section 4B(k), projects of the type added to the definition of that term by section 4B(a) while
held by a development corporation are tax exempt under section 11.11 of the Tax Code. See TEX.
REV. CIV.STAT.ANN.art. 5190.6,s 4B(k) (Vernon Supp. 2006); see also TEX.TAX CODEANN.
5 11.11 (Vernon Supp. 2006) (exempting publicly owned property used for public purposes).
         Section 4B(a)(2) provides that for the purposes of section 4B, "projectn6 includes "land,
 buildings, equipment, facilities, and improvements found by the board of directors [of the
 development corporation] to . . . be required or suitable for" or that promote the development of, in
 general, (A) sports, entertainment, tourist, public park purposes and events, and related purposes;
 (B) "new or expanded business enterprises that create or retainprimary jobs, including a project to
 provide public safety facilities, streets and roads, drainage and related improvements, . . . general
 municipally owned improvements, . . . and any other project that the board in its discretion
 determinespromotes or develops new or expanded business enterprises that create or retainprimary
jobs"; (C) affordable housing; (D) water supply facilities; or (E) water conservation programs. TEX.
 REV.CIV.STAT.ANN.art. 5190.6, 4B(a)(2)(At(E) (Vernon Supp. 2006) (emphasis added); see
 also id. 4B(a)(2)(F). A primary job is one that is "available at a company for which a majority of
 the products or services . . . are ultimately exported to regional, statewide, national, or international
 markets infusing new dollars into the local economy," and included in the named sectors of the
 North American Industry Classification System (NAICS). Id. 2(17)(A)(i)-(ii).7

         Additionally, section 4B(a)(3) provides that for a corporation created by an eligible city with
apopulation of 20,000 or fewer persons, "'project' shall also include the land, buildings, equipment,
facilities, expenditures, targeted infrastructure, and improvementsfound by the board ofdirectors
topromote new or expanded business development." Id § 4B(a)(3) (emphasis added). Significantly,
this subsection by its terms does not require that the authorized projects create primary jobs. See id ;
see also id. 5 4B(a)(4) (providing for projects in a "landlocked community"). This provision would
be applicable here because the City of Westworth Village has a population of fewer than 20,000
persons. See UNITEDSTATES       CENSUS   BUREAU,    2000 CENSUS   POPULATION:     POPULATION    FINDER
(population of City of Westworth Village, Texas is 2,124), available at http:llwww.census.govl (last
visited Jan. 3 1,2007).


          %ection 2(11) ofthe Act contains a general definition of "project." See TEX. REV. CIV. STAT.ANN. art. 5190.6,
 5 2(11) (Vernon Supp. 2006).
          'The named sectors are crop production, animal production, forestry and logging, commercial fishing,
 agriculture and forestly support activities, mining, utilities, manufacturing, wholesale trade, transportation and
 warehousing, information, financial and insurance activities, scientific research and development, management of
 companies and enterprises, telephone call centers, correctional institutions, and national security. Id 5 2(17)(A)-(B).
The Honorable Tim Curry - Page 5                (GA-0522)



        The list of projects added to the Act's general definition of that term by section 4B(a) is long
and broad in scope. See TEX.REV. CIV. STAT.ANN.art. 5190.6, 5 4B(a)(2)-(3) (Vernon Supp.
2006). While section 4B authorizes public projects, it plainly does not limit itself to such projects.
See id. Consistently with the economic development purposes of the Act, section 4B authorizes a
development corporation to undertake projects that may be sold or leased for private commercial use.
See id. $5 2(15)8(defiing "user" to include aprivate entity), 23(a)(3)-(4) (authorizingdevelopment
corporation to sell or lease projects to users), 4B(a)(2)-(3) (listing authorized projects); see also W:
Seafood Co. v. City ofFreeport, 346 F . Supp. 2d 892, 898 (S.D. Tex. 2004), a f f m e d inpart, and
vacated andremanded inpart by W: Seafood Co. v. Unitedstates, 2006 WL 2920809 (5th Cir.2006)
(not designated for publication) (concluding that a private marina development falls within the
definition of project in sections 2(11) and 4B(a)(2) of the Act).

         In answer to the first question, then, under the terms of section 4 B Q of the Act, land and
improvements for the specifically listed purposes in section 4B(a)(2) of the Act constitute projects
eligible for tax exemption. Additionally, any other land and improvementthat the Authority's board
of directors determines promote or develop business enterprises in accordance with section 4B(a)(3)
are such eligible projects. Land and improvements meeting the section 4B(a) standards and used for
private commercial purposes would constitute eligible projects under section 4B(k). But whether
a particular property or improvement constitutes a "project" under these standards is a question of
fact. See, e g., Tex. Att'y Gen. Op. No. JC-0362 (2001) at 5. The Act grants the Authority's board
of directors the discretion to make that determination in the first instance subject to judicial review
for abuse of discretion. See TEX.REV. CIV. STAT.ANN.art. 5190.6, 5 4B(a)(2)-(3) (Vemon Supp.
2006); Barrington v. Cokinos, 338 S.W.2d 133, 142 (Tex. 1960) ("[Wlhere the law visits upon a
governing body the duty to exercise its sound judgment and discretion, courts have no right to
interfere so long as such body acts lawfully. . . . [I]f such body acts illegally, unreasonably, or
 arbitrarily, a court of competent jurisdiction may so adjudge . . . .") (quoting Lewis v. City ofFort
 Worth, 89 S.W.2d 975,978 (Tex. 1936));see also Tex. Att'y Gen. Op. No. JC-0362 (2001) at 5 ("the
 determination of whether a particular project will promote the economic development purposes of
the Act is, in general, a question of fact within the discretion of the board of directors of the
 development corporation in the first instance").

        B.     Whether section 4B(k) is constitutional insofar as applied to leased projects used
               for private commercial rather than public purposes

        Section 4B(k) of the Act provides that "for all constitutional and statutory purposes[,]
projects of the types added to the definition of that term by Subsection (a) of this section are owned,
used, and held for public purposes for and on behalf of the eligible city incorporating the
corporation," and they "are exempt from taxation under Section 11.11, Tax Code, for that period."
TEx. REV. CIV.STAT.ANN.art. 5190.6, $ 4B(k) (Vernon Supp. 2006).

        Article VIII, section 1 ofthe Texas Constitutioncommands that all real property and tangible
 personal property is taxable unless exempt as required or permitted by the Texas Constitution. See


         'See supra note 2
The Honorable Tim Cuny - Page 6                         (GA-0522)



TEX.CONST.art. VIII, 5 l(b). Article VIII, section 2(a) provides that the "the legislature may, by
general laws, exempt from taxation public property used for publicpurposes." TEX.CONST.art. VIII,
5 2(a); see also id art. XI, § 9 ("The property of counties, cities and towns, owned and held only for
public purposes, . . . and all other property devoted exclusively to the use and benefit of the public
shall be exempt from forced sale and from taxation. . . ."). Article VIII, section 2(a) "authorizes the
Legislature to exempt only publicly owned property used for public purposes." Leander Indep. Sch.
Dist. v. Cedar Park Water Supply Corp., 479 S.W.2d 908,912 (Tex. 1972);see also N Alamo Water
Supply Corp. v. Willacy County ~ppraisalDist., 804 S.W.2d 894, 899 (Tex. 1991) (stating that
statutory definitions and standards cannot replace constitutional requirements). Pursuant to article
VIU, section 2(a), the Legislature enacted section 11.11 of the Tax Code. See Hays County
AppraisalDist. v. Sw. Tex. State Univ., 973 S.W.2d419,421 n.1 (Tex. App.-Austin 1998,nopet.);
see also Tex. Att'y Gen. Op. No. JM-1049 (1989) at2-3 (Legislature enacted section 11. l l pursuant
to article VIII, section 2). Section 11.1l(a) provides that "property owned by this state or apolitical
subdivision of this state is exempt from taxation if the property is used for public purposes." TEX.
TAXCODEANN. § 11.1l(a) (Vernon Supp. 2006).

         The issue here is limited to whether section 4B(k) projects used for private commercial
purposes meet the public purpose use requirement of Texas Constitution article VIII, section 2 and
Tax Code section 11.1l(a).9 For tax exemption purposes, the Texas Supreme Court has said that
public property is used for public purposes if it is used primarily "for the health, comfort, and welfare
ofthe public." A. & M. Consol. Indep. Sch. Dist. v. Czty ofBryan, 184 S.W.2d914,915 (Tex. 1945).
"It is not essential that it be used for governmental purposes. It is sufficient if it be property which
all of the public has a right to use under proper regulations." Id. (citations omitted). Property used
for the private commercial purposes of a lessee is not used primarily for the health, comfort, and
welfare of the public, and all the public does not have a right to use it. See City of Beaumont v.
Fertitta, 415 S.W.2d 902,908-09 (Tex. 1967) (stating that city-owned property used by lessee for
private commercial purposes cannot be said to be used for public purposes under the A. & M. Consol.
Indep Sch Dist definition). The fact that the public entity may use the revenues derived from the
lease for public purposes is insufficient to qualify the property for tax exemption. See id. at 908.
Thus section 4B(k) projects leased to private commercial enterprises and used for private
commercial purposes would not be used for public purposes under the established constitutional test.
And section 4B(k)'s statement-that all projects added to the definition of that term by section
4B(a)(2) are used for public purposes-would not alone replace or substitute for this constitutional
requirement. C$ N Alamo Water Supply Corp., 804 S.W.2d at 899 ("The assertion that statutory
provisions can replace constitutional requirements is erroneous. . . . Before an organization can be
considered for qualification for tax exempt status under section 11.18 of the . . . Tax Code, [it] must


          'You suggest that section 4B(k) as applied to exempt 60m taxation projects used for private commercial
purposes may violate the article VIII, section 1 requirement that taxation be equal and uniform and the article 111, section
52(a) prohibition against lending of credit. See Request Letter, supra note 1, at 7. In the context of your letter, we
assume that these suggestions are premised on the argument that the privately used projects are not exempt under arlicle
VIII, section 2 because they are not used for public pulposes. Additionally, you do not ask and we do not address
whether the property here is publicly owned as required by Texas Constitution article VIII, section 2(a) or owned by "this
state or a political subdivision of this state" as required by Tax Code section 11.1](a). See TEX.TAXCODEANN. 5
11.11(a) (Vernon Supp. 2006).
The Honorable Tim Curry - Page 7                (GA-0522)



first meet the applicable constitutional requirements which entitle those organizations to seek the
exemption." (citations omitted)); Tex. Tpk. Co , 271 S.W.2d at 402 ("Public ownership, for tax-
exemption purposes, must grow out of the facts; it is a legal status, based on facts, that may not be
created or conferred by mere legislative, or even contractual, declaration."); Hous. Auth. v.
Higginbotham, 143 S.W.2d 79,84 (Tex. 1940) ("Mere fiat, whether pronounced by the Legislature
or by a subordinate agency, does not make that a public use which is not such in fact, and the
question (always present) as to the true nature of the use is one of law.").

        However, because such section 4B(k) projects are authorized to promote economic
development, we must consider whether Texas Constitution article In, section 52-a-deeming
economic development measures public purposes for the expenditure of public funds--expands the
definition of public purpose for tax exemption purposes. Article 111, section 52-a provides that:

                Notwithstanding any other provision of this constitution, the
                legislature may provide for the creation of programs and the making
                of loans and grants of public money. . . for the public purposes of
                development and diversification of the economy of the state, the
                elimination of unemployment or underemployment in the state. . . or
                the development or expansion of transportation or commerce in the
                state.

TEx.CONST.art. 111, 5 52-a.
        Article 111, section 52-a by its terms creates exceptions to the preexisting constitutional
prohibitions against the use of public funds and resources to aid private persons and promote
economic development. See id; see also Barrington, 338 S.W.2d at 140 (stating that municipal
funds and credit may not be used to aid private enterprise simply to obtain the general benefits
resulting from operation of such enterprise); see also HOUSERESEARCHORG.,    BILLANALYSIS,     Tex.
H.J. Res. 5, 70th Leg., R.S. (1987) at 1-2 (stating that the amendment is "necessary to override
certain current constitutional provisions that might be construed as prohibiting economic
development investments by state or local governments that aided individual companies"); TEXAS
LEGISLATIVE   COUNCIL,    ANALYSES  OFPROPOSED     CONSTITUTIONAL  AMENDMENTS AND REFERENDA
 14 (Sept. 1987)(stating that proposed amendment would resolve questions under article 111, sections
51 and 52 and make clear that public funds could be used to make loans and grants to private
businesses to aid economic development).

        Article 111, section 52-a does not by its terms directly exempt from taxation properties used
 for economic development purposes or expand the public purposes for which the Legislature may
 exempt such property pursuant to article VIII, section 2. See TEx. CONST.art. III, 5 52-a; Stringer
 v. Cendant Mortgage Coup., 23 S.W.3d353,355 (Tex. 2000) (statingthatwheninterpretingthe state
 constitution, we must look at its literal text and give effect to its plain language). In fact, it makes
 no reference to taxation or exemption. See TEX.CONST.art. 111, 5 52-a And to date no Texas court
 has addressed whether article 111, section 52-a expands the definition of public purpose for tax
The Honorable Tim Curry - Page 8                       (GA-0522)



exemption purpose^.'^ In the absence of express constitutional language and binding judicial
authority, we decline to construe article 111, section 52-a to expand the definition of public purpose
for tax exemptionpurposes. See N. Alarno Water Supply Corp.,804 S.W.2d 899 ("exemptions from
taxation are not favored by the law and will not be favorably construed")."

        In answer to the second question,we conclude that a court could determinethat section4BO
is unconstitutional as applied to exempt from ad valorem taxation particular projects used for private
commercial purposes that do not meet the established public purpose use test, i.e., used primarily
for the health, comfort, and welfare of the public that all of the public has a right to use under proper
regulations.

        C. Whether the Tarrant County Appraisal District, a taxing unit, or a taxpayer may
               challenge the projects' tax exemptions

       Finally, you ask whether the Tarrant County Appraisal District, a taxing unit, or a taxpayer
may challenge the tax-exempt status of the land and improvements designated as section 4B(k)
projects. See Request Letter, supra note 1, at 6-7. You also ask about the procedures for
challenging the projects' tax-exempt status. See id. at 7.

        The Tax Code provides the procedures for challenging tax exemptions. It establishes an
appraisal district in each county and requires each district to appraise property for each taxing unit
that imposes ad valorem taxes on property in the district. See TEX.TAXCODEANN.§ 6.01(a)-(b)
(Vernon 2002). The appraisal district's board of directors appoints the chief appraiser who is the
chief administrator of the appraisal office. See id. 5 6.05(c) (Vernon Supp. 2006). The Tax Code
also establishes an appraisal review board for each district, which is charged with ensuring that


         ''The Arkansas Supreme Court has construed a constitutional amendment authorizing economic development
financing to allow tax exemption of publicly owned property (financed under the statutory economic development
program) usedfor private commercialpurposes under the state's constitutionalprovision exemptingpublic property used
exclusively for puhlic purposes. See Pulaski County v. Jacuzzi Bros. Div., 964 S.W.2d 788 (Ark. 1998). In 2004, the
United States District Court for the Southern District determined, based on article 111, section 52-a's and the Act's
recognition that economic development is a public purpose and the Texas courts' liberal interpretation of public use
requirement under the taking clause, that condemnation ofproperty for a private marina project didnot violate the public
use requirement of Texas Constitution article I, section 17. See K Seafood Co. v. City ofFreeport, 346 F. Supp. 2d 892,
898 (S.D. Tex. 2004), affirmedinpart, andvacated andremandedinpart by K SeafoodCo. v. UnitedStates, 2006 WL
2920809 (5th Cir.2006) (not designated for publication). But the Fifth Circuit Court of Appeals, while upholding the
exercise of eminent domain under the United States Constitution, vacated and remanded on the taking claim under the
state constitution for reconsideration in light of Government Code section 2206.001, placing limitations on the use of
eminent domain for.economic development purposes. See W Seafood Co. v. UnitedStates, 2006 WL 2920809, at *I,
46;see also Act of Aug. 16,2005,79th Leg., 2d C.S., 5 1,2005 Tex. Gen. Laws 1, 1-2 (enacting Government Code
section 2206.001, the Limitations on Use of Eminent Domain Act).

         ''See also Bullock v. Nat'l Bancshares Corp., 584 S.W.2d 268,271-72 (Tex. 1979) ("Statutory exemptions
from taxation are subject to strict construction . . . ."); accordRiver Oaks Garden Clztb v. City ofHouston, 370 S.W.2d
851, 854-55 (Tex. 1963); Bexar Appraisal Dist. v. Incarnate Word Coll, 824 S.W.2d 295, 297 (Tex. App.-San
Antonio 1992, writ denied) ("It is a long-standing rule ofconstruction in Texas that language granting exemptions from
taxation must be construed strictly.").
The Honorable Tim Cuny            -   Page 9              (GA-0522)



property is properly appraised. See id. $5 6.41 (Vernon Supp. 2006), 41.01 (Vernon 2002). Each
year, the chief appraiser must prepare appraisal records listing all taxable property in the district and
stating its appraised value. See id 5 25.01 (Vernon 2002). Following notice to the property owners
of the appraised value, the chief appraiser submits the completed appraisal records to the appraisal
review board "for review and determination of protests." Id. 5 25.22(a). The appraisal review
board's duties include, as relevant here, determining protests initiated by taxpayers, challenges
initiated by taxing units, and "whether an exemption or a partial exemption is improperly granted."
Id. $ 4 1.Ol(a)(l)-(2), (5). Taxing units are entitled to bring challenges of designated actions before
the appraisal review board, including challenges to the exclusion of property from the appraisal
records and "a grant in whole or in part of a partial exemption." Id. 5 41.03(a)(2)<3). The owner
of the property is entitled to protest the inclusion of the property on the appraisal records or denial
"in whole or in part of a partial exemption." Id. 5 41.41(a)(3)-(4). And the property owner, the
taxing unit, and the chief appraiser are entitled to appeal to a district court an order of the appraisal
review board determining protests of property owners and challenges by taxing units. See id.
§ $ 42.01, .02, ,031, .21.

        In answer to the third question, the Tax Code permits the Tarrant County Appraisal District
to challenge the tax-exempt status of a particular property designated by the Authority as a section
4B&) project. See id. $5 25.01,42.02; see also Jester Dev. Corp. v. Travis County Appraisal Dist.,
775 S.W.2d 464, 4 6 5 4 6 (Tex. App.-Austin 1989, no writ). The chief appraiser of the Tarrant
County Appraisal District is charged with initially determining whether the section 4B(k) tax
exemption applies to a particular property designated by the Authority as a 4B(k) project. See TEX.
TAXCODEANN. § 25.01 (Vernon 2002)." If the District does not believe that the property is tax
exempt, it may include the property on the appraisal records as taxable property and then defend its
position before the Tarrant County Appraisal Review Board and appeal to the district court an order
of the board determining in favor of the property owner. See id. $5 25.01,42.02; Jester Dev. Corp.,
775 S.W.2d at 466 ("[Tlhe Appraisal District should apply the statute as it thinks proper and, if the
taxpayer appeals to district court, then the . . . District may defend its position.").

       Additionally, the Tax Code permits a taxing unit within which a particular property
designated by the Authority as a section 4B(k) project is located to challenge before the Tarrant
County Appraisal Review Board the exclusion of the property from the appraisal records and appeal
to the district court the board's determination. See TEX. TAXCODEANN. $$ 41.03(2), 42.031
(Vernon 2002); see also Atacosa County v. Atacosa County Appraisal Dist., 990 S.W.2d 255,259
(Tex. 1999) ("Chapters 41 and 42 of the Tax Code allow a taxing unit to challenge appraisal district
deiisions that affect appraisal records.").

        But "[nlowhere in the tax code is there a provision for an individual taxpayer to challenge
the grant of an exclusion [from the appraisal records] on another's property in the courts." Scott v.
Harris MethodistHEB, 871 S.W.2d 548,550 (Tex. App.-Fort Worth 1994,no writ). Thus, theTax


           ''See, e.g., Nw. Indep. Sch. Dist. v. City ofFort Worth, 1997 W L 269095, at *2 (Tex. App.-Austin 1997, no
 pet:) (not designated for publication) (stating with respect to a4B(k) project that the "appraisal district will have to make
 some threshold determinations before the property will have tax-exempt status").
The Honorable Tim Cuny - Page 10               (GA-0522)



Code does not give an individual taxpayer an administrative remedy or statutory standing to
challenge an exemption granted to any other property owner. See id. Additionally, under the
common law, "[a] private citizen who seeks to assert a public right lacks standing to assert that right
unless he can establish that he has been injured in a manner distinct from others." Id. (citations
omitted). The fact that the taxpayer will pay higher taxes because of the exemption granted to
another is insufficient. See id.
The Honorable Tim Curry - Page 11            (GA-0522)



                                      S U M M A R Y

                     Under the terms of section 4B(k) of article 5190.6, Texas
              Revised Civil Statutes (the "Act"), land and improvements for the
              specifically listed purposes in section 4B(a)(2) of the Act constitute
              projects eligible for tax exemptions. Additionally, any other land and
              improvements that the Westworth Redevelopment Authority's (the
              "Authority") board of directors determines promote or develop
              business enterprises in accordance with section 4B(a)(3) of the Act
              are such eligible projects. But whether a particular property or
              improvement constitutesa "project" under the section 4B(a) standards
              is a question of fact. The Act grants the Authority's board of
              directorsthe discretion to make that determination in the first instance
              subject to judicial review for abuse of discretion.

                      Under the terms of section 4B(k) of the Act, projects used for
              private commercial purposes would be eligible for tax exemption. A
              court could determine that section 4B(k), when applied to exempt
              from ad valorem taxes such projects that do not meet the established
              public purpose use test, is unconstitutional as applied.

                     The Tax Code permits the Tarrant County Appraisal District
              and a taxing unit in which a particular property designated by the
              Authority as a section 4B(k) project is located to challenge the
              property's tax-exempt status.




                                              ~ t t o r n d e n e r aof
                                                                     l Texas


KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee
