                           QiXfice    of the 5!lttornep @enera
                                        Mate of Qexae
DAN MORALES
 Al-ronNLY
        GENERAL                            Jmuaiy25,19%



      Mr. Ray Far&es                                 Opiion No. DM,374
      of&e OfGeneral ColuLwl
      The University of Texas System                 Re: Whether the El Paso County Water
      201 west seventh street                        Jmprovement District No. 1 may, pursuant
      Austin, Texas 787013981                        to chapter 55, subchapter N of the Water
                                                     code,assessrtaxonthe~tbasis
                                                     against land belonging to the Permanent
                                                     University Fund (IQ-71 5)

      Dear Mr. Farabee~

              You have requested our opinion as to whether land belong@ to the permanent
      University Fund’is subject to taxation on a be&t basis under chapter 55, subchapter N
      of the water code. You state that, since 1977, the El Paso County water Improvement
      District No. 1 (the ‘dist&t”) has been levying rmesmats, penalties, and interest on three
      tracts of land belonging to the Permanent University Fund and located in El Paso County?
      You tkther inform us that the three tracts of land are leased out for grazing purposes, but
      that neither the bosrd of regents of The University of Texas System (the “university”) nor
      the lessee has requested water from the ditict.~ Furthermore, you state that the land
      never has rcmived water service from the district.

             We understsnd that the district is a political subdivision6f the state, orgsnized and
      existing pursuant to article XVI, section 59 of the Texas Constitution. Chapter 55 of the
      Water Code pertains to water improvement districts. Section 55.022 authorizes the
      commissioners court of a county to create one or more water improvement districts in the
h4r.RayFambee     - Page 2                  (DM-374)




county.4 A water improvement district operating under article XVl, section 59 of the
Texas Constitution, such as the district, may be created for three purposes:
1. To provide for irrigation of land within the district’s boundaries.
2. To knish water for domestic, power, and commemialpurposes.
3. To cooperate with the United States under the federal reclamation laws for the
   purpose of (a) constructing irrigation and drainage facilitiesn#xssary to kaintain the
   inigabiity of the land, (b) purchasing extendm& operat& or mainta&g the
   consttucted fkcihies; or (c) assuming indebtedness to the United States on account of
   district lands.
Water Code 5 55.161.

         Section 55.651(a) of the Water Code authorizes a water improvement district that
operates under the provisions of article XVI, section 59 of the consthution to ask, at the
time the district is created or before it issues bondq the district’s voters whether the
district wilt levy, assess, and collect taxes on the ad valorem or on the beneSt basis. Upon
the electorate’s approval of taxation on the be&t basis, and as soon as practicable after
the district has adopted the plan for improvements to be constructed, the board of
directors of a water improvement district must appoint three disinterest~ commissioners
to “view the land in the district which will be atlbcted by the district’s reclamation
plans. . . and [to] assess the amount of the benefit and damages that will accrue to the
land . . from the construction of the improvamnts Id. 5 55.662. Following a hearing,
the mnmissioners must issue a final order statin the amount of berm&s or damages
assessed on each tract of land. Id. 8 55.668.
                                                    i
        If the voters of the district previously have approved it, the beneSts for tax
purposeswillbefixed”as~cqu~sumoneachrcreofLandthatisirrigatedortobe
irrigated by gravity flow from the canal system of the district” (the %niform acreage
valuation”). Id. 8 55.670. A district using the uniform acreage valuation for taxation need
not ascemin the value of an improvement to a partiadar tract of land.s Id. 08 55.670,
.673. In addition, sn owner of nonirrigable land may have his or her land excluded from
thedistrict. Id 5 55.672.




                                            p.   2031
Mr.RayFarabee - Page 3                      (DM-374)




        We uuderstand from the district’s briefthat the district derives most of its revenue
from taxes assessed on the benefit basis and that it has adopted the uniform acreage
valuation for taxation.6 You believethat the district may not levy taxes on the benefit
basis against the hmd belongingto the Permsnent University Fund. You argue first that, if
taKation on the beneflt basis is in fkct a qwial or local asses-          the district, you
belim,musttuIveexpressauthoritytolevythe         wsasment against the lands of the Public
University Fund. Because the district lacks such specik authority, you assert that the
district may not collect the benetit assessment against the Permanent University Funds
land. If,ontheotherhand,thebene6t      assessmentisatax,weunderstandyoutocontend
that,underarticleVJ&section16oftheTexasConstitutionasweUassection1l.ll(b)of
the Tax Code, the land is exempt from all taxes except county taxes.

        The diict avers that taxation on the benefit basis is indeed a tax, not a special
assessment. Futiermore, the district believes that because the university leases the land
for grazing purposes, the land is not used for a public purpose and, pursuant to section
11.1l(e) of the Tax Code, is not exempt from the tax. .Seealso Water Code 8 55.676
(providing that *[iIn a district that levies taxes on a benetit basis, the rate of taxation and
the ususment and collection oftaxes shall be governed by the law taking to ad valorem
taxes to the extent applicable”).

        Asapreliminarymaner,wewillQcMlinethedistinctionbamenatax~da
special assessment. Broadly spealdng, the terms “tax” and “taxes” encompass evety
burden, including a special assessment, that a govemmental body, by virtue of the taxing
power. lawiblly may impose upon the citizen. 84 C.J.S. 7”rion 8 1, at 32 (1954);
accord Annot.. 90 AL.R 1137, 1137 (1934). In a narrower sense, however, taxes and
special assessments are distinguishable. &mot., 90 A.L.R at 1137; see &o Attorney




                                             p.   2032
Mr. RayFsmbee - Page 4                      (DM-374)




General Opinions M-1035 (1989) at 3 (citing Civ of Wichirp Falfs v. Williams, 26
S.W.Zd910,911 (Tex. 1930)). N-523 (1986) at 1.
           Taxes, as the term is generally used, are public burdens imposed
           generAllyon the inhabitants of the whole state, or some civil division
           therwc for govemmental purposes, without reference to peculiar
           benefits to particuhu individuals or property. Assessments have
           reference to impositions for improvements which are specially
           bene!kid to particular individuals or property and which are
           r~,in        proportion to the particular benefits supposed to be

Annot., 90 ALR at 1137. Thus, a tax is collected for the purpose of raising revenue, to
be used for public or governmental purposes, and is unrelated to any special benefit the
taxpayer may receive fkomthe expmdiie of the funds. See Conlen Groin & Mercuntile.
Inc. v. Texas Grain Sorghum producers Bd., 519 S.W.2d 620.623 (Tar. 1975); Attorney
General opinions JM-1035 (1989) at 3 (and csses cited therein), O-1861 (1940) at 4
(citing Clegg v. State, 42 Tex. 605,608 (1875)); 84 C.J.S. T&on 0 1, at 33 (1954). A
special assessment, on the other hand, is imposed upon property that will benetit from a
proposed improvement, levied upon an individual property owner in proportion to the
benefit the property is expected to derive from the improvement, and designed to cover
the wsts of the improvement. Attorney Gem& Opiion JM-iO35 (1989) at 2 (quoting
City of Wichiia Falls v. Willimrp, 26 S.W.2d at 911); see a&o 6A C.J.S. Assement
571-72 (1975).

         We believe that we need not determine here whether taxation on the be&t basis
under section 55.651(a) of the Water Code is a tax or a special assessmentbecausewe
conclude that the district may not impose either a tax or a special assessment on the land.7
If the benefit assessment is a tax, we look to article VII. section 16 of the constitution and
its statutory counterpart, section 11.l l@) of the Tax Code. Both provide that land of the
Permanent University Fund is taxable for county purposes. This office determined in
Attorney General Opinion JM-1049 that land comprising the state permanent university
iimd is taxable for county purposes only. Attorney Genera) opinion JM-1049 (1989) at 7.




                                           p.   2033
Mr. Ray Farabee - Page 5                     (DM-374)




        Article VIII, section 2(a) of the Texas Constitution authorizes the legislature to,
“by general laws, exempt from taxation public property used for public purposes.” Under
article VIlI, section 2(a). public property leased to a private individual to carry on a
business is not used for public purposes. Article VIII, section 2(a) is not applicable to
land of the Permanent University Fund, however. See State v. Universi~ of Iiousmn, 264
S.W.2d 153,154-55 (Ten. Cii. App.-Galveston 1954, writ ref’d n.r.e.); Attorney General
Opiion MW-430 (1982) at 2-3; see aka Attomq Genersl Cpiions JM-1049 (1989) at
7, o-1861 (1940) at 5.

        Thelegi&ureenactedsection       11.11 oftheTaxCodepursuanttotheauthority
article VIII, section 2(a) grants it. Attorney General Opiion DM-272 (1993) at 3.
Section 11.11 provides for the tsmtion of public property, and it states in pertinent part as
follows:
                  (a) Except as provided by Subsections (b) and (c) of this
             sectioq property owned by this state or a poUtic.rJsubdiision of this
             state is exempt from taxation if the property is used for public
             pWQOSU.


                  (b) Land owned by the Permanent University Fund is taxable
             for county purposes. . . .
                     ...
                  (d) Property owned by the state that is not used for public
             purposes is taxable. Property owned by a state agency or institution
             is not used for public purposes if the propetty is rented or leased for
             compensation to a private business enterprise to be used by it for a
             purpose not related to the performance of the duties and functions of
             the state agency or institution. . .
                  (e) It is provided. however, that property that is held or
             dedicated for the support, maintenance,or benefit of an instiion of
             higher education as deiked in Chapter 61, Texas Education Code,
             but is not rented or leased for compensation to a private business
             enterprise to be used by it for a purpose not related to the
             perfomutnce of the duties and timctions of the state or
             instiMion . . . isnottmrable.~. ,
This ofiw d&nnined that section 11.1l(b) is an exception to the generat principles set
out in section 11.1l(a), (d). Attorney General Opiion I’M-1049(1989) at 7-8. We do
not believe that subsection (e) applies to land owned by the Permanent University Fund.’
Article VII, section 16 of the Texas Constitution makes taxable for county purposes only


         *although~uorocyGmerslOpinionJM-1049quoted section Il.ll(e) of the Tax Cd, the
@lliOtldidllOtdi6ClWthCSCCUW.




                                             P.   2034
Mr. Ray Farabee - Page 6                   (DM-374)




land belonging to the Permanent University Fund. In our opinion, section 11, 11(b) of the
Tax Code wrresponds to article VII, section 16 of the wnstitution. Land owned by the
Permanent University Fund is taxable only in accordance with subsection (b); subsections
(e), as well as wbsections (a) and (d), are inapplicable. To wnstrue subsection (b) as
wmplementary of subsections (a), (d), and (e). so that all Pemtanent University Fund land
is subject to rll county taxes and, if the hnd is not used for a public purpose, to all other
taxes, would wntravene article VII, section 16 of the wnstitution.s Furthermore, as we
have stated above, article VII& section 2 is inapplicable to lands of the Permanent
University Fund.

        Additionally, as we have stated above, the land is not subject to truution on the
benefit basis if the tax is in thct a special assessment. In Mrurrick Corm@Waer Cantrol
& ImpmvementDistrict No. 1 v. State, 456 S.W.2d 204 (Tex. Cii. App.-San Antonio
1970, writ refd), the court of civil appeals considered whether the sovereign is liable to
pay specirl assessments levied against state land?
          It is generally held that, in the absence of ckar legislative
          authorization, a political subdivision of the State has no power to
          levy a special assessment against State property. We adopt this view
          at least in a case where, as here, the sovereign is neither making nor
          wntemplating any use of the allegedly benefited land and has wither
          received nor requested the services rendered by the assessing
          agency.”




                                           P.   2035
Mr. Ray Farabee - Page 7                  (DM-374)




Id. at 207 (footnote added); see ako Attorney General Opinions JM-1035 (1989) at 8-9
(discussing Maverick Caun~ Water Cantrol & lmpravement District No. I), JM-535
(1986) at 2-3 (same), MW-551 (1982) at 2-3 (same). In this case. we find no clear
legislative statement authorizing the district to exact a benefit assessment against lands
held by the Permanent University Fund. C! Attorney General Opinion JM-1035 (1989) at
 10-13 (concluding that Water Code section 26.176(b) clearly authorizes local government
to impose capital rewvery fee on land Texas A&M University owned). Furthermore, we
do not understand that the state is nuking or wntetnphtting any use of the land and has
received or requested district services.ts

        We therefore conclude that, whether taxation on the benefit basis under section
55.651(a) of the Water Code is considered a tax or a special assessment, the district may
not levy a “tax. . . on the benefit basis,” see Water Code 4 55.651(a), against the three
tracts of land owned by the Permanent University Fund.


                                  SUMMARY

               WhetherthewaX..     . on the benefit basis” authorized by chapter
          55. subchapter N of the Water Code is a tax or a special assessment,
          the El Paso County Water Improvement District No. 1 may not levy
          such a tax against land owned by the Permsnent University Fund.




                                                     DAN MORALES
                                                     Attorney General of Texss

JORGE VEGA
Fii Assistant Attorney Genera)

SARAH J. SHIRLEY
Chair, Opiion Committee

Prepared by Kymberly K. Oltrogge
Assistant Attorney General



        12In~evtnt,whethathesratekusingmyorPUdthekodwithintbcdimicSorwhc(hertbc
nuchssreccivcdorrrqucacddirtriarcniarucitJuadfsathrtnrrina~~~fortbccpinion
process. See, eg., ~tmney Gautd Opiions DM-98(1992)at 3. H-56(1973)at 3, M-187(1968)at 3,
O-2911(1940)at 2.


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