Can a Texas navigation district grant a tax abatement on land the county already abated, and for how long?

Texas AG Opinion DM-0090: A Navigation District's Tax-Abatement Window

Plain-English summary

A county attorney asked two questions about whether the Chambers-Liberty Counties Navigation District could grant a property-tax abatement. First, could the district abate taxes on land that was already the subject of a county tax abatement agreement executed on November 27, 1990? Second, could it abate taxes for a landowner if one of the district's board members owned an interest in the property? The Attorney General answered the first question in a way that made the second one unnecessary.

The governing law was chapter 312 of the Tax Code, the Property Redevelopment and Tax Abatement Act. That chapter lets a county or a municipality designate a reinvestment zone and execute a tax abatement agreement with a property owner there. It does not give other taxing units, like a navigation district, the power to start an abatement on their own. Instead, the opinion read the chapter to mean that other taxing units can abate the same property only in a follow-on role: after a county or city signs an abatement agreement, each other taxing unit in which the property sits may execute its own agreement within 90 days, and that agreement has to carry terms identical to the county or municipal one. The terms, in other words, have to be supplied by the pre-existing county or municipal agreement, not invented by the district.

Applying that, the navigation district (a self-liquidating district under chapter 63 of the Water Code, and a "taxing unit" under the Tax Code) could have abated taxes on the land only within 90 days of the county's November 27, 1990 agreement. By the time of the request, that window had closed, so the district no longer had authority to enter an abatement agreement on that property. Because the district had no authority regardless, the opinion did not need to address whether a board member's ownership interest would have been a separate problem.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Chapter 312 of the Tax Code has been amended several times since 1992, including changes to how and when taxing units other than counties and municipalities may participate in abatements. Verify current law before relying on the 90-day rule or any section number mentioned here.

Common questions

Can a navigation district grant a property-tax abatement on its own?
No. Under chapter 312 of the Tax Code, only counties and municipalities can initiate a tax abatement. A navigation district and other taxing units can only follow a county or city agreement, and only within a set window.

How long does a taxing unit have to join a county's abatement?
Ninety days. After a county or municipal abatement agreement is executed, each other taxing unit where the property is located has 90 days to execute its own agreement, with terms identical to the county or city agreement.

Why couldn't the navigation district act here?
Because the county's abatement agreement was executed on November 27, 1990, and the district's authority to abate the same land ran out 90 days after that date. By the time of the question, the window had already closed.

What about the board member who owned an interest in the property?
The opinion never reached it. Once it decided the district had no authority to abate the land at all, the conflict-of-interest question in the second part of the request did not need an answer.

Background and statutory framework

Chapter 312 of the Tax Code (the Property Redevelopment and Tax Abatement Act) authorizes a municipality or county to designate a reinvestment zone and execute a tax abatement agreement with the owner of taxable real property there (Tax Code §§ 312.204, 312.402), entitling the owner to a property-tax exemption (see § 11.28). The opinion inferred that other taxing units' authority to participate is conditioned by provisions such as §§ 312.002, 312.006, and 312.207(a), and that § 312.206(a), applied to county agreements through § 312.402(b), gives each other eligible taxing unit 90 days after the municipal or county agreement to execute an identical-terms agreement. The Chambers-Liberty Counties Navigation District is a self-liquidating navigation district under chapter 63 of the Water Code and a "taxing unit" under Tax Code § 1.04 (see Attorney General Opinion MW-3 (1979)). The Act also cross-references the Texas Enterprise Zone Act, article 5190.7, V.T.C.S.

Citations

Statutory provisions:

• Tax Code ch. 312 (Property Redevelopment and Tax Abatement Act), including §§ 312.002, 312.204, 312.205, 312.206, and 312.402
• Tax Code § 11.28 (tax exemption under an abatement agreement)
• Tax Code § 1.04 (definition of "taxing unit")
• V.T.C.S. art. 5190.7 (Texas Enterprise Zone Act)
• Water Code ch. 63 (self-liquidating navigation districts)

Prior Attorney General opinion discussed: MW-3 (1979).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0090
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0090.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
Attorney General

February 7, 1992

Honorable A. J. (Jack) Hartel
Liberty County Attorney
P. O. Box 9127
Liberty, Texas 77575-9127

Opinion No. DM-90

Re: Authority of a navigation district to enter into a tax abatement agreement (RQ-251)

Dear Mr. Hartel:

You ask two questions regarding the authority of the Chambers-Liberty Counties Navigation District (the navigation district) to enter into a tax abatement agreement. You first ask whether the navigation district has the authority to enter into a tax abatement agreement[1] pertaining to land that is the subject of a county tax abatement agreement executed on November 27, 1990.[2] Second, you ask whether the navigation district has the authority to enter into a tax abatement agreement with a landowner if a board member of the navigation district owns an interest in the property receiving the tax abatement. We have determined that the navigation district is not authorized to enter into a tax abatement agreement in the situation you posed in your first question. This determination obviates the need to answer your second question.

Chapter 312 of the Tax Code, the "Property Redevelopment and Tax Abatement Act," (the act) authorizes a county or municipality to grant tax exemptions to owners of land that has been designated as a reinvestment zone pursuant to section 312.201 of the Tax Code or as an enterprise zone under the Texas Enterprise Zone Act, article 5190.7, V.T.C.S. See also Tax Code § 312.2011. That chapter authorizes the governing body of a municipality and the commissioners court of a county to execute a tax abatement agreement with the owner of certain taxable real property located in a reinvestment zone. Id. §§ 312.204, 312.402. Chapter 312 does not affirmatively authorize other taxing units to enter into such agreements; we believe a court would find the authority of other taxing units to participate in such agreements can be inferred from provisions in chapter 312 which state that other taxing units may not participate in tax abatement agreements unless certain conditions are met. See id. §§ 312.002, 312.006, 312.207(a). Section 312.402 of the Tax Code provides in part:

(a) The commissioners court may execute a tax abatement agreement with the owner of taxable real property located in a reinvestment zone designated under this subchapter. The execution, duration, and other terms of an agreement made under this section are governed by the provisions of Sections 312.204 and 312.205 applicable to a municipality. . . .

(b) A tax abatement agreement made by a county has the same effect on the school districts and other taxing units in which the property subject to the agreement is located as is provided by Sections 312.206(a) and (b) for an agreement made by a municipality to abate taxes on property located in the taxing jurisdiction of the municipality.

Section 312.206(a) describes the effect a municipal tax abatement agreement has on agreements made by other taxing units. Pursuant to section 312.402(b), that provision applies to county tax abatement agreements as well, and reads in part:

(a) If property taxes on property located in the taxing jurisdiction of a municipality are abated under an agreement made under Section 312.204, the governing body of each other taxing unit eligible to enter into tax abatement agreements under Section 312.002 in which the property is located may execute a written agreement with the owner of the property not later than the 90th day after the date the municipal agreement is executed. The agreement must contain terms identical to those contained in the agreement with the municipality providing for the portion of the property that is to be exempt from taxation under the agreement, the duration of the agreement, and the provisions included in the agreement under Section 312.205, even if the value of the property at the time the agreement is executed is not the same as its value when the municipal agreement was executed and even if improvements or repairs have been made to the property since the municipal agreement was executed. If the governing body of the taxing unit by official action at any time before the execution of the municipal agreement expresses an intent to enter into an agreement with the owner of property under this subsection or to be bound by the terms of the municipal agreement if the municipality enters into an agreement under Section 312.204 with the owner relating to the property, the terms of the municipal agreement regarding the share of the property to be exempt in each year of the municipal agreement apply to the taxation of the property by the taxing unit.

Section 312.206 indicates that taxing units other than counties and municipalities can not sua sponte enter into a tax abatement agreement with someone who owns land in a reinvestment or free enterprise zone; the tax abatement authority of these other taxing units depends on the existence of either a municipal or county tax abatement agreement. Indeed, the terms of a tax abatement agreement executed by other taxing units must be supplied by the preexisting county or municipal agreement. We find no other means in the act for a taxing unit that is not a county or municipality to provide a tax exemption to a landowner in a reinvestment or free enterprise zone except to do so after the execution of a tax abatement agreement by a county or municipality as provided in sections 312.402 and 312.204 of the Tax Code.

When property that is the subject of a county or municipal abatement agreement is located within another taxing unit, the governing body of that taxing unit is authorized to enter into an abatement agreement pertaining to the same land only for a period of 90 days after the date of the execution of that agreement. Thus, in this case, the authority of the Chambers-Liberty Counties Navigation District[3] to enter into an agreement pertaining to land that is the subject of a county tax abatement agreement executed on November 27, 1990, expired 90 days after that date.[4]

SUMMARY

The authority of the Chambers-Liberty Counties Navigation District to enter into a tax abatement agreement pertaining to land that is the subject of a county tax abatement agreement expired 90 days after the date of the execution of the county agreement.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

JUDGE ZOLLIE STEAKLEY (Ret.)
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Kay Guajardo
Assistant Attorney General

[1] A landowner who has entered into an agreement under the Property Redevelopment and Tax Abatement Act is entitled to an exemption from taxation of all or part of the property as provided in the agreement. Tax Code § 11.28, ch. 312.

[2] In asking both of your questions you have asked us to assume that "the resolution electing to become eligible to grant tax abatement and the appropriate guidelines and criteria for granting tax abatement have been formally and properly adopted by the Navigation District; that the required application has been filed with the Navigation District by Moss Bluff Gas Storage Co., Inc. [the landowner in this case]; that the Navigation District has approved the application for tax abatement; and that Liberty County, acting through its Commissioners Court, granted tax abatement to Moss Bluff Gas Storage Co., Inc. on the same property in an agreement dated 27 November, 1990." For purposes of your questions, we will assume compliance with the procedures set forth in five sections in the Tax Code: section 11.43 regarding an application for a tax exemption, section 312.002 regarding the eligibility of a taxing unit to participate in a tax abatement agreement, section 312.205 regarding the specific terms required for a tax abatement agreement, section 312.207 regarding approval by the governing body of a taxing unit, and section 312.401 regarding the designation of a reinvestment zone by the commissioners court of a county.

[3] The Chambers-Liberty Counties Navigation District is a self-liquidating navigation district operating under chapter 63 of the Water Code. See Attorney General Opinion MW-3 (1979). The definition of "taxing unit" includes a district created by or pursuant to the Water Code. Tax Code § 1.04.

[4] We have not been informed of the existence of a municipal tax abatement agreement pertaining to the land involved here; we limit our answer to the facts presented. Further, we note that although a designated officer or employee of a county that intends to enter into a tax abatement agreement is required to give written notice of that fact to the presiding officer of the governing body of each other taxing unit in which the property that is to be the subject of the agreement is located, failure to deliver such notice does not affect the validity of the agreement. Tax Code § 312.2041(a).