Is it constitutional for Texas to make overlapping appraisal districts tax a property at the lowest appraised value?

TX AG Opinion GA-0317: Is the lowest-value rule for overlapping appraisal districts constitutional?

Plain-English summary

Most Texas property is appraised once, by the appraisal district for the county where it sits. But because a taxing unit (a school district, city, or special district) can cross county lines, a property can end up inside two or more appraisal districts at the same time, and each district appraises it separately. When that happens and the chief appraisers do not agree on a value, Tax Code section 6.025(d) requires every one of them to enter the lowest appraised and market value that any district came up with. The Dallas County District Attorney asked whether this lowest-value rule is unconstitutional under three provisions of Article VIII of the Texas Constitution: section 1(a) (taxation must be "equal and uniform"), section 1(b) (property must be "taxed in proportion to its value"), and section 18(c) (the legislature must provide a single board of equalization for each appraisal entity, made up of people who reside in the territory appraised).

On the value and equal-and-uniform questions, the Attorney General concluded section 6.025(d) is not unconstitutional on its face. Courts presume a tax statute is constitutional, and a statute is facially invalid only if it "could not be constitutional under any circumstances." The opinion reasoned that the second district is also required by law to appraise at market value using an approved method, so in many cases the lowest of the competing values will itself be a legitimate market value. The constitution also tolerates a "reasonable discrepancy" in valuations and lets the legislature draw distinctions in how market value is determined, as long as the distinctions are not unreasonable, arbitrary, or capricious. Because the legislature has clear authority over overlapping appraisal districts and a plausible policy reason for the rule (getting districts to agree on a single value), the opinion could not say the rule is invalid as a matter of law.

The opinion did flag a real limit. Appraisal districts run on different reappraisal cycles, so one district might have a fresh, higher value while another still carries an older, lower one. Forcing the higher district to drop to the lower value could, in a particular case, push values in the overlap area so far below the rest of the district that taxation there stops being equal and uniform. Whether that has happened depends on the facts of each case, the challenger bears the burden of proving it, and the Attorney General does not find facts. So the opinion held only that the statute is not invalid on its face, while acknowledging it could be unconstitutional as applied.

On the board-of-equalization question, the opinion found no violation. Section 6.025(d) does not change who sits on an appraisal review board or let a board set values outside its own district. When a value is reduced, it is reduced by the review board of a district in which the property actually lies, so the value is never set by non-resident board members, and the single-resident-board requirement of section 18(c) is satisfied.

Currency note

This opinion was issued in 2005. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Who this opinion affected (as of 2005)

Appraisal districts and chief appraisers: The opinion told them section 6.025(d)'s lowest-value rule was valid on its face and had to be followed, while leaving open that a district or taxpayer could challenge a specific application of it in court on equal-and-uniform grounds.

Taxing units (school districts, cities, counties): The opinion meant a taxing unit collecting in an overlap area might have to tax property at a value another district's review board set, and that the unit (or an affected party) would have to make a fact record to challenge the result as non-uniform.

Property owners in overlapping districts: The opinion explained the practical effect: a property in two districts gets the lowest of the competing values, which can cut both ways depending on the districts' reappraisal cycles. Anyone claiming the result violated equal-and-uniform taxation would carry the burden of proof on the facts.

Common questions

What does Tax Code section 6.025(d) actually require?
The opinion explained that when a property lies in overlapping appraisal districts and the chief appraisers cannot agree on a value, each must record the lowest appraised and market value any of the districts determined, both initially (on May 1) and again if a protest, appeal, or other action later reduces the value in any district.

Did the Attorney General find the lowest-value rule unconstitutional?
No. The opinion concluded that as a matter of law section 6.025(d) does not violate Article VIII, section 1(a) or (b), because a statute is facially invalid only if it could never be applied constitutionally, and in many cases the lowest value is still a legitimate market value.

So the rule can never be challenged?
It can. The opinion said a court could find, on the facts of a particular case, that a value forced by section 6.025(d) fails to reflect market value and makes a tax non-uniform, an "as applied" challenge. The challenger bears the burden, and the Attorney General does not resolve fact questions.

Why would different appraisal cycles matter?
Because districts must reappraise only at least once every three years, one district may have just raised a value in a rising market while another still carries an older, lower figure. The opinion noted that pulling the higher district down to the older, lower value could make the value drastically below current market value.

Does the rule violate the requirement of a resident board of equalization?
No. The opinion held that the board reducing a value is always the appraisal review board of a district where the property lies, so the value is not set by non-resident members, and section 6.025(d) does not change the residency requirement or let a board reach outside its district.

Does each appraisal district still have its own review board?
Yes. The opinion noted section 6.025(d) does not change the appeal structure: property owners and taxing units still protest or challenge a district's valuations before that district's single appraisal review board.

Background and statutory framework

The Texas Constitution requires that property be taxed in proportion to its value (Article VIII, section 1(b)), which courts read as reasonable market value (Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931 (Tex. 1996); Whelan v. State, 282 S.W.2d 378 (Tex. 1955)), and that taxation be equal and uniform (section 1(a)). Section 18 directs the legislature to provide a single county appraisal (with appraisals outside a county allowed when a taxing unit crosses county lines), a single board of equalization for each appraisal entity with resident members (section 18(c)), and the methods to implement the system (section 18(d)). The legislature carried this out through the Property Tax Code, with appraisal districts administered by chief appraisers (Tax Code §§ 6.01, 6.05) and an appraisal review board for each district (§ 6.41) handling protests and challenges (§§ 41.01, 41.03). Because a district's boundaries can extend across county lines (§ 6.02), property can lie in overlapping districts and be appraised more than once.

Section 6.025 governs those overlaps: subsections (a) through (c) require chief appraisers to share information and coordinate to reach the same value, and subsection (d) supplies the tie-breaker, the lowest appraised and market value, when they cannot agree. The constitutional analysis applied the presumption of constitutionality and the facial-invalidity standard that a statute survives unless it "could not be constitutional under any circumstances" (Appraisal Review Bd. of Galveston County v. Tex-Air Helicopters, Inc., 970 S.W.2d 530 (Tex. 1998)). Enron supplied the rule that the constitution tolerates reasonable discrepancies and reasonable legislative classifications in determining value, and the opinion noted that a classification with a "plausible policy reason" survives (citing the U.S. Supreme Court's Equal Protection decision in Nordlinger v. Hahn, 505 U.S. 1 (1992)). The opinion gathered the equal-and-uniform case law (including Tex. Pipe Line Co. v. Anderson and Harris County Appraisal Dist. v. United Investors Realty Trust) to show the doctrine generally compares properties within the same district, leaving the cross-district as-applied question to be developed on a factual record.

Citations

Constitutional and statutory provisions:

• Tex. Const. art. VIII, §§ 1(a), 1(b), 18, 18(b), 18(c), 18(d)
• Tex. Tax Code Ann. §§ 1.04(7), 6.01, 6.05, 23.0101, 41.01, 41.03(a)(1), 41.03-.07, 41.41-.47, 25.18(a)-(b) (Vernon 2001 & Supp. 2004-05)
• Tex. Tax Code Ann. §§ 6.02(a), (b), 6.025(a), (c), (d), 6.025(a)-(c), 6.41, 6.41(a)-(g), 23.01(a), 23.011-.9807, 23.23(a) (Vernon 2001 & Supp. 2004-05)

Cases:

• Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 934-37 (Tex. 1996)
• Whelan v. State, 282 S.W.2d 378, 380 (Tex. 1955)
• Wilson v. Galveston County Cent. Appraisal Dist., 713 S.W.2d 98, 101 (Tex. 1986)
• HL Farm Corp. v. Self, 877 S.W.2d 288, 290 (Tex. 1994)
• Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556, 558 (Tex. 1985)
• Smith v. Davis, 426 S.W.2d 827, 831 (Tex. 1968)
• Texas Nat'l Guard Armory Bd. v. McCraw, 126 S.W.2d 627, 634 (Tex. 1939)
• Nootsie Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)
• Appraisal Review Bd. of Galveston County v. Tex-Air Helicopters, Inc., 970 S.W.2d 530, 534 (Tex. 1998)
• Nordlinger v. Hahn, 505 U.S. 1, 11 (1992)
• Harris County Appraisal Dist. v. United Investors Realty Trust, 47 S.W.3d 648, 654 (Tex. App.-Houston [14th Dist.] 2001, pet. denied)
• Tex. Pipe Line Co. v. Anderson, 100 S.W.2d 754, 761 (Tex. Civ. App.-Austin 1937, writ ref'd)
• Spring Indep. Sch. Dist. v. Harris County Appraisal Dist., 889 S.W.2d 562, 565 (Tex. App.-Houston [14th Dist.] 1994), rev'd on other grounds, 922 S.W.2d 931 (1996)
• City of Arlington v. Cannon, 263 S.W.2d 299, 304-05 (Tex. Civ. App.-Fort Worth 1954), aff'd in part, rev'd in part, 271 S.W.2d 414 (1954)
• Weatherly Indep. Sch. Dist. v. Hughes, 41 S.W.2d 445, 447 (Tex. Civ. App.-Amarillo 1931, no writ)

Other authorities:

• Tex. Att'y Gen. Op. Nos. GA-0106 (2003), GA-0283 (2004)
• House Comm. on Local Gov't Ways & Means, Bill Analysis, Tex. H.B. 703, 78th Leg., R.S. (2003); Senate Comm. on Finance, Bill Analysis, Tex. H.B. 703, 78th Leg., R.S. (2003)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0317
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2005/ga0317.pdf

Original opinion text

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

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

April 20, 2005

The Honorable Bill Hill
Dallas County District Attorney
Administration Building
411 Elm Street, Suite 500
Dallas, Texas 75202-3384

Opinion No. GA-0317

Re: Whether section 6.025(d) of the Tax Code violates article VIII, sections 1(a), (b) and 18(c) of the Texas Constitution (RQ-0285-GA)

Dear Mr. Hill:

In some cases, property subject to ad valorem taxation will lie in two or more appraisal districts and will be subject to multiple tax appraisals. If after appraising a property in overlapping appraisal districts the chief appraisers disagree as to the appraised or market value of the property, section 6.025(d) of the Tax Code requires the chief appraisers to enter into their districts' appraisal records the lowest appraised and market values from all the values determined by each appraisal district. See TEX. TAX CODE ANN. § 6.025(d) (Vernon Supp. 2004-05). You ask whether section 6.025(d) violates three provisions of article VIII of the Texas Constitution: section 1(a), which requires that taxes be "equal and uniform"; section 1(b), which requires that all property be "taxed in proportion to its value"; and section 18(c), which requires the legislature to "provide for a single board of equalization for each appraisal entity consisting of qualified persons residing within the territory appraised by that entity." See TEX. CONST. art. VIII, §§ 1(a)-(b), 18(c).[1]

I. Legal Background

Before addressing your constitutional questions, we briefly review the legal framework for appraising property for ad valorem taxation.

A. Property Appraisals

Article VIII, section 1(b) of the Texas Constitution provides that "[a]ll real property and tangible personal property in this State . . . shall be taxed in proportion to its value, which shall be ascertained as may be provided by law." Id. § 1(b). Courts have long held that the constitution "requires 'value' for ad valorem tax purposes to be based on the reasonable market value of the property." Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 935 (Tex. 1996); Whelan v. State, 282 S.W.2d 378, 380 (Tex. 1955). The Tax Code defines "market value," see TEX. TAX CODE ANN. § 1.04(7) (Vernon 2001),[2] and generally requires that "all taxable property is appraised at its market value as of January 1," id. § 23.01(a). The Tax Code also establishes several appraisal methods for determining market value. See id. § 23.0101 ("In determining the market value of property, the chief appraiser shall consider the cost, income, and market data comparison methods of appraisal and use the most appropriate method."); see also id. §§ 23.011-.9807 (Vernon 2001 & Supp. 2004-05) (governing specific appraisal methods). The Tax Code also uses the term "appraised value," and, in some cases, a property's appraised value may differ from its market value. See generally Tex. Att'y Gen. Op. No. GA-0283 (2004).[3]

The constitution also provides for tax appraisal administration at the local level. Article VIII, section 18 provides in pertinent part:

(b) A single appraisal within each county of all property subject to ad valorem taxation by the county and all other taxing units located therein shall be provided by general law. The Legislature, by general law, may authorize appraisals outside a county when political subdivisions are situated in more than one county or when two or more counties elect to consolidate appraisal services.

(c) The Legislature, by general law, shall provide for a single board of equalization for each appraisal entity consisting of qualified persons residing within the territory appraised by that entity. Members of the board of equalization may not be elected officials of the county or of the governing body of a taxing unit.

(d) The Legislature shall prescribe by general law the methods, timing, and administrative process for implementing the requirements of this section.

TEX. CONST. art. VIII, § 18.

The legislature has fulfilled its duty under article VIII, section 18(b) to provide for a single tax appraisal of property by enacting the Property Tax Code, chapters 1 through 43 of the Tax Code. See Wilson v. Galveston County Cent. Appraisal Dist., 713 S.W.2d 98, 101 (Tex. 1986). The Property Tax Code provides for appraisal districts in each county and charges these districts with appraising property within the district. See id. Each appraisal district is administered by a chief appraiser. See TEX. TAX CODE ANN. § 6.05 (Vernon 2001). The purpose of each district is to place a single value on each piece of taxed property located within the district. See TEX. CONST. art. VIII, § 18(b). Under the Tax Code, each taxing unit participating in an appraisal district taxes property according to the value determined by the appraisal district. See TEX. TAX CODE ANN. § 6.01 (Vernon 2001).

The legislature has fulfilled its duty under article VIII, section 18(c) to "provide for a single board of equalization for each appraisal entity," TEX. CONST. art. VIII, § 18(c), by providing for an appraisal review board for each appraisal district. See TEX. TAX CODE ANN. § 6.41 (Vernon Supp. 2004-05). Appraisal review boards determine, among other matters, property valuation protests initiated by property owners and challenges initiated by taxing units. See id. § 41.01 (Vernon 2001). With respect to appraisals, a taxing unit is entitled to challenge "the level of appraisals of any category of property in the district or in any territory in the district, but not the appraised value of a single taxpayer's property." Id. § 41.03(a)(1).

B. Overlapping Appraisal Districts and Multiple Property Appraisals

Under section 6.02 of the Tax Code, an appraisal district's boundaries are generally the same as the county's boundaries. See id. § 6.02(a). However, a taxing unit that has boundaries extending into two or more counties may choose to participate in only one of the appraisal districts, and, in that event, the boundaries of the district chosen extend outside the county to the extent of the unit's boundaries. See id. § 6.02(b). This is consistent with article VIII, section 18, which expressly permits the legislature to authorize an appraisal district to appraise property outside the county in these circumstances. See TEX. CONST. art. VIII, § 18(b) ("The Legislature, by general law, may authorize appraisals outside a county when political subdivisions are situated in more than one county or when two or more counties elect to consolidate appraisal services."). Because an appraisal district's boundaries may extend outside the county into other counties, property may lie in two or more overlapping appraisal districts and, in such a case, would be appraised by each district.

Each appraisal district is required to appraise property at its market value pursuant to appraisal methods authorized by the Tax Code, and, in theory, appraisal districts appraising the same property should arrive at the same values. Sometimes this is not the case, however. The reasons for this vary. As this office recently explained, "'property appraisal is an inexact process.'" Tex. Att'y Gen. Op. No. GA-0283 (2004) at 2 (citation omitted). The Tax Code itself may also lead to different valuations because

each appraisal district with jurisdiction over a particular piece of property may calculate the property's appraised value using different methods. See TEX. TAX CODE ANN. § 23.0101 (Vernon 2002) (directing a chief appraiser to consider alternate appraisal methods). Furthermore, overlapping appraisal districts may use different appraisal cycles so that one district may reappraise property every two years, while another district reappraises property every three years. See [id.] § 25.18(a)-(b) (requiring each appraisal office to implement a plan to reappraise property at least once every three years).

Id. at 2-3.

Section 6.025 of the Tax Code, the provision at issue in your query, governs the duty of chief appraisers of overlapping appraisal districts with respect to the property located in the territory in which each of the districts has appraisal jurisdiction. It requires chief appraisers of overlapping appraisal districts to enter into a written understanding that:

(1) permits each appraiser to have access to and use information appropriate to appraisals, including a record of an exemption application, rendition, or other property owner report;

(2) eliminates differences in the information in appraisal records of the districts, including information relating to ownership of property, the description of property, and the physical characteristics of property; and

(3) contains the form of a written advisory prescribed by the comptroller informing the owners of property that reports and other documents required of the owners must be filed with or sent to each appraisal district and that the owners should consider sending any other document relating to the property to each appraisal district.

TEX. TAX CODE ANN. § 6.025(a) (Vernon Supp. 2004-05). Section 6.025(c) requires the chief appraisers of overlapping appraisal districts "to the extent practicable [to] coordinate their appraisal activities so as to encourage and facilitate the appraisal of the same property appraised by each district at the same value." Id. § 6.025(c).

Your query focuses on section 6.025(d), which governs the appraised and market value of property in overlapping appraisal districts in the event the chief appraisers are not able to agree on the same values:

If on May 1 all the chief appraisers of the appraisal districts described by Subsection (a) in which a parcel or item of property is located are not in agreement as to the appraised or market value of the property, on that date each of the chief appraisers shall enter as the appraised or market value of the property on the appraisal records of the appropriate appraisal district the lowest appraised or market value of the property as determined by any of the chief appraisers. If as a result of a protest, appeal, or other action the appraised or market value of the property is subsequently reduced in any of the appraisal districts, the chief appraiser shall notify each of the appraisal districts of the reduced appraised or market value. The chief appraiser of each appraisal district shall enter that reduced appraised or market value on the appraisal records as the appraised or market value of the property. If the appraised or market value is reduced in more than one appraisal district, each chief appraiser shall enter the lowest of those values on the appraisal records.

Id. § 6.025(d). This provision requires chief appraisers with overlapping jurisdictions to enter the lowest appraised and market value for a property (1) on May 1, and (2) thereafter if the property's appraised or market value is reduced "as a result of a protest, appeal, or other action." Id.; see also Tex. Att'y Gen. Op. No. GA-0283 (2004) at 7-8 (concluding that section 6.025(d) of the Tax Code requires the chief appraiser of each of the overlapping districts to enter in the appraisal records the lowest values, appraised and market, listed by any of the overlapping districts).[4]

II. Analysis

You ask about Tax Code section 6.025(d)'s constitutionality under article VIII, sections 1(a), (b) and 18(c). See Request Letter, supra note 1, at 2-3. In considering a tax appraisal statute's constitutionality, the Texas Supreme Court has applied the following presumptions:

[W]e begin with a presumption that it is constitutional. HL Farm Corp. v. Self, 877 S.W.2d 288, 290 (Tex. 1994); Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556, 558 (Tex. 1985). Courts presume that the Legislature "'understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience, and that its discriminations are based upon adequate grounds.'" Smith v. Davis, 426 S.W.2d 827, 831 (Tex. 1968) (quoting Texas Nat'l Guard Armory Bd. v. McCraw, 126 S.W.2d 627, 634 (Tex. 1939)). The wisdom or expediency of a law is for the Legislature to determine, not this Court. Smith, 426 S.W.2d at 831.

Enron Corp., 922 S.W.2d at 934. Accordingly, we apply the same presumptions in considering your questions about section 6.025(d) of the Tax Code. We also keep in mind the legislature's authority under article VIII of the constitution to adopt appraisal methods to ascertain value and to establish the appraisal and appraisal equalization system. See TEX. CONST. art. VIII, § 1(b) ("All real property and tangible personal property in this State . . . shall be taxed in proportion to its value, which shall be ascertained as may be provided by law.") (emphasis added), 18(b) ("A single appraisal within each county of all property subject to ad valorem taxation by the county and all other taxing units located therein shall be provided by general law.") (emphasis added), (c) ("The Legislature, by general law, shall provide for a single board of equalization for each appraisal entity . . . .") (emphasis added), (d) ("The Legislature shall prescribe by general law the methods, timing, and administrative process for implementing the requirements of this section.") (emphasis added).

A. Article VIII, Section 1(a)-(b): Value and Equality and Uniformity

Your first concern is that section 6.025(d) violates the article VIII, section 1(b) requirement that property be taxed in proportion to its value. See TEX. CONST. art. VIII, § 1(b). You point out that value in this sense means market value and that the Tax Code and case law recognize a limited number of methods to determine market value. See Request Letter, supra note 1, at 2; see also Nootsie Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996); TEX. TAX CODE ANN. §§ 23.0101-.9807 (Vernon 2001 & Supp. 2004-05) (appraisal methods).

You argue, in essence, that section 6.025(d) requires a chief appraiser to appraise a property at a value other than its market value:

Section 6.025(d) requires the selection of the lowest value determine[d] in different markets, with different sets of comparables. Dallas County believes that automatic application of the lowest value to a property merely because it falls within overlapping districts does not establish value based on market value.

Request Letter, supra note 1, at 2. This contention ignores the fact that the second appraisal district is also required by statute to appraise the property at market value using an authorized method. We must assume as a general matter that appraisal districts appraise property pursuant to the Tax Code, arriving at legally permissible values. Moreover, article VIII, section 1 permits "[a] reasonable discrepancy between the actual value of the property and the value at which it is assessed for taxes . . . to allow for a difference in judgment." Enron Corp., 922 S.W.2d at 935.

"A statute is not facially invalid unless it could not be constitutional under any circumstances." Appraisal Review Bd. of Galveston County v. Tex-Air Helicopters, Inc., 970 S.W.2d 530, 534 (Tex. 1998). We cannot conclude that all valuations mandated by section 6.025(d) will offend article VIII, section 1(b). In some instances the appraisal district with the lowest value will have determined that value according to methods permitted by the Tax Code, arriving at a value that reasonably reflects the property's actual market value. Requiring another appraisal district to use such a value does not violate the constitutional requirement that property be taxed in proportion to its value. Because section 6.025(d) valuations will be constitutional in some circumstances, we cannot conclude that section 6.025(d) on its face violates article VIII, section 1(b). See id.

Second, you ask whether section 6.025(d) violates article VIII, section 1(a), which requires that "[t]axation shall be equal and uniform." TEX. CONST. art. VIII, § 1(a). The Texas Supreme Court has "long recognized that exact uniformity and equality is unattainable," Enron Corp., 922 S.W.2d at 935, and that "the Legislature may constitutionally draw distinctions in the manner in which market value of property is determined for ad valorem tax purposes," id. at 936. Such classifications will comport with article VIII, section 1(a), "as long as the classifications are not unreasonable, arbitrary, or capricious." Id. An ad valorem tax classification with a "'plausible policy reason'" will pass constitutional muster. Id. at 937 (quoting Nordlinger v. Hahn, 505 U.S. 1, 11 (1992) (addressing the validity of tax classifications under the Equal Protection Clause)). However, your letter asserts that any classification created by section 6.025(d) that distinguishes between the valuation of property based on whether it is appraised by overlapping appraisal districts is "clearly . . . arbitrary." See Request Letter, supra note 1, at 3.

As we have noted, article VIII, section 18 permits the legislature, by general law, to authorize appraisals outside a county "when political subdivisions are situated in more than one county." TEX. CONST. art. VIII, § 18(b). As a result of the constitutionally authorized system of overlapping appraisal districts, a property may be subject to two or more appraisals. The legislature is clearly authorized to adopt laws governing overlapping appraisal districts' authority with respect to such property. See id. § 18(b), (d). In subsections (a) through (c) of section 6.025, the legislature has required overlapping appraisal districts to cooperate in order to appraise properties in their overlapping jurisdictions at the same values. See TEX. TAX CODE ANN. § 6.025(a)-(c) (Vernon Supp. 2004-05). The legislative history suggests that the legislature adopted section 6.025(d) to further encourage appraisal districts to arrive at the same values by requiring them to record the lower values in the event they are unable to agree on common values. See HOUSE COMM. ON LOCAL GOV'T WAYS & MEANS, BILL ANALYSIS, Tex. H.B. 703, 78th Leg., R.S. (2003); SENATE COMM. ON FINANCE, BILL ANALYSIS, Tex. H.B. 703, 78th Leg., R.S. (2003).

We believe that a court would conclude that any distinction section 6.025(d) draws between the valuation of property based on whether the property is appraised by overlapping appraisal districts is based on a plausible policy reason—to avoid varying valuations in overlapping appraisal districts. See Enron Corp., 922 S.W.2d at 936-37. Given the legislature's authority to regulate overlapping appraisals and the reasonableness of its goal to achieve uniform appraisals in overlapping appraisal districts, we cannot conclude that section 6.025(d) imposes a classification that is unreasonable, arbitrary, or capricious as a matter of law.

However, we have received a number of briefs from appraisal districts arguing that section 6.025(d) may be unconstitutional as applied to particular fact situations.[5] As these briefs point out, in some instances the lower market or appraised value may be significantly below the property's actual market value. For example, an appraisal district must reappraise a property at least once every three years. See TEX. TAX CODE ANN. § 25.18(a)-(b) (Vernon 2001). Valuations may differ because appraisal districts are on different reappraisal cycles. The appraisal district with the higher value for a property may have just reappraised the property in a period of rising property values whereas the appraisal district with the lower value has not done so for two years. In that case, the lower value may be drastically below the current market value. Moreover, in some such instances, the section 6.025(d) requirement that the first appraisal district use the other district's values for property in the overlapping area may cause the property values in that area to be so much lower than property values in the rest of the first appraisal district that taxation by taxing units in that district will not satisfy the equal and uniform requirement. See Harris County Appraisal Dist. v. United Investors Realty Trust, 47 S.W.3d 648, 654 (Tex. App.-Houston [14th Dist.] 2001, pet. denied) ("[I]t is unfair, and constitutionally prohibited, to require one taxpayer to pay a tax based on market values if other taxpayers are paying a rate that is lower than the market value of their properties. If we were to allow this, one landowner would be paying property taxes disproportionately to other landowners. The constitution expressly prohibits this."). Although requiring uniform appraisals in overlapping appraisal districts may be a reasonable legislative policy as a general matter, in some cases requiring uniform appraisals may offend article VIII, section 1(a) and (b).[6]

A court could determine in a particular case that a property value required by section 6.025(d) fails to appraise the property at its market value and causes a taxing unit to levy a tax that is not equal and uniform. This will depend upon facts in the record in each case. The party challenging section 6.025(d)'s constitutionality would bear the burden of demonstrating that it fails to meet the constitutional requirements. See Enron Corp., 922 S.W.2d at 934. This office, which cannot find facts, cannot make such a determination. See Tex. Att'y Gen. Op. No. GA-0106 (2003) at 7 ("[t]his office cannot find facts or resolve fact questions in an attorney general opinion").

In sum, this office cannot conclude that, as a matter of law, section 6.025(d) violates article VIII, section 1(a) and (b).

B. Article VIII, Section 18(c)

You also ask whether section 6.025(d) violates article VIII, section 18(c), which requires the legislature to "provide for a single board of equalization for each appraisal entity consisting of qualified persons residing within the territory appraised by that entity." TEX. CONST. art. VIII, § 18(c). As we have noted, section 6.41 of the Tax Code establishes an appraisal review board for each appraisal district and requires that a member of an appraisal review board must be a resident of the district, see TEX. TAX CODE ANN. § 6.41(a)-(g) (Vernon Supp. 2004-05), and chapter 41 of the Tax Code establishes an appraisal review board's duties with respect to the district's appraisals, see, e.g., id. §§ 41.03-.07 (Vernon 2001) (taxing unit challenges), 41.41-.47 (Vernon 2001 & Supp. 2004-05) (taxpayer protests).

As you state your concern,

[s]ection 6.025(d) requires that an appraisal review board (board of equalization) for an individual overlapping appraisal district setting the lowest value establish[] values for other overlapping districts where members of the appraisal review board do not reside. Thus the constitutionally mandated residency requirement is not satisfied.

Request Letter, supra note 1, at 3. It is true that when the appraised or market value of a property in overlapping appraisal districts is reduced as the result of the action of one appraisal review board, section 6.025(d) requires all the chief appraisers to enter that value in their appraisal records. See TEX. TAX CODE ANN. § 6.025(d) (Vernon Supp. 2004-05) ("If as a result of a protest, appeal, or other action the appraised or market value of the property is subsequently reduced in any of the appraisal districts, the chief appraiser shall notify each of the appraisal districts of the reduced appraised or market value. The chief appraiser of each appraisal district shall enter that reduced appraised or market value on the appraisal records as the appraised or market value of the property."). However, the appraisal review board that has reduced the property's valuation will be the appraisal review board for an appraisal district in which the property lies. Thus, it is not the case that the property's value will be established by appraisal review board members who are not residents of an appraisal district in which the property is located.

More generally, section 6.025(d) does not alter the section 6.41 requirement that a member of an appraisal review board must be a resident of the appraisal district. Nor does it authorize an appraisal review board to set property values for property outside the boundaries of its appraisal district. For these reasons, we conclude that section 6.025(d) does not violate the legislature's duty under article VIII, section 18(c) to provide for a single board of equalization "consisting of qualified persons residing within the territory appraised by that entity." TEX. CONST. art. VIII, § 18(c).

It has also been suggested that section 6.025(d) violates the legislature's article VIII, section 18(c) duty to "provide for a single board of equalization for each appraisal entity." Id. (emphasis added).[7] However, section 6.025(d) does not change procedures for appealing property valuations. Property owners and taxing units continue to protest or challenge an appraisal district's valuations before its appraisal review board. As the constitution requires, the legislature has provided for a system in which a single review board reviews an appraisal district's valuations. And section 6.025(d) does not interfere with article VIII, section 18(b)-(c)'s requirement that all the taxing entities participating in an appraisal district impose taxes on a property using the same, single value. It is true that under section 6.025(d) a property value to be used by taxing units in an appraisal district may have been set by another appraisal review board in the course of reviewing its appraisal district's valuation of the property. But we do not believe that this possibility violates the legislature's duty to provide for a single board of equalization for each appraisal district.

SUMMARY

Section 6.025(d) of the Tax Code, which requires the chief appraisers of overlapping appraisal districts to enter into their districts' appraisal records the lowest appraised and market values from all the values determined by each appraisal district, does not as a matter of law violate article VIII, section 1(a) or (b) of the Texas Constitution. In a particular fact situation, a court could determine that a property value required by section 6.025(d) fails to appraise the property at its market value and causes a taxing unit to levy a tax that is not equal and uniform.

Section 6.025(d) does not violate the article VIII, section 18(c) requirement that the legislature establish a single review board for each appraisal district and that appraisal review board members reside in the appraisal district.

BARRY R. McBee
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Mary R. Crouter
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter from Honorable Bill Hill, Dallas County District Attorney, to Honorable Greg Abbott, Texas Attorney General, at 2-3 (Oct. 22, 2004) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].

[2] Section 1.04(7) of the Tax Code defines "market value" as "the price at which a property would transfer for cash or its equivalent under prevailing market conditions if: (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other." TEX. TAX CODE ANN. § 1.04(7) (Vernon 2001).

[3] For example, under section 23.23(a) of the Tax Code, a residence homestead's appraised value "may not exceed the lesser of" (1) the property's market value, or (2) the sum of: (A) 10 percent of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the property was last appraised; (B) the appraised value of the property for the last year in which the property was appraised; and (C) the market value of all new improvements to the property. Id. § 23.23(a) (Vernon Supp. 2004-05).

[4] Attorney General Opinion GA-0283 noted but did not resolve the constitutional issues raised by this request. See Tex. Att'y Gen. Op. No. GA-0283 (2004) at 4 n.2.

[5] See Brief from Roy L. Armstrong, McCreary, Veselka, Bragg & Allen, P.C., on behalf of the Central Appraisal District of Taylor County, to Honorable Greg Abbott, Texas Attorney General, at 2-3, 6 (Nov. 30, 2004) [hereinafter TCAD Brief]; Brief from Mike M. Tabor, Shannon, Gracey, Ratliff & Miller, L.L.P., on behalf of the Dallas Central Appraisal District, to Honorable Greg Abbott, Texas Attorney General, at 3-6 (Nov. 11, 2004); Letter from Foy Mitchell Jr., Executive Director/Chief Appraiser, Dallas Central Appraisal District, to Nancy S. Fuller, Chair, Opinion Committee, Office of Attorney General, at 2-3 (Nov. 17, 2004) [hereinafter DCAD Letter]; Brief from Robert Mott, Perdue, Brandon, Fielder, Collins & Mott, L.L.P., on behalf of the Bexar County Appraisal District and the Williamson County Appraisal District, to Honorable Greg Abbott, Texas Attorney General, at 2 (Dec. 6, 2004) [hereinafter BWCAD Brief] (all correspondence on file with Opinion Committee).

[6] We have received a brief that suggests that article VIII, section 1(a) requires appraisals by overlapping appraisal districts to be "equal and uniform." Brief from Honorable Burt R. Solomons, Chair, Committee on Financial Institutions, Texas House of Representatives, to Honorable Greg Abbott, Texas Attorney General, at 4 (Dec. 17, 2004) (on file with Opinion Committee) ("it is unequal and inconsistent to have a single property assessed differently by two different taxing agents"). However, cases construing article VIII, section 1(a) hold that it applies to property valuations and taxation of properties within the same territory, taxing unit, or district. See Tex. Pipe Line Co. v. Anderson, 100 S.W.2d 754, 761 (Tex. Civ. App.-Austin 1937, writ ref'd) ("It is also the settled rule that in determining the question of discrimination because of inequality of valuation or assessment of property for taxation purposes, the inquiry is necessarily limited to the particular taxing district or county in which the properties involved are situated."); see also Spring Indep. Sch. Dist. v. Harris County Appraisal Dist., 889 S.W.2d 562, 565 (Tex. App.-Houston [14th Dist.] 1994), rev'd on other grounds, Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931 (1996) ("Texas courts have held that taxation is 'equal and uniform' when no person or class of persons in the same territory is taxed at a higher rate than other persons on the same property in the same district.") (emphasis added); City of Arlington v. Cannon, 263 S.W.2d 299, 304-05 (Tex. Civ. App.-Fort Worth 1954), aff'd in part, rev'd in part, 271 S.W.2d 414 (1954); Weatherly Indep. Sch. Dist. v. Hughes, 41 S.W.2d 445, 447 (Tex. Civ. App.-Amarillo 1931, no writ). We are not aware of any case holding that article VIII, section 1(a) requires uniformity or equality between overlapping appraisal districts' appraisals of property within their overlapping jurisdictions.

[7] See DCAD Letter, supra note 5, at 6; see also TCAD Brief, supra note 5, at 7; BWCAD Brief, supra note 5, at 4.