Must a Texas public housing authority reimburse a city or county for services to a housing project?

Plain-English summary

State Representative Ryan Guillen, writing on behalf of the Housing Authority of the City of Laredo, asked the Attorney General to read one subsection of the Housing Authorities Law. A public housing authority and its property are exempt from local and state taxes and special assessments. Local Government Code subsection 392.005(b) then says that if a municipality, county, or political subdivision furnishes improvements, services, or facilities for a housing project, the authority "may, in lieu of paying taxes or special assessments, agree to reimburse" the entity an amount not greater than the estimated cost. The dispute in the Laredo area was whether that subsection requires the housing authority to reimburse the local governments, or merely lets it choose to do so. Some political subdivisions read it as a requirement; the Laredo housing authority read it as discretionary.

The opinion read the word "may" the way the Legislature defined it. Under the Code Construction Act, "may" creates discretionary authority or grants permission or a power. The Texas Supreme Court has likewise said that authorization to act grants the power to act but does not by itself require exercising that power. Nothing in subsection 392.005(b) requires a housing authority to reimburse; it simply authorizes the authority to provide reimbursement if it agrees to do so. So the opinion concluded that subsection 392.005(b) authorizes, but does not itself require, a housing authority to agree to reimburse a municipality, county, or political subdivision for improvements, services, or facilities provided.

The opinion was careful about what it did not decide. Because the question was limited to subsection 392.005(b), the opinion did not address whether some other statute, a contract, or federal law (a brief had raised a federal payments-in-lieu-of-taxes requirement) might separately obligate a housing authority to reimburse, nor what consequences might follow if an authority chose not to reimburse in a given case.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

The housing authority and the local governments (as the opinion held for them): The opinion told both sides that subsection 392.005(b), standing alone, makes reimbursement discretionary. The statute authorizes, but does not compel, a housing authority to agree to reimburse a city, county, or political subdivision for services furnished to a housing project.

On what the opinion did not reach (where it stopped): The opinion expressly declined to decide whether a separate statute, a contract, or federal law might require reimbursement, and declined to opine on the consequences of an authority's decision not to reimburse. Readers cannot take this page as resolving any of those separate questions.

Political subdivisions seeking payment (as the opinion described it): The opinion did not foreclose other avenues; it held only that this subsection is not itself the source of a reimbursement obligation, leaving any obligation to be found, if at all, in some other law or agreement.

Common questions

Does a Texas housing authority have to reimburse a city or county for services to a housing project?
According to the opinion, not because of subsection 392.005(b). That provision authorizes reimbursement by agreement but does not require it.

Why is reimbursement discretionary?
The opinion pointed to the statute's use of "may," which the Code Construction Act defines as creating discretionary authority or permission, not a mandate.

Could a housing authority still owe reimbursement some other way?
Possibly. The opinion did not decide whether a separate statute, a contract, or federal law might require it; it addressed only subsection 392.005(b).

Are housing authorities exempt from local taxes?
Yes. The opinion noted that subsection 392.005(a) exempts a housing authority and its property from taxes and special assessments of a municipality, county, other political subdivision, or the state.

Background and statutory framework

Chapter 392 of the Local Government Code is the Housing Authorities Law. Tex. Loc. Gov't Code Ann. §§ 392.001-.104 (West 2005 & Supp. 2010). A housing authority and its property are exempt from all taxes and special assessments of a municipality, county, other political subdivision, or the state. Id. § 392.005(a). Subsection (b) provides that if such an entity furnishes improvements, services, or facilities for a housing project, the authority "may, in lieu of paying taxes or special assessments, agree to reimburse" the entity an amount not greater than the estimated cost. Id. § 392.005(b) (West 2005). The Code Construction Act defines "may" as creating discretionary authority or granting permission or a power. Tex. Gov't Code Ann. § 311.016(1) (West 2005). A brief raised a federal payments-in-lieu-of-taxes provision, 42 U.S.C. § 1437d(d), which the opinion did not address because the question was limited to state law.

The opinion construed the statute by its plain language and the discretionary force of "may." City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 2006); Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009); Dallas Cnty. Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 873 (Tex. 2005).

Citations

Cases:

• City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 2006)
• Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009)
• Dallas Cnty. Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 873 (Tex. 2005)

Statutes:

• Tex. Loc. Gov't Code Ann. §§ 392.001-.104 (West 2005 & Supp. 2010)
• Tex. Loc. Gov't Code Ann. § 392.005(a)
• Tex. Loc. Gov't Code Ann. § 392.005(b) (West 2005)
• Tex. Gov't Code Ann. § 311.016(1) (West 2005)
• 42 U.S.C. § 1437d(d)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0887
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2011/ga0887.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

October 24, 2011

The Honorable Ryan Guillen Opinion No. GA-0887
Chair, Committee on Culture, Recreation,
and Tourism Re: Whether a public housing authority is
Texas House of Representatives required to reimburse a political subdivision that
Post Office Box 2910 furnishes improvements, services, or facilities for
Austin, Texas 78768-2910 a housing project (RQ-0966-GA)

Dear Representative Guillen:

On behalf of the Housing Authority of the City of Laredo, you ask "whether Texas Local Government Code [subsection] 392.005(b) requires a public housing authority to reimburse a municipality, county, or political subdivision for furnishing improvements, services, or facilities for a housing project, in lieu of paying taxes or special assessments."[1] Chapter 392 of the Local Government Code sets out the Housing Authorities Law, which establishes the requirements for creating and operating a housing authority. TEX. LOC. GOV'T CODE ANN. §§ 392.001-.104 (West 2005 & Supp. 2010). Local Government Code subsection 392.005(a) provides that a housing "authority and the authority's property are exempt from all taxes and special assessments of a municipality, a county, another political subdivision, or the state." Id. § 392.005(a). Subsection (b), the provision about which you ask, states:

If a municipality, county, or political subdivision furnishes improvements, services, or facilities for a housing project, an authority may, in lieu of paying taxes or special assessments, agree to reimburse in payments to the municipality, county, or political subdivision an amount not greater than the estimated cost to the municipality, county, or political subdivision for the improvements, services, or facilities.

Id. § 392.005(b). You explain that some political subdivisions in your area believe that under this provision "public housing authorities are required to reimburse ... political subdivisions for furnishing improvements, services or facilities for a housing project."[2] Request Letter at 1. You indicate that the Housing Authority of Laredo apparently disagrees, contending that subsection 392.005(b) provides a public housing authority with discretion to choose whether to reimburse political subdivisions. Id. at 2.

In construing statutes, our primary objective is to ascertain and give effect to the Legislature's intent. City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 2006). If the Legislature provides definitions for words it uses in statutes, then we use those definitions in construing statutes. Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009). Under the Code Construction Act, the Legislature has explained that the word "may" should be construed as "creat[ing] discretionary authority or grant[ing] permission or a power." TEX. GOV'T CODE ANN. § 311.016(1) (West 2005). Legislative authorization to act ordinarily grants the power to do so but by itself does not require execution of the power granted. Dallas Cnty. Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 873 (Tex. 2005) (emphasis added).

Nothing in the language of subsection 392.005(b) itself requires a housing authority to reimburse political subdivisions for furnishing improvements, services or facilities for a housing project. TEX. LOC. GOV'T CODE ANN. § 392.005(b) (West 2005). The statute simply authorizes a housing authority to provide reimbursement if the authority agrees to do so. Id. Because you ask only about a construction of subsection 392.005(b) and not about other sources of law, we do not address whether a housing authority may be obligated under a separate statute or contractual arrangement to reimburse political subdivisions. In addition, you do not ask, and we do not opine on the consequences, if any, that may arise from a housing authority's decision not to reimburse a political subdivision in a given instance. Limiting our opinion to the specific statute on which you have asked for guidance, we conclude that subsection 392.005(b) of the Local Government Code authorizes, but does not itself require, a housing authority to agree to reimburse a municipality, county, or political subdivision for the improvements, services, or facilities provided to the housing authority. Id.

SUMMARY

Local Government Code subsection 392.005(b) authorizes, but does not itself require, a housing authority to agree to reimburse a municipality, county, or political subdivision for the improvements, services, or facilities provided to the housing authority. We do not determine whether a housing authority may be required to do so under a separate law or contractual arrangement.

Very truly yours,

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chair, Opinion Committee

Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee

[1] Letter from Honorable Ryan Guillen, Chair, House Committee on Culture, Recreation, and Tourism, to Honorable Greg Abbott, Attorney General of Texas at 1 (Apr. 14, 2011), https://www.oag.state.tx.us/opin/index_rq.shtml ("Request Letter").

[2] A brief submitted in response to your request argues that federal law requires a public housing agency to make payments in lieu of taxes to political subdivisions in certain circumstances. Letter from John A. Kazen & J. Francisco Tamez, on behalf of Laredo Independent School District, to Honorable Greg Abbott, Attorney General of Texas at 5 (June 6, 2011) (on file with the Opinion Committee) (citing 42 U.S.C. § 1437d(d)). However, you do not ask about a housing authority's obligations under federal law, and our opinion is therefore limited to the state statute at issue.