When does a Texas city tax abatement end if the owner joins the city council?

Plain-English summary

This opinion is a short follow-up to an earlier one. In Attorney General Opinion JC-0155 (1999), the office had read section 312.204(d) of the Tax Code, part of the Property Redevelopment and Tax Abatement Act, to mean that property owned or leased by a member of a city's governing body is excluded from a tax abatement. So a property owner who was already receiving a city tax abatement could still run for and serve on the city council that granted it, but the property could no longer keep the abatement once its owner joined the council. Senator Chris Harris asked the natural next question: exactly when does the abatement stop, at the moment of election or at the end of the year?

The opinion's answer was neither of those. The exemption ends on the date the owner assumes office as a member of the city council. An elected officer does not take office on election day; for a new term, the term begins later (for many state and county offices, January 1 of the following year), and even someone elected to fill a vacancy must qualify by taking the oath of office and meeting any other requirements. So the city's attorney would need to look at the city charter, ordinances, and council minutes to pin down the exact date the owner assumed office. That date is when the abatement ends.

Because the exemption is lost partway through the year rather than on January 1, the opinion explained that the year's tax is prorated. Under section 26.10 of the Tax Code, the assessor figures the tax for the whole year in the usual way and multiplies it by a fraction whose denominator is 365 and whose numerator is the number of days the exemption did not apply. In plain terms, the property gets the benefit of the abatement for the part of the year before the owner took office and is taxed at the regular rate for the rest.

Currency note

This opinion was issued in 2000. 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

Senator Chris Harris and the Senate Administration Committee (what the opinion held): The opinion gave him a single date rule. The abatement does not end at the election and does not run to the end of the year; it ends when the owner assumes office on the council, and the year's tax is prorated from that date under section 26.10.

A property owner who joins the council (what the opinion held for them): The opinion meant their abatement kept running until the day they assumed office, after which the property was taxed normally for the remainder of the year, with the year's bill split by the proration formula. Consistent with JC-0155, the owner could still serve on the council.

City tax officials and the city attorney (what the opinion held for them): The opinion directed them to the city charter, ordinances, and council minutes to fix the date the owner assumed office, and to apply the section 26.10 proration method to calculate the tax owed for that year.

Common questions

Does the abatement end the day the owner is elected?
No. The opinion concluded the exemption ends when the owner assumes office as a member of the city council, and an elected officer ordinarily does not assume office at the time of the election.

How do I know the exact date the owner "assumed office"?
The opinion said the city's attorney should consult the city charter, ordinances, and the minutes of council meetings, because an officer must qualify by taking the oath of office and meeting any other requirements, whether elected to a new term or to fill a vacancy.

Does the property lose the whole year's abatement?
No. The opinion explained that because the exemption is lost during the year, the tax is prorated under section 26.10: the full-year tax is multiplied by a fraction with 365 as the denominator and the number of days the exemption did not apply as the numerator.

Can the owner still serve on the city council?
Yes. The earlier opinion, JC-0155, concluded the owner was not barred from serving on the council that granted the abatement; this opinion only addresses when the abatement itself ends.

Background and statutory framework

Chapter 312 of the Tax Code lets a municipality's governing body enter a tax abatement agreement with the owner of taxable real property in a reinvestment zone, exempting from taxation a portion of the property's value for up to 10 years (Tex. Tax Code § 312.204(a)). The agreement entitles the owner to the exemption provided by the agreement (§ 11.28), and that exemption is subject to the Tax Code provisions generally governing property tax exemptions, as Fina Oil & Chemical Co. v. Port Neches Indep. Sch. Dist. illustrates in applying the section 11.43(h) notice provision to cancellation of an abatement exemption. Section 312.204(d) excludes from abatement property owned or leased by a member of the municipality's governing body or its zoning or planning board, which is the provision JC-0155 construed.

Eligibility for an exemption is usually fixed by the claimant's qualifications on January 1 (§ 11.42), but when an exemption applicable on January 1 is lost during the year, section 26.10 prorates the tax, and section 22.02 requires the owner at termination to render the property for taxation within thirty days. The opinion tied the loss date to the officeholding rules: an elected officer does not take office at the election (§ 601.003 sets the regular term start for many offices at January 1 following the general election), and one filling a vacancy must qualify by oath and any other requirements (Purcell v. Carrillo; Tex. Att'y Gen. Op. No. JM-589 (1986)). The exemption therefore ends on the date the owner assumes office, with the year's tax computed under sections 26.09 and 26.10.

Citations

Statutory provisions:

• Tex. Tax Code Ann. § 312.204(a), (d) (Vernon Supp. 2000)
• Tex. Tax Code Ann. § 11.28 (Vernon 1992)
• Tex. Tax Code Ann. § 11.42 (Vernon Supp. 2000)
• Tex. Tax Code Ann. § 11.43(h)
• Tex. Tax Code Ann. § 22.02 (Vernon 1992)
• Tex. Tax Code Ann. § 26.09 (Vernon Supp. 2000)
• Tex. Tax Code Ann. § 26.10 (Vernon Supp. 2000)
• Tex. Gov't Code Ann. § 601.003 (Vernon 1994)

Cases and opinions:

• Fina Oil & Chemical Co. v. Port Neches Indep. Sch. Dist., 861 S.W.2d 3, 6-7 (Tex. App.-Beaumont 1993, writ denied)
• Purcell v. Carrillo, 349 S.W.2d 263 (Tex. Civ. App.-San Antonio 1961, no writ)
• Tex. Att'y Gen. Op. No. JC-0155 (1999)
• Tex. Att'y Gen. Op. No. JM-589 (1986)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0236
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2000/jc0236.pdf

Original opinion text

Best-effort transcription from the official scanned PDF. Minor character-level errors from the source OCR have been corrected; the linked PDF is authoritative.

June 22, 2000

The Honorable Chris Harris
Chair, Administration Committee
Texas State Senate
P.O. Box 12068
Austin, Texas 78711-2068

Opinion No. JC-0236

Re: Time when municipal tax abatement ends for a property owner elected to the city council that granted the abatement: Clarification of Attorney General Opinion JC-0155 (1999) (RQ-0177-JC)

Dear Senator Harris:

You request clarification of Attorney General Opinion JC-0155 (1999), which addressed the following provision of chapter 312 of the Tax Code, the Property Redevelopment and Tax Abatement Act:

Property that is in a reinvestment zone and that is owned or leased by a member of the governing body of the municipality or by a member of a zoning or planning board or commission of the municipality is excluded from property tax abatement or tax increment financing.

TEX. TAX CODE ANN. § 312.204(d) (Vernon Supp. 2000). This office concluded that the owner of property receiving a municipal tax abatement was not barred from serving on the city council that granted the abatement, but the property "may not continue to receive a municipal tax abatement once its owner is elected to the city council." Tex. Att'y Gen. Op. No. JC-0155 (1999) at 2.

You now ask when the tax abatement stops, at the moment of election or at the end of the year? The exemption for tax abatement stops when the owner of the property assumes office as a member of the city council.

Chapter 312 of the Tax Code allows the governing body of a municipality to enter into a tax abatement agreement with the owner of taxable real property located in a reinvestment zone "to exempt from taxation a portion of the value of the real property or of tangible personal property located on the real property, or both, for a period not to exceed 10 years." TEX. TAX CODE ANN. § 312.204(a) (Vernon Supp. 2000). The tax abatement agreement entitles the property owner "to exemption from taxation by an incorporated city or town of all or part of the value of the property as provided by the agreement." Id. § 11.28 (Vernon 1992). The tax exemption created by the agreement is subject to the Tax Code provisions that generally apply to property tax exemptions. See Fina Oil & Chemical Co. v. Port Neches Indep. Sch. Dist., 861 S.W.2d 3, 6-7 (Tex. App.-Beaumont 1993, writ denied) (notice provision of Tax Code section 11.43(h) applied to cancellation of partial exemption created by abatement agreement).

Eligibility for a tax exemption is usually determined by a claimant's qualifications on January 1. TEX. TAX CODE ANN. § 11.42 (Vernon Supp. 2000). If a tax exemption applicable to a property on January 1 is lost during the year, the tax due for the year is prorated according to section 26.10 of the Tax Code. Id. § 26.10 (Vernon Supp. 2000); see also id. § 22.02 (Vernon 1992) (person who owns the property when the exemption terminates must render it for taxation within thirty days). The tax due on the property is prorated by determining the tax for the entire year according to the usual method set out in section 26.09 of the Tax Code and multiplying this amount "by a fraction, the denominator of which is 365 and the numerator of which is the number of days the exemption is not applicable." Id. § 26.10 (Vernon Supp. 2000). Thus, the loss of the tax exemption affects the tax rate as of the date the exemption is lost.

The tax exemption at issue in Attorney General Opinion JC-0155 was lost when the owner of the property became a member of the governing body that granted the abatement. See id. § 312.204(d). An elected officer ordinarily does not assume office at the time of the election. If the person is elected to a new term of office, he or she may not assume office until the new term begins. See generally TEX. GOV'T CODE ANN. § 601.003 (Vernon 1994) (regular term of elective state, district, county or precinct office begins on January 1 of the year following the general election for state and county officers). Even if the individual is elected to fill a vacancy in an unexpired term, he or she must qualify for office by taking the oath of office and complying with any other requirements. See Purcell v. Carrillo, 349 S.W.2d 263 (Tex. Civ. App.-San Antonio 1961, no writ); Tex. Att'y Gen. Op. No. JM-589 (1986) at 2. The attorney for the city in question should consult the city charter, ordinances, and minutes of the city council meetings to determine the date at which the property owner assumed office as a member of the city council. The property tax exemption granted by the city in the tax abatement ends as of that date.

SUMMARY

Attorney General Opinion JC-0155 (1999) determined that property owned or leased by a member of a municipality's governing body is not eligible for a tax abatement agreement authorized by the Property Redevelopment and Tax Abatement Act, chapter 312 of the Tax Code. Attorney General Opinion JC-0155 is clarified by determining when the property loses the tax exemption granted by the tax abatement agreement.

If the owner of property subject to the tax abatement agreement is elected to the municipality's governing body, the tax exemption created by the agreement is lost on the date the property owner assumes office as a member of the governing body. The tax due on the property for the year is determined according to the method set out in section 26.10 of the Tax Code.

JOHN CORNYN
Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General - Opinion Committee