taxesProperty Tax Assistance

2017 Court Decisions and AG Opinions

Listed below are 2017 decisions and opinions concerning various property tax issues. The list does not include all opinions and decisions concerning property tax. The summaries are provided by the Comptroller's office as a public service intended solely as an informational resource. The summaries are not intended as substitutes for or interpretations of the opinions and decisions summarized and should not be relied upon as such. The information provided neither constitutes nor serves as a substitute for legal advice. Questions regarding the meaning or interpretation of any information included or referenced herein should, as appropriate or necessary, be directed to an attorney or other appropriate counsel.

Texas Supreme Court Decisions

Harris County Appraisal District v. Texas Workforce Commission

Harris County Appraisal District v. Texas Workforce Commission, No. 16-0346 (Texas Supreme Court) (PDF)
(May 12, 2017)

Several members of the Harris County Appraisal Review Board who served a maximum of three terms, and some current board members whose working hours had been reduced, filed for unemployment compensation with the Texas Workforce Commission and indicated that the Harris County Appraisal District was their employer. The Workforce Commission determined that the claims were valid and the individuals were entitled to compensation.

The District filed suit against the Workforce Commission, arguing that the appraisal review board members fell within an exception in the Texas Unemployment Compensation Act for members of the judiciary and that the Texas Property Tax Code does not permit appraisal districts to exercise control or direction over appraisal review boards, thus the claimants were not its employees. The district court granted the appraisal district's motion for summary judgment and set aside the Workforce Commission's determinations awarding compensation. The 14th Court of Appeals reversed and reinstated the Workforce Commission's determinations.

In affirming the court of appeals judgment, the Texas Supreme Court applied a twenty-factor test for employment set out by a Workforce Commission regulation and held that:

Substantial evidence review requires "only more than a mere scintilla" of evidence to validate an agency's decision. After reviewing the evidence, we conclude that although no evidence supports the TWC's finding of employment under some of the factors and some factors do not apply under the circumstances, there is substantial evidence—that is, more than a scintilla—to support the TWC's determination that HCAD did not overcome the presumption of employment under several parts of the twenty-factor test.

In response to the appraisal district's argument that the claimants fall under an exemption in the Texas Unemployment Compensation Act for members of the judiciary, the court held that:

The employment benefits at issue in this case concern only the claimants in their roles as employees. In contrast, each of the cases in which courts have extended judicial protections to quasi-judicial officers concerned those officers' actions in their decision-making capacity. For example, in Sledd, the court of appeals reasoned that "[t]o determine whether the Panel Members are entitled to judicial immunity, we examine the functions they perform to see if these functions are comparable to those of judges." Employment benefits do not concern judicial functions. Although it is clear that the Legislature was concerned with the independence and neutrality of appraisal review boards, those considerations do not warrant an extension of the members of the judiciary exemption in this case.

ETC Marketing, LTD. v. Harris County Appraisal District

ETC Marketing, LTD. v. Harris County Appraisal District, No. 15-0687 (Texas Supreme Court) (PDF)
(April 28, 2017)

The Harris County Appraisal District (HCAD) appraised the value of approximately 33 billion cubic feet of natural gas allocated to ETC Marketing, LTD. (ETC) that was stored in a reservoir facility in Harris County the Houston Pipeline Company (HPL) owns and operates. The facility is attached to HPL's intrastate pipeline that is connected, in turn, to an interstate pipeline network through which gas stored at the facility is transported. ETC protested the appraised value to the Harris County Appraisal Review Board by arguing, unsuccessfully, that the stored gas was in the stream of interstate commerce and therefore immune from taxation.

ETC appealed the ARB's ruling to district court. Both HCAD and ETC filed motions for summary judgment. ETC relied again on the protections of the Commerce Clause. HCAD countered that the stored gas was not in the stream of interstate commerce, and even if it was, the tax was valid under all four prongs of the U.S. Supreme Court's holding in Complete Auto Transit, Inc. v. Brady, which supplies the test for determining the constitutionality of state taxation of interstate commerce. The trial court granted HCAD's motion and denied ETC's motion. ETC appealed and the court of appeals affirmed.

In reviewing the court of appeals decision, the Texas Supreme Court held that whether the gas was in interstate commerce had to be determined first, as part of the Complete Auto test:

Complete Auto provides the most recent test for determining whether a state tax violates the Commerce Clause. D.H. Holmes Co. v. McNamara, 486 U.S. 24, 30 (1988) (citing Complete Auto, 430 U.S. at 288). If the tax implicates interstate commerce, the tax must meet four necessary conditions to withstand constitutional scrutiny. McNamara, 486 U.S. at 30. The tax must: (1) apply to an activity with a substantial nexus with the taxing state; (2) be fairly apportioned; (3) not discriminate against interstate commerce; and (4) be fairly related to the services provided by the state. Id.

The Texas Supreme Court held that ETC's gas does enter interstate commerce. The court then applied the four-prong test of Complete Auto. The court held that the reason for ETC's storage – to create and maintain a surplus so as to time the market and therefore increase profit – broke continuity of transit, creating a substantial nexus and satisfying the first prong. The court held the second prong was met, as the tax was fairly apportioned since it was confined by both geography and timing. The court held the tax was nondiscriminatory since HCAD assessed the tax on ETC's entire amount of stored gas, regardless of where it would ultimately be sold, thus satisfying the third prong. Lastly, the court held the fourth prong was met since the tax was reasonably related to services provided by the state.

The court stated the following in the conclusion of its opinion:

Having met all the prongs of Complete Auto, the tax levied in this case withstands constitutional scrutiny. And because the tax does not violate the Commerce Clause, neither does it violate Section 11.12 of the Texas Tax Code, which provides a state-law exemption for taxes that would otherwise violate federal law.

Valero Refining-Texas, L.P. v. Galveston County Appraisal District

Valero Refining-Texas, L.P. v. Galveston County Appraisal District, No. 15-0492 (Texas Supreme Court) (PDF)
(February 24, 2017)

The Texas Supreme Court summarized its opinion in the unequal appraisal lawsuit Valero brought regarding its refinery against the county appraisal district:

In appraising real property, an appraisal district may choose to divide a single tract into multiple accounts for various reasons, such as the complexity of improvements. The issue before us is whether an owner's complaint of unequal taxation may be directed to only some of those accounts and not the valuation of the whole tract. The court of appeals concluded that the issue is one of fact. We hold, as a matter of law, that appraisals of individual accounts may be challenged as unequal. We reverse the judgment of the court of appeals and remand the case to that court for further proceedings.

The following excerpt from the court's opinion sets forth the reasoning supporting the decision:

The District argues that in determining whether Valero's property has been taxed unequally as compared to BP's and Marathon's, only the total valuations can be compared and not their component accounts. In essence, the District's argument is that the value of property in one tax account is affected by the value of property in other accounts—that is, that the components of the refineries cannot be appraised separately. This is contradicted by the District's own determination that they can be. The District does not argue that it was wrong to use separate accounts in appraising the refineries but minimizes its decision as one of administrative convenience. The District's argument that appraisals of some accounts cannot be compared separately from appraisals of others violates the requirement that a property owner have notice of what is included in each account to be assured that property is not being double-taxed. If the component parts of a property cannot be valued in isolation, then as a matter of law, separate tax accounts are not appropriate. It follows that if tax accounts are appropriate, then as a matter of law, the property in each account can be valued in isolation. This is transposition logic, not a factual dispute.

The high court also rejected, as did the lower courts, the appraisal district's jurisdictional argument that "an equal-and-uniform challenge can be determined only if made to the appraised value of the entire tract."

Courts of Appeals Decisions

Chambers v. San Augustine County Appraisal District
  • Chambers v. San Augustine County Appraisal District, No. 12-15-00201-CV (Twelfth Court of Appeals - Tyler)
    (February 8, 2017)

    In a suit in district court, the landowners challenged the decision of the San Augustine Central Appraisal District that they owned an interest in pooled minerals located in San Augustine County, and thus had an obligation to pay taxes in that county. The landowners contended that the mineral interest they owned was located in Shelby County and properly appraised and taxed in that county. The appraisal district argued that the landowners had "cross-conveyed their mineral interests with other mineral owners, and [are] appropriately taxed in both San Augustine and Shelby counties in proportion to the percentage of the unit lying within each county." The trial court agreed with the appraisal district and granted its motion for summary judgment.

    The Tyler court of appeals reversed the trial court's judgment and remanded the cause based on its conclusion that the landowners' leases authorized pooling but prohibited cross-conveyance of interests. In rejecting the District's argument, the appellate court reasoned that whether pooling resulted in cross-conveyance, and whether the minerals the District seeks to tax lie within or outside the boundaries of San Augustine County, depends on construction of the language in the leases. Giving effect to all language of the landowners' leases, the appellate court concluded, as a matter of law, that the leases authorize pooling but prohibit cross-conveyance of interests and accordingly, the District failed to establish that the landowners owned an interest in pooled minerals located in San Augustine County.

Attorney General Opinions

Opinion No. KP-0175

Opinion No. KP-0175 (PDF)
(November 13, 2017)

Re: Whether an appraisal district is authorized to modify the boundary of a school district upon receipt of information suggesting the survey line is inaccurate (RQ-0168-KP)

The Attorney General set forth the following conclusion in his summary:

A tax appraisal district has no authority to detach property from one school district and transfer the property to another school district under section 13.051 of the Education Code. The Legislature has not given an appraisal district independent authority to determine or alter the boundaries established by a school district.

Opinion No. KP-0165

Opinion No. KP--0165 (PDF)
(September 12, 2017)

Re: Whether affidavits regarding ownership of real property by adverse possession may be recorded with the county clerk pursuant to section 12.001(a) of the Property Code (RQ-0155-KP) (PDF)

The Attorney General set forth the following conclusion in his summary:

Local Government Code section 192.001 requires a county clerk to record an instrument that is required or permitted by law to be recorded. Thus, a county clerk may not refuse to accept for filing an instrument concerning real property, including an affidavit of adverse possession, if the affidavit meets the recording requirements of Property Code section 12.001(a). Fraudulent affidavits are criminal, and county clerks have a duty to notify property owners when a fraudulent affidavit is filed.

Opinion No. KP-0157

Opinion No. KP--0157 (PDF)
(August 3, 2017)

Re: Whether relatives of a public official may perform uncompensated work for the official's office without violating nepotism laws if the relatives receive reimbursement of actual expenses or a per diem expense payment (RQ-0147-KP) (PDF)

The Attorney General set forth the following conclusion in his summary:

Section 573.041 of the Government Code prohibits a public official from appointing certain relatives to positions compensated with public funds. The reimbursement of expenses, however, is not compensation. Thus, a public official may appoint a close relative to a volunteer position that provides reimbursement for incurred expenses but no compensation.

Opinion No. KP-0154

Opinion No. KP--0154 (PDF)
(July 14, 2017)

Re: Whether an independent school district must hold a tax ratification election pursuant to Tax Code Section 26.08 in specific circumstances (RQ-0159-KP) (PDF)

The Attorney General set forth the following conclusion in his summary:

Tax Code Section 26.08(a) requires the registered voters of an independent school district to approve an adopted tax rate if the governing body of the district adopts a tax rate that exceeds the district's rollback tax rate. The rollback rate calculation, defined in Tax Code Section 26.08(n), includes a maximum maintenance and operations (M&O) tax rate component and a current debt service tax rate component. The debt service component of the rollback rate does not reflect the debt service tax rate of the preceding year but of the current year. As a result, the rollback tax rate effectively measures only the M&O component of the tax rate.

An independent school district may not increase an M&O tax rate above the maximum M&O tax rate component calculated for purposes of the rollback tax rate without voter approval through a tax ratification election.

Opinion No. KP-0147

Opinion No. KP--0147 (PDF)
(May 11, 2017)

Re: Scope of residence homestead tax exemption in Tax Code subsection l l.13(l)(2)(B) (RQ-0140-KP) (PDF)

The Attorney General set forth the following conclusion in his summary:

A court would likely construe subsection 11.13(l)(2)(B) of the Tax Code to refer to an owner's temporary residence in an establishment set up to assist persons with overcoming illness or injury, or with needs related to physical or mental weakness or growing old, through a wide range of activities, regardless of whether the owner receives such services.

Opinion No. KP-0144

Opinion No. KP--0144 (PDF)
(April 24, 2017)

Re: Whether the computation of state funding for school districts receiving additional state aid for tax reduction must include local option homestead exemptions that were determined to be authorized in Attorney General Opinion KP-0072 (2016) (RQ-0137-KP) (PDF)

The Attorney General set forth the following conclusion in his summary:

The computation of state funding for school districts receiving additional state aid for tax reduction must not include local option homestead exemption repeals or reductions that Tax Code subsection 11.13(n-1) prohibits.