City of El Paso v. El Paso Community College District
729 S.W.2d 296
Tex.
1986
Check Treatment

*1 PASO, EL Texas et The CITY OF Petitioners,

al., Mattox, Atty. Asst. Jim Gen. and Debo- Austin, Hutchison, Herzberg, Ray rah EL PASO COLLEGE COMMUNITY Hutchison, Price, Brooks, Dallas, Boyle & al., Respondents. et DISTRICT Diamond, Diamond, Rash, Tom Leslie & No. C-4752. Smith, Paso, El petitioners. Supreme Court Texas. Safi, Grambling Anthony & S. Mounce Sparks, Crowley, Sam Michael C. 1986. Dunbar, Christie, Berry Edward W. & Dun- May 13, Rehearing Denied bar, Paso, El for respondents. CAMPBELL, Justice. El Paso declaratory judg- of Texas seek

General Financing Tax Increment 1066e, cre- zones, ation of reinvestment is constitution- the Act al. The trial court held tional. The court judgment and held the Act trial court’s El Paso District Communi- College ty District. 698 S.W.2d We ap- judgment of the court of reverse the peals.

The Tax Increment passed in 1981. Tax increment in financ- designed to aid cities and towns in or un- ing public improvements derdeveloped areas. Under Article designate municipality must which, opinion, meets the defini- requirements a “reinvestment tional 1066e zone.” Tex.Rev.Civ.Stat.Ann. (Vernon 3(b) Any increase Supp.1985). land tax revenues from with- ad valorem pur- the zone is committed ap- improvement of property, chase of proved property, or retirement of revenue funding bonds issued approved projects. enabling legislature recognized an necessary to ensure

amendment would be constitutionality. Act’s It entitled, “Development rede- tax re- velopment property; ad valorem and notes.” lief and issuance of bonds 1-g. This Tex. ConstAnn. art. people of amendment was *2 297 schools”, l-g(b) in 1981. the the Texas Section of be determined the District’s Board of Trustees. Palmer v. may incorporated city an town (Tex.Civ. authorize or Trustee, 289 S.W.2d 344 Dist. “... bonds the issue or notes to finance App.-Texarkana 1956, ref’d, writ n.r.e.); development unpro- or of an Tex.Educ.Code (1972). Ann. 20.48 § ductive, underdeveloped or area court held The of further the pledge repayment ... and to for of those subject not the school districts are man- bonds or notes in ad tax increases valorem date of art. because VIII school imposed property revenues “political are not subdivisions” that term or town and other is in the school used amendment. The dis- subdivisions.” urged tricts other which the court of 30, 1980, On City December of El appeals did not address. a Paso created Tax Increment District in court, City asserts that al pas- its central business district. After the though prohibit expendi article VII would sage City of article 1066ethe confirmed the of tures the school district’s tax revenues District as a Reinvestment Zone ordi- an purposes for other than maintenance of nance August effective All schools, public free article VIII modified government entities within District are allowing this restriction of use school included in the reinvestment zone. The purposes funds of Act. School Districts claim the Act is unconstitu- City argues that article should VIII tional as to them. over article VII control because article VIII trial court held the Act constitutional and passed later and is therefore “lat the City’s ordinance valid. expression people, est of the will of the appeal On the School Districts contend any provisions previous of the constitution is ordinance it because conflict, existing must, ly yield in case of to use the School Districts’ Shep amended Cramer [the sections].” ad tax valorem non-education- pard, 140 Tex. 167 S.W.2d 152 and to seize the revenues with- (1942). out the consent of the School District’s Trustees, Board of in violation of respond The school districts that this rule VII, Const. Ann. art. 3.1 The School of construction of constitutional amend- argue Districts further that a dis- school applied only should ments be a last community college trict and district are not resort, Trustees, Farrar v. Board of subject to tax increment because (1951) only “political are not subdivisions” within “a impossible determination that it is the meaning of l-g(b) of any provisions by to harmonize the reason- Texas Constitution. permit able will them construction which together.” Collingsworth County stand of court held the ordinance Allred, 120 Tex. 40 S.W.2d unconstitutional because article VII of urge The school districts in- Constitution allows the use school funds only finding apply- stead of public for the conflict exists and “maintenance of free ing the rule of the later equip schools” and for construction that “the erection and try prevails, ment of we should to har- buildings” school in the school by holding district. That and VIII court cited the Texas Edu monize VII prohibition against cation expending encompass Code’s VIII does not school school for purposes “political funds than those use “necessary in public conduct subdivisions”. VII, provides, part: pertinent Article § 3 ad tax to levied and additional valorem heretofore collected Legislature pass shall be authorized to formed, or the further formed hereafter laws for the assessment and collection of taxes schools, public and for management in all free said districts and maintenance for the public buildings equipment control of the districts,... such erection schools of Legislature may authorize therein... appar

The court of resolved the reference to Code’s definition ent units.” conflict not a subdivision” within the floor records of debates Texas 1-g, and thus the Senate also the term indicate sub- school districts were excluded from the divisions” to include was meant school dis- scope of article VIII and 3, 1981, August tricts. On Senate Bills 16 *3 (enacted participate 1066f) forced to reinvestment as 1066eand zone. The court based its on the were discussed. reconciling apparent

policy repugnancies SENATOR VALE: giving in the Constitution and effect to program How will affect the tax base Jordan, every part of it. Hansen v. there, say of the local entities down let’s 320, 198 (1946). However, S.W.2d 262 particular If the school districts. support there is no case law to the court of participation is set in this kind aside appeals’ “politi program, interpretation happens to the tax what subdivision”, property to legislative revenues from that history cal school districts? framers of the indicates the intended the term to include dis SENATOR FARABEE: tricts. they The tax are frozen so that get same revenues continue to construing a constitutional getting... amendment, we look to intent of the Senator was also concerned about Brown framers and the voters who the effect of the Act on school districts and Farrar, supra. amendment. The Act re taxing units: quires “taxing units” in all the reinvest SENATOR BROWN: authority ment zones created under its Senator, in finding interested I’d be plan. The participate in the Act refers to designated if out... an area is one Tax Code the definition of city, these areas 1.04(12) specifically unit”. Section authorities, taxing does this cause other junior college school districts and includes within, county city hospital falls taxing legislature units. The districts,... other —school adopted the which mandates the taxing those other entities. Does the “taxing units”, inclusion of was city’s designation cause action and those proposed legislature same the consti others to also come under and be amendment, tutional which property? unable then to tax this participation by political subdi FARABEE: SENATOR financing plan. in the tax increment visions They frozen would tax at the value and proposing the amendment reason for above that. So that could not tax was a constitutional basis for they would to that extent... be bound 16, 1981, No. Acts Act. See S.B. 16 and 17 on Floor Debate Tex. S.B. C.S., p. Leg., 67th 1st ch. 3, 1981) Senate, Leg. (August 67th provided: (on tape). question addressed A Tax Increment This Act [the mayor Arthur one of the former of Port if only the takes effect constitution- Act] legislature did indeed Senators shows the # 67th SJR consider the effect Session, Legislature, 1st Called districts: adopted. Q: developer for a possible Would it be area, open get could not have legally go framers article VIII into an par- from and have the incorporated meant to exclude Here, freezing school and ticipation in reinvestment zones. effect of open land values? enabling legislation pursuant county consti- at taxes moving possibly sev- requires you’d ... so tutional amendment into the eral hundred school students participation, as is evidenced the Act’s give but would not them an and remanded the — opportunity for a tax base on which cause to that court. S.W.2d-. to educate these students. points raised several of er- ror appeals. before the court of The court Hearings on Tex. S.B. 16 and 17 before considering only three 29, 1981) Finance (July Senate Committee error, points of held the (on Act unconstitution- tape). al. 698 S.W.2d 248. we re- excerpts These show the manded the cause to aware the Act would affect school districts. points address those not considered. The Furthermore, this court has held sustained subdivisions” includes school districts. are: Lewis v. Point 1: The El Paso ordinance was 83, 161 (1942), we held a school district corporation is a or a subdivision of the state” *4 pledged to be used for

meaning III, non-edu- of article 52 of the Texas purposes. cational Constitution. Point 2: The El Paso ordinance was Guaranty Corporation opinion Armstrong, (Tex.1980), 609 S.W.2d 529 case, supportive. also In that this court pledged or used without discussed the political attributes of a subdi- consent, against express .the including: 1) jurisdiction vision as over a direction, respective of the boards of portion state; 2) elected officials as a trustees. governing body; 3) power to assess Point 3: The El Paso ordinance was Id. at 531. A school and collect taxes. because the possesses all of these features. districts were not subdivi- The school districts also contend the vot- sions” of article ers were unaware that lg(b). section would be covered term that, they known, subdivisions” and had reversing we they would not adopted have the amend- Thus, primarily wrote Point above. ment. presumed voters are question the school districts whether our have the construction of a word or opinion eliminates Points from re phrase placed which has been thereon By consideration remand. It does. Richey Moor, courts. that school districts are 249 S.W. subdivisions, we held that school district ad valorem tax are within the do judgment Act is constitutional. The main of the El Paso Tax Increment Financ is reversed. The ing plan. the Texas Constitu because it had held the tion is not offended if such funds are used unconstitutional, failed to consider sev- (Point 1) for non-educational eral urged by of error the school without the consent of the boards of trust district. This cause is remanded to that (Point 2). ees Tex. Const.Ann. art. VIII court for its remaining consideration of the l-g(b). Accordingly, the motions for re points.

hearing by El Paso MOTION FOR Community College, REHEARING El Paso

ON A General, CAUSE of El Paso are overruled. rehearing, motions for El Paso Inde- pendent School District and El Paso Com-

munity College seek clarification of our 16,1986 opinion holding the Tax Incre- opinion tional. judgment Our