Attorney General Opinion JM-0453

JIM MATTOX Attorney General Supreme Court Building P. 0. BOX 12548 Austin. TX. 78711. 2548 51214752501 Telex 9101874-1387 Telecopier 5W475-0288 714 Jackson, Sulle 700 Dallas, TX. 7520245M 214l742.8944 4824 Alberta Ave., Suite 180 El Paso, TX. 799052793 9151533-3484 100, Texas, Suite 700 Houston, TX. 77002-3111 71312235888 WE Broadway. Suite 312 Lubbock, TX. 79401-3479 8OW47.5238 4309 N. Tenth, Suite B McAllen, TX. 78501-1685 51216824547 200 Main Plaza, Suite 400 San Antonio, TX. 78205-2797 51212254191 An Equal OppOrtunityI Affirmative Action Employer The Attorney’ General of Texas March lg.'1986 Bowsable Guy Jarm?o Gray Criminal District Attorney P. 0. Box 1329 opinion No. JM-453 Re: Applicability of article 2351a-6, Jasper, Texas 7!i951 V.T.C.S., to the withdrawal of a city from a rural fire prevention district Dear Mr. Gray: You ask for the opinion of this office concerning the right of a city within a nmal fire prevention district to withdraw from the district. You a&r:tse us that the Jasper County Rural Fire Prevention District Ho. 4. composed of a portion of Jasper County. was created under the provisf(ms of article III. section 48-d, of the Texas Constitution and a.rticle 2351a-6, V.T.C.S. The city of Jasper was included in the original boundaries of the district. In 1983, the voters of the proposed district, including the voters of the city of Jasper, voted in xcordance with the provisions of article 2351a-6 to confirm the organ:Lz:ation of the district and to authorize the levy of a tax not to exceed three cants on the $100 valuation of property. V.T.C.S. art. 235l.er6, $12. Except for the issuance of bonds or notes which are authorized by sections 12A-12G of article 2351a-6, a rural fire prevention district may not contract :Eor an indebtedness in any one year in excess of funds then on hand or in excess of an amount which may be satisfied out of current rrrenues for the year. V.T.C.S. art. 2351a-6, 512. A fire prevention di:strict is authorized to issue bonds and notes that are payable from and secured by liens on and pledges of ad valorem taxes, or revenueiI, income, or receipts of the district, or a combina- tion of taxes, revenues, incoma, and receipts. V.T.C.S. art. 2351a-6, 512A(a). The sta!:ute provides that if bonds or notes are payable from ad valorem texes, the Board of Fire Commissioners, at the time of the authorization of the bonds or notes, shall levy a tax sufficient to pay the principal of and interest on the bonds or notes and to provide reserve funds. Sets. 12A(j), (k). Bonds or notes secured by taxes may not be authorbred until approved by the voters of the district at an election for that purpose. Seci 12B. Section 14a of the act provides for expansion of the area of a district. Effective September 1. 1985, section 14b was added to the act to authorize the exclusion of a city from a Eire prevention district's territory. Section 14b provides that p. 2057 Honorable Guy Jamas Gray - P,age 2 (JM-453) (a) The governing body of a city that has an area within its corporate or extraterritorial jurisdiction included within a rural fire preven- tion district my, on agreeing to provide fire protection to the area as provided by Section 8B of this Act, or if the area is designated au industrial distrLct under Section 5, Municipal Annexation Act (Article 970a. Vernon's Texas Civil Statutes), notif!, the secretary of the board of fire commissione:rs in writing that the area is excluded fromthe district's territory. (b) On receipt of the notice under Subsection (a) of this section. the board shall cease to provide further :rarvice to the area, exclude the area by order from the district, and redefine the district's boundaries. Subsequently, on October 28, 1985, the city of Jasper notified the Jasper County Rural Fire District No. 4 that the city had adopted a resolution to exclude the arca within its corporate and extra- territorial jurisdiction from the fire prevention district's territory. You first inquire whether section 14b of article 2351a-6 applies only to rural fire prevent:Lon districts created after September 1, 1985. We believe that whwl section 14b became law on September 1, 1985, it became applicable on that date to all rural fire prevention districts created and then existing under article 23518-6. Where the legislature makes no exceptions to the provisions of a statute, it is presumed that the legislature intends no exceptions. It is well settled that ~zxceptions in statutes are not ordinarily implied. See Spears v. City of San Antonio, 223 S.W. 166, 169 (Tex. 1920); Stubxv. Lowrey's II:&, 253 S.W.2d 312, 313 (Tex. Civ. App. - Eastland 1952, writ ref'd n.r.e.). We find nothing in the act to indicate that the legislature intended section 14b to apply only in the case of rural fire prevention districts created after September 1, 1985. Your second question <asks for which year a withdrawal notice under article 2351a-6, section 14b, becomes effective for tax purposes. It is our opinLon that a city's withdrawal from a district subsequent to January 1 hat no effect on the assessment or collection of taxes by the district for the year in which the withdrawal occurs and would be effective on.Ianuary 1 of the year following withdrawal. The status of property for taxation is fixed on January 1 of each year. See Hedgecroft v. City of Houston, 239 S.W.2d 828, 830 (Tex. p. 2058 Honorable Guy James Gray - Piage 3 (JM-453) Civ. App. - Galveston 1951). rev'd on other grounds, 244 S.W.2d 632 (Tex. 1951); Attorney General Opinion O-4589 (1942). The board of a rural fire prevention district shall annually levy and cause to be assessed and collected a tax on all properties, real and personal, situated within the district and subject to district taxation in an amount not to exceed three cents on the $100 valuation for the support of the di:jtrict and for the purposes authorized by article 2351a-6. Sec. 12. Real property is taxable by a taxing unit if located in the unit on January 1. Tax Code 921.01. Except for railroad rolling stock, tr.ngible personal property is taxable by a taxing unit on January 1, iC it is located in the unit on January 1 for more than a tanporary period or it normally is located in the unit, evan though it is outside the unit on January 1, if it is out- side the unit only temporarily. Tax Code 921.02. Your third question asks, if article 2351a-6, section 14b. is not applicable, must the withdrawal be by a majority vote in an election of those living within thle corporate limits and extraterritorial jurisdiction of the city. Article 2351a-6 provides both for expansion of an existing rural fire p,cevantion district and for dissolution of such a district. sees. lQf1, 19-22. Except for section 14b, which became effective on September 1, 1985, the act contains no provisions which authorize the withdrawal of any territory from an axisting rural fire prevention district. The act requires ratification of the annexation of territory to a district by a majority vote of the electors at a separate election held in the existing district and by a majority vote of the electors at a separate election held in the territory proposed to be added. Sec. 14a(S)(s). The act also requires an election to :onfirm the dissolution of a rural fire prevention district. Sec. 21. But neither section 14b. which provides for the exclusion of corporate limits and extraterrltorial jurisdiction from the boundaries of an existing fire prevention district, nor any other provision of article 2351a-6 contains either a requirement or authority for an election by the voters residing in a territory that will be uithdrawn from an existing district. We conclude that the act doe11 not authorize an election to confirm or accomplish the withdrawal of any territory from the boundaries of an existing rural fire prevantion district. You advise us that the fire prevention district made purchases of equipment and incurred InddMedness based on its ability to pay with its existing tax base, and that the withdrawal of city property values from the tax base jeopardizes the district's ability to repay its previously incurred indebtedness. Your last question is: What protection does the district have in this situation? p. 2059 Honorable Guy Jamas Gray - ~?age 4 (JM-453) Since the legislature expreszsly provided that, except for the issuance of authorized bonds or notes, no indebtedness may be contracted in any one year in excess of funds ,then on hand or which may be satisfied out of current revenues for ,:he year, we assums that the district's concern involves its abilj.ty to repay indebtedness incurred by the issuance of bonds or notes. Hence, the issue includes the protection of bondholders of the district. A statute authorizing a bond issue and providing the means for its repayment constitutes part of a contract with bondholders that may be enforced by bondholders. See Cochran County v. Mann, 172 S.W.2d 689, 690 (Tex. 1943). Subllequz legislation that removes the source of repayment to bondholders without substitution of something of equal efficacy mav imnair the ohl~ination of contract and. therefore. come _ - _ under constitutional condauiation. See U.S. Coast. -art. I. 510, cl. 1; Tex. Const. art. I, 116; City of r Ensas Pass v. Keeling, 247 S.W. 818. 821 (Tex. 1923); Burn, v. Dillcp District, 295 S.W. 1091. County Line Independent School 6% (Tex. Comm'n App. 1927, ludgmt adopted); Attorney General Opinion O-1205 (1939). The-courts have said that the most certain test of whetha:r an imoairmant of a contract has occurred is whether the value of the! ccntra& has been diminished. See Dallas County Levee Improvement D:ietrict No. 6 v. Rugel, 36 S.W.2d 188, 189 (Tax. Comm'n App. 1931, :u.dgmt adopted). In Determan v. City of Irving, Texas, 609 S.W.2d 565 (Tex. Civ. App. - Dallas 1980, no writ), the court found that a charter amendment limiting the taxing authority of a city lessened the security of bondholders and constituted impair- mant of the obligation of coattact. It is, however, the bondholders who have standing to raise the question of impairment of the obliga- tion of contract. See U.S. - -- Trust Co. v. New Jersey, 431 U.S. 1 (1977). In the case of the e?+amsion of a rural fire prevention district that has outstanding debt,3 or taxes, article 2351a-6 requires the voters of proposed additional territory to agree to assume the addi- tional territory's proportian of the debts or taxes. Sec. 14a(S)(h). Following voter approval to dissolve a rural fire prevention district, article 2351a-6 requires the: board to continue levying and collecting a tax on the property in th'e district until all outstanding debts of the district are paid. Sec. 22. Article 2351a-6 contains no express provision for payment of tbe excluded territory's pro rata share of an axisting district indebtedness. Cf. Water Code S953.268, 54.731 (on payment of pro rata share of axiszg district indebtedness, excluded territory and irs taxpayers are released from liability to the dis- trict and payment of taxes). It is our opinion that article 2351a-6, as recently amended to allthorize the exclusion of a city from a district, is not facially unconstitutional. In particular situations where the obligation of contract to bondholders would be impaired, the statute may be unconstitutional as applied without the collection of taxes from the excluded arca to pay its pro rata share of obligations p. 2060 Eonorable Guy James Gray - Page 5 (JM-453) to bondholders that are in existence at the time the city is withdrawn from the district. See Attorney General Opinion MW-337 (1981). - SUMMARY Section 14b of article 2351a-6, V.T.C.S., applies to all rural fire prevention districts. A city's withdrawal from a ,mral.fire prevention district is effective for tax :purposes on January 1 of the year following withdrawal. Article 2351a-6 does not require or author::ze an election by voters of a city to confirm or accomplish withdrawal of the city from a district. A statute authorizing a bond issue and providing the mems for its repayment constlrutes part of a contnm with bondholders that may be enforced by bondholders. JIM MATTOX Attorney General of Texas JACK HIGHTOWER First Assistant Attorney Gmeral MARYKELLER Executive Assistant Attommy General ROBERT GRAY Special Assistant Attorney General RICR GILPIN Chairman, Opinion Coumlttetr Prepared by Nancy Sutton Assistant Attorney General p. 2061