Quantcast

SOUTHEAST TEXAS RECORD

Thursday, April 18, 2024

Paxton opinion: Special assessments related to PACE Act treated similar to real estate taxes

Lawsuits
Courtgavel456

AUSTIN – Attorney General Ken Paxton has stated that contractual assessments related to an act regarding property improvements to decrease water demand and consumption are treated similar to real estate taxes.

Williamson County Attorney Doyle Hobbs asked Paxton in February if contractual assessments imposed by local governments under the Texas Property Assessed Clean Energy Act (PACE) are special assessments and if they should be treated in a similar manner as real estate taxes.

According to the Aug. 13 opinion from Paxton, "A court would likely find that a contractual assessment imposed under a program authorized by chapter 399 of the Local Government Code is a special assessment by the local government and, with respect to lien priority status, enforcement and delinquencies including the recovery of costs and expenses, is treated in a manner similar to the real property taxes on the property."

According to Hobb's request, the PACE Act became effective in 2013 and allows a local government to establish a program for financing improvements of privately owned commercial or industrial properties, or residential properties with five or more dwelling units, to decrease water or energy consumption/demand.

Hobb wrote that the U.S. Department of Housing and Urban Development issued a notice in January 2017 that requires that residential properties participating in PACE need an opinion from the state's attorney general that "the obligations under the PACE program of that state are special assessments and treated in a similar manner as real estate taxes."

"In order to satisfy one of Housing and Urban Development's requirements for giving its consent to a PACE assessment on a property in Williamson County, and in other participating municipalities and counties in the state, on which it holds the mortgage, l ask the Opinion Committee to confirm that the assessments imposed under the Texas PACE Act are special assessments and treated in a similar manner as the real estate taxes on the property," Hobb's request states.

When considering if this was how the Act was intended to be interpreted, Paxton maintained that the special assessment was not an ad valorem tax and was a less-risky way for the government to provide a loan that was tied to a property tax bill.

More News