If the disannexation election is successful on May 6, it is likely to be litigated.
One issue will be whether the disannexed properties will be liable for their pro rate share of the $8.2 million in bonds sold for the Salado sewer system.
Local Government Code Sec. 43.143 deals with the pro rate share of debt for which the property owners of a disannexed area are liable. Sec. 43.148 addresses the refund of taxes and fees.
Sec. 43.143 (c) is clear on the debt. “If the area withdraws from a municipality as provided by this section and if, at the time of the withdrawal, the municipality owes any debts, by bond or otherwise, the area is not released from its pro rata share of that indebtedness. The governing body shall continue to levy a property tax each year on the property in the area at the same rate that is levied on other property in the municipality until the taxes collected from the area equal its pro rata share of the indebtedness. Those taxes may be charged only with the cost of levying and collecting the taxes, and the taxes shall be applied exclusively to the payment of the pro rata share of the indebtedness.
This subsection does not prevent the inhabitants of the area from paying in full at any time their pro rata share of the indebtedness.”
However, John Newman, spokesperson for Salado FED UP (Friends of an Election for Disannexation) says that the property owners will not be liable for the sewer debt because of Section 43.148 REFUND OF TAXES AND FEES, which states “(a) If an area is disannexed, the municipality disannexing the area shall refund to the landowners of the area the amount of money collected by the municipality in property taxes and fees from those landowners during the period that the area was a part of the municipality less the amount of money that the municipality spent for the direct benefit of the area during that period.”
When questioned about the sewer debt by alderman Frank Coachman at an April 8 town hall meeting on Disannexation, Newman said, “They’re outside of the village. They won’t be paying any Village taxes. All the Village taxes go away. And now you want to hit me with the debt stuff.”
“There’s 43.148 that you failed and this attorney failed to mention,” he said.
Coachman said that when the properties are released from the city, they will no longer have the exemptions and “They will then pick up the debt service,” the resident said.
“What debt service?” Newman responded.
“You’re not providing sewer to those properties,” Newman said, adding that because the properties receive no direct benefit, they cannot be taxed.
“The municipality in their ordinance of disannexation will release the property in lieu of no back pay on those refunds of taxes and fees,” Newman adding, pointing to a disannexation in Mission, Texas.
Coachman countered, “Because you are in the boundary that voted on the sewer bond, you are liable for that.”
“Well,” Newman said, “we’re ready to litigate on that.”
“If 43.148 did not exist, this wouldn’t happen. But it exists and it’s happening now,” Newman said.
Bojorquez deflected the section 43.148 as not being applicable to the debt service for the sewer bonds.
He pointed to the experience of his staff attorneys Laura Mueller (who worked with Texas Municipal League (TML) and Linda Sjogren (former city attorney for San Angelo and Big Spring).
“We are in unison on this,” he said.
“If that property disannexes and if there is bonded indebtedness at the time of disannexation,” they are liable for the debt. “There is no ambiguity, there is no vagueness. The language is clear.”
Furthermore, “the tax code makes it clear that a municipality only has authority to grant any exemption within the city limits,” Bojorquez said. “If a property is no longer in the city limits, the Village of Salado will have no authority to provide any sort of cap or exemption on taxes.”
“Somebody who may not be responsible for the debt service today, is going to be responsible for the debt service after May,” if the disannexation election passes, he said.
“When voters voted to approve bonds, the Attorney General’s office has gone through and approved the issuance of those bonds,” he said, “it is as though a lien has been put on those properties.”