April 2, 2020 Update Texas Tax Code § 11.35

COVID-19 and Property Taxes

Texas Tax Code Section 11.35 provides a temporary exemption for qualified properties that have been damaged by natural or man-made disasters. Although this exemption shows some promise for property owners looking to abate some of the losses felt by COVID-19, most owners need to be wary of the application of this statute as it relates to the current COVID-19 pandemic.

Section 11.35 is a new statute enacted in response to recent floods and hurricanes. The provision affects all properties at least fifteen percent damaged and located in an area declared by the governor to be a disaster area. On March 13, 2020, Governor Greg Abbott declared a state of disaster for all counties in Texas due to COVID-19. If the property owner or agent shows each of those things to be true, the chief appraiser will assign a level of I, II, III, or IV to the damage, which corresponds to an exemption of 15%, 30%, 60%, or 100% of the total value, and that exemption is pro-rated for the year based on the date of the disaster declaration.

Rumors have begun to circulate regarding this exemption and the applicability to the current situation because some claim that this statute was never meant to cover a global pandemic, but instead a natural or man-made disaster such as a tornado, flood, wildfire, or hurricane. While it may be true that lawmakers did not envision this statute to provide relief for disasters whose effects are primarily economic in nature, the text of the statute that was passed by the legislature and subsequently enacted does not include such limitations. Although the legislative intent can be discussed, it is only relevant in situations where the text of the statute is unclear, and the text of Section 11.35 clearly describes situations where a property has suffered minimal damage and may continue to be used as intended.

Although this statute provides some hope for immediate property tax relief, owners should not plan to receive relief as a result of this provision until the interpretation becomes clearer. Since this statute was recently enacted in 2019, this is the first application of the exemption and courts have not had the opportunity to provide a definitive interpretation. If this is not clarified by the legislature, it is highly likely that courts will have the opportunity to issue a written opinion concerning this disaster declaration.

Currently, the deadline to file an exemption under this statute is June 26, 2020 (105 days from the date the governor declares a state of disaster). Although there has been limited guidance on the impact of this statute, property owners should continue to collect data regarding the impact of COVID-19 on their properties and be sure they have adequate representation to address the 2020 valuation.