DAN MORALES

ATTORSEY CWERAL 

### QBffice of tip S!Utornep @eneral &ate of ?Il;exas December lo,1992

Honorable Dale W.Elliott Potter County Attorney 303Courthouse Amarillo, Texas 79101 Opinion No. DM-188

Re: Tax exemptions for public property leased to private entities (RQ-18)

Dear Mr. Elliott:

On behalf of the Potter-Randall County Appraisal District, you ask whether real property owned by three governmental bodies in Potter County is exempt from ad valorem taxation under the circumstances you describe. Your letter stipulates certain facts, and the governmental entities in separate briefs supply additional facts. We will address your questions in light of all the information provided. However, because tbe answers to your questions depend on the resolution of fact issues, a function that this office cannot perform in the opinion process, our responses are necessarily subject to the facts in a given case. Before addressing the specific scenarios, we willbriefly describe the source, nature, and limits ofproperty taxexemptions for government-owned property. ’

A. Tawzmpt statu ofpubIic&owdprv~.

Article VIII, section 1ofthe Texas Constitution declares inrelevant part that [a]ll real property and tangible personal property in tbis State, unless exempt as required or permitted by this Constitution, whether owned by natural persons or corporations, other than municipal, shah be taxed in proportion to its value, which shall be ascertained as may be provided bylaw.
Tex. Const. art. VIII, 5 l(b). Article XI, section 9ofthe Texas Constitution declares inpart that

property of counties, cities, and towns, owned and held only for public purposes,
. . . and all other property devoted exclusivelyto

p. 985Honorable Dale W.Elliott - Page 2 (k-188)

the use and benefit of the public shall be exempt from forced saleandfromtaxation.... This provision is self-executing and requires no enacting legislation A &M Consol. h&p. Sch.Dirt. v.Ci&ofBryan, 184S.W.2d914 (Tex. 1945). Prior decisions of the courts held that despite the specific reference to counties, cities and towns, this provision applied to all political subdivisions. See,es., Lower Colomdo RiverAuth.
v. Chemical Bunk & Tnut Co., 190 S.W.2d 48 (Tex. 1945). However, more recent decisions have clarified that the provision applies solely to the enumerated gwernmental entities. State v.HoustonLighting& PowerCo., 609 S.W2d 263,266 (Tex Civ. App.-Corpus Christi 1980,writ refd n.r.e.) (citing L.eunderIndep. Sch. Dirt. v. Cedar Park WaterSupply Corp., 479 S.W.2d 908 (Tex. 1972)); see also Satterleev.GulfCocatW&e DisposalAuth., 576 S.W.2d773,778-79(Tex. 1978).

Article VIII, section 2(a) ofthe Texas Constitution provides in part that the

“legislature may, by general laws, exempt from taxation public property used for public purposes.” Pursuant to the latter provision, the legislature has enacted section 11.11ofthe Tax Code, whichprovides the followinginpertinent part:

(a) Except as provided by Subsections (b) and (c) of this section, property owned by this state or a political subdivision of this state is exempt from taxation if the property is used for public purposes. Subsections (b) and (c),whichprovide for the limited taxation ofland owned by the Permanent University Fund and counties, are not relevant to your questions. Section 11.11 supplies other qualifications to the general exemption described in subsection (a), whichwew-ill address as appropriate in this opinion.

You ask initially whether the phrase “other than municipal” in article WI, section l(b) of the Texas Constitution creates an implied exemption for municipal property. You conclude that it does not. We agree.
As you note in your brief, the supreme court has held that article WI, section 1merely specifiesthe types ofproperty the legislature isrequiredto tax. Ci@ ofBeuumonr v.Fertina,415 S.W.2d902 (T’ex.1967). Article VIII, section 17 states that the specification ofthe objects and subjects oftaxation in the constitution does not deprive the legislature of the power to require other objects or subjects to be taxed consistently with other provisions of the constitution. The phrase “other than

p. 986Honorable Dale W.Elliott - Page 3 C&55188)

municipal” in article VIII, section 1thus means the legislature is not required to tax municipal property, but may provide for such unless the property is othenvise exempted from taxation, Section 11.01of the Tax Code states in part that all real property that the state hasjurisdiction to tax (Le.,any real property located in the state) is taxable unless exempt by law. Tax Code 0 11.01(a),(b). Article XI, section 9 exempts from taxation municipal property owned and held for public purposes and section 11.11of the Tax Code exempts property owned by political subdivisions that is used for public purposes. Thus, the legislature has, consistent with the constitution, provided for the taxation ofmunicipal property.

The essential substantive inquiry under the constitutional and statutory provisions cited above iswhether the public property in question isbeing used for a public purpose. The courts instruct that the test for public purpose is whether the public property isused primarily for the health, comfort, and welfare of the public. A &M Consolidated

Independent SchoolDism ’ct,184S.W.2d914;HoustonLighting& Power Cornpuny,609 S.W2d at 266. In addition, it must be shown that the property is held only for public purposes and is devoted tzc&veIy to the use and benefit of the public. Satterlee, 576 S.W.2d at 778-79. Consequently, public property that is acquired and held with the intention that it not be used primarily for the health, comfort, and welfare of the public is not entitled to a tax exemption under these provisions. See Grand PrairieHosp. Auth. v. @llas CountyAppraisal Disk, 730 S.W2d 849 (Tex. App.-Dallas 1987,writ refd n.r.e); Grand PrairieHosp.Auth. v. Tarant Appraisal Dirt., 707 S.W.2d 281 (Tex. App.-Fort Worth 1986, writ refd n.r.e.).

Each of the scenarios you describe involves public property that is leased to private individuals or other political subdivisions. Property ofa political subdivision will not lose its tax exemption if a charge is made for the property or a profit is generated thereby, provided the charges are incidental to its use by the public and the proceeds inure to the benefit of tbe political subdivision. Lower ColoradoRiver Authority, 190 S.W.2d 48; A & M ConsolidatedIndependent School Dism ’ct, 184 S.W2d 914. However, where a political subdivision specifically intends its public property to be put to private commercial uses, it is not used exclusively for the use and benefit of the public within the meaning of these provisions and, thus, is not entitled to tax-exempt status. GrMd Prairie HospitalAuthority,730 S.W.2d 84% Tanant Appraisal District, 707 S.W.2d 281; Attorney General Opinions JhMOS (1985); MW-430 (1982).

p. 987Honorable Dale W.Elliott - Page 4 (G-188)

B. Tax-aemptstamofpm#owdbycityofAmado.
I. Ailpthangar.
You advise that the City ofAmarillo is constructing an airport hangar at the city-owned Amarillo International Airport whichwillbe leased to a private entity as a facility for the repair, maintenance, and storage of aircraft You askwhether this property, owned by the municipality but dedicated to an allegedly private use, is exempt from ad valorem taxation. If it is exempt, you ask whether the leasehold is exempt from taxation to the lessee pursuant to section 25.07ofthe TaxCode.

In a brief to this office, the City of Amarillo indicates that the airport property is being developed pursuant to the Municipal Airports Act, V.T.C.S. articles 46d-1 through 46d-22. Article 46d-15inpertinent part broadly declares that the acquisition of any land or interests in land pursuant to the act, and the development, maintenance, construction, equipment, and operation of airports and air navigation facilities are public, governmental, and municipal purposes. Attorney General Opinion JM-464 (1986)in similar fashion concluded that

as a matter of law..

. [a] city’s airport and airport facilities, including those leased to aprivate individual, are impressed with
a public purpose sufficient to meet Texas constitutional and statutory tests regarding ad valorem taxes. Attorney General Opinion JM-464 at 3. In In& Indep. Sch. Dist,v.DeltaAidines, Inc., 534 S.W.2d 365 (Tex. Civ. App.-Texarkana 1976,writ refd n.r.e.), the court ruled that a maintenance hangar is necessary to the operation of an airport under the Municipal Airports Act, and thus was entitled to a tax exemption under the statutory predecessor to section 25.07 of the Tax Code.1 The case did not concern the tax-exempt status of the underlying real property, but the case is instructive because it acknowledges that under usual circumstances aircraft maintenance facilities are necessary to the safe and efficient operation ofa municipal airport On the basis of the factual similarity of the city’sintended use ofthe airport hangar to the uses considered in these authorities, the city argues that the hangar isentitled to tax exempt status.

%ection 25.07 is &rived from V.T.C.S. arti& 7173. It will be discwed in greater detail beknv.

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At issue in Attorney General Opinion M-464 was the tax status ofproperty owned by a municipality and operated as an airport A portion ofthe airport proper was leased to an individual who operated an aircraft fueling facility, and another portion was operated by the United States Government as a weather station and air traffic control facility. Land surrounding the airport was leased to private persons and corporations for private commercial and agricultural purposes. The opinion concluded that the airport facility itself was exempt from ad valorem taxation, but the surrounding land was not exempted because it was not put to fan actual, exclusive public use asrequired by the constitution and Tax Code.

Under the facts presented in the opinion, it is apparent that the use of the airport property by the fueling facility lessee and the federal government was in direct support ofthe city3 operation ofthe airport.2 In cotmasS the private use of the surrounding airport property extinguished the city’s tax exemption precisely because the use bore no relationship to the city’soperation ofthe airport. We thus construe Attorney General Opinion JM-464 to requiresa showing that the use of municipal airport property is in direct support of the city3 operation ofthe airport. In the absence of such a showing, the mere use of airport property for aircraftrelated maintenance is insufficient to protect the city from liability for ad valorem taxes.

The City of Amarillo contends that the airport hangar in question will be used to support the city’ssafe and efficient operation of the airport. If this is the case, then we agree that the private commercial use of the facility will not jeopardize the property’s tax-exempt status. However, you contend that most ofthe aircraft stored and serviced at the city-owned hangar willbe brought there solely for purposes of maintenance and storage and will not be engaged in the transport of passengers and cargo to and from the airport. Ifthis representation is correct, the facility would not be used exclusively in support ofthe city’soperation ofthe airport, but would instead be used to serve the private commercial interests of the lessee. The property under these circumstances would not be entitled to a tax exemption because it is not used exclusively for public purposes and therefore does not satisfy constitutional and statutory criteria. See Grand PrairieHospitalAuthorify, 730

*under the Ieaseagreemcn~ the operation ofthe fuelingfacility,though admittedly for private commercid gain, was subject to the direction and control of the city. The weather station and air traffic coatr01facilitywere obviously necessary tothe operation oftheairport.

p. 989Honorable Dale W.Elliott - Page 6 K&%188)

S.W2d 849; Tamnt AppraisalDktrict, 707 S.W.2d281; Attorney General Opinions JM-405; MW-430.

As noted, this office cannot resolve disputed questions offact in the opinion process. Because the city offers facts that conflictwith the information supplied by your office, we cannot resolve your first question as a matter of law. Rather, the resolution of this issue must await the development of facts in an appropriate administrative orjudicial forum.

The same must be said with respect to your next question-whether the leasehold interest in the hangar is exempted from taxation to the lessee. Leasehold interests generally are not taxable to a lessee. See Cherokee WaterCo. v. Gregg County Appraiwl Dist., 801 S.W.2d 872 (Tex. 1990). Rather, the lessor is traditionally held responsible for taxes on the full value of the property. Id. Consequently, if the airport property is determined not to be tax exempt, the city rather than the lessee would be liable for ad valorem taxes on the property.3 If, on the other hand, the underlying real property is determined to be tax-exempt, it will become necessary to determine the tax status ofthe leasehold interest in the hangar.

Section 23.13 of the Tax Code requires appraisal at market value of a

“taxable leasehold or other possessory interest” in,real property that is exempt from taxation to the owner. Section 25.07, meanwhile, requires certain leaseholds and other possessory interests in real property that isexempt from taxation to the owner to be listed on the appraisal rolls in the name ofthe owner ofthe possessoty interest if the interest is at least one year in duration.4 Tax Code 925.07(a). These provisions have consistently been interpreted to require taxation of leasehold interests in tax-exempt real property, including property owned by political subdivisions. See Tamnt AppraisalDirt.v.AmericM Abfhes, Inc., 826 S.W.2d 767 (Tex. App.-Fort Worth 1992,writ denied); DeltaAirline-s, 534 S.W.2d365;Attorney General Opinion JM-1049 (1989).

3Partiu to alease typicallytake into account the Icssar’spropertytaxliabiity when negotiating the terms of the lease, either by wntrachully providing for a pass through of taxs to the lessee. or setting rentals in an amount that reflects the estimated tax liabiity. Chemke W&r Company, 801 S.W.Zd at 875d3 (Tex. 1990).

4Weassume forpurposes ofthisopinion thatthelease ofthe city ’sairport hangar isfor aterm ofat least one year.

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Section 25.07 excepts certain leasehold and possessory interests from its listing requirements. A leasehold interest that is excepted from the listing requirement of section 25.07 is itself exempt from taxation to the lessee. Delta Akfines, 534 S.W2d 365. Among the exceptions is one for a “public transportation facility ownedby an incorporated city or town” Tax Code 52507(b)(3). In addition to constituting apublic transportation facility, the property in whichthe leasehold or other possessory interest lies must satisfy one of several alternative requirements. One such alternative isthat the property be used as

an airport passenger terminal building or a building rued prima+ for maint-e ofaircraflor other airaaft services, for aircraft equipment storage, or for air cargo. Tax Code 525.07(b)(3)(A) (emphasis added).

Aircraft maintenance facilities, including maintenance hangars, which are intended for use in the safe and efficient operation ofa municipal airport are public transportation facilities for purposes of section 25.07. DeltaAirlines, 534 S.W.2d 365. The city in its brief contends that the airport hangar in question will be devoted to similar uses. If the city’s representations are correct, the leasehold interest in the city-owned airport maintenance hangar isexempt from taxation to the lessee so long as the facility isused to support thesafe and efficient operation ofthe airport by the city?

SThecityalludes to other lwchold interwts at the airport,e.g.,restaurant, lounge, and airline leases, and argues that these interests are also exempted from taxation to the lessees because they support the general public purpose ofair transportation atthe airport. A recent case indicates that the
mere operation ofa facilityin support ofairliae operations may not be sufficieat to confer tax-exempt stahu on a leasehold interest in airport property. Tamm Appnaid Din. Y. Amvicon Aides, 826 S.WJd 767 (Tex App.-Fort Worth 1992,tit denied) conuxns the proper method for valuation of an airline’sleasehold interest intax-exempt airport property. American Airlines leased MOacres of land aud improvements from the DFW Regional Airport Board. Neither the nature nor the purpose of the Ieased property were descriid in the opinion. Tbe court did not examine in detail the tax-exempt status ofthe lwehold interest under section 25.07of the Tax Code. Rather, the court concluded that the lease “resuhs in a taxable leasehold estate to American because the DFW Board is 811 exempt
owner.’ 826S.W.2dat768. Furthermore, section 25.07attaches several comiitionsto the exemption of leasehold interests in public transportation facilities, most ofwbkh relate either to uircm~? services or foreign trade zone status. Thus, it should not be assumed that any leasehold interest in airport property isentitled totax-exempt

statusperse.Seeulro

Attorney General Opinion JM-464. Whether such property isused byalessee forapublic

purpose will depend OII thefacts ofeach case.

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2 Bui&grleadtopktebu&em
You also state that the City of Amarillo owns several buildings which currently are not used by the city but are instead leased to private businesses. You do not describe the conditions under which the cityholds and leases such property
or the particular uses put to the property. The city does not contest your representation of the facts. You ask whether these buildings are exempt from ad valorem taxation; you conclude they are not.

Prior opinions ofthis office conclude that publicproperty put to aprivate use willremain tax-exempt where the private use can either be characterized as a public purpose or is in direct support of a public purpose of the political subdivision. See Attorney General Opinions JM-1049 (lease ofreal property comprising permanent school fund to private commercial interests is a public purpose where proceeds deposited in permanent school fund); JM-464. However, the leasing of public property purely for private commercial uses removes the tax exemption for the property under both constitutional and statutory standards. See Gmnd Pr&ie HospitalAuthority, 730 S.W.2d 849; Tammt Appraisal Distnkt, 707 S.W.2d 281; Attorney General Opinions JM-405; MW-430 and authorities cited therein. If the buildings in question are owned by the citypurely for the purpose ofleasing them to private commercial interests, the property would not, in our opinion, be tax-exempt. Whether the private use constitutes or supports apublic purpose ofthe city must be determined on the basis ofthe facts of the case abd the terms of any constitutional
or statutory provisions authorizing the city’sacquisition and use ofthe property. See Attorney General Opinions JM-1049; JM-464..
C. O@ecomp~ownedbyaschool~.
You state that the Amarillo Independent School District (AISD) recently purchased an office complex consisting of six separate buildings-five office buildings and a restaurant facility. One of the office buildings serves as the administrative office ofthe district and is the sole structure used or occupied by the district at this time. Portions of the other office structures are leased to private and governmental entities. The remaining office space and the restaurant facility are vacant

The school district in its brief states that the office complex, known as Security Park, waspurchased in its entirety for economic reasons. It asserts that the school board’s intention at the time ofpurchase wasto sell all ofthe complex except

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the district’s administrative office, and it describes some of the steps it has taken to sell the property. As oftbe date ofits brief, the surplus property had not been sold, and the AISD resorted to leasing some ofthe property and depositing the rentals in its treasury. The AISD concedes that at the time the property was acquired it did not anticipate using all ofthe facility itself,but itreserves the option ofretaining any ofthe property that maybe required for the district’soperations.

The AISD argues that the Security Park complex is exempt from ad valorem taxation because it was acquired in the pursuit of the school district’s legitimate functions and isheld for tbe purpose ofresale.6 It directs us to cases which conclude that a political subdivision’sownership ofland under such circumstances is a public purpose for purposes of the constitution and section 11.11of the Tax Code and the land therefore is tax-exempt to the political subdivision. See State v. City of San Antonio, 209 S.W.2d 756 (Tex. 1948); City ofAustinv. Sheppard, 190 S.W.2d 486 (Tex. 1945); Lubbock Indep. Sch. Dirt. v. Owens, 217 S.W.2d 186 (Tex. Civ. App.-Amarillo 1948,writ refd); Stare v. C&v ofHouston, 140S.W.2d277 (Tex. Civ. App.-Galveston 1940, writ refd); see also Stare v. Moak, 207 S.W.2d 894 (Tex. 1948);Eason v. David, 232 S.W.2d 427 (Tex. Civ.App.-Beaumont 1950,writ refd n.r.e.). However, with a single exception, each of the cases cited involved the acquisition of land by a taxing unit for purposes of collecting taxes (either through enforcement of a tax lien or purchase at a tax sale) and the holding ofsuchproperty for resale. Taxing units are expressly authorized to acquire and dispose ofproperty in satisfaction of taxes due on the property. Tax Code 0334.01(c), 34.05. None of the tax cases involved the temporary leasing ofthe property pending the resale. We therefore do not find these cases dispositive of the AISD’s tax liability on the Security Park complex.

The single exception among the cited cases is State v. City of Houston, 140 S.W2d 277. There the citypurchased a tract ofland, a portion ofwhich it intended to develop as a public street. The city intended to sell the surplus property if it

%e board oftrustees of an independent school districtisvested with the exclosive power to “manage and govern the public free schools of the district”and may, in the name ofthe school district, aquirc and hold real and personal property. Edu~ Code 52326(a), (b). The board of trustees of a school district may seIlreal property ofthe district ifthe proceeds ofthe sale are used for the pu.rchase of ‘more convenient and more d&able school property,’ the construction or repair of school buildings, or arc deposited inthe local maintenance fund ofthe district. Id. 5 7330(a), (c). In addition, the property must no longer be needed for school purposes. Attorney General Opioioos JM-X00 (1988); O-1570(1939).

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received a fair offer. Pending the sale ofthe property, the city rented houses on the unused portion of the tract to private parties. The state and Harris County sought to collect back taxes on the property that were levied after the city acquired the tract The court of civil appeals concluded that the property was tax-exempt because the record reflected that the city’smotive in acquiring the entire tract was to conserve city road funds. The city chose to buy the entire tract because it received a much better bargain than itwouldhave had it purchased onlythe portion necessary for the road. The renting of tbe property pending its sale did not, in the view of the court, change the character of the city’sinterest in the property or the essential public purpose of the city3 use of the property. The property therefore remained tax-exempt.

The AISD states that its acquisition of the Security Park complex was motivated by economic interests similar to those of the city in Cr?yofHouston, 140 S.W.2d277. It explains that the former owner of the property initially indicated a willingness to sell the AISD only that portion ofthe complex that the district sought for its administrative offices, but later decided to offer only the entire complex for sale. After considering other alternatives, the board of trustees concluded that purchase ofthe entire Security Park complexwasthe most economical alternative.

Once again we emphasize that we cannot resolve the fact issues that are at the center of your inquiry. However, the facts portrayed by the AISD tend to support a tax exemption for the Security Park complex under section 11.11of the Tax Code. The court in C& of Houston, 140 S.W.2d 277, concluded that public acquisition of land in excess of actual need constitutes a public purpose if the acquisition was intended to conserve the fund that made the public work possible. The public purpose is not lost if the political subdivision puts the property to productive use pending its disposal and the proceeds ofthis use are deposited to the credit of the public fund used to purchase the tract.7 The private use in these circumstances further conserves the public fund, serving yet an additional public purpose. Accordingly, if it is determined that the Security Park complex was acquired and is used in similar fashion, we believe that property would be taxexempt to the district

?he funds used topurchase the tractwere bond funds dedicated to road improvements. Itis not dear whether the courtwould have required deposit ofrentals to the creditof the original funding
sowx ifthe bond funds had not been so dedicated. We are not ad&cd as to the SOUTCS. ofthe funds used byAISD topurchase the SecurityParkcomplex

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You also inform us that the Amarillo Junior College District has purchased real property adjoining the campus of knarillo College for purposes of future expansion. It has leased some of the property to private individuals pending the expansion. The district explains that it acquired 29parcels ofproperty, many with improvements., pursuant to a long-range expansion plan adopted by its board of regents in 1983. Four residences on the properties are currently leased to students
or employees of &narillo College; eleven others evidently are leased to persons who are not students or employees ofthe college. Twounits ofan eight-unit storage garage facility are rented topersons who are not students or employees ofthejunior college. The remaining 20 structures were razed or moved or are currently used by the district. The district deposits rental income in itsbuilding fund.

The district advises that the lease of these properties is temporary, pending implementation of the long-range expansion plan. It advances arguments and authorities similarto the AISD. In particular, it cites Cityof Abilene v. State, 113 S.W.2d 631 (Tex. Civ. App.-Eastland 1937,writ dism’dw.o.j.) which involved the lease of city property acquired for construction of a reservoir. The property involved in the dispute constituted only a portion ofthe property that was required for the project; the city was unable at the time to acquire all of the property required for tbe project. Pending the acquisition bfthe remaining property, the city leased the land acquired to that point. The court concluded that the temporary rental of the property would not remove its tax exemption because the purpose for which the property was originally acquired - construction of a reservoir --was a public purpose, a purpose which the city had not abandoned when it leased the property for private use.s
Tbejunior college district stipulates factswhich,iftrue, would conform to the
uses of public property approved in Ciiy ofAbilene, 113S.W2d 631. However, we

tie City

ofAbi.he case

was disapproved

iaCity of Beaumont Y.Fe&a, 4l5 S.W.2d 902 (Tcx 1967). because the wurt ofcivil appeals wrongly assumed thatmrmicipal

properly waswithin

the. legislature’s

authority to taxandthat articleVIII,sectlou 2 applied to municipal

property. The supremecourtin Fetiaa ruledthat municipal propertywasnot subjecrto taxation underthe constitution.

Thesupreme

courthassinczretreated

hornthisholding,

though ithasnotexpressly overruled

F&a@. See Saaedee, 576 S.W.Zd ?E$ Leader Independent School Disbkt, 479 S.WZd 908. Andasnotedearlier

inthisopinion,

thelegislahrre

hasprovided

forthetaxation

of municipal property consistent with the constitution.

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believe this case governs only the renting of the storage garage units. This use of public property pending its ultimate public use does not destroy its tax-exempt status. The tax status ofthe residences owned by an institution ofhigher education and rented for housingpurposes isgoverned by section 11.11ofthe Tax Code.

As previously noted section 11.11 of the Tax Code contains a number of qualifications to the general tax exemption provided public property under subsection (a). One such qualification is subsection (e), whichprovides the following in pertinent part:

It is provided, however, that property that is held or dedicated for the support, maintenance, or benefit of an institution ofhigher education as defined in Chapter 61, ‘Texas Education Code, but isnot rented or leased for compensation to
a private business enterprise to be used by it for a purpose not related to the performance of the duties and functions of the state or institution or is not rented or leased toprovideprivate residentialhousingto members of thepublic otherthanstudents andemployeesofthestate orimtitution

isnottaxable.

. . . The language of subsection (e) plainly implies that property of an institution of higher education dedicated to the support,’ maintenance, or benefit of the institution that is leased or rented to employeesor students of tbe institution for private residential housingistax-exempt. Chapter 61ofthe Education Code defines

“institution ofhigher education” to include, interu&r,a publicjunior college. Educ. Code g 61.003(g). A public junior college is any junior college certitied by the Coordinating Board of the Texas College and University System. Id. I)61.003(2). We are informed that Amarillo Junior College is so certified. It is also apparent from the description ofthe facts that the parcels ofproperty on which the houses sit
are dedicated to the benefit of thejunior college. Accordingly, the property of the junior college that is rented or leased to employees and students for residential housing is not taxable. On the other hand, property that is rented~or leased to provide private residential housingto individuals who are not employees or students ofthejunior college is not tax-exempt. The property containing the storage garage units remains tax-exempt since its use conforms to the uses approved in City of Abilene, 113S.W.2d631.

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SUMMARY
Property owned by the City of Amarillo consisting of an airport maintenance hangar that is leased to a private party for operation as such is exempt from ad valorem taxation if the property isused in direct support ofthe operation ofthe airport by the city. Buildings that are owned by the city are not taxexempt ifthey are owned purely for the purpose ofrenting them to private commercial interests. An office complex owned by the Amarillo Independent School District and partially leased to private parties and other political subdivisions remains taxexempt ifthe facility was acquired in its entirety for the purpose of conserving school district funds. Property acquired by the Amarillo Junior College District for purposes of future expansion and temporarily leased to private persons as storage units is tax-exempt. Property rented to students and employees of the junior college for residentisl housing also remains taxexempt, but property rented for these purposes to persons who
are not students or employees is subjectto taxation.

DAN MORALES Attorney General ofTexas

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WILL PRYOR First Assistant Attorney General

MARYKELLER Deputy Assistant Attorney General

RENEAHICKS Special Assistant Attorney General

MADELEINE B.JOHNSON Chair, Opinion Committee Prepared by Steve Arag& Assistant Attorney General

p. 998