JIMMAllOX AttorneyGeneral Supreme CowlBulldIng P.0. 80x 12S48 Austin.TX. 711711.2S4a 512l4752501 Telex 91ws7c13a7 Telecopier 512/47402+6

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AnEqualOpportunity/ Affirmative Action Employer 

# TheAttorney General ofTexas :)ecember 27, 1984

Ronorable MikeDriscoll **Rarris** CountyAttorney 1001Preston, Suite 634 Rouston, Texas 77002 Opinion No. JM-269 Re: Whether the real andpersonal property of the Blue Bird Circle is exempt from advalorem taxes DearMr. Driscoll: Youhave asked this

. office to determine whether section 11.18 of tne state Property Tax Code exempts from advalorem taxation the real and personal prope,rty of the Blue Bird Circle. Section 11.18 exempts charitable organizations **from** taxation of their buildings and tangible property. provides that the organization can meet certain stated requirements. We conclude that the Blue Bird Circle does not meet these statutory requirements for exemption under section 11.18. We limit our answer to the particular facts which you have given us. Youinform us that **the** Blue Bird Circle [hereinafter Circle] is a non-profit Texas corporation which owns a tract of land on which it maintains an offi’:s building and two resale shops. The Circle uses the office bulldir~e; for its various programs andmeetings; the resale shops sell merchandise which has been donated to the Circle. The Circle uses all profits from its various activities to support the Blue Bird Clinic for Pediatric Neurology, which is located in the Texas Uedical Center, several miles away from the property in question. Section ll.lIl~:c) **of** the Texas Tax Code lists the requirements which an organir.ation must meet to qualify ‘-6 a charitable organization under the statute:

(c) To qualify as a charitable organixaiion for the purposes of this section. an organization (whethe:, operated by an lndlvldual. as a corporation, or as anassociation) must: (1) be organized exclusively to perform relic ious, charitable, scientific, literary, or educa,tlonal purposes rind. except as permitted by subsection (d) of this section, engage

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exclusively in performing one or more of the folloving charitable functions: (A) providing medical care without regard to the beneficiaries’ ability to pay;

. . . . As this office noted in Attornev General Ooinion MW-288(1980). the court in Hilltop Villa:Qs, Inc. -v. Kerrvilie Independent School District, 426 S.W.2d 943 (Tax. 1968). indicated that the activity **of** providing facilities which **m,eet**special residential requirements of the aged-might qualify as au institution for tax exemption as one of purely public charity, but only where it also qualified under the statutory definition of such institutions for tax exemption purposes. Because the controlling st:a.tute (former article 7150. section 7, V.T.C.S.) at that time restricted exemptions to property of institutions dispensing aid “vithout regard to [the] poverty or riches of the reciuient.” a reauirement which the claimant failed to meet. the exemption was denied: 426S.W.2d at 948. See also City of(Waco v. Texas Retired Teacher Re!aidence Corporation, 464 S.W.Zd 346 Tex. 1971). Accordingly, if theF’roperty of the Circle is **to** be accorded a charitable exemption, the Circle itself must be exempt under section 11.18.Wemust conclude that the Circle does not qualify for a section 11.18 tax exemption. Wenote that the burden of establishing the requirements for exemptlox from taxation is on the institurion claiminn the exemution. and the exemption must be proved in such a **manner** as **to** leave no doubt:. Willacy County Appt&d District v. North AlamoWater Supply Corporation. No. 13-83-318-0 (Tex. App. - Corpus Christi. June 28. lTB4). Further, in such cases, exemptions from taxation are never favored. and, in construing laws exempting an organization.’ all doubts uust be resolved against the institution claiming the exemption. HeQecroft v. City of Housron. 244 S.W.2d 632 (Tex. 1951). Both statutory and constitutional provisions purporting to grant exemption from taxation will be given a narrow and strict construction. and all doubts mustbe resolved against the granting of the tax exemption. Hillto) Village v. Kerrvifie Independent School District, supra. Section 11.18(c)(3)(B) of the Tax Code requires that charter, bylaws, or regulations adopted by the organization to govern its affairs must

direct that on d::scontinuance of the organization by dissolution or otherwi.se the assets are to be transferred to this state or CO an educational, religious, charitable, or other similar organiration that is qualified as a charitable

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.q Honorable MikeDriscoll - Prtge3 (JM-269)

organization under Section 501(c)(3). Internal RevenueCodeof 1!154, as amended. Article I, section 3o:: the Circle's bylaws reads:

Section 3. No part of the property of this Corporation shall ever be utilized for the private gain or profit of any officer, director, or member,as such, oi1the Corporation.
In its brief, the Circle refers to section 3 as ensuring that its assets are "perpetually dedicated to use in performing the organization's charitable function." The Circle asserts that this provision satisfies the staeutory requirements of section 11.18(c)(3). Wedisagree. There is no provision in the documents submitted to us that directs the Circle's assets to be transferred in the required mannerin the event of its Hacontinuance. The tax status of the c,orporation for this year is determined by its qualifications on January 1. 1984. Prop. Tax Code 511.42. Because the Circle does not meet the section 11.18(c) statutory requirements of a charitat~le organization, we conclude that its property is not exempt from advalorem taxation.
SUMMARY The Blue Ri::d Circle does not meet the statutory requirements to qualify as a charitable organization and, therefore, is not exempted from advalorem taxaticn by section 11.18 of the state Property TaxCode.

JIM MATTOX Attorney General of Texas TOM GREEN First Assistant Attorney G+eral DAVIDR. RlCRARDS Executive Assistant Attorncfy General RICKGILPIN Chairman, Opinion Committee!

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Prepared by Rick Gilpin Assistant Attorney General APPROVED: OPINIONCOMMITTEE Rick Gilpin. Chairman Colin Carl SusanGarrison TonyGuillory JimHoellinger Jennifer Riggs

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