Reversed and Rendered and Memorandum Opinion filed June 30, 2015.

In The 

Fourteenth Court of Appeals 

NO. 14-14-00251-CV

NHH-CANAL STREET APARTMENTS, INC., A TEXAS NON-PROFIT 

CORPORATION, Appellant 

V.

HARRIS COUNTY APPRAISAL DISTRICT AND HARRIS COUNTY 

APPRAISAL DISTRICT APPRAISAL REVIEW BOARD, Appellees 

On Appeal from the 295th District Court 

Harris County, Texas 

Trial Court Cause No. 2010-68486 

M E M O R A N D U M O P I N I O N 

Appellant, NHH-Canal Street Apartments, Inc., a Texas Non-Profit 

Corporation, (“NHH-Canal Street”) appeals the trial court’s orders denying its 

motion for summary judgment in its suit challenging the denial of a property tax 

exemption and granting summary judgment in favor of appellees, Harris County 

Appraisal District and Harris County Appraisal District Appraisal Review Board 

(collectively “HCAD”). We reverse and render judgment in favor of NHH-Canal 

Street. 
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I. BACKGROUND

New Hope Housing, Inc. (“NHH”) is a Texas non-profit corporation, exempt 

from federal income taxation under section 501(c)(3) of the Internal Revenue 

Code, and organized exclusively for charitable and educational purposes. Its 

mission is to provide “life-stabilizing, affordable, permanent housing with support 

services for people who live on limited incomes.” It owns and operates the NHHCanal Street Apartments, located at 2821 Canal Street, Houston, Harris County, 

Texas. The NHH-Canal Street Apartments is a single room occupancy facility. 

All residents are low-income individuals, most of whom are homeless, disabled, or 

have special needs. In order to qualify for housing, the individual must produce 

documentation that his or her annual income does not exceed the limits set by the 

Department of Housing and Urban Development. The residents pay no, or 

significantly-reduced, rents. In addition to housing, residents are provided other 

support, including assistance with securing employment, managing finances, 

education assistance, social programs, nutritional information, health screenings 

and counseling. 

For tax years 2008-2011, HCAD denied NHH-Canal Street an ad valorem 

property tax exemption for charitable organizations under Texas Tax Code 

Sections 11.18(d)(2) and (3). See Tex. Tax Code Ann. §§ 11.18(d)(2), (3) (West, 

Westlaw through 2015 R.S.). HCAD denied the exemption because it believed 

NHH-Canal Street generally required its residents to pay some portion of rent for 

the apartments; thus, it could not establish it provided support without regard to a 

tenant’s ability to pay for an apartment. 

NHH-Canal Street appealed to the trial court HCAD’s denial of the 

exemption. Both HCAD and NHH-Canal Street filed traditional motions for 

summary judgment. The trial court granted HCAD’s motion and denied NHHCanal Street’s motion. 
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II. ANALYSIS

In four issues, NHH-Canal Street challenges the trial court’s order granting 

HCAD’s motion for summary judgment and denying NHH-Canal Street’s motions 

for summary judgment and reconsideration. 

A. Standard of Review 

When, as in this case, both parties file motions for summary judgment and 

the trial court has granted one and denied the other, we may consider the propriety 

of the grant, as well as the denial, of the motions, and affirm or reverse 

accordingly. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (citing 

FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000)); 

Cullins v. Foster, 171 S.W.3d 521, 529 (Tex. App.—Houston [14th Dist.] 2005, 

pet. denied) (citing Lidawi v. Progressive County Mut. Ins. Co., 112 S.W.3d 725, 

729 (Tex. App.—Houston [14th Dist.] 2003, no pet.)). If the facts are undisputed 

and the court considers a question of law, the court will affirm the judgment or 

reverse and render. Cullins, 171 S.W.3d at 530. Where statutory construction is 

involved, we review de novo, as we do all questions of law. See Texas Dept. of 

Transp. v. Needham, 82 S.W.3d 314, 317 (Tex. 2002). 

When both parties move for summary judgment, we must review the 

summary-judgment evidence presented by both sides to determine the questions 

presented, and render the judgment the trial court should have rendered. Gilbert 

Texas Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex. 

2010); Expro Americas LLC v. Sanguine Gas Exploration, LLC, 351 S.W.3d 915, 

919 (Tex. App.—Houston [14th Dist.] 2011, pet. denied). In the case of crossmotions for summary judgment, each party must establish it is entitled to judgment 
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as a matter of law. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 

(Tex. 2000). 

A plaintiff moving for traditional summary judgment must conclusively 

establish all essential elements of its claim. Cullins, 171 S.W.3d at 530 (citing 

MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986)). If the movant establishes a 

right to summary judgment, the nonmovant bears the burden to present evidence 

raising an issue of material fact. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 

28 S.W.3d 22, 23 (Tex. 2000). 

We review de novo a traditional motions for summary judgments. See 

Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009) (per 

curiam). When reviewing a summary judgment, we take as true all evidence 

favorable to the nonmovant and we indulge every reasonable inference and resolve 

any doubts in the nonmovant’s favor. Valence Operating Co. v. Dorsett, 164 

S.W.3d 656, 661 (Tex. 2005). 

B. Motions for summary judgment 

NHH-Canal Street moved for summary judgment contending it is exempt 

from taxation as authorized by Texas Constitution Article 8, Section 2(a) and 

Texas Tax Code Sections 11.18(d)(2) and (d)(3). See Tex. Const. art. VIII, § 2(a); 

Tex. Tax Code Ann. §§ 11.18(d)(2), (3). Sections 11.18(d)(2), (3) provide: 

(d) A charitable organization must be organized exclusively to 

perform religious, charitable, scientific, literary, or educational 

purposes and, except as permitted by Subsections (h) and (l) engage 

exclusively in performing one or more of the following charitable 

functions: . . . 

(2) providing support or relief to orphans, delinquent, 

dependent, or handicapped children in need of residential care, 

abused or battered spouses or children in need of temporary 

shelter, the impoverished, or victims of natural disaster without 

regard to the beneficiaries’ ability to pay.
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(3) providing support without regard to the beneficiaries’ 

ability to pay to 

(A) elderly persons, . . . ; or 

(B) the handicapped. . . . 

See Tex. Tax Code Ann. §§ 11.18(d)(2), (3). 

HCAD also moved for summary judgment, contending that NHH-Canal 

Street did not fall under the Tax Code’s requirements for exemption from taxation 

because it does not provide services to the impoverished “without regard to the 

beneficiaries’ ability to pay,” as found in Sections 11.18(d)(2), (3). See id. 

C. Qualification for exemption 

NHH has conclusively established that it serves the “impoverished.” Under 

Section 11.18(d)(2), NHH does not have to establish that it does so “without regard 

to the beneficiaries’ ability to pay.” See id. 

1. Service to the impoverished 

In order to qualify for an exemption, NHH-Canal Street must fall within the 

statutory and constitutional requirements for exemption. See N. Alamo Water 

Supply Corp. v. Willacy Cnt.y Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991). 

The statutory provisions for a charitable organization’s exemption from taxation 

are found in Section 11.18 of the Tax Code, as set forth above. The constitutional 

requirements found in Article VIII, sections 1 and 2 provide that taxation “shall be 

equal and uniform” and “the legislature may, by general laws, exempt from 

taxation . . . institutions of purely public charity; and all laws exempting property 

from taxation other than the property mentioned in this Section shall be null and 

void. See Tex. Const. art. VIII, §§ 1, 2. Although the constitution does not define 

“purely public charity,” we look to certain elements to determine whether an 

organization qualifies for a tax exemption: 
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First, it made no gain or profit; second, it accomplished ends wholly 

benevolent; and, third, it benefitted persons, indefinite in numbers and 

in personalities, by preventing them, through absolute gratuity, from 

becoming burdens to society and to the state. . . . Charity need not be 

universal to be public. It is public when it affects all the people of a 

community or state, by assuming, to a material extent, that which 

might otherwise become the obligation or duty of the community or 

the state.

. . . . 

The word ‘purely’ was meant ‘to describe the quality of the charity, 

rather than the means by which it is administered, that it should be 

wholly altruistic in the end to be attained, and that no private or selfish 

interest should be fostered under the guise of charity . . . .’ 

N. Alamo Water, 804 S.W.3d at 897 (citing City of Houston v. Scottish Rite 

Benevolent Ass’n, 111 Tex. 191, 198–99, 230 S.W. 978, 981 (1921)) (quoting 

Widows’ & Orphans’ Home v. Commonwealth, 126 Ky. 386, 103 S.W. 354, 358 

(1907)); see also River Oaks Garden Club v. City of Houston, 370 S.W.2d 851, 

853 (Tex. 1963) (holding article VIII, Section 2 exempts from taxation an 

institution of purely public charity where property “was owned and used 

exclusively by them for purely public charity.”). 

The evidence reflects that after receiving a significant donation from the 

congregants of Christ Church Cathedral, New Hope Housing was founded in 1993. 

New Hope Housing raised over $75 million to support its mission of providing 

single room occupancy housing in Houston. The organizational purpose of NHHCanal Street was for “owning, developing, constructing and operating housing for 

low income homeless and unemployed persons; providing educational and social 

programs to assist and better prepare such persons in achieving gainful 

employment; and performing such other functions as may be necessary or 

appropriate to fulfill these purposes.” To support those purposes, NHH-Canal 

Street built and operates the Canal Street Apartments under restriction agreements 
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amongst the City of Houston, Texas Department of Housing and Community 

Affairs, and the Federal Home Loan Bank of Atlanta. In the past two decades, 

New Hope Housing, and its subsidiaries including NHH-Canal Street, has provided 

housing to over 8,000 individuals. 

The evidence shows that a majority of residents of New Hope Housing and 

other subsidiaries, including NHH-Canal Street, are below the poverty line, and a 

majority of them are disabled, have special needs, and/or are formerly homeless. 

Its tenants are screened to ensure that their incomes are at or below the poverty 

level, and all pay some amount of below-market rent. NHH-Canal Street also 

provides residents with various activities, offered at no charge, including 

counseling, educational programs, health screening, and other services described 

above. 

Rent levels at the Canal Street Apartments are determined each year and are

set at levels that cover operating costs and include a maintenance/replacement 

reserve. The rent levels are substantially below market rental rates due to large 

contributions which eliminated debt for the construction and operation of the 

apartments. The rents do not fund all of the resident services provided at NHHCanal. Additionally, because the rents do not cover the total cost of operating 

expenses (rent and other services provided), New Hope Housing subsidizes the 

operations at NHH-Canal-Street. Finally, the evidence reflects that NHH-Canal 

Street was constructed entirely through charitable contributions, rendering the 

operation debt-free. When taken as a whole (below-market rent, costs of resident 

services programs and debt-free construction), for the tax years at issue, 65-75% of 

NHH-Canal Street’s costs are charitable. As a result, NHH-Canal operates at a 

loss on an annual basis. In order to fund those losses, New Hope Housing accepts 

charitable contributions. 
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We hold the “ultimate consideration” should turn on the totality of the 

services NHH-Canal Street provided at or below cost, or in the case of programs 

and services, at no cost—all of which support the New Hope Housing mission. 

See Dallas Cnty. Appraisal Dist. v. The Leaves, Inc., 742 S.W.2d 424, 427 (Tex. 

App.—Dallas 1987, writ denied) (granting exemption where 14% of revenue was 

from charity) (citing City of McAllen v. Evangelical Lutheran Good Samaritan 

Society, 530 S.W.2d 806, 809–10 (Tex. 1975) which concluded an exemption is 

appropriate when there are no patients who cannot pay something toward their care 

and where the hospital operated at a loss)). The City of McAllen court’s rationale 

is instructive and controls the outcome here. Key to that holding is not that 

services are provided free of charge. See City of McAllen, 530 S.W.2d at 809. 

Rather, what controls is whether the charitable organization demonstrates that 

beneficiaries are not required to pay the full cost of services received. Id.

We conclude the evidence established that NHH-Canal Street’s tenants are 

not required to pay the full cost of rent or other services provided; therefore, NHHCanal Street should not be denied the tax exemption of Section 11.18(d)(2). See 

id., 520 S.W.2d at 806; Lamb County Appraisal Dist. v. South Plains HospitalClinic, Inc., 688 S.W.2d 896, 904–905 (Tex. App.—Amarillo 1985, writ ref’d 

n.r.e.) (allowing exemption where 8-15% of patients received charity, hospital’s 

source of income was derived from other patients who paid for care and no patient 

was denied care); El Paso Cent. Appraisal Dist. v. Evangelical Lutheran Good 

Samaritan Society, Inc., 762 S.W.2d 207, 208 (Tex. App.—El Paso 1988, no writ) 

(holding exemption was proper where charity engaged in benevolent work beyond 

that of charitable and religious nature); cf. Hilltop Village, Inc. v. Kerrville Ind. 

School Dist., 426 S.W.2d 943, 949 (Tex. 1968) overruled by City of McAllen, 530 

S.W.2d at 811 (denying exemption where charity not “bound to assume charitable 

obligations” or to dispense relief to the needy and “no assurance that society is 
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being or will be relieved of the care and expense of those in need.”); Baptist 

Memorials Geriatric Ctr. v. Tom Green Cnty. Appraisal Dist., 851 S.W.2d 938, 

944 (Tex. App.—Austin 1993, writ denied) (denying exemption where charity did 

not use property for charitable purposes). 

2. As a matter of statutory interpretation, NHH was not required to 

show that it served the impoverished without regard to 

beneficiaries’ ability to pay 

NHH-Canal Street argues that the word “impoverished” is not modified by 

the words “without regard to the beneficiaries’ ability to pay. Section 11.18(d)(2) 

provides in pertinent part that the charitable organization is entitled to the tax 

exemption where it provides support to “...the impoverished, or victims of natural 

disaster without regard to the beneficiaries’ ability to pay.” See Tex. Tax Code 

Ann. § 11.18(d)(2). On the other hand, Section 11.18(d)(3) provides that the 

charitable organization is exempt where it is “‘providing support without regard to 

the beneficiaries’ ability to pay’ to: (A) elderly persons, . . . (B) the handicapped . . 

. .” See id. NHH-Canal Street argues that under a plain reading of the statute, 

“without regard to beneficiaries’ ability to pay” modifies only “victims of natural 

disaster” and not the word “impoverished.” NHH-Canal Street further argues that, 

if the Legislature had intended such a modification, it could have written Section 

(d)(2) just as it wrote (d)(3). 

HCAD argues that “without regard to beneficiaries’ ability to pay” modifies 

“the impoverished,” and because NHH-Canal Street requires a tenant to have a 

minimum income, it is considering the beneficiaries’ ability to pay. HCAD 

contended that NHH-Canal Street’s “Tenant Selection Plan and Procedure 

Manual” (the “Manual”) of New Hope Housing, Inc. (“NHHI”)1

 is evidence that 

NHH-Canal Street considers ability to pay: 

 

1 NHHI is a Texas nonprofit corporation which provides property management to its 
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An applicant must demonstrate sufficient income to pay full rent. To 

be considered eligible for residency, the applicant’s income must be 

greater than 1.5 times the rental amount. NHHI will have rental rates 

affordable to individuals with low-incomes not exceeding the 

applicable program rent limits set by the HOME Investment 

Partnership Program, FHLB-Atlanta Affordable Housing Program, 

Housing Tax Credit Program and HUD.

In the “Tenant Qualifying Criteria” section of the Manual is a “General 

Occupancy Standard,” which provides: 

An applicant must provide proof of annual gross income that does not 

exceed the annual income limits set by U.S. Department of Housing & 

Urban Development (“HUD”). An Applicant must demonstrate 

sufficient income to pay full rent. The Applicant’s income must be 

greater than 1.5 times the rental amount to be considered eligible. 

New Hope reserves the right to give first priority to applicants who 

are Veterans and Persons with Special Needs. “Persons with Special 

Needs,” as defined by HUD, includes persons with disabilities, 

persons with HIV/AIDS, elderly persons, frail elderly persons, 

persons with alcohol and/or drug addictions, victim of domestic 

violence, persons who are homeless and public housing residents. 

HCAD cites other sections in the Manual stating that “rent is not 

subsidized,” “All eligible applicants will be screened to determine their ability to 

pay rent on time and meet the requirements of the lease,” and the screening is be 

applied to all applicants. 

As quoted above, Section 11.18(d)(2) provides that the charitable 

organization is entitled to the tax exemption where it provides support to “the 

impoverished, or victims of natural disaster without regard to the beneficiaries’ 

ability to pay.” See Tex. Tax Code Ann. § 11.18(d)(2). Section 11.18(d)(3) 

provides that the charitable organization is exempt where it is “‘providing support 

without regard to the beneficiaries’ ability to pay to: (A) elderly persons, . . . (B) 

the handicapped . . . .” See id.

 

communities, including the Canal Street Apartments. 
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HCAD argues that NHH-Canal Street is entitled to the tax exemption only if 

it shows that it serves the “impoverished without regard to the beneficiaries’ [the 

impoverished’s] ability to pay.” HCAD’s interpretation “strains the sentence’s 

grammar and apparent meaning.” City of Dallas v. Stewart, 361 S.W.3d 562, 571 

n.14 (Tex. 2012) (citing Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 

(Tex. 2000)) (giving effect to all words of a constitutional provision and 

concluding that the last antecedent “canon of construction” requires that the 

qualifying phrase “must be confined to the words or phrases immediately 

preceding it to which it may, without impairing the meaning of the sentence, be 

applied.”) The interpretation advanced by NHH-Canal Street “comports with the 

doctrine of last antecedent, which suggests that in most cases, a qualifying phrase 

should be applied only to the portion of the sentence ‘immediately preceding it.” 

See id. Accordingly, under the rules of interpretation, the qualifying phrase—

“without regard to the beneficiaries’ ability to pay”—applies only to the portion of 

the sentence immediately preceding it; specifically “victims of natural disaster.” 

Under HCAD’s interpretation, “without regard to the beneficiaries’ ability to 

pay” would apply and modify each term in Section 11.18(d)(2). Had the 

Legislature intended this result, it could have written the section as it did in Section 

11.18(d)(3), which allows an exemption when the charitable organization provides 

support “without regard to the beneficiaries ability to pay” to elderly persons and 

the handicapped. See Tex. Tax Code § 11.18 (d)(3); Texas West Oaks Hosp., LP v. 

Williams, 371 S.W.3d 171, 185 (Tex. 2012) (holding the phrase “directly related to 

health care” modifies the terms immediate before it and rejecting the notion that it 

relates to each term in the definition of a health care liability claim); 8100 N. 

Freeway Ltd. v. City of Houston, 329 S.W.3d 858, 862 (Tex. App.—Houston [14th 

Dist.] 2010, no pet.) (concluding where Legislature did not insert a comma to set 
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apart a phrase, both rules of punctuation and last antecedent mandate the phrase 

modifies only the last noun in a list). 

In considering the undisputed evidence, we conclude that NHH-Canal Street 

conclusively established it is organized exclusively as a charitable organization, 

that it provides services to the impoverished, and that NHH-Canal Street did not 

have to prove that it provided services to the impoverished without regard to their 

ability to pay; therefore, it is entitled to the ad valorem property tax exemption 

under Section 11.18(d)(2).2 See Tex. Tax Code Ann. § 11.18(d)(2). 

Accordingly, we sustain appellant’s four issues, reverse the trial court’s 

order denying NHH-Canal Street’s motion for summary judgment and granting 

HCAD’s motion, and render judgment that NHH-Canal Street is entitled to an ad 

valorem tax exemption. 

 

 /s/ John Donovan 

 Justice 

Panel consists of Justices Christopher, Donovan, and Wise. 

 

2 HCAD argued that the Harris County Appraisal Review Board was not a proper party, 

relying on Texas Tax Code Section 42.21. See Tex. Tax Code Ann. § 42.21 (West, Westlaw 

through 2015 R.S.). NHH-Canal Street responded that the statute as it existed in 2010 (when it 

filed suit) was permissive; that is, the appraisal review board could be sued, if appropriate. 

Section 42.21 was amended in 2011, and the legislation contained no effective date. See Tex. 

Tax Code Ann. § 42.21. In the absence of an effective date, under Texas Government Code 

Section 311.022, the presumption is that the law applies prospectively. See Tex. Gov’t Code

Ann. § 311.022 (West, Westlaw through 2015 R.S.). Thus, there was no statutory provision 

applicable to NHH-Canal Street’s suit against the Appraisal Review Board at the time it filed suit 

and HCAD failed to demonstrate how whether the board is a proper party effects NHH-Canal 

Street’s entitlement to the tax exemption.