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Mr. Jules Damiani, Jre Criminal Metrict Attorney Galve~ston

County Galveston,Texas Opinion No. C-27

Re: Whether the Moody House is exempt from the payment of ad valorem taxes under the Dear Mr. Damiani: stated facts.

You have requested our opinion a8 to whether or not the property set out in your statementof facts Is exempt from ad valorem taxes. The following facts are copied from your letter:

“Theproperty originallyknown as the

BuccaneerHotel, including the Buccaneer Cabanas and Poolwas acquired by The Methodist

### Homes for Older People,a charitable corporation Incorporated under the laws of the State of Texas,
on the 29th day of December, 1961, as
a gift from The Moody Fogdation, and commenced operating it as a home for. olderpeople on the 1st day of Januaryp 1962q

“TheMethodist Homes for Older People
was required to take title to the property subject to any and all leases and rental contracts then in existence. There were three (3) outstanding leases for store or office space that are still in effect and fromwhich the pres&it owner receives a smallrentalD All of the rent8 received ftiom these three (3) tenants Is by action of the Board, befng plaoed In a special ‘HealthCare Trust Fund’ and is used solely for health and welfare care of residents of Moody’ Abuse0

“One of the rental units la oocupled

as a barber shopwhich Is being operated almost entirely

### for the 

### convenience of the residents of Moody House. The other

-109-Mr. Jules Damianl, Jr., Page 2 (No. C-27)

rental units are a small gift shopand the OalveStOnMerchaants Association,all of which have leases that were In effect at the time the property was acquired and

as above stated, the .presentownerwas ~requlredto accept the title subject to these leases. The total reAta1 received from these units amounts to only $375.00 per month.

"Thisproperty la malntalAedaAd operated
as a home for olderpeople and offers full custodialand Aurslng care. Some of the present residents are Aot ln a financial posltlon to pay for their entlre care and maintenancewhich Is being subsidized from other fuAda. Moody House IA 1962, paid an average of approximately $l,OOO.OOper reslderat

as subsldlzatlon. Itwill continue to be the policy to accept residents at Moody Housewho will require some subsldlzatlonfor thelr care and support.
"MoodyHouse has been licensed by the State Health Department for a nursing 'homeand this-service Is now being offered with ffve (5) nurses beingprovided. The
care being offered to PesideAts of Noody House includes lodging,meals, medical and ~~rsl~g service.

'TheNethodlst Homes for Older People 1s incorporatedunder the Texas Nonptioflt CorporationAct for charitableand benevolentpurposes, Moody .House,operatedby said corporation, la a project of The Texas Conferenceof The Methodlst Church, and 1s operated by an admiAlstratOraAd staffunder the supervlslonof aA Executive Steering Committeeappointedby the Board of Dlrectors of sald corporatloAaad approved by the Annual C6AfereAceof The Methodlst ChurchD

"TheAdmlAlStPRtOrand SteerlAg Commltt&e have attempted to determflae what It will cost :to operate Moody House. The charges being made to resldelnts are expected to underwrite the cost of furnlshlng the residents' living quarterasall meala, a complete staff lncludlng

'-B10-Mr. Jules Damianl, Jr., Page 3 (No. C-27)

an administrator,a full time Director of SocialActivities,a resident doctor, a sufficientnursing staffwhich Includes registerednurse8 and licensedvocational
nurses.

“There la AO admission fee or a fixed amount for admission to Moody House. In each case the matter of the amount to be paid by the resident Is negotiated and a mutual agreement as to the amount to be paid by the Individual Is determined from his needs and ability to pay. It Is not expeoted that every person will underwrite the cost of his or her care, and It Is not expected that any person will be In such financial circumstancesas to require full financialaidD All funds received from residents, rentals or otherwise,will be used for the care and maintenance of the residents, and that such fundswill be from time to time supplementedby The Methodist Church.

‘With‘referenceto paragraph three, you will note that there are vaPlous units rented o.utIn the Moody House to private lndlvlduals. Vernonts Annotated Civil Statutes, Article 7150 aAd The Constitution of the State of Texas, Article 8--section 2, holds that to be an Institute of purely public charity no that its property may i be exempt for taxation, the fnstftutlon must be one whose property la used wholly and exclusively for charitablepurposes. In BPOE L.od

e WoQ.151 vs City of Houston, 44 SW2nd 48!, there Is a holding that where lndlvldual COACefB3fOA~ were leased Out t0 lndfvfdualaand were not used solely for the beneflt of the organlzatlon,-thatsaid organlzatlon.

would not be exempt from taxation. It Is the wrlterqs opinion that the Moody House lu baslcally a charitable lnstltutlon,‘howeverpunder the holding herein before cited itwould appear by leasing fOP

a fee Its premises to lndfvfduals other than the resedents of the Institutionandthe allowance of the public to patronize and

use these facllltleswould result In the ruling that the Moody Housewas not a

-1X1-Mr. Jules Dsmlanl, Jr., Page 4 (No. C-27)

charitable organization and Is Aot exempt from taxation. Your 0plAibn la Pespectfully Pequested."

Under the facts stated, it appears that thd organization owning this property described has compliedwith theeAeCessaPy law and facts to make it a charitable fnatltution,aAd the property would be exempt from ad valorem taies were it not for the fact that certainparts of the property are being leased to tenants as stated IA your request. This matter has been dlscussed at length IA opinions heretoforerendered by this department, being OPIAIOAS Nos. WW-12 

### 7 dated March 

### 16, 1962, W-1424 1 dated August 

### 24, 1962, and WY-1 27aated August

### 30, 1962, copies of which are enclosed herewith.

In Morrisv. Lone Star.Cha ter No. 

### 6, Royal Arch Masons, 

### 68 Fe em f, s w 519 d87 thebuilding &own ;s thi l&on& th f t h tha Tej&e w:s ttei ~y'~lain~lff and other Masonic organizations to h6ld their 

### meetings but that

a part of the buildingwas rented to'differentpePsons, and plaintiff received a monthly rental for each of sald

### rooms rented amounting In the aggregate to about $15O,OOper month for all of the rooms in the ffrst and second stories In the .bulldlng.

The Court IA Its ?plnlon had the following to say:

II D D DThe burden of .showlngthat an exempt.loA

from taxatlon exists9 rests upon the party who olafma It, o' D Dand when the constrmctlon of~the law Is doubtful, the doubtwill be resolved In favor of:the state, and against the exemption, D + *Applying these rmles, we conclude that the buildlAg In questlon %s not @usedexclusively'by appellee'ln the sense gIveA to these

### words in the constitutf0A~the exclusive me meant being the actual aAd directuse for the purposes of the assOclatfOA,and not a use by others fop reveAue, although that revenue may be exclusively appropslated for the 'objectsof the charity. The legislature IA exerclslng~



### the power CoAfePPedby the constitution seems to follow,the constrmctloA we have adopted,.aAdexempt ‘all buIldlAgs belOAglAg t0 1AStltutlOnsOf purely public charlty;together with the 1aAds belOnglAg to and occupfed.by such'. lnstlttitlons,

~'Aot leaaed or othepwlseused wlth a view td prof+t,' aAd all moneys andMr. Jules Damlanl,Jr., Page 5 (No. c-27)

credits appropriated solely to sustaining suoh Institutions,’ This means that a building leased for profit 1s not exempt although suchprofit may be appropriated solely to the purposes of the charity, and not to the private gain of Its promoters or stockholders. o e *”

of Houstonv. Scottish Rite Benev. hss’n., 0 S.W. 978 (19

21)-6f the Ancient and Accepted ScottishRite of Fre&nasonryof the City of Houston purchased certainproperty which was known as ScoMlsh Rite Cathedral. The lot and bulldlng situated thereonwas actually used by members of the association,and nopart of the samewas rented or used by any otherperson or instltutlon. The association owned no property used with a view tog;flt. It had
no capital stockand declared no dlvldenda. used by the Masonic orders, Including San Jaclnto f&e v”,f was
PerfectionNo. 6 and the Houston Chapter of Rose Croix No. 5, each ofwhich collectedmembership fees and dues whloh were used for charitablepurposes other than the bare neceseltles for the lodge. No person received any salary or profit directly fromthe lodge or lodges. The buildingwas used pplncipally for meetings of thn various Masonic orders.

The facts further showed that the associationwas not
one that did nothing but dispense charity,but it did dispense charity. The main purpose of the associationwas to provide a lodge and place of meeting, and to look after and provide for lndlvldualMasons and their families.

The Court said in Its opinion:

“By the very tinner and terms of this property’s acqulsltlon, It was required

__ to be used9 as it was In fact used, by,. the two Masonic orders* ‘toenable them to pursue their work as Masonic lodges,I I. suchwork being, as agreed, only partly charitable.

“To the extent that the property was used by ~aonlc organizations,whoae actlvltles Included other fields than charity, It was not, aAd couldnot be, used exclusively by an lnstltutlonof purely public charity. Not.belngused exclusively by an institution of purely public charity, the claim to exemption under the constltutlonalprOViSIOn fails,or. Jules Damlanl, Jr., Page 6 (No. C-27)

and our answer to the certified question Is that the propertywas subJect to tax-aMon."

In the case of B.P.O.E., Lodge No. 151 v. City of Houston, 44 S.W.2d 488 lTex.Civ.App. 1931, error ref.),.the City Houston sued the Elke Lodge for ad valorem tnxes on the property occupiedby the lodge. The facts showed that the lodge dispensed charity but carried on other actlyitles such as games, daACeS and othe'rSocialactivities for the purpose of entertaining its members and securingnew members.

The Court said that whether appellant Is a purely charitable lnstltutloA 1s one of fact. Therewas within the building a barbershop,the proprietor 6f which paid no rent but kept all the money he took In from servicesrendered to members of the lodge,a gymnasium IAstructor,and a restaurant operator,none ofwhom paid any rent or money to the lodge.

The Court said:

"Underthe law, for the property of appellant to be exempt from taxation, It must Aot only be owned, but also be used exclusively,by an lnstltutlon of purely public charity. Is It,so used here? The barbershop 1s operatedby onewho gets all the income. He pays no rent, but he gets free space'

to operate his trade, aAd retains for himself all the income. The iaan who ruAs the gymnasium Is a paid lAstructoP. He not only receives $200 a month as Instructor,b t I: he keeps in the :gymnaslum

his own sto,c of suppliesand sells them 'tothe membera,has free space9 and,retalAs the whole of the Income for his own use. The man who rune the reStaUrant also keeps aAd furAfShsSall his suppliesaAd PetalAs all the Income. He shares fn the use of space free of rent. The marp

who gives electric batha furnishes the towels ana rubbing llnfmeaats aAd keeps all the Income. e D 0
11 D e

. "ExemptlOABfrom taxation are not favored, and the law allowing exemptions shouldbe given a strict Interpretation, It'Is then policy of the states aAd but justicebetween

-114-Mr. Jules Dnmlanl, Jr., Page 7 (No. c-27)

Its citizens, that all property shouldbe taxed, and that no property shall escape this common burden,unlese It comes clearly within the exemption,and Itwao Incumbent
on the appellant to show that It comes within the exemption clauses of the Constitutionand the statute. We do not think this has been shown."

It is.our opinion that since portions of the Moody House are rented to private lndlvldualswho pay rent to the operators of Woody House, that in accordanoewith the decisions above, this property is not uaed exclusively for oharltablepurposes and therefore does not meet the requlr’ements to be exempt from taxation.

SUMMARY SUMMARY

Under the facts stated the property Involved In this opinion Is not used exclusivelyby an lnstltutlonof purely public charityand la therefore not exempt from ad valorem taxes.

Under the facts stated the property Involved In this opinion Is not used exclusivelyby an lnstltutlonof purely public charityand la therefore not exempt from ad valorem taxes.

Yours very truly, WAQQONER

CARR Attorney General of Texas

JHB: pw

Enclosures

APPROVED:

OPINION COMMITTEE W. V. Qeppert, Chairman Joe R. Long **Brady** Coleman Albert P+uett Jerry Brock

APPROVBD FOR ‘i’RE

ATTORNEY QENERAL By: Stanton St

bne -115- .