THEATTOWNEY GENERAL 

Q3F TEXAS 

Honorable Ted Butler Opinion No. M- 676 

Criminal District Attorney 

Bexar County Re: Do the installers and 

San Antonio, Texas operators of the city's 

skyride hold a taxable 

leasehold interest in 

real property or a mere 

operating agreement or 

Dear Mr. Butler: license not taxable? 

We have received your request for an opinion on the 

captioned subject from which we quote as follows: 

"A question has arisen as to the tax status 

of an elevated skyride located on certain 

city-owned property known as HemisFair within 

the Civic Center Urban Renewal Project No. 5, 

City of San Antonio, which is operated by a 

Concessionaire as a sight-seeing and entertainment ride for the public at a patronage 

charge per ride from which the City is paid 

compensation in an amount equal to a percentage 

of gross annual receipts agreed upon by written 

contract between the parties. 

"Your opinion is respectfully sought on the 

following question: 

"Does the use, operation and maintenance of 

the elevated skyride as more fully described 

below constitute a leasehold interest which 

is taxable by the State of Texas, and the 

County of Bexar, under Article 7173> Vernon's 

Civil Statutes? 

"Pursuant to a contract executed on 18 October, 

1966, Austin Hemphill and Billy J. McCombs, 

hereinafter referred to as 'Hemphill-McCombsP, 

in conjunction with Aerial Transportation, Inc., 

hereinafter referred to as sConcessionaires, 

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Honorable Ted Butler, Page 2 (M- 676) 

agreed to install, operate and maintain 

an elevated skyride on City of San Antonioowned property within Urban Renewal Civfc 

Center Project No. 5, during the exposition 

known as HemisFair 1968, and for a period of 

years thereafter. (See copy of contract 

attached hereto). 

'Construction was at the expense of HemphillMcCombs and ownership remained in HemphillMcCombs until it was completed and accepted 

by the City of San Antonio upon delivery of 

a Bill of Sale, dated 29 May, 1968. Since 

said conveyance to the City of San Antonio, 

the skyride has been operated by Concessionaire. 

"Charles G. Davis, Tax Assessor-Collector for 

Bexar County, has assessed the property and 

established an account on the tax rolls for 

the taxation of the Skyride property as a 

leasehold interest in public lands in accordance with Articles 7145, 7143, and 7174, 

Vernon's Annotated Texas Statutes. The leasehold interest is not presently taxed by the 

City or School District. 

"A contrary vfew that has been expressed is 

that the property, being wholly owned by the 

City of San Antonio, is exempt, and further, 

that it is not taxable to Hemphill-McCombs 

or Concessionaire under Article 71739 V,A.T.S., 

for the reason that it is befng operated under 

a mere operating agreement 05 license as distinguished from a leasehold. 

The general distinction between a lease and a license is: 

"A lease is a grant of an estate in land for 

a lfmited term with conditions attached, and 

it creates both privity of estate and privity 

of contract between the parties. The relatfon 

of landlord and tenant is created where the 

owner of land consents to the occupancy thereof 

by another and the occupant holds in recognition 

of, or subordination to the title of the owner. 

" 35 Tex.Jur.2d 464-485, Landlord and 

;enallt, Sec. 1. (Emphasis added.) 

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Honorable Ted Butler, Page 3 (M-.676) 

. . . in the law of real property a 

license is a privilege or authority given 

mined by one to do some particular 

act or series of acts upon the land of 

another, but which~does not amount to an 

estate or interest in the land itself." 

36 Tex.Jur.2d 587-588, License, Sec. 1. 

(Emphasis added.) 

that ". 

Our Supreme Court has recently reiterated thenprincipal 

. . ordinarily licenses are revocable; 

Eagle Rock Ranch, 364 S.W.2d 196, 203 (Tex.Sup. '1465); %%-&d 

been declared in the early case of Merriwether v. Dixon, 28 Tex. 

15, 18 (1866). 

In then case of Priddy v. Green, 220 S.W. 243 (Tex.Civ. 

ADV. 1920, no writ), involvina the construction of an oil and 

gas lease-for a primary term of five years and as long thereafter as oil or gas is produced from the land, the Court said, 

in part: 

"We think the instrument evidences~more 

than a mere license to go uvon the land. 

A mere license is a personal privilege 

to do some act on the land without passg 

t", t% 

y estate therein. The conveyance 

licensee or licenser would revoke 

- t. . . . (at p. 248) ( Emphasis added.) 

The contract in question unequivocally conveys to the 

named installers and operators of the concession the exclusive 

use and control of an area defined therein for the Iti tion and maintenance of such concession, referred 

to":: 'S?yzide" P for definite,primary and secondary terms 

from 1968 conti&ously through October 31, 1983, at a stated 

consideration passing from such installers and operators to 

the City, as owner of the concession and land upon which it is 

situated. The consideration is based upon the annual gross 

receipts gleaned from patronage by the public of such concession during the life of the contract. Also, such contract 

specifically uses the term "leasehold improvements" wherein 

the concessionaire is required to procure and maintain fire 

and extended coverage insurance on the improvements. 

We point out that a conveyance by the City of its freehold interest in the property involved would not, in any way, 

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Honorable Ted Butler, Page 4 (‘M- 676) 

affect the leasehold interest of such named installers and 

operators or otherwise restrict their rights and obligations 

under such contract. The contract by its express terms prohibits said installers and operators from assigning, transferring, conveying~or otherwise disposing of the contract or 

any portion thereof without permission of the City. Therefore, 

under the terms of such contract, the operation of the concession in question cannot be a mere ersonal privilege revocable 

by a conveyance of either party's nterest therein, as would be 

true in the case of a mere license to do some act on the land 

without passing~any estate therein. Settegast v. Foley Bros. 

Dry Goods Co., 114 Tex. 4.52, 270 S.W. 1014 (1925) 

R. I. & G. Ry. Co. v. Johnson, 156 S.W. 253, 256 ;=?@ (Tex.C v.App. 

11913, error ref.), and Pridd v. Green,:supra; Hancock v. 

Bradshaw, 350 S.W.2d 95vTex.Civ.m 1.961, no writ). A 

lease confers more comprehensive rights than does a license. 

Texas Pacific Coal & Oil Co. v. Fox, 228 S.W. 1021 (Tex.Civ. 

App. 1921, no writ). 

It seems clear that the instrument in question granted 

a leasehold interest in property for a term of more than three 

years which Is taxable as the property of the installers and 

operators under the terms and provisions of Article 7173, 

Vernon's Civil Statutes, which provides in its portion which is 

applicable here, as follows: 

'Property held under a lease for a term of 

three years or more, or held under a contract 

for the purchase thereof, belonging to this 

State, or that is exempt by law from taxation 

in the hands of the owner thereof, shall be 

considered for all the vurvoses of taxation, 

as the property of the person so holding the 

same, except as otherwise specially provided 

bylaw. . . ." (Emphasis added.) 

For related questions involving the scope and applicabilit 

of Articles 7173 and 7174, we refer you to our Opinion M-319 (196 5 ), 

a copy of which is in yourpossession. 

SUMMARY 

The contract in question, which granted a 

leasehold interest in property for more than 

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Honorable Ted Butler, Page 5 (M-676) 

three years, conveyed a leasehold estate 

in the elevated skyride property, which 

is taxable under Article 7173 

Prepared by R. L. Lattlmore 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor3 Chairman 

W. E. Allen,.-Co-Chairman 

Harriet Burke 

Howard Fender 

Roland Allen 

Rex White 

MEADE F. GRIFFIN 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

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