DAN MORALES

.ATTORNET CESERAL 

## QBffice

of tfp !Zlttornep@enerat 6tate of llLexas December 141992

Honorable Marcus D.Taylor Criminal District Anomey Wood County P.0. Box689 Quitman, Texas 75783 Opinion No. DM-187

Re: Whether property seized by the state pursuant to the Code of Criminal Procedure, chapter 59, is exempt from property taxes (RQ-233)

Dear Mr.Taylor:

You ask whether property seized by the state pursuant to chapter 59 of the Code of Criminal Procedure is exempt from ud vuloremproperty taxes. Ifit is taxexempt,you ask at what time the tax exemption takes effect and how longit applies. We conclude that such property is exempted from taxation by section 11.11of the Tax Code. The tax exemption becomes effective on the date title vests in the state under the terms ofchapter 59 and applies for aslong astitle rests with the state and ’ the property isused forpublic purposes. Chapter 59ofthe Code ofCriminal Procedure, enacted in 1989,provides for the forfeiture ofcontraband seized bypeace officers employed by law enforcement agencies of the state and its political subdivisions. The chapter generally provides that property classified as contraband is subject to seizure and forfeiture under the chapter. Code Crim. Proc. art. 59.02(a). “Contraband” isdefined asproperty of any nature (including real, personal, tangible, or intangible property) that is used or intended for use in the commission of certain enumerated felonies. Id. art. 59.01(2).1 A peace officer may seize property subject to forfeiture either with or

‘Property is contraband if it is used in the commission of first or wood degree felonies under the Penal Codq felonies under chapters 29, 30, 31, or 32 of the Penal Code; or felonies under the Texas Securities Act, V.T.C.S. art. 581-l et seq. Property that is used or is intended to be used in the commission of felonies under the Texas Controlled Substances Act, Health and Safety Code chapter 481; chapter 483 of the Health and Safety Code; or V.T.C.S. article 350 is also chssifkd as contraband. code Crh. Proc. art. 59.01(2).

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without a warrant in accordance with the chapter and must notify the attorney representing the state ofsucha seizure within 72hours ofthe event. Id. art.59.03.
The attorney representing the state2 must commence forfeiture proceedings byEling a notice ofthe seizure and intended forfeiture with the clerk ofthe district court not later than the 30th day after the date ofthe seizure. Id. art. 59.04(a), (b). Notice isgivento owners andinterest holders ofproperty seized pursuant to chapter 59 in accordance with the rules governing service ofprocess in civil cases. Id. art. 59.04(b). Ifthe seized property isreal property, the attorney representing the state must 6le with the county clerk in each county where the property is located a lir pendens notice describing the property. Id. art. 59.04(g). Tbis notice must be filed not later than the third day after the date forfeiture proceedings are commenced. Id.

Forfeiture proceedings under chapter 59 are conducted in accordance with rules and principles governing civilcases. Seeid, art. 59.05(a), (b). Ifthe court finds that the state has proven by a preponderance ofthe evidence that all or part ofthe seized property is subject to forfeiture, the judge shall forfeit the property to the state. Id. art. 59.05(b), (e). A finaljudgment offorfeiture under chapter 59perfects the state’stitle to the forfeited property. Id art. 59.06(f). The attorney representing the state acts asthe state’s agent inreceiving and disposing offorfeited property. Id. art. 59.05(e). On finaljudgment of forfeiture, the attorney representing the state shall dispose ofthe property asprovided by article 59.06. Id.3

In the absence of an agreement with local law enforcement agencies regarding the disposition ofthe property, forfeited property must be sold at public auction on the 75th day after the date of final judgment of forfeiture. Id. art. 59.06(a). The sale isconducted under the direction ofthe county sheriff after notice is provided in accordance with laws governing sheriffs sales. Id. Proceeds of the sale are distributed in accordance with article 59.06.

2”Attomey representing the state” is defmed as the prosecutor with felony jurisdiction in the county inwhich a forfeiture proceeding isheld. Code Gin. Proc. art. 59.01(l).
hpter 59allows owners and interest holders of seized property to replevy the property pcrding the forfeihue hearing. Code Grim. Proc. art. 59.02(b). The chapter also allows holders of nonforfeitable interests in seized property to protect their interests in the property prior to tinal judgment of forfeiture. Id arts. 59.02(c) (describiig nonforfeitable interests), 59.05(e).

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You expiain that on October 23, 1989, the Wood County Sheriffs Department seized 723.796 acres in Wood County pursuant to a valid search warrant. Following notice ofthe seizure to taxingtits and the holder ofa Deed of Trust to 564.796 acres of the property, the taxing units filed suit for taxes due in 1989. The interest holder subsequently sought to foreclose on the entire 723.796
acre tract, but ultimately agreed to foreclose ononlythe 564.796acres.
You state that forfeiture could not be obtained on the remaining 159 acres until October 26, 1990. We assume this to ~meanthat finaljudgment of forfeiture
was obtained on that date. You also state that the property was posted for sale in accordance with chapter 59. At the sale the tax assessor-collector of a taxing unit announced that over $8000in delinquent property taxes were owed.on the property. You indicate that the announcement resulted in the cancellation of the sale. The property remains unsold.

You Srst askwhether property forfeited to the state pursuant to chapter 59 is exempt from property taxes. Article VIII, section 1 of the Texas Constitution provides in part that “[a]11 real and tangible personal property in the State..

.shah be taxed in proportion to its value, which shah be ascertained as provided by law.” Article VLU,section 2(a) provides in pertinent part that the “legislature may, by general laws, exempt from taxation public property used for public purposes.‘“ 4 Pursuant to thisprovision, the legislature has enacted section 11.11ofthe Tax Code, whichprovides the followinginpart:

(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) provide for the taxation for county purposes ofland owned by the Permanent University Fund and for the taxation of certain land owned by counties for the benefit of the public schools. Subsections (d) through (g) supply additional qualXcations to the general tax exemption provided in subsection (a). They are not relevant to this opinion.

‘ArtieIe XI., section 9 of the Texas Constitution ia pertinent part exempts fxom taxation

“property of coo&s, cities and towns, owned and held only for public poqwses,
. . . aod all other property &voted excbkvely to the use and benefit of the public..

. .” This provision is self-executing but has not been interpreted to apply to property owned by the state. See Attorney General Opinion M-1049 (1989) at 2 n.1.

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The critical inquiry under these provisions iswhether the public property in question is used for a public purpose. The courts instruct that the test for public purpose iswhether the public property isused primarily for the health, comfort, and welfare ofthe public. A &M Conso.l Indep. Sck Dirt. v. Ci@ofBtym. 184 S.W2d 914 (Tex. 1945); State v.Houston Lighting &Power Co., 609 S.W.2d263 (Tex. Civ. App.-Corpus Christi 1980,tit refd n.r.e.). 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 Gmnd Rabie Hosp. Auth. v. Dallas Cowtty Appmid Dirt., 730 S.W2d 849(Tex.App.-Dallas 1987,w-rit refd ar.e.).

Asyou note inyour brief, no authority appears to address your tit question directly. You argue, however, that property forfeited to the state should be considered tax-exempt, drawing an analogy to cases involving property acquired by political subdivisions through tax foreclosures or tax sales. See Cify ofAu.& v. Sheppurd, 190 S.W.2d 486 (Tex. 1945). These cases uniformly hold that the acquisition ofproperty by a political subdivision under these circumstances and the holding of such property for resale constitutes a public purpose under the constitutional and statutory tests. Property so acquired and held is therefore taxexempt. See&o State v. Cz$ ofSanAntonio, 209 S.W.2d756 (T’ex.1948);State v. Moak, 207S.W.2d894(Tex. 1948);Eason v.David, 232S.W.2d427 (Tex. Civ.App.-- Beaumont 1950, writ refd n.r.e.); Lubbock Indep. Sch. D&. v. Owem, 217 S.W.2d 186(Tex.Civ.App.-Amarillo 1948,writ refd).

We believe these cases plainly demonstrate that, where the state or its political subdivisions are authorized to acquire and dispose ofproperty pursuant to express statutory authorization, the acquisition and use ofthe property pending its disposal is

prima faciea public purpose. Taxingunits are authorized to acquire and dispose of real property in satisfaction of taxes due on the property. Tax Code #$34.01(c); 34.05. Thus, the legislature has anticipated and authorized public ownership and sale ofproperty forpurposes ofcollectingproperty taxes. Similarly, Attorney General Opinion JM-1049 (1989) concluded that lands set aside by article VII, section 2 of the Texas Constitution for the benefit of the public free schools are exempt from ad valorem taxation even where such property isleased for compensation to private individuals tobe used for purposes not related to the performance of the duties and functions of the School Land Board. The opinion concluded that the manifest public purpose ofarticle VII, section 2was not that land set aside for educational purposes under the provision actually be used for

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educational purposes, but that incomefrom such property be used for such purposes. See uko Attorney General Opinion JM-1085 (1989) (real property comprising the Veterans’ Land Fund, includingland forfeited to the state on default ofapurchaser, isexempted from advalorem taxation to the state).

In our opinion, the public ownership of property forfeited to the state pursuant to chapter 59 of the Code of Criminal Procedure undoubtedly serves a public purpose within the meaning of the constitutional and statutory provisions described above. Under chapter 59, forfeited property may be used by law enforcement agencies for official purposes. Code Grim. Proc. art. 59.06(b). In the alternative, the property maybe sold,withthe proceeds ofthe sale deposited in the general revenue fund of the state treasury or distributed to law enforcement agencies and the attorney representing the state for law enforcement purposes or drug and alcohol abuse treatment and prevention programs. Id. art. 59.06(c), (h). In either case, forfeited property (or its proceeds) clearly is used to promote the health, comfort, and welfare ofthe public. Accordingly, we conclude that property forfeited to the state pursuant to chapter 59 ofthe Code of Criminal Procedure is exempt from ad valorem taxation so long as the property is used for public, as opposed toprivate, purposes.
Your second question concerns the time at whichthe exemption takes effect. It is clearly established that public property is tax-exempt during the time title is vested in the political subdivision, provided, ofcourse, that the property is used for public purposes during that period. SeeCiryofSanAntonio, 209 S.W.2d756;Moak, 207 S.W.2d 894; Lubbock Independent School District, 217 S.W.2d 186. Article 59.06(f) ofthe Code ofCriminal Procedure provides the following:

(i) A tinal judgment of forfeiture under this chapter perfects the title ofthe state to the property as of the date that the contraband was seized or the date the forfeiture action was filed, whichever occurred first, except that ifthepropertyforfeited ir realproperry, the title isperfected as ofthe date a notice of li.s pendens &fled onthepropeq. [Emphasis added.] The notice oflirpendens must be bled not later than the third day after the date forfeiture proceedings are commenced. Code Crin~ Proc. art. 59.04(g). Consequently, in accordance with article 59.06, forfeited real property becomes taxexempt from the time title vests in the state followinga Snaljudgment offorfeiture under chapter 59,ie., the date notice ofli~pendens is filed describing the property.

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The tax exemption applies for as long astitle restswith the state and the property is used forpublicpurposes.

SUMMARY

Real property forfeited to the state pursuant to chapter 59, Code of Criminal Procedure, is exempt from cld valorem taxation. The exemption is effective as of the date title to the property vests in the state following a final judgment of forfeiture under chapter 59,ie., the date notice oflirpendenr is filed describing the property. Code Crim. Proc. art. 59.06(f). The taxexemption applies for aslong astitle rests with the state and the property isused forpublicpurposes. Verytruly yours, /

DAN MORALES Attorney General ofTexas

WILLPRYOR First Assistant Attorney General

MARY KELLER Deputy Assistant Anomey General

RENEAHIcKs SpecialAssistant Attorney General

MADELEINE B.JOHNSON Chair, Opinion Committee Prepared bySteveArag6n Assistant Attorney General

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