Honorable J. Albert Dickle Opinion No. M-897 

County Attorney 

Coryell County Courthouse Re : 

Gatesvllle, Texas 76528 

Exemption from ad valorem 

taxes of property owned 

by a non-profit corporation organized for the 

purpose of promoting 

Industrial development 

in Copperas Cove, Texas, 

Dear Mr. Dickle: and contiguous trade area. 

You have requested that we advise you as to the taxability 

of properties belonging to Copperas Cove Industrial Foundation, 

Inc., hereinafter referred to as “Copperas”, a non-profit corporation organized pursuant to the provisions of the Texas NonProfit Corporation Act.l The corporate purpose is stated In 

Article Four of the charter of Copperas: 

“The purpose or purposes for which the corporation 

is organized are: Promoting Industrial development 

for and within said city of Copperas Cove, Texas, and 

Its contiguous trade territory and area, and with the 

intent of exercising all of the general powers authorized by Article 2.02 of the Texas Non-Profit Corporation Act .‘I 

The charter also states that Copperas shall have perpetual duration. 

Section 3 of the By-Laws of Copperas provides that no offlcer or director shall ever draw compensation and that an,v assets 

held by Copperas at the time of corporate dissolution would 

pass to a successor corporation or organization having a similar 

l 3 V.C.S., Ch. 9, Art. 1396-1.01, et. seq. 

-4368- 
Honorable J. Albert Mckle, page 2 (M-897) 

purpose and like exempt status. 

With regard to the operation of Copperas, you have given us 

the following information In a letter pertaining to your opinion 

request. 

The Initial assets of the corporation was obtained 

&r&h the purchase of memberships, a list of which and 

the amounts donated Is also enclosed. For each $100.00 

membership entitles a member to vote. Contributions of 

less than $100.00 entltles the person contributing to a 

non-voting membership. Any single member Is limited to 

the number of votes that he or It can cast, which is 5% 

of the total number of votes. This Is a protection 

against large contributors, such as the~~~cove Bank, being 

able to control the organization.2 

There is a continuation of the solicitation of members. 

The membership Is non-redeemable and cannot be resold to 

the corporation. 

The assets of the corporation conslst~approximately of 

$600.00 cash and a 51-acre tract of land, 3 or 4 acres 

of which lie within the city limits of Copperas Cove and 

the balance lying outside the city limits. The acreage 

within the city limits had previously been subdivided 

for residential purposes before It was purchased. It Is 

not the Intention of the corporation to subdivide for 

residential purposes, however, due' to financial problems, 

the corporation Is attempting to sell the tit limit 

acreage. The property was purchased on the 2 8 th day of 

November 

payable 5 

1969 from the Erby Wolfe Estate for $25,OOO.OO, 

5,OOO.OO down and $5,000.00 per year. Because 

of the lack of funds to pay the next payment of $5,000.00 

2 The membership list, as furnished us, shows that there are a 

total of 72 contributing members. 51 members are voting members. 

Of these 51, only five contributors have as many as five votes, 

the two largest of these contributors being the Cove State Bank 

which contributed $2,000.00, and an Individual who made a contribution In the amount of $1,650.00. 

-4369- 
Honorable J. Albert mckle, page 3 (M- 897) 

It is necessary to sell the city limit acreage as above 

indicated. At the present time there Is a balance of 

$15,000.00 owing on the property. No individual member 

may purchase any of the assets of the corporation except 

upon competitive bids. 

There are no options to purchase or sell or purchase contracts existing at the present time. The corporation is 

attempting to attract investors, and does Intend to sell 

small tracts for the purpose of attracting business ventures. One such instance and apparently the only one that 

continued any length of time was a garment factory that 

apparently was not located on the above referred to acreage, but was housed at another location. The corporation 

paid approximately 6 months rent for this venture before 

It turned sour. The nature of the activities of the corporation Is contracting and carrying on correspondence 

with prospective businesses, and attending industrial and 

business seminars. No expense Is paid to individuals for 

attending these seminars nor is anyone In the corporation 

receiving expense money or a 

3 

alary and this includes the 

attorney for the corporation. 

3 The above described corporate activities are well within the 

powers conferred by Section 10 of the,By-Laws which read, in par 

as follows: 

1, 

. . . Without prejudice to such general powers and the 

other powers conferred by statute, by the charter and by 

these by-laws, it Is hereby expressly declared the board 

of directors shall have the following powers, that is to 

say: (1) To purchase, or otherwise acquire for the corporation, any property, rights, or privileges which the 

corporation Is authorized to acquire, at such price or 

consideration and generally on such terms and conditions 

as they think fit; and at their discretion to pay therefor either wholly or partly In money, stock, bonds, debentures, or. other securities of the Corporation; (2) To 

create, make and Issue notes, mortgages, bonds, deeds of 

trust, trust agreements and negotiable or transferrable 

Instruments and securities, secured by mortgage or deed 

-4370- 
Honorable J. Albert Dickle, page 4 (M-897) 

. . . . 

"There seem to be adequate provisions to prevent lndlvidual members from profiting by being members of the 

corporation and when taking Into consideration the broad 

base of membership and the general small amounts of contribution and considering the corporation from all pertinent data it appears that the assets have been accumulated from contributions made for the development of 

the business of Copperas Cove as distinguished from 

contributions made by Investing in capital stock of a 

corporation." 

Three provisions of the Texas Constitution will be considered 

here. 

Article VIII, Section 1 provides, In part, as follows: 

. . . All property in this state, whether owned by 

natural persons or corporations, other than municipal, shall be taxed in proportion to Its value, 

which shall be ascertained as may be provided by 

law . . .It 

Article XI, Section 9 provides, in part, as follows: 

"The property of counties, cities, and towns, owned 

and held only for public purposes, . . . and all 

(3 cont'd) of trust on any real property of the corporation 

or otherwise, and to do every other act and thing necessary to effect the same; (3) To sell or lease the 

real or personal property of the corporation on such 

terms as the boa~rd may see fit and to execute all deeds, 

leases and other conveyances or contracts that may be 

necessary for carrying out the purposes of this corporation and (4) To delegate any of the powers of the board 

in the course of the"current business of the corporation 

to any standing or special committees or to any officer 

or agent, and to appoint any persons the agents of the 

corporations, with such powers (Including the power to 

subdelegate and upon such terms as they think flt.)N 

-4371- 
Honorable J. Albert Dlckie, page 5 (~-897) 

other property devoted exclusively to the use and 

benefit of the public shall be exempt . . . from 

taxation . . .' 

Article XI, Section 9 Is self-executing. 4 

Article VIII, Section 2 provides, in part, as follows: 

1, 

. . . The legislature may, by general laws, 

exempt from taxation public property used for 

public purposes . . . and Institutions of 

purely public charity . . ." 

Article VIII, Section 2 Is permissive In nature rather than selfexecuting, and Is dependent for Its effectiveness upon the statutes enacted In pursu nce 

8 

to Its authorizations and In compliance 

with its llmltations. 

Even though it Is our opinion that Article VIII, Section 2 

and the valid statutes thereunder are determinative of exemption 

in this case, we have set out the above quoted portions of Article VIII, Section 1 and Article XI, Section 9 because these 

provisions are so frequently Inexorably Intertwined in court 

decisions determining questions of taxability for ad valorem 

tax purposes. 

We are aware of the ever-expanding scope of the terms 

"public" and "charitable" under applicable constitutional and 

statutory provisions effectuating exemption from ad valorem 

taxes. Although the progression has been largely legislative, 

it has embraced both public and private property. The judicial 

branch has recently carefully preserved exemption for municipal 

property in the absence of legislative action subjecting It to 

4 A & M Consolidated Independent School Dist. v. 

143 T 

City of Bryan, 

348 184 s l W 2d 914 (1945). 

lty v?6hemlial Bank i Trust Co., 

L ower Colorado Ri ver Author164 Fex. 32b, 190 S . W . 2d 48 (194 5). 

5 City of Wichita Falls v. Cooper, 170 S.W.2d 777 (Tex. Civ. App. 

1943, error ref.); Dlcklson v. Woodmen of the World Life Insurance 

co.. 280 S.W.2d 315 (Tex. Clv. App. 1955, error ref.). 

-4372- 
. 

Honorable J. Albert Dlckle, page 6 (~-897) 

t=, 

6 and even more recently, upheld the constitutionality of 

legislation expressly recognl 

3t 

ed as broadening prior statutory 

concepts of exempt charities. 

Since Copperas Is a private corporation, exemption cannot 

be obtalne 

Section 9; 8 

under the self-executing provisions of Article XI, 

but it is possible that properties belonging to 

Copperas might be exempt by statutes within the constitutional 

authorizations of Article VIII, Section 2 for “public property 

used for public purposes” or for 

charity. ” 

“institutions of purely public 

We will first consider that constitutional authorization for exemption of “public property used for public purposes”. 

In the early case of Daugherty v. Thompson, 71 Tex. 192, 

9 S.W. 99 (1888), the Supreme Court declared at page 101: 

I, that section of the constitution seems to apply 

t; i&perty owned by persons or corporations in private 

6 In City of Beaumont v. Fertltta, 415 S.W.2d go2 (Tex. s~p.~;z67), 

the court h Id th t since municipalities are excepted from 

constitutioEa1 re:ulrement of Article VIII, Section 1 that all 

property belonging to natural persons or corporations be taxed, 

the legislature could authorize taxation or not as it saw fits; 

and since the legislature had not seen fit to authorize the taxation of such properties but had provided for the taxation of 

long-term leaseholds on municipal property whereby taxes are 

paid by the lessors, municipal property, regardless of the use 

to which it Is being put, is exempt from taxation. 

7 San Antonio Conservation Society, Inc. 

455 S.W.2d 743 

v. City of San Antonio, 

(T ex. Sup. 1970) . 

c 11 is the property ‘publicly owned’ so as to be exempt from 

taxis’u:der Article XI, Section 9 of the Constitution? Public 

ownership, for tax exemption purposes, must grow out of the facts: 

It Is a legal status based on facts, that may not be created or 

conferred by mere legislative, or even contractual declaration.” 

Company v. Dallas County, 153 Tex. 474, 271 S.W.2d 

. 

-4373- ‘, 
Honorable J. Albert Dlckle, page 7 (m-897) 

right, but which, from the use to which it Is 

applied, is, in a quallfl d 

property." (Einphasls our:.) 

sense, deemed public 

This original interpretation was affirmed In Lower Colorado 

River Authority v. Chemical Bank & Trust Co., 144 Tex. 326, 190 

. . 46 (1943) at page 49: 

"Nor are we under any obligation, under the facts of 

this case, to harmonize Art. XI, Sec. 9, supra, with 

Art. VIII, Sec. 2, of the Constitution of Texas, which 

declares that the legislature 'may, by general laws, 

exempt from taxation public property used for public 

purposes.' That duty likewise was performed for us 

a long time ago by Chief Justice Stayton when he said, 

in Daugherty v. Thompson, 71 Tex. 192, 9 S.W. 99, 102: 

'As before said,_section 2, art. 8 of the constitution, 

gave to the legislature power to exempt property held 

In private ownership, but used for purposes which give 

to it a public character.' (Italics ours.) . , .I' 

And In 1963, the Supreme Court quoted with approval the 

above set out portions of the above two opinions at page 910 

of City of Beaumont v. Fertitta, 415 S.W.2d 902, supra, footnote 6, page 6. 

This being the extent of the constitutional authorization 

for exemption for "public property used for public purposes', 

do any of the legislative enactments contained in Artic?e 7150, 

20 Vernon's Civil Statutes, provide an exemption which may be 

deemed applicable to Copperas under the submitted facts? We 

think not. 

We will next consider the c~onstitutlonal authorization for 

exemption of "Institutions of purely public charity". Many 

court decisions have been concerned with the meaning of this 

provision. However, we think an analysis of the recent decision 

of our Supreme Court In San Antonio Conserv. Sot. Inc. v. City 

of San Antonio, 455 S.W.!?d 743 (1970) will resolve the question 

under consideration. 

In the Conservation Society case, the court was concerned 

with the following facts. The Society was a non-profit corporation chartered for the purpose of preserving historical buildings 

-4374- 
Honorable J. Albert Mckie, page 8 (~-897) 

and sites, and, in fact, so operated. The specific piece of 

property Involved was Navarro House1 named for a native Texas 

hero of the Texas Revolution, "who,' said the court, "served 

Texas as one of Its great public figures for many years." The 

House was used as a museum for the benefit of all the public. 

At the outset of the opinion, the court quoted that portion of Section 2 of Article VIII exempting "institutions of 

purely public charity", and pointed out that it was not until 

1905 that the legislature undertook to define that phrase more 

fully. Acts 29th Leg., Ch. 127, pp. 314-315 (presently Section 

7, Article 7150, V.C.S.). The court noted the subsequent amendments to Section 7, as well as the additional sections which 

have been added to Article 7150. Specifically, the section 

under consldeKatlon was Section 20, the pertinent portions of 

which exempt . any non-profit organization chartered or 

incorporated &d& the Texas Statutes for the purpose of preserving historical buildings, sites and landmarks, not leased 

or otherwise used with a view to profit, . . .'I. The court 

stated that Section 79 was concerned with charity in the sense 

of almsgiving, but that Section 7 was not the exclusive basis 

9 Section.7 reads as follows: 

"7. Public Charities. All buildings and personal 

property belonging to Institutions of purely public 

charity, together with the lands belonging to and 

occupied by such institutions * * * not leased or 

otherwise used with a view to profit, unless such 

rents and profits and all moneys and credits are 

appropriated by such Institutions solely to sustain 

such Institutions and for the benefit of the sick 

and disabled members and their families and the 

burial of the same, or for the maintenance of persons when unable to provide for themselves, whether 

such persons are members of such institutions or 

not. An institution of purely public charity 

under this article Is one which dispenses its aid 

to its members and others In sickness or distress, 

or at death, without regard to poverty or riches 

of the recipient, also when funds, property and 

assets of such institutions are placed and bound 

-4375- 
Honorable J. Albert Dlckle, page 9 (~-897) 

for a claim that an institution was one of purely public charity, and that the legislature In enacting Section 20 intended 

to add to the existing-law and to change it. 

After havinn thus ascertained the Intent of the legislature, the court Fe-announced the rule stated In River Oaks 

Garden Club v. City of Houston, 370 S.W.2d 851 ('Pex. Sup. 1963): 

t /charity/ is public when ft affects all the people of a communlry or sFate by assuming, to a material extent, ihat which 

otherwise might become the obligation or duty of the community 

or the state." It was conceded that the whole public received 

benefits from the preservation of the House; therefore, the remaining question, said the court; was whether the Society In 

preserving It had assumed to a material extent an obligation or 

duty of the community or state. The court concluded that it 

had. In so holding, the court traced, at some length, at pages 

746, 747, various constitutional and statutory provisions expressing the governmental obligation to preserve evidence of 

Texas' historical heritage from the time of the first Texas 

Constitution until the time of the decision. See also Cedar 

Pa;k iJa;er Su$r;yozi. vnp;;";eru;;S.Di ($:)yet report. 

There Is no constitutional provision expressing governmental obligation to promote Industrial development for cities 

or areas or even the state Itself. There are statutory evidences 

of legislative concern about industrial development. A good 

example is Article 12.03, Title 28, Taxation-General, Vernon's 

Civil Statutes, exempting from franchise taxes "corporations 

having no capital stock and organized for the exclusive purpose 

of promoting-the public interest of any county, city or town or 

other area within the state . . '.' We are also aware of the 

fact that numerous non-profit corporations having corporate 

purposes similar to those of Copperas have been formed. 

tg cont'd) by its law to relieve, aid and administer In any 

way to the relief of Its members when in want, slckness and distress, and provide homes for its helpless and dependent members and to educate and malntaln the orphans of its deceased members or other 

persons; * * *.‘I 

-4376- 
Honorable J. Albert Mckle, page 10 (~-897) 

In the instant case, we do not question the bona fldes of 

the incorporators of Copperas or Its contributors. Their declared purposes are In the public Interest and, Insofar as Is 

apparent, are entirely divorced fromany direct personal gain. 

Nevertheless, In the absence of any legislation specifically 

exempting from ad valorem taxes property belonging to such 

corporations, we must assume that the legislature did not intend to accord them exemption. Finally, we are bound by the 

well settled fundamental principles that exemptions from taxation are never favored and that all taxing provisions will be 

strictly construed In favor of the taxing authorities and the 

state. We are therefore of the opinion that Copperas cannot 

obtain exemption from ad valorem taxes undoer any of the presently existing constitutional or statutory provisions. 

SUMMARY 

Properties belonging to Copperas Cove Industrial 

Foundation, Inc .# a non-profit corporation organized 

for the purpose of promoting Industrial development 

In Copperas Cove, Texas, and contiguous trade areas, 

are not exempt from ad valorem taxes under any constltutlonal or statutory of this State. 

ciIzk$.C2* 

Attor y General of Texas 

Prepared by Marietta McGregor Payne 

Assistant Attorney General 

-4377 - 
Honorable J. Albert Dlckle, page 11 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

James Broadhurst 

Houghton Brownlee 

,S. J. Aronson 

Jim Swearingen 

MEADE F. GRIFFIN 

Staff Legal Assistant 

ALFREDWALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

. 

(~-897) 

-4378-