### E Y GENERAL
OF XAS

AUSTIN aa.TExas April 17, 1962

HonorableR. E. Swift OoinionNO. ~~-131.8 County Attorney Anderson County Palestine,Texas Re :

Dear Mr. Swift: Exemption from ad valorem taxes of propertybelonging to The CartmellHome for Aged and Orphans.

We quote the followingexcerpt from your letter requesting the opinion of this office on . _ the aoove captloneamatter:

“Where a home for aged and orphans, which Is a public charity as set out in Article 7150, Section 7, is located on a 195 acre tract, and the buildingsand the property actuallyused by the aged amounts to only about 5 acres, is the remaining 190 acres of this ssme tract subject to taxation?”

In connection

with your request you have suppliedus with detailed facts concerningthe CartmellHome for Aged and Orphans, hereinafterreferred to as the Home, which is Incorporated under the laws of this State as a charitablecorporation pursuant to directivescontained in the will of Sarah E. J. Cartmell of Anderson County, Texas3 who died in 

### 1948.

By the residuary clause of her will, Miss Cartmell devised and bequeathedall the resfdue of her estate to her Executors snd Trustees to be used by them for the establishment and maintenance of a home In and near Palestine,Texas, for the destitute aged and for the destituteorphans. The testatrix directed that her present “home place” be used for this home and that the home be maintained there with such changes and additions to be made and added as might from time to time be necessary.
The Home obtained its charter in June of 1953, at which time the estate of Miss Cartmellwas distributedto the Trusteesnamed in the will and/or appointedby the court. The first unit of the Home was opened in 

### 1956, the second unit in 

### 1960, both units being located on the 195 acre tract in questionwhich was the former home place of Miss Cartmell. The Rome is being operated at the top capacity for 56 persons with a wafting list of applicants who desire admission.HonorableR. E. Swift, Page 2 OpinionNo. ~~-1318

Residentspay $65 per month for all services Includingroom, board, laundry,nursing care8 drugs and routine doctor bills, the actual cost of which averages approximately$150 monthly. Comparable services in a private home for the aged or one operated for a profit have been estimated to run from $150 to $300 per month.

The balance of all of the real property devisedby Miss Cartmell to the Home (with the directionthat the income therefrom be devoted,Lto

the establishment

and maintenanceof the Home) has been sold or is being held for sale or Is rented or being held for rent. It has been rendered for taxation to the appropriate authorities. It is not controvertedthat these propertiesare subject to tax.

You have correctlyconcludedunder the facts stated that the Home is an "lnstltutlon of purely public charity"as that term is used in Section 2 of ArticleVIII of the Constitutionof the State of Texas, pursuant tf which Section the Legislatureenacted Section 7 of Article 7150, Vernon's Civil Statutes. As such an institution,it Is exempt from taxation,the sole questiznbeing the extent of that exemption. Althoughyou have stated that the buildings and property actuallyused by the aged'and' orphans amounts to only about 5 acres,.

. .'I, elsewhere in connection with your request, it Is stated that approximately eight to ten acres of land immediatelysurroundingthe buildings are kept by mowing. It Is further stated that some two or three pear trees are located on anotherportion of the tract* and that the pears are preserved in the kitchen in the Home for consumption by the residents. The south portion of the tract Is described as beinghillyax&rocky and very rough land, with no

y Section 7 reads as follows:

"All buildings and personalpropertybelonging to institutions of purely public charity, togetherwith the lands belonging to and occupiedby such Institutions not leased or otherwiseused with a view to profit, unless such rents and proffts and all moneys and credits are appropriated by such institutions solely to sustain such Institutions and for the benefit of the sick and disabledmembers and their famillea and the burial of the same, or for the maintenanceof persons when unable to provide for themselves, whether such persona are members of such inst&utions OP not. An Institutionof purely public charity under thisHonorableR. E. Swift, Page 3 OpinionNo. ~~-1318

buildings located on any portion thereof,ncr any Income derived therefrom. The State Highway Departmenthas advised the Home that It hopes to acquire approximately22 acres of this tract
as right-of-wayfor a Bypass around the City of Palestine.

We quote the followingexcerpt from the letter of the manager of the Home:

“The policy of the Board of Directors regarding this 195 acres has always been that thie fs the ‘Hometract’ referred to In the will of Miss Cartmelland that it is to be used for the charitable purpose> that fzlrther

expansionsare to take place
on this tra-t as the years go by and as its assets grow and that no portion of this tract will be held for sale or for rent. ’

In Hedgecroftv. City of Houston, 150 Tax. 654, 244 S.W.2d 632 (1952) the questionwas whether property in the City of Houston owned by The HedgecroftClPnic, a charitablecorporation operatinga charitablehospital, clinic and training school for the treatment of polfomyelitis and similar diseases,was exempt from ad valorem taxes of the Cfty &cd the Houston Independent School District for the year 1949. The City took the position that Hedgecrofthad failed to show an actual, direct and exclusive use of the propertyfor charitable purposes on January 1, 1949, and asserted that such action did not ,ccmmer.ce until May 13, 1949.

The property ir,

qdestlonhad been given and conveyed to Hedgecrofton December 30, 1948. Prior to that time, it had been owned and occupied as a home, Long before Hedgecroft acquired title, ft had agreed with a construction company to make necessary alter%tfonsand repairs of the property to fit it

1 ConltJ
article is one which dispenses its a%3 to its

members and others in sicknessor distress,or at death, without regard to poverty or riches of the recepient,also when the funds, property rd aosets of such institutions are placed and boc?d by its law to relfeve, aid an+ adminrstcr in ark ‘way

to the relief of its members when in want> sicknessand distress,and provide homes for its helpless and dependentmembers and to educate and maintafn the orphans of its deceasedmembers or other persons.”HonorableR. B. Swift, Page 4 OpinionNo. ~~-1318

for the operationof a hospital, clinic and training school. Beginning with the week ending July 7, 1948, and continuinguntil December 29, 1948, the construction oosl~any

had been reparlng plans for repairs and alterations. Form August 1, 19 8 through t2 December 27, 1948, a blueprint companyhad furnishedHedgecroft with numerousblueprints for remodelingthe premises. Prior to Hedgecroft

Is acquisitionof the property, ,..on,.the,

days of acqulsltion and immediatelythereafter, Hedgecroftwas engaged in planning and making the necessary repairs and improvementfor the clinic and hospital,and on May 13, 1949, these repairs had been completed sufficientlyto allow Hedgecroftto move from its old premises to the premiseswhich were the subject of this suit. On and since the date of acquisition,the premises had been used exclusivelyby Hedgecroft,whose representatives

visited the premises, supervisedremoval of furniture,startedwork, on the yard, etc. The buildingpermit for the remodelingwas Issued December 29, 1948.

It was admittedby the City that Hedgecroftwas an lnstitution of purely public charitywithin the meaning of that term as used In Section 2 of Article VIII of the Texas Constitution and that such use as it had made of the property since It became the
owner thereof had been exclusive In the sense that no one else had occupied the property nor had it been leased or otherwiseused for profit.

It was argued that the use requiredby the Constitutionfor exemptionmust be actual, direct and exclusiveand that Sedgecroft’s actions in relation to the propertywere merely evidence of future plans and intentionsand did not constitutea present use on January 1, 1949, forits charitablepurposes in that no patients
were admitted for treatmenton that day or prior thereto. In other words, it was argued that since the buildingwas not then being actually operated and was not ready to be operated for the treatmentof patients, it was not exempt. The court rejected this position and accorded exemption.

The court reviewed decisions from other states holding, under similar exemptionprovisions,that when the subsequentuse created
a tax exempt status, then a use which was confined to readying property for such purpose likewise created a tax exempt status. We quote the followingexcerpt from page 636 of the opinion of the court:

“In our opinion the rule announcedand

applied in the out-of-statedecisionsabove discussed is sound and is appropriateto this
case. We approve the position taken by petitioneras tfius stated in Its application for writ of error: ‘It is obvious that with-HonorableR. E. Swift, Page 5 OpinionNo. W-1318

out some preparationof the premises, there
never could have been a polio clinic in opera-.. tion. To fulfill the charitablepurpose of treatingpolio sufferers,Hedgecrofthad first to remodel the property, then to operate the clinic

Q Preparationfor tied operation of the clinic are both Indispensable. Both took place on the premises. Both constituted
a use by Hedgecroftof the premises. The constitutional

clause which admittedlyexempts the property during operation likewiseexempts the property during bona fide necessarypreparation.’
,I oplni&: The facts alleged show, In our

in actual and direct use of the property on and prior to January 1, 1949, for the charitable purpose. “Respondent

makes the valid argument that, ownershipwith mere Intentions, well-grounded plans and hopes cannot confer the exemption, in other words, that intentionto use, without use, is not sufficient. But according to the allegationsof the petition there was more tkan mere 3ntentionto use. o * qn

In view of the facts which have been furnishedus, we cannot say that the CartmeliHome is making an actu%l, direct use of the entire 195 acres for its charitablepurposes. Just how much of 195 acres is being dfrectlyused by the Rome Is a fact questionwhich must be determinedby you. But Insofar as the Board of Directors of the Rome contemplates further expansion
on the tract “as the years $0 by”, in view of the Hedgecroft case, ownershipwith mere intentions, well-grounded

plans and hopes is insufficientto confer exemption. Tht non-use of the property by other% or the fact it producesno revenue,18not : sufficientto effectuateexemption,

SUMMARY

That portion of the 195 acre tract which is directlyused by the Cartmell Home for the Aged and Orphans for its charitable purpose is exempt from ad valorem taxes. The rematifngportion of the acreagewhich is not presentlybeing directlyused by the charitablecorporationfor Its charitableHonorable R. E. Swift, Page 

### 6 OpinionNo. 

### ~-1318

purposes cannot be exempt from ad valorem taxationdespite the fact that further expansionsand ultimate direct use are contemplated

at some uncertain future time.

Yours very truly,

WILL WILSON Attorney General of Texas

Assistant

MMP:cm

APPROVED:

OPINION COMMITTEE: W. V. Geppert, Chairman
Jay Howell W. 0. Shultz Charles Lind John Hoffmann

REVIEWED FOR THE ATTORNEY GENERAL By: HoughtonBrownlee,Jr.