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THE ATTORNEY GENERAL OFTEXAS

Hon. James E. Barlow Opinion No. M-375 CrFmi.nalDistrict Attorney Bexar County Re: Is real estate owned by SanAntonio, Texas 78204 an institution exempt from ad valorem taxation as a public charity, such as a general hospital, but used as an automobile parking Dear Mr. Barlow: lot, exempt from taxation?

Your letter requests an opinion of this or‘ficeconcerning the exempt status of "certain parking lots" owned by the Baptist Memorial Hospital. For thepurpose ofyour request, you have assumed that thehospital itself isan institution of 'purely public charity" as-defined inRiver Oaks Garden Club v. City of Houston, 370 S.W.2d 851 (Tex.Sup. lgb3). Hence. for theuurnoses of this oninion the auestion of the exemption of the "Baptist Memoriai Hospital"-is not involved and it isassumed that suchhospital is an institution of "purely public charity" as defined inArticle. 7150, Section 7,Vernon's Civil Statutes.

You have submitted, as an exhibit toyour request, a map which clearly, and indetail, shows all of the real estate, by lotnumbers, which is involved inyour request. Your letter makes references to thismap and details the use being made by thehospital of thevarious numbered lots. Your request classifies these parking areas and which we briefly summarize as follows:

(1)A pay parking lot across Dallas Street from themain hospital building, wherein the public is charged forparking priv~ileges.However, doctors and ministers are allowed free parking at any time and employees and volunteer workers may park free, during regular working hours. (2)Parking lots contiguous to themain hospital building,restricted to doctors and interns forwhom there isno charge. -1852-.. .

Hon. James E. Barlow, page 2 (M-375)

(3) Parking spaces on lots to the rear of or inbetween other buildings in thehospital complex, fordoctors, nurses, administrative personnel and their employees free of charge. (4)Parking lots set aside for theuse of employees only, free of charge. (5) Free employee parking spaces on lots contiguous to awork shop, repair shop, and paint shop, foruse ofhospital in itsmaintenance work.
Article VIII, Section 2 of the Constitution ofTexas, presently reads, inpart:

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. . .the Legislature may, by general laws, exempt from taxation

. . .property used exclusively and reasonably necessary in conducting any association engaged inpromoting the religious, educational andphysical development of boys, girls, young men oryoung women operating under a State orNational organization of like character;

. . .and institutions of purely public charity;

. . . ." (Emphasis added.)
Thus "property" of institutions ofpurely public charity may be exempted from taxation by the Legislature when "used exclusively and reasonably :necessary in conducting (suchA institutions." Attorney General's Opinion NO. c-203 (19 4).

Pursuant toArticle VIII, Section 2of our Constitution, the Legislature passed Article 7150, Section 7, Vernon's Civil Statutes, which reads as follows:

"Public Charities. All buildings and personal property belonging to institutions ofpurely public charity, together with the lands belonging to and occupied bg such institutions not leased or otherwise used with a view toprofit, unless such rents and profits and allmoneys and credits are appropriated by such institutions solely to sustain such Institutions and for thebenefit of the sick and disabled: members and their families and the burial of the same, or for themaintenance ofpersons T,lhen unable toprovide for themselves, whether suchper- -1853-. -

Hon. James E. Barlow, Page 3 (M-375)

sons are members of such institutions or not. An institution ofpurely public charity under this article is one which dispenses to itsmembers and others in sickness or distress, or at death, without regard topoverty or riches of the recipient, also when the funds. property and assets of such institutions are placed and bound by its laws to relieve, aid and administer inany way to the relief of itsmembers when inwant, sickness and distress, and provide homes for its helpless and dependent members and to educate andmaintain the orphans of its deceased members or other persons."
Even before the admendments toArticle VIII, Section 2 of our Constitution, when it exempted only buildings owned and used exclusively by institutions ofpublic charity, theword "building" was construed to embrace the land necessary for theproper and economical conduct of the institution. The Texas Supreme Court would give the constitutional exemption a "broader signification, consonant with thepurpose of the exemntion and the settled nolicv of the state." Cassiano v.u&line Academy, 64 Tei. 671, 676 (1885).~

While we are unable to find anypertinent Texas authority which has passed upon the extent of the tax exemption for a charitable institution whose property in question isbeing utilized foruarkine:areas in connection with the c,onductof the activities of s;ch institution, we do find apertinent decision by theOhio Supreme Court, Bowers v.Akron City Hospital, 16 Ohio St.2d 94, 243 N.E.2> 91, (lgbt5), which held Xhat aparking facility operated in connection with ahospital is exempt from real property taxes, even though a charge for theparking privilege was made to regulate and exclude those not having a legitimate connection with the institution.

In theBowers case, supra, theOhio Constitution, which is substantially similar in substance to theTexas Constitution, permits the adoption of general laws exempting institutions used exclusively for charitable purposes from taxation. The Ohio Legislature, similarly to theTexas Legislature, passed a statute exempting the "property" of such institutions "used exclusively for charitable purposes." In the course of the opinion, the Court held:

II

. . .In the instant case, the record shows thepay lotwas converted from part of a free parking areawhen itwas discovered that the -1854-. .

Hon. James E. Barlow, Page 4 (M- 375)

general public was using itand visitors could find no parking spaces. The existence of a $19,000 'profit' from the lot in 1965 and $15,000 in 1966 does not remove it from the statutory category of exempt property. It is theuse of theproperty-rather than the fact that revenues are collected and received fromproperty which is controlling.

. .Nor do reasonable charges exacted frombeneficiaries of a charitable institution detract from its eleemosynary character.

. . Here the evidence shows that the parking lot isan essential and integral part of thehospital's function and not property used mainly for income purposes. The lotprovides visitors and patients a safe and convenient place topark. The fees are not diverted to purposes ulta vires of the institution, but are used topay expenses ofmaintaining, regulating and expanding theparking area which is necessary for thehospital complex." (Emphasis added)

InTexas, it is settled law that the fact that charges aremade by the charitable institutions, or "profits" were derived therefrom and used by it for its charitable purposes, inand of itself, will not deprive the organization of its tax emption as apurely public charity. Santa Rosa Infirmary v. City of SanAnt:Jnio,259 S.W. 926 (Tex.Comm.App. 1924).

On the other hand exemptions fr,omtaxation are not favored, and are strictly construed against the one claiming the exemption.

The rule of exemptions from tavntion is tersely stated in 511Tex.Jur.2d 203,Taxation, Sec. 65 et seq. as follows:

"Construction oV exemption provisions. "Exemptions from taxation are not favored. And it isa universal rule, applicable to constitutional and statutory provisions exempting property from taxation, thatwhen an exemption 1s found to exist it should notbe enlarged by construction. On the contrary, it should receive a strict construction, ?or the reasonable presumption is that the state has granted in express terms all it intended to grant, and that unless thepriv~ilegeis limited to thevery terms of the statute the favorwould be extended beyond what was meant.~ Furthermore, the
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exemption 01'certain property throws agreater taxburden onproperty that is taxable; therefore, any exemption derogates from the common right of equality ofburden, and for this reason, also, both the constitutional provision authorizing the exemption and the statute granting itmust be found to cov~era claimed exemption unambiguously. Accordingly, if the construction-of the law id doubtful, the doubt will be resolved in favor of th taxing power and against the claim.

. . ." (Eiphasis added.)

It isapparent that the question ofwhat lands are reasonably necessary to the support and maintenance'9 a'part cular charitable institution may be the subject ofmuch confusion. It could be said that thenature or the operation of an institution will determine what additional lands are necessary to its support and occupancy. The necessity of a distinct and separate use ofproperty in connection with the occupancy of thebuilding, by a charitable institution, would have tobe determined from evidence not before US. Parking lotsmay ormay not be an essential and integral part of thehospital's function under the evidence. Such a determination cannot be made without such evidence as to any and all of theparking lots occupied by theBaptist Memorial Hospital.

In view of the rule of strict construction that must be applied, for tax exemption, any use made of adjoining property or property apart from thebuilding of the institution would have tobe essential and reasonably necessary to the conduct of the charitable activities of the institution. Parking lots as such cannot be said tobe reasonably necessary in this sense as amatter of law. The nature of the institution, and the availability of theuse of other property in the immediate vicinity, and all other circumstances must be considered to determine whether parking lots are required, and how many are sufficient to meet the essentiality or reasonably necessary test.

Under the facts submitted inyour request for an opinion, there isnot sufficient showing that all of the parking lots in question are reasonably necessary for the operation of the institution tobe classified, as amatter of law, for tax exemption. These facts shouldbe determined i-

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Hon. James E. Barlow, Page 6 (M-375)

by theproper officials, and after determining the facts, the law as set forth in this opinion should be applied to the taxable status of the various lots involved. In accordance with the settled policy of this office, we leave these issues for the factual determination of the local tax authorities under theguide lines herein set out. Attorney General's Opinion No. R-2225 (1950).
SUMMARY Parking lots owned by a hospital operated as apurely public charity, and determined tobe reasonably necessary inoperating thehospital, and an essential, necessary and integral part of thehospital's function, may be accorded a tax exemption under Article VIII, Section 2, Constitution ofTexas, and Article 7150, Section 7, Vernon's Civil Statutes. The factual determination ofwhat lots, ifany, are reasonably necessary for the use of thehospital as an integral part of its function, is the duty of the local tax authorities, and this office cannot make

/ is determination.

Attorn General ofTexas Prepared by John R. Grace -j/*;7y&$y7a

Assistant Attorney General
APPROVD: OPINION COMMITTEE
Kerns Taylor, Chairman George Kelton, Vice-Chairman Aian Minter Al,'redWalker Larry Craddock Z.T. Fortescue James Broadhurst

W. V. Geppert Staff Legal Assistant
Hawthorne Phillips Executive Assistant -1857-