. . 

THE ATTORNEY GENERAL 

OFTEXAS 

Hon. James E. Barlow Opinion No. M-375 

CrFmi.nal District Attorney 

Bexar County Re: Is real estate owned by 

San Antonio, 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‘fice concerning 

the exempt status of "certain parking lots" owned by the 

Baptist Memorial Hospital. For the purpose of your request, 

you have assumed that the hospital itself is an institution 

of 'purely public charity" as-defined in River Oaks Garden 

Club v. City of Houston, 370 S.W.2d 851 (Tex.Sup. lgb3). 

Hence. for the uurnoses of this oninion the auestion of the 

exemption of the "Baptist Memoriai Hospital"-is not involved 

and it is assumed that such hospital is an institution of 

"purely public charity" as defined in Article. 7150, Section 

7, Vernon's Civil Statutes. 

You have submitted, as an exhibit to your request, a 

map which clearly, and in detail, shows all of the real estate, 

by lot numbers, which is involved in your request. Your 

letter makes references to this map and details the use being 

made by the hospital of the various numbered lots. Your request classifies these parking areas and which we briefly 

summarize as follows: 

(1) A pay parking lot across Dallas Street 

from the main hospital building, wherein the 

public is charged for parking 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 the main 

hospital building, restricted to doctors and 

interns for whom there is no charge. 

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

(3) Parking spaces on lots to the rear of 

or in between other buildings in the hospital 

complex, for doctors, nurses, administrative 

personnel and their employees free of charge. 

(4) Parking lots set aside for the use of 

employees only, free of charge. 

(5) Free employee parking spaces on lots 

contiguous to a work shop, repair shop, and 

paint shop, for use of hospital in its maintenance work. 

Article VIII, Section 2 of the Constitution of Texas, 

presently reads, in part: 

11 

. . . the Legislature may, by general laws, 

exempt from taxation . . . property used exclusively and reasonably necessary in conducting any association engaged in promoting the 

religious, educational and physical development 

of boys, girls, young men or young women 

operating under a State or National organization 

of like character; . . . and institutions of 

purely public charity; . . . ." (Emphasis added.) 

Thus "property" of institutions of purely public 

charity may be exempted from taxation by the Legislature 

when "used exclusively and reasonably :necessary in conducting (such 

A 

institutions." Attorney General's Opinion 

NO. c-203 (19 4). 

Pursuant to Article VIII, Section 2 of 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 of purely public 

charity, together with the lands belonging to and 

occupied bg 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 T,lhen 

unable to provide for themselves, whether such per- 

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

sons are members of such institutions or not. An 

institution of purely public charity under this 

article is one which dispenses to its members and 

others in sickness or distress, or at death, without regard to poverty 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 in any way to the 

relief of its members when in want, sickness and 

distress, and provide homes for its helpless and 

dependent members and to educate and maintain the 

orphans of its deceased members or other persons." 

Even before the admendments to Article VIII, Section 2 

of our Constitution, when it exempted only buildings owned and 

used exclusively by institutions of public charity, the word 

"building" was construed to embrace the land necessary for 

the proper and economical conduct of the institution. The 

Texas Supreme Court would give the constitutional exemption 

a "broader signification, consonant with the purpose 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 any pertinent Texas authority 

which has passed upon the extent of the tax exemption for a 

charitable institution whose property in question is being 

utilized for uarkine: areas in connection with the c,onduct of 

the activities of s;ch institution, we do find a pertinent 

decision by the Ohio Supreme Court, Bowers v. Akron City 

Hospital, 16 Ohio St.2d 94, 243 N.E.2> 91, (lgbt5), which held 

Xhat a parking facility operated in connection with a hospital 

is exempt from real property taxes, even though a charge for 

the parking privilege was made to regulate and exclude those 

not having a legitimate connection with the institution. 

In the Bowers case, supra, the Ohio Constitution, 

which is substantially similar in substance to the Texas 

Constitution, permits the adoption of general laws exempting 

institutions used exclusively for charitable purposes from 

taxation. The Ohio Legislature, similarly to the Texas 

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 

the pay lot was converted from part of a free 

parking area when it was discovered that the 

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

general public was using it and 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 the use of 

the property-rather than the fact that revenues 

are collected and received from property which 

is controlling. . . Nor do reasonable charges 

exacted from beneficiaries of a charitable institution detract from its eleemosynary character. . . 

Here the evidence shows that the parking lot 

is an essential and integral part of the hospital's 

function and not property used mainly for income 

purposes. The lot provides visitors and patients 

a safe and convenient place to park. The fees are 

not diverted to purposes ulta vires of the institution, but are used to pay expenses of maintaining, 

regulating and expanding the parking area which is 

necessary for the hospital complex." (Emphasis added) 

In Texas, it is settled law that the fact that charges 

are made by the charitable institutions, or "profits" were 

derived therefrom and used by it for its charitable purposes, 

in and of itself, will not deprive the organization of its 

tax emption as a purely public charity. Santa Rosa Infirmary 

v. City of San Ant:Jnio, 259 S.W. 926 (Tex. Comm.App. 1924). 

On the other hand exemptions fr,om taxation are not 

favored, and are strictly construed against the one claiming 

the exemption. 

The rule of exemptions from t avntion is tersely stated 

in 511 Tex.Jur.2d 203, Taxation, Sec. 65 et seq. as follows: 

"Construction oV exemption provisions. 

"Exemptions from taxation are not favored. And 

it is a universal rule, applicable to constitutional 

and statutory provisions exempting property from 

taxation, that when an exemption 1s found to exist 

it should not be 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 the priv~ilege is limited to 

the very terms of the statute the favor would be 

extended beyond what was meant.~ Furthermore, the 

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Hon. James E. Barlow, Page 5 (M-375) 

exemption 01' certain property throws a greater 

tax burden on property that is taxable; therefore, any exemption derogates from the common 

right of equality of burden, and for this reason, 

also, both the constitutional provision authorizing 

the exemption and the statute granting it must 

be found to cov~er a 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 is apparent that the question of what lands are 

reasonably necessary to the support and maintenance'9 a'part 

cular charitable institution may be the subject of much 

confusion. It could be said that the nature 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 of property in connection 

with the occupancy of the building, by a charitable institution, would have to be determined from evidence not before 

US. Parking lots may or may not be an essential and integral 

part of the hospital's function under the evidence. Such 

a determination cannot be made without such evidence as to 

any and all of the parking lots occupied by the Baptist 

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 the building of the institution would have to be essential and reasonably necessary 

to the conduct of the charitable activities of the institution. Parking lots as such cannot be said to be reasonably 

necessary in this sense as a matter of law. The nature of 

the institution, and the availability of the use 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 in your request for an 

opinion, there is not sufficient showing that all of the 

parking lots in question are reasonably necessary for the 

operation of the institution to be classified, as a matter 

of law, for tax exemption. These facts should be determined 

i- 

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. . 

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

by the proper 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 the guide lines herein set out. Attorney General's 

Opinion No. R-2225 (1950). 

SUMMARY 

Parking lots owned by a hospital operated as 

a purely public charity, and determined to be 

reasonably necessary in operating the hospital, 

and an essential, necessary and integral part 

of the hospital's function, may be accorded a 

tax exemption under Article VIII, Section 2, Constitution of Texas, and Article 7150, Section 7, 

Vernon's Civil Statutes. The factual determination of what lots, if any, are reasonably necessary 

for the use of the hospital as an integral part of 

its function, is the duty of the local tax authorities, 

and this office cannot make 

/ 

is determination. 

Attorn General of Texas 

Prepared by John R. Grace 

-j/*;7y&$y7a 

Assistant Attorney General 

APPROVD: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

George Kelton, Vice-Chairman 

Aian Minter 

Al,'red Walker 

Larry Craddock 

Z.T. Fortescue 

James Broadhurst 

W. V. Geppert 

Staff Legal Assistant 

Hawthorne Phillips 

Executive Assistant 

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