May 23, 1989

Honorable Garry Mauro Opinion No. JM-1049 Commissioner General Land Office Re: Whether real property Stephen F.Austin Building belonging to the Permanent 1700North Congress Avenue School Fund is exempt from Austin, Texas 78701 property taxes when it is leased to aprivate business (RQ-1408)

DearMr. Mauro:

You ask five questions regarding the taxability of certain interests in realproperty comprising part of the permanent school fund, specifically, the interest retained by the statewhen ithas leased land toprivate businesses. Your request is prompted by the following two fact situations. First, in September 1986, the state acquired title in fee simple absolute to two tracts of land in Tarrant County for the use and benefit of the permanent school fund. At the time that the state acquired title, you leased both tracts onbehalf ofthe permanent school fund to
aTexas corporation. A commercial strip shopping center is located on one tract: no improvements are located on the second tract. Thepermanent school fund owns only the real property; itowns none of the improvements located thereon. The Texas corporation towhich you leased the first tract
owns the improvements and, inturn, has subleased the tract to the occupants of the stores. InOctober of 1987, Tarrant County and an independent school district located inTarrant County sent tax statements to the General Land Office, imposing advalorem taxes on the real property but not on the improvements.

The second situation you ask'about involves the taxability of coastal and upland lands that are dedicated by statute to the permanent school fund. Pursuant to chapter 33of theNatural Resources Code, the School Land Board, of which you are amember, has the authority to grant easements forprivate use of coastal and upland public land and leases forusebypublic entities. It isyour understanding

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that local taxing units intend to impose advalorem taxes against easement holders that engage inprivate businesses (such as oil and gas pipelines and commercial marina operations) based upon theproperty values of the permanent school fundproperty encumbered by the easements.

You contend that both thepermanent school fund land leased to aprivate business enterprise, aswell as any leasehold interest encumbering it, isexempt from property taxation. In other words, you contend that both the real property in the hands of the state and the leasehold interest inthehands of theprivate lessee are exempt from property taxation. In the alternative, you contend that, if thepermanent school fund land that is leased to a private business enterprise is taxable, then only the leasehold estate is taxable to theprivate business enterprise: YOU contend that the realproperty itself isnot taxable to the state.

You first ask:

Does TEX. CONST. art.VIII, 52and art. VII, ~$5,inconjunction with Tex. Tax Code Ann. §ll.ll(a) (Vernon 1982), exempt Permanent School Fund property from advalorem,property taxes even though leased to aprivate business enterprise?

We conclude that the state's interest in land that is part of the permanent school fund is exempt from ad valorem taxation, even ifthe statehas leased the land to aprivate
concern tobe used for aprivate purpose.
Article VIII, section 1,of the Texas Constitution provides in relevant part: "All real property and tangible personal property inthis State

. . . shall be taxed in proportion to itsvalue, which shall be ascertained as may beprovided by law." Article VIII, section 2,provides in relevant part that "the legislature may, by general laws, exempt from taxation public property used for purposes."1 public

Pursuant to article VIII, section 2, the

1. Article XI, section 9, of the Texas Constitution, by its terms, exempts "property of counties, cities and towns, owned and held only for public purposes,
. . .and (Footnote Continued)

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legislature enacted section 11.11 of the Tax Code, governing the taxation ofpublic property:

(a) Except asprovided by Subsections (b) and (c)of this section, property owned **by** this state orapolitical subdivision of this state isexempt from taxation ifthe orouerty isused forDubliC oUrIJOSeS.2
(b) Land ownedby the Permanent University Fund is taxable for county purposes. Any notice required by Section 25.19 of this code [Notice of Appraised Value] shall be sent to the State Property Tax Board, and the board shall appear inbehalf ofthe state in anyprotest or appeal relating to taxation of Permanent University Fund land.
(c) Agricultural land or grazing land owned by a county forthebenefit of public schools under Article VII, section 6, of the Texas Constitution istaxable forall purposes. The county shallpay the taxes on the land from the revenue derived from the land. If revenue from the land is insufficient to pay the taxes, the county shall pay the balance from the county general fund.
(d) Pronertv ownedbv the state that is not used for wublic nurnoses is taxable. Prowertv owned bv a state aaencv or institution isnotused forDUbliC ourooses if the

(Footnote Continued) all other property devoted exclusively to the use and benefit of the public

. . .from taxation

. . . ;'I This section is self-executing. Because the last clause has
never been construed to apply to property owned by the state, we need not discuss the cases involving counties and cities that rely upon this provision.

**2.** The Texas Supreme Court has construed the relevant language of article VIII, section 2, of the Texas Constitution to require exclusive use by the political subdivision inorder that itreceive exempt status. Leander IndeD. School **Dist.** v. Cedar Park Water SUDD~V Corp., 479 S.W.2d 908 (Tex. 1972).

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prowertv isrented or leased for comoensation to aorivate business enternrise tobe used **by** it for a wurwose not related to the performance of the duties and functions of the state aaencv or institution orused to provide private residential housing for compensation tomembers of thepublic other than students and employees of the state agency or institution owning the property, unless the residential use issecondary to its use by an educational institution primarily for instructional purposes. Any notice required by Section 25.19 of this code shall be sent to the agency or institution that owns theproperty, and itshall appear inbehalf of the state inany protest or appeal related to taxation of theproperty.
(e) It is provided, however, that property that is held or dedicated for the support, maintenance, or benefit of an institution ofhigher education asdefined by Section 61.003(7), Texas Education Code, but isnot rented or leased for compensation to a private business enterprise tobeused by it forapurpose not related to the performance of the duties and functions ofthe state or isnot rented or leased toprovide private residential housing tomembers of the public other than students and employees of the state isnot taxable. (Emphasis added.)

By the terms of subsection (d),itmight appear that the state's interest inthe Tarrant County lands you ask about
are taxable to the state, since both are leased for compensation to aprivate business enterprise tobe used by it for apurpose not related to theperformance of the duties of the School Land Board. You contend, however, that leasing such property for compensation that will inure to thebenefit of thepermanent school fund isprecisely the public purpose for which thepermanent school fund was created and that, therefore, the state is exempt from ad valorem taxation on such property. We agree with your assertion. Before we discuss specifically the questions you submit, we first will present somebackground information regarding the taxation ofthevarious constitutional school funds inTexas.

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Article VII of the~Texas Constitution governs public education onboth the ublic elementary and secondary school and university levels.I: Sections 10through 18of article VII set forth theprovisions regarding university level education: sections 1through 8of article VII set forth the provisions regarding public elementary and secondary school education. Article VII, section 11,creates a permanent university fund, comprising, inter alia, certain lands dedicated for suchpurposes, aswell as theproceeds derived from the sale thereof: interest derived from the investment of the proceeds of the sale of such lands is usually referred to as the "available university fund." Article VII
was amended in 1930by the addition of section 16(a), which provides that all landmentioned in sections 11, 12,and 15 of article VII, then belonging to theUniversity of Texas, shallbe subject to taxation forcounty purposes to the same extent as lands privately owned.4 See also Tax Code, § 11.11(b).

Sections 2and 6of article VII create two distinct types of trust funds inwhat hasbeen termed adual **system** forpublic elementary and secondary education; section 2 dedicates state-owned land to a state "perpetual school

3. Additionally, article VII, section 9, of the Texas Constitution dedicates all lands then granted for the benefit of the "Lunatic, Blind, Deaf and Dumb, and Orphan Asylums" to create a permanent fund for their support, maintenance and improvement.

4. The "Interpretive Commentary" to article VII, section 16(a), declares the purpose behind the adoption of the 1930 amendment:

Due~tothepolicy ofthe Board of Regents withholding the university lands from sale in spite ofArt. 7, § 12 of the constitution,

**some** of the poorer counties contained large
areas ofuntaxable land. In order to assist these counties this amendment was adopted in 1930.

See also 2Braden, The Constitution ofthe State of Texas: AnAnnotated and Comparative Analysis, at 551-52 (1977).

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fund,l15while section 6 grants certain lands to counties also forthe benefit of thepublic schools. -2 Braden, suwra, at 530-31. Income derived from the state "permanent school fund" isdesignated by article VII, section 5, as the "available school fund." Section 6 creates what is, in effect, a system ofpermanent school funds forthe various counties, with the income derived from permanent county school fund investments dedicated to each county's "available school fund." Article VIIwas amended in 1927by the addition of section 6a (and, subsequently, in 1972 by the addition of 6b),which specifically makes taxable for all except state purposes those lands set aside for the county permanent school funds.6 See Tax Code, 4 11.11(c).

5. The terminology used todesignate the fund is confusing: section 2refers to itas the "perpetual school fund".and "perpetual public school fund:" section 4 refers to itas the "public free school fund;" and section 5 labels itthe "permanent school fund." The Texas Supreme Court long ago opted for the appellation of section 4, stating that sections 2 and 5provided that certain funds and property constituted a "public free school fund." y&r& County v. Board of School Trustees, 65 S.W. 878 (Tex. 1901). The endowment has been enlarged from time to time by statute, which designates itthe "permanent school fund." Educ. Code 5 15.01. Byyour use of thephrase "Permanent School Fund land," we understand you tomean that real property dedicated by section 2 of article VII, whose components have been added toby amendment to section 15.01 of the Education Code.

6. The "Interpretive Commentary" to article VII, section 6a, sets forth the reason for the amendment:

Article 11, Section 9 of the Texas Constitution exempts from taxation 'property of counties, cities, and towns owned andheld forpublic purposes.' In 1888, the Texas Supreme Court held that no tax could be levied ona lease-holder of school lands:
t*Countyschool lands,when leased to raise an available school fund, are as exclusively devoted to the use andbenefit of the public
as they would be if covered with school- (Footnote Continued)

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Therefore, land comprising the state permanent university fund is taxable forcounty purposes only. Land comprising the permanent school funds of the various counties istaxable forall, except state, purposes. YOU ask about the taxability of lands comprising neither the permanent university fundnor thevarious county permanent school funds, but rather those comprising the state permanent school fund: Neither the Texas Constitution nor the Tax Code specifically addresses the issue of the taxability of such lands. Nor has any Texas court case or attorney general opinion addressed the issue.

For two reasons we conclude that, under the provisions of section 11.11 ofthe Tax Code, those 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 inthe event that they are leased for compensation toprivate business enterprises tobe used for purposes not related to theperformance of the duties and functions of the School Land Board. Moreover, even if section 11.11 of the Tax Code fairly could be construed as requiring the taxation of permanent school fund land, we construe article VII, section 5,of the Texas Constitution
as forbidding it.
First, we donot construe section 11.11 of the Tax Code to require the taxation of permanent school fund land. By thevery terms of subsection 11.11(a) of the Tax Code, subsections (b)and (c)of section 11.11,which require the taxation incertain instances ofpermanent university fund

(Footnote Continued)

houses; and the constitution forbids the taxation of the means through which such landsmay bemade toyield arevenue, without sale, as fully asdoes it forbid the taxation of the lands. Forbidding the taxation of the lands, it forbids the taxation of an estate less than fee,whether imposed on the county
or its lessee." (Daughertyv. Thompson, 71 T. 192, 9S.W. 99)

Inorder to permit such taxation, except for state purposes, Sec. 6awas added to the Constitution in 1927.

See also 2Braden, m, at 533-34.

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land and land comprising thevarious county permanent school funds, serve as exceptions to the general principles set forth insubsections (a)and (d). The express mention or enumeration of oneperson, thing, consequence, or class is tantamount to an express exclusion of all others. State v. Mauritz-Wells Co., 175 S.W.2d 238 (Tex. 1943); Ex carte McIver, 586 S.W.Zd 851 (Tex.Crim.App. 1979). We conclude that the express inclusion of subsections (b)and (c),which indicates the intention of the legislature to require the taxation of certain specified state-owned land as provided by the Texas Constitution, likewise indicates the intention of the legislature not to require the taxation of permanent school fund land.
Second, we agreewith your assertion that the sale or lease of land dedicated by article VII, section 2, of the Texas Constitution, with the proceeds from such sale or lease becoming part of the permanent school fund, is the precise public purpose forwhich such landwas dedicated in the first instance. Even a cursory reading of the relevant provisions ofarticle VII of the constitution makes itclear that the legislature that proposed those sections and the voters who adopted them did not intend, not that the land itself would be used for educational purposes, but rather that the income derived from its sale or lease would be so used. The establishment of such a fund in the Texas Constitution impresses upon the fund the nature of a public purpose. Absent specific constitutional language requiring taxation, the state's interest insuch dedicated lands is tax exempt.

Subsections (a)and (d)of section 11.11 of the code, taken together, provide the following: (1) that all property owned by the state or apolitical subdivision is exempt from taxation if theproperty is used for a public purpose; (2)that property so owned that isnot used for a public purpose istaxable: and, (3)that property so owned that is rented or leased for compensation to a private business enterprise tobe used by it for a purpose not related to the performance of the duties and functions of' the political subdivision, except under certain specified exceptions, isnot used for apublic purpose and therefore istaxable.

If the legislature had intended that land owned by either the permanent university fund, the various county permanent school funds, orthepermanent school fund fall within the ambit of (3) **above** (or, more specifically, subsection (d) of section ll.ll), it would have been

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unnecessary to include subsections (b)and (c)in section 11.11,making land ownedby the permanent university fund andby the various county permanent school funds taxable. Thevery terms of subsection (d) ordinarily would require the taxation of such dedicated lands. If the legislature had assumed that such dedicated landswould be taxable, subsections (b)and (c)would bemere earlier amendments adding section 6aandsuf;;z;a;z and the article VII would have been unnecessary. The legislature is never presumed todo auseless act. Hunter v. corr,. ,620 S.W.2d 547 (Tex. 1981): State v. Citv of Dallas, 319 S.W.Zd 767 (Tex.Civ.App. -Austin 1958), aff'd, State
v. Citv ofAustin, 331 S.W.Zd 737 (Tex. 1960). Had the legislature intended thatpermanent school fund lands be taxable, it isreasonable to assume that itwould have so provided.
Finally, when construing section 11.11 of the Tax Code,
wemust presume that the legislature intended compliance with the Texas Constitution. Gov't Code, g 311.021(l). The legislature could not have intended that section 11.11 of the Tax Code be construed to require the state's interest in permanent school fund land that is leased to a private business enterprise be taxed, because todo sowould violate subsection (a)of section 5of article VII. That subsection provides in relevant part: "Except asprovided by this section, no law shall ever be enacted appropriating anypart ofthe permanent or available school' fund to any other purpose whatever

. . . .@IThis subsection has been construed toprevent the use of any proceeds forany purpose not specifically authorized. gg, e.q., Greene v. Robison, 8 S.W.2d 655 (Tex. 1928) and companion cases: Jerniaan v. Finlev, 38 S.W. 24 (Tex.1896); Attorney General Opinions H-881, H-878 (1976); V-147 (1947). We have found no authorization permitting proceeds tobe expended for ad valorem taxation, either inthe Texas Constitution or inthe Tax,~Education, orNatural Resources Codes.

We deem it significant that those constitutional provisions that govern both the permanent university fund and thevarious county permanent school fundsdonot contain restrictive language comparable to that found in section 5 governing the permanent school fund. Moreover, we deem it significant that sections 6a, 6band 16(a) of article VII had tobe added before permanent university land and the lands comprising thevarious county permanent school funds
were taxed.

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Accordingly, we answer your first question in the affirmative; the state's interest in lands owned by the permanent school fund that are rented or leased to private business enterprises isexempt from advalorem taxation.

You next 'ask:

If any of the tracts mentioned above are not fully exempt, are the leasehold estates taxed according toTex. Tax CodeAnn. 523.13 and if so, towhat extent, ifany, isthe Permanent School Fund liable for any taxes thatmay be assessed?

Section 25.07 ofthe Tax Code requires that certain leasehold and other possessory interests inexempt property be listed in the appraisal rolls inthe name of the owner of thepossessory interest. Section 25.07 of the Tax Code provides inpart:

(a) Except asprovided by Subsection (b) of this section, a leasehold or other possessory interest in property that is exempt from taxation to the owner of the estate or interest encumbered by the possessory interest shall be listed in the
name of the owner of thepossessory interest ifthe duration of the interest may be at least oneyear.
(b) Except asprovided by Subsections (b) and (c) of Section 11.11 of this code, a leasehold or other possessory interest in exempt property may notbe listed if:

(1) the property is permanent university fund land;
(2) theproperty is county public school fund agricultural land.

Section 23.13 of the Tax Code governs the appraisal of such taxable leaseholds andprovides:

A taxable leasehold or other possessory interest inreal property that isexempt from taxation to the owner of the estate or interest encumbered by the possessory interest isappraised at themarket value of

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the leasehold or other possessory interest. However, the appraised value may notbe less than the total rental paid forthe interest forthe current taxyear.
Sections 25.07 and 23.13 of the code and their predecessor statutes have been construed toprovide for the taxation ofa leasehold interest inreal property, even in
an instance in which the real property is exempt from taxation to the owner. See, e.a., Martin v. Citv of Mesouite, 590 S.W.Zd 793 (Tex.Civ.App. -Dallas 1979, Writ ref'd n.r.e.); Irvina Indew. School Dist.v. Delta Airlines, Inc., 534 S.W.2d 365 (Tex.Civ.App. -Texarkana 1976, writ ref'd n.r.e.) (predecessor statute to section 23.13 of the Tax Code specifically held tobe constitutional): Attorney General Opinions WW-281, WW-270 (1957);O-4661 (1942). We conclude that, by the clear terms of sections 11.11, 25.07 and 23.13 of the Tax Code, the leasehold interests in land comprising part of thepermanent school fund are taxable to the owners of those interests. The permanent school fund itself isnot liable for such taxes.

We have already concluded that permanent school fund land isnot taxable to the state;we know ofno reason why section 23.13 of the Tax Code does not require the taxation of the leasehold estate. Id.7 In such an instance, the permanent school fundwould notbe liable in the event that the owner of the leasehold estate fails to tender properly any taxes imposed.

You next ask:

7. You rely principally upon Dauahertv v. Thomwson, 9 S.W. 99 (Tex. 1888) and two caseswhich rely upon Dauahertv, Davisv. Burnett, 13S.W. 613 (Tex. 1890), andMontaomerv v. Peach River Lumber Co., 117S.W. 1061 (Tex.Civ.App. 1909), insuwoort of the nrooosition that a leasehold interest in exempt-land is aiso- exempt. In a case discussing the history of the predecessor statutes to section 23.13 of the Tax Code, the Supreme Court ofTexas declared, inter alia, that Dauaherty is no longer controlling on the issue. Philliws Chemical co.v. Dumas Indew. School Dist., 316 S.W.2d 382 (Tex. 1958), rev/d on other arounds, 361U.S. 376 (1959).

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Ifa leasehold estate is subject to taxation, and the lease isterminated or forfeited for failure to comply with the lease agreement, what party remains liable forthe payment of taxes? If the tract of land is subsequently leased to another entity, does the tax liability continue to encumber the property
ordoes itremain apersonal liability of the previous lessee?

Theperson owning thepossessory interest when the assessment is imposed isthe person who remains liable for any unpaid taxes. Section 32.01 of the Tax Code governs the creation of tax liens andprovides:

OnJanuary 1of each year, a tax lien attaches toproperty to secure thepayment of all taxes, penalties, and interest ultimately imposed fortheyear on theproperty, whether
ornot the taxes are imposed inthe year the lien attaches. The lien exists in favor of each taxing unit having power to tax the property.
Section 32.07 of the Tax Code governs inan instance in which the person who owned a taxable interest in property when the tax liability was imposed no longer owns such an interest:

(a)Except as provided by Subsection (b)

of this section, property taxes are the personal obligation of theperson who owns or acquires the property on January 1 of the year forwhich the tax is imposed. A nerson isnot relieved of the obliaation because he
no lonaer owns the wroaertv. (Emphasis added.)

Section 32.07 of the code and itspredecessor statutes have been construed to preclude the imposition on a purchaser of land that was subject to a lien for taxes and penalties of personal liability for those taxes and penalties. Citv of SanAntonio v. Toewwerwein, 133 S.W. 416 (Tex. 1911):Attorney General Opinions V-441 (1947): O-6293 (1944);O-5062 (1943). By the clear terms of section 32.07 of the Tax Code, the person inwhose name the possessory interest is listed remains personally liable forany unpaid taxes, penalty, and interest. We note, however, that the taxable interest intheproperty is itself subject to sale

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for the satisfaction of unpaid taxes validly assessed against it,whoever might have been its ownerwhen the taxes originally accrued. Tax Code 5 32.01; Attorney General Opinions MN-523 (1982);H-1108 (1977).

Younext ask:

If leasehold estates are subject to taxation by the authority of Tex.' Tax Code Ann. 511.11(d) and 925.07(a), are easements granted by the School Land Board also taxable to the holder of the easement? If so, what isthevalue of the taxable interest? Is the value equal to the consideration paid for the easement or thevalue of theproperty encumbered or some othermeasure?

Section 33.103 of theNatural Resources Code specifies those interests that may be granted by the School Land Board:

The board may grant the following

interests in coastal public land for the indicated purposes:
(1) leases forpublic purposes;
(2) easements for purposes connected with:
(A) ownership of littoral property;
or
(B) the operation of a facility operated by an existing channel and dock corporation that was issued articles of incorporation under Chapters 13 and 14, Title 32,Revised Statutes:
(3) permits authorizing limited continued
use ofpreviously unauthorized structures on coastal public land not connected with ownership of littoral property: and

(4) channel easements to the holder of any surface or mineral interests in coastal public land for purposes necessary or appropriate to the use of the interests.

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Section 33.111 of theNatural Resources Code governs the granting of easements by theboard andprovides:

(a) Theboard may grant easement rights to the owner of adjacent littoral property authorizing-the placement or location of a structure~on coastal public land forpurposes connected with the, ownership of littoral property.
(b) Theboard may grant easement rights to construct channels, wharves, docks, and marinas to an existing corporation that was issued articles of incorporation under Chapters 13and 14, Title 32,Revised Statutes.
(c) Notwithstanding anyprovision in its charter or articles of incorporation to the contrary, a corporation described in Subsection (b)of this sectionmay only obtain the use of or acquire property from the state
asprovided by that subsection.

We understand you to ask about the taxability of these easements granted by theboard.

Aswe stated inanswer toyour third question, sections 23.13 and 25.07 of the Tax Code impose **tax liability**  on "leaseholds and other possessory interests inproperty that isexempt to the owner of the estate or interest encumbered by the possessory interest." In Attorney General Opinion JM-59 (1983),we construed section 23.13 of the Tax Code to require a two-step procedure: first, there had to be a determination that the realproperty inquestion was exempt inthe hands ofthe owner; second, there had to be a determination that the rights conferred by the owner of the fee constitute a llpossessoryinterest inproperty." We have already concluded that the real property comprising the permanent school fund isexempt inthehands of the state. Weheld in Attorney General Opinion JM-59 that concession rights ina state park forthe construction and operation of
agolf course granted by the Department of Parks and Wildlife was a sufficient "possessory interest" forpurposes of section 25.07 of the Tax Code. The issue iswhether an easement granted by theboard likewise constitutes such a "possessory interest."

‘;)

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Section 1.04(16) of the Tax Code defines ~~possessory interest" inthe following way:

\Possessory interest' means an interest that exists as aresult of possession or exclusive use of a right to possession or exclusive use of a property and that is unaccompanied by ownership of a fee simple or life estate in the property. However, \possessory interest' does not include an interest, whether of limited or indeterminate duration, that involves a right to exhaust a portion of real property.
Generally, an "easement" isa right oneperson has to
use the land of another for a specific purpose. Maanolia Petroleum Co.v. Caswell 1 S.W.2d 597 (Tex.Comm'n App. 1928, judgm't adopted); Biller v. Babb, 263 S.W. 253 (Tex. Comm'n App. 1924, judgm't adopted). Section 33.111 of the Natural Resources Code specifies thepurpose forwhich the board can grant easements, i.e., "theplacement or location of a structure on coastal public land forpurposes connected with the ownership of littoral property." By the terms of section 33.111 of theNatural Resources Code,cl;;:

interest or easement granted is clearly a tVpossessory interest" for purposes of the Tax Code. Therefore, we conclude that an easement granted by theboard pursuant to section 33.103 of theNatural Resources Code falls within the ambit of sections 25.07 and 23.13 of the Tax Code and iS taxable. Any such easement granted must be appraised pursuant to section 25.07 of the Tax Code.
Finally, you ask:

Ifany interest held by the Permanent School Fund isnot exempt from advalorem taxation, and ifthe Permanent School Fundhas cause to question the notice given by the taxing authority, the listing of theproperty inthe
name of the Permanent School Fund, or the valuation of the subject property, what is the appropriate procedure for the Permanent School Fund toprotest such notice, listing,
orvaluation and to what extent would the Attorney General be required to represent the Permanent School Fund in suchprotest?

Inview of our answers toyour previous questions, we need not answer your last question.

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SUMMARY

The state's interest in real property comprising the permanent school fund ' exempt from advalorem taxation, even in ttz event that the property is leased to a private business enterprise. The leasehold estates in land comprising the permanent school fund are taxable to the lessees. If such a leasehold is terminated and taxes remain unpaid inthe leasehold estate, the tax liability becomes apersonal liability of the lessee who possessed the leasehold estate when the taxwas imposed and the lien against the leasehold estate remains in force. Easements granted by the School Land Board in coastal and upland public lands that are dedicated to thepermanent school fund are taxable pursuant to sections 11.11 and 23.13 of the Tax Code; such easements must be appraised pursuant to the provisions of section 25.07 of the Tax Code.

Very truly yo 

# Lliii&L

L JIM MATTOX Attorney General of Texas

MARY KELLER FirstAssistant Attorney General

LOUMCCREARY Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared byJim Moellinger Assistant Attorney General

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