Court Opinion

ID: 4131062
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:11:33.179322+00
Date Added: 2024-06-11T14:33:52.898826
License: Public Domain

The Attorney        General of Texas
                                             Decf!mber
                                                     23, 1985
JIM MATTOX
Attorney General

SupremeCourt Building          HonorableAnn Postnn Musgrove      Opinion No. JM-405
P. 0. Box 12548                ChildressCounty At.tomey
AUH,“, TX. 78711.2548          County Courthouse                 He: Whether a building owned by a
5121475-2501                   Childress,Texas '79201            hospital district is exempt from
Tam 9101874.1367                                                 taxation under section 11.11 of
Telecopier 5121475.0260
                                                                 the Tax Code

714 Jackson. Suite 700         Dear Ms. Musgrwe:
Dallas, TX. 75202-l508
214i742-8S44
                                    You ask whether a building owned by a hospital district but
                               leased to three oi:b.erentities is exempt from ad valorem taxation in
4524 Alberta Ave., Suite 160   an instance in w1rtchthe district receives remuneration from the
El Paso, TX. 799052793         entities in the form of rental payments. Although we cannot as a
91515333464                    matter of law conc.lude tha,tsuch property is tax-exempt,we conclude
                               that the fact that the district receivesremunerationin the situation
,001Texas,
        suite700               you describe will :notdeprive the district of tax-exempt status on
~ouston,TX.
          77002-3111           such property. WI: do not understandyou to ask whether the lessees
713/2255888                    will be subject to taxationon their leaseholds.

                                    You inform us that the Childress County Hospital District is a
606 Broadway, Suite 312
Lubbock, TX. 79401.3479
                               political subdivlsloncreated pursuant to article 4494, V.T.C.S., and
806/747-5238                   article IX, section 9 of the Texas Constitution. Acts 1965, 59th
                               Leg., ch. 647, at 1483. You indicate that PanhandleCommunityAction
                               and PanhandlePlannNedParenthood,two nonprofitcorporations,and the
 4309 N. Tenth. Suite S        Texas Department cf health, a state agency, lease the building from
 ,&Allen, TX. 78501.1685
 5121882.4547
                               the hospital distr:ict.You further state:

                                        The leafsedbuilding in question Is used by
 200 Main Plaza, Suite 400              Panhandle Comtunity Action, Planned Parenthood,
 San Antonio, TX. 78205.2797            and the Texas Department of Health for the
 512m5-4191
                                        following;purposes: to provide health care and
                                        cmnmunit~~services to area persons in need,
 An Equal OppOrtUnitYI                  includingclothing and food, implementingfederal
 Affirmatlve Action Employer            housing programs, and implementing state rural
                                        transportationprograms,and providingfor certain
                                        medical uaeds such as birth control, and inocula-
                                        tions. 1~portion of the building is also retained
                                        for use by the hospital district for storage of
                                        hospital records and equipment.

                                                       p. 1855
HonorableAnn Postma Musgrove - Page 2 (JM-405)

     YOU contend that the fact that the district receives rental
paymentsfrom its lessees ahould not preclude the district'sreceiving
ad valorem tax exemption on its property. It has been suggested,
however, that the property is taxable under section 11.11(d) of the
Tax Code regardlessof the characterof the servicesprovided by the
lessees of the building. We disagree. Subsection (d) of section
11.11 provides the followingin pertinentpart:

            (d) Property owned by the state that is not
         used for public purposes is taxable. Property
         owned by a state agency or institutionis not used
         for public purpo13c3s if the property is rented or
         leased for compensation to a private business
         enterprise to bc: used by it for a purpose not
         related to the performance of the duties and
         functions of the state agency or institu-
         tion. . . .

If the property is taxable, it is not so pursuant to subsection(d),
which is applicableonly tc propertyowned by the state.

    Article VIII, section 1 of the Texas Constitutionprovides the
followingin pertinentpart:

         Taxation shall be equal and uniform. All real
         property and targible personal property In this
         State, whether cwned by natural persons or cor-
         porations,other than municipal,shall be taxed in
         proportion to its value, which shall be ascer-
         tained as may be providedby law.

     Article VIII, section 2 provides the followingIn pertinentpart:

         [T]he legislature may, by general laws, exempt
         from taxation public property used for public
         purposes. . . . (Emphasisadded).

Article XI, section9 of the Texas Constitutionprovides the following
in pertinentpart:

         The property of counties,cities and towns, owned
         and held only foe public purposes, such as public
         buildings and t'ls sites therefor . . . and all
         other property devoted exclusivelyto the use and
         benefit of theT;blic shall be exempt from . . .
         taxation.. . . TEmphesis added).

     Section 11.11(a) of the Tax Code sets forth the following in
pertinentpart:

                             p. 1856
\

    HonorableAnn Postma Musgrove - Page 3 ~(JM-405)

                Except as prov:ldedby Subsections (b) and (c)
             of this sectior. [which are here inapposite],
             property owned by this state or a political sub-
             division of this Istateis exempt from taxation if
             the property is used for public purposes.     -

         Property of a politics,1subdivisionwhich would otherwisequalify
    for exemption from ad valorem taxation under one of the foregoing
    constitutionalprovisionswill not lose its tax-exemptstatus merely
    because a charge is made :foruse of the property or a profit is
    generatedthereby,provided the chargesare incidentto its use by the
    public and the proceeds :Lnure to the benefit of the political
    subdivision. Lower Colorado River Authority v. Chemical Bank and
    Trust Company, 190 S.W.2d-48, 50 (Tex. 1945); A & M Consolidated
    IndependentSchool District v. City of Bryan, 184 S.W.2d 914, 915-16
    (Tex. 1945). See also Cit? of Beaumont v. Pertitta,415 S.W.2d 902,
    915 (Tex. 1967)rz,,           dissenting);GalvestonWharf Company v.
    City of Galveston, 63 Tex. 14 (1884). Cf. Santa Rosa Infirmary v.
    City of San Antonio, 259 !j.W.926 ~(TaTComm'n App. 1924, judgmt
    adopted);City of Dallas v. ,Smith,107 S.W.2d 872 (Tex. 1937); City of
    Palestine v. Missouri-PaciFmnes      Rospital Association,99 S.W.2d
    311 (Tex. Civ. Ann. - Amar:CLlo1936. writ ref'd) (cases involved not
    poli&al    subdivisions,but rather institutions.of purely public
    charity). Accordingly, we conclude that, in the situation you
    describe, the fact that tlw district receives compensationfor the
    lease of its propertywill n,otdeprive the district of its tax-exempt
    status on the property if it would otherwisebe tax-exempt.

         We note that the Texas Supreme Court has consistentlyreaffirmed
    the principle that, in order for public property to be exempt from ad
    valorem taxation,it must be held only for public purposes and devoted
    exclusivelyto the use and benefit of the public. Satterleev. Gulf
    Coast Waste Disposal Autho.Lk, 576 S.W.2d 773 (Tex. 1978); Leander
    IndependentSchool District v. Cedar Park Water Supply Corporation,
    479 S.W.2d 908 (Tex. 1972); Daugherty v. Thompson, 9 S.W. 99 (Tex.
    1888). The test for determiningwhether public property Is tax exempt
    is whether it is used primarily for the health, comfort, and welfare
    of the public. It is not ?:ssential  that it be used for governmental
    purposes;it is sufficient,'Ilatit be used for "proprietary"purposes.
    A & M Consolidated Independent School District v. City of Bryan,
    supra. It is immaterial"Ferber only residents of the district are
    benefitted or whether other,sbenefit-as well; the fact that property
    is owned by the public and is used primarily for the health, comfort
    and welfare of the public of some portion of the state is sufficient
    to entitle such property to tax-exempt status. Stats v. Houston
    Lighting & Power Co., 609 S.W.2d 263 (Tex. Civ. App. - Corpus Christi
    1980, writ ref'd n.r.e.). see also Attorney General @pinions MW-430
    (1982); MW-391 (1981). The determinationthat such property is so

                                 p. 1857
HonorableAnn Postma Musgr~m - Page 4 ~(JM-4~aj
                                                                          I

                                                                      ,

used in this instance is a factual matter upon which this office is
not empoweredto rule.

                            SUMMARY

            Tbe fact that: a hospital district receives
         remunerationfor leasing a building owned by that
         district will not deprive that district of tax-
         exempt status on such property.

                                       JIM    MATTOX
                                       AttorneyGeneral of Texas

JACK HIGHTOWRR
First AssistantAttorneyG&era1

MARY KELLER
ExecutiveAssistantAttorneyGeneral

ROBERT GRAY
SpecialAssistantAttorney Zenera

RICR GILPIN
Chairman,Opinion Comittee

Preparedby Jim Moellinger
AssistantAttorneyGeneral

                             p. 1858