Court Opinion

ID: 4132651
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:28:57.782872+00
Date Added: 2024-06-11T14:33:56.807547
License: Public Domain

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The Honorable   Fred P. Holub                          Opinion     No.   H- 729
County Attorney
P. 0. Box 1527                                         Re: Exemption from state
Bay City, Texas     77414                              and county ad valorem
                                                       taxation of the fractional   owner-
                                                       ship interests  of the Cities of
                                                       San Antonio and Austin in a
                                                       nuclear power plant located
                                                       in Matagorda   County, Texas.

Dear    Mr.   Holub:

        You have asked our opinion as to whether or not the interests     of the
Cities of San Antonio and Austin in a power generating plant located in
Matagorda    County;  Texas,  are exempt from state and county ad valorem
taxes.   You explain that an electric generating plant is to be constructed   in
Matagorda    County, to be fueled by nuclear power.   Private utility companies
will own a portion of the plant, San Antonio will own a 28’70 undivided interest
in the plant and Austin will own a 16% undivided interest.   It is these fractional
interests of San Antonio and Austin and their possible              tax exempt       status   that
have prompted your opinion request.

         Article   II,   section   9 of the Texas   Constitution    provides      in pertinent
part:

                   The property of counties,   cities and towns, owned
                   and held only for public purp0se.s.    such as public
                   buildings and the sites therefor,   fire engines and
                   the furniture thereof,  and all property used, or
                   intended for extinguishing  fires,  public grounds
                   and all other property devoted exclusively     to the
                   use and benefit of the pubHc shall be exempt from
                   forced sale and from taxation . . . .

                                     p. 3112
The Honorable     Fred    P.     Holub    - page 2 (H-7291

        Article   8,   section     2, additionally   provides:
                                   :
                  . . . the Legislature    may, by general           laws,
                  exempt from taxation public property               used for
                  public purposeA.     . . .

Pursuant to this constitutional   authority,     the Legislature  enacted article
7150, V. T. C.S.,   which exempts,      together with other properties,      “[a]11
property,  whether real or personal,        belonging exclusively   to this State,
or any political  subdivision  thereof.    . . . ”

         It is not necessary    to resolve the question            of whether this statutory
exemption forecloses      taxation of city property in           view of the specific
constitutional   exemption of article 11, section 9,             since both the constitutional
and statutory language except municipal property                  from taxation.    A. &M.
Consolidated    Independent School District v. City              of Bryan,   184 S.W.2d 914
(Tex. Sup. 1945).

        Howe-r,     for either exemption to apply the property involved must be
public property used for “public purposes.     ” Tex. Const. art. 11, 5 9 and
art. 8, § 2; Leander Independent School District v. Cedar Park Water Supply
Corporation,    479 S.W.2d 908 (Tex.   Sup. 1972) ; A. &M. Consolidated
Independent School District    v. City of Bryan, supra.

         Property   owned by a municipality   and used for the generation   of
electric  power and for the supplying of electrici,ty is “public property’“‘used
for a public purpose. ” V. T. C. S.   art.~ ,1108 and art. 1175; A.&M.    Consoli-
dated School District v. City of Bryan,     supra at 915 and 916.   This result
is not dependent upon whether the generating      plant or some of the customers
served by the light and power facilities    are located without the city’s
boundaries.     City of New Braunfels  v. City of San Antonio,    212 S.W.2d
817 (Tex. Civ. App. -- San Antonio 1948, writ ref’d n. r. e.); A. &M. Con-
solidated Independent School District v. City of Bryan,      supra.

                                         p. 3113
.        -
    .

        The Honorable    Fred   P.   Holub   - page 3 (H-729)
                                                                                .

                   It has been suggested   that because San Antonio and.Austin   own
        fractional     interests in the Matagorda   generating plant along with private
        utilities,    the plant may not be owned for a “public purpose. ”

                 However,   it is well settled that properties    can be jointly owned andi
        that each interest must be assessed      and taxed separately.       F3ashara v.
        Saratoga Independent School District,      163 S.W.2d 631 (Tex. Sup. 1942);
        Hager v. Stakes,    294 S.W. 835 (Tex. Sup. 1927).       If follows that the interests
        of San Antonio and Austin in the power plant are severable          from the private
        utility interests and must be treated separately       for taxation purposes.

                 Moreover,    the Legislature     has provided that municipalities    and other
        public and private corporations       may join together as co-owners       in the
        construction   of electric generating plants (article 1435a, V. T. C. S.) and,
        pursuant to its authority    to legislate    taxation exemptions bestowed by article
        11, section 9 of the Constitution,     has provided that:

                         Each participating   entity shall be entitled to the
                     L   same constitutional    and statutory exemption from
                         ad valorem    taxes and all other taxes.       . .attributable
                         to the participating  entity’s interest in the ownership
                         of the jointly owned electric      facilities.   . . to the extent
                         that the entity would have been exempt from the tax
                         if its undivided interest were an entire interest.           . . .
                         V.T.C.S.      art. 1435a,   5 4(3).

                 Accordingly,  we think it is clear that the undivided interests              of San
        .Antonio and Austin in the Matagorda     generating plant are not subject             to the
         state and county ad valorem   tax.

                                             SUMMARY

                         Fractional,    undivided interests  of cities in
                         electric  generating   plants are exempt from
                         ad valorem    taxes.

                                                             Very   truly yours,

                                                             Attorney    General    of Texas

                                              p. 3114
The Honorable       Fred   P.    Holub ~- Page 4 (H-729)

C. ROBERT HEATH,
            HI                  Chairman
Opinion Committee

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                                           p, 3115