Court Opinion

ID: 4131003
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:10:53.372345+00
Date Added: 2024-06-11T14:37:37.333800
License: Public Domain

The Attorney         General of Texas

     JIM MATTOX                                        :&arch31. 1986
     Attorney General

     Supreme Court Building           Honorable Am Postma Musgrove        opinion No. m-464
     P. 0. BOX 12549                  Cbildrcss County A,ttomey
     Austin, TX. 7871% 2549
                                      Courthouse                          Ret Whether the city of Cbildress
     51214752501
     Telex 910/874-1387
                                      Childress, Texas   79201            is exempt from taxes under section
     Telecopier  512/4750288                                              11.11 of the Tax Code, on city-owned
                                                                          airport land leased to individuals
     714 Jackson, Suits 700
     Dallas, TX. 752024506
                                      Dear Ms. Musgrove:
     21U7428944
                                           You ask whet,ber real property med     by a city but leased to
                                      private indlviduale is exempt from ad valorem taxation which the
     4S24 Alberta   Ave., Suite 180   county and a hospi,taldistrict seek to impose. You inform us that the
     El Paso. TX. 79905-2793
                                      property includes an airport operated by the city in which some of the
     915/53344B4
                                      airport facilities are leased to an individual who sells fuel to
                                      airplane operatom.   The lessee operates the facility as a commercial
91       Texas, Suite 700             enterprise but sub,jectto the direction and control of the city as
      JUS~O”, TX. 77W2.3111           specified in the lease agreement. Also, the federal government
     71~2235886                       operates a weather station and directs flight cdntrol at the airport.
                                      The land surround,ingthe airport is leased by the city to private
     808 Broadway, Suite 312          individuals and corporations that use the land for commercial
     Lubbock, TX. 79401.3479          purposes, includ,lng farming and ranching.        The city receives
     905,747.5239                     remuneration from the individuals in the form of rental payments which
                                      are devoted exclusively, you assert, to the use and benefit of the
     4309 N. Tenth, Suits S
                                      public, specifically including the upkeep of the airport.
     McAllen, TX. 7850%1685
     51216824547                           We understand you to .ask whether the city is exempt from ad
                                      valorem taxes on ,the airport operation, oo the airport facilities
     200 Main Plaza, suite 400
                                      which are leasei. to an individual who sells fuel to airplane
     San Antonio, TX. 782052797       operators, and on the land surrounding the airport which is leased for
     5121225.4191                     private commercial.purposes. We do not understand you to ask whether
                                      the lessees willl~c:subject to taxation oo their leaseholds. We first
                                      address the airport facilities question and will then address taxation
     An Equal OpportunItyI
                                      of the surroundins;land.
     Aftlrmatlvs Action Employer

                                           Article VIII, section 1, of the Texas Constitution provides the
                                      following in pertLumt part:

                                                   Taxal:l.oa
                                                            shall be equal and uniform. All real
                                                property and tangible personal property in this
                                                tsltate, whether owned by natural persons or cor-
                                                porations, other than municipal, shall be taxed in

                                                                p. 2126
.   Honorable Ann Postma Musgrcve - Page 2     (JM-464)

              proportion to it,s value, which shall be ascer-
              tained as way be provided by law.

         Article VIII, section 2, of the Texas Constitution. provides the
    following in pertinent part:

              [Tlhe legislature my, by general laws, exempt
              from taxation public property used for public
              purposes. . . . (Emphasis added).

         Article XI, section !):,of the Texas Constitution provides the
    following in pertinent part:

              The property of s:ounties, cities and towns, owned
              and held only folrpublic purposes, such as public
              buildings and tl;! sites therefor . . . and all
              other property debvotedexclusively to the use and
              benefit of the-$blic shall be exempt from . . .
              taxation. . . . emphasis added).

         Section 11.11 of the lax Code sets    forth the following:

              511.11. Public Froperty

                (a) Except 811 provided by Subsections (b) and
             (c) of this sectjon [which are not here apposite],
             property owned b:~ this state or a political sub-
             division of this- state is exempt from taxation
             if the property -is used for public purposes.
             (Emphasis added).-

         Property of a political subdivision which would otherwise qualify
    for exemption from ad valorem taxation under one of the foregoing
    constitutional provisions will not lose its tax-exempt status merely
    because a charge is made :Eor use of the property or a profit is
    generated thereby, providei that charges are incident to its use by
    the public and the proceeds inure to the benefit of the political
    subdivision. Lower Colomdo River Authoritv v. Chemical Bank and
                  , 190 S.W.2d-48, ~50 CT&. 1945); A b M Consolidated
                  :hool Distrlcllv. City of Bryan, 184 S.W.2d 914, 915-16
                   See also City                         , 415 S.W.2d 902,
    915 (Tex. 1967)( ,Walker, J.. dissenting); Galveston Wharf Company v.
    City of Galveston, 63 Tex.. 14, 23 (1884): Cf. City of Dallas v.
    Smith, 107 S.W.2d 872, 878 (Tex. 1937); SantaRosa Infirmary v. Cite
    ofn     Antonio. 259 S.W. 926, 931 (Tex. Ccmn'n App. 1924, judgmt
    adopted); City of Palestfne v. Hissourl-Pacific Lines Hospital
    Association, 99 S.W.2d 311,-314 (Tex. Civ. App. - Amarillo 1936, writ
    ref'd) (cases involved not political subdivisions, but rather
    institutions of purely prblic charity). The fact that the city
    receives compensation for +le lease of its property will not deprive

                                     p. 2127
 .
     Honorable Ann Postma Musgrove - Page 3   (JM-464)

     the city of its tax-exanpt status on       the   property if   it would
     otherwise be tax-exempt.

          But this discussion, of course, does not end our inquiry. The
     Texas Supreme Court has consistently raafflrmed the principle that, in
     order for public property to be exaupt from ad valorem taxation, it
     rrmstbe held onlv for oub1.j.cDumoses and devoted exclusivelv to the
     use and benefit df the bub:.ic.'Satterlee v. Gulf Coast Waste Disposal
     Authority, 576 S.W.2d 773, 778 (Tex. 1978); Leander Independent School
     District v. Cedar Park Watsr Supply Corporation, 479 S.W.2d 908, 912
     (Tex. 1972); Daugherty v. Thompson, 9 S.W. 99, 102 (Tex. 1888). The
     test for determining whethP:cuublic orooertv is tax exemDt is whether
     it is used for the health, &fort.   'andweifare of the niblic. It is
     not essmtial that it be used for "governmental" purposes. Lower
     Colorado River Authority 12 Chemical Bank and Trust Company, supra;
     Corporation of San Felipe I$ Austin v. State, 229 S.W. 845, 847 (Tex.
     1921). It is sufficient t,hat it be used for "proprietary" purposes.
     A 6 M Consolidated Independent School District -v. Cit; df Bryan,
     supra. It is imaterial whether only residents of the district are
     benefitted or whether others benefit as well; the fact that property
     is owned by the public ctnd is used for the health, comfort, and
     welfare of the public of gnomeportion of the state is sufficient to
     entitle such property to tre:-exemptstatus. State v. Houston Lightins
-.   & Power Co., 609 8.W.2d :!63, 270 (Tex. Civ. App. - Corpus Christi
     1980, writ ref'd n.r.e.). See also Attorney General Opinions MW-430
     (1982); IN-391 (1981).

          We have no difficulty in statlng as a matter of law that the
     city's airport and airpor,t facilities, Including those leased to a
     private individual, are impressed with a public purpose sufficient to
     meet Texas constitutional .and statutory tests regarding ad valorem
     taxes. The Texas Legislature has specifically authorized all cities
     and towns. including home rule cities, to build and purchase airports
     and to mortgage or otherwillsencumber airports, as well as the land on
     which they are situated. See V.T.C.S. art. 1015~; see also V.T.C.S.
     arts. 126921;1269j; 46d-1 t!t:scq.("Municipal AirpOrtB Act"). Article
     46d-16, V.T.C.S., specificcillyprovides %n relevant part:

              Any property in this [sltate acquired by a munici-
              paltry for airport purposes pursuant to the pro-
              visions of this [slct [articles 46d-1 to 46d-221,
              and any income derived by such municipality from
              the ownership, operation or control thereof, shall
              be exempt from taxation to the sane extent as
              other property uc;edfor public purposes.

     In fact, municipal airports constructed with public funds have been
     said to differ In no water:lal element from other public facilities,
     such as a public auditorium or a municipal hospital. Hayden V. City

                                    p. 2128
Honorable Ann Postma Musgroyre- Page 4 (a-464)

of Houston, 305 S.W.2d 798, 802 (Tex. Civ. App. - Fort Worth 1957,
writ ref'd n.r.e.).

     We mw turn to the iswle of taxation of the surrounding land. In
City of Abilene v. State, 113 S.W.2d 631 (Tax. Civ. App. - Eastland
1937, writ dism'd), real ,-.
113 S.W.2d at 633. The court assumed that the leasing of such lands
for a purpose unrelated to ithe operation of the municipality did not
constitute a public purpose?.,It relied upon the fact that there had
been no abandonment of the public purpose for which the property was
purchased by the city in the first place and concluded that, in spite
of the fact that there was 'uo actual public use of the property then
involved, "public use" did not require continuous, uninterrupted, or
unranittent use.

          It is, therefore, our view that when the facts of
          a giveu case establish the ownership of property
          by a municipal corporation, which has been
          acquired for an authorized public purpose, and the
          purpose for which it is owned and held has not
          been abandoned, such property is to be regarded as
          used for public purposes, and the Legislature has
          the power to p,covide by general law for its
          exemption from taxation.

113 S.W.2d at 635.

     In City of Beaumont v. Fertitta. 415 S.W.2d 902, 912 (Tex. 1967),
however, the court expre&ly disapproved the holding in City of
Abilene. The continuing v;%:lidityof Fertitta is itself doubtful, due
in no small measure to 1:hLenovel legal analysis employed in the
majority opinion. See LellrtderIndependent School District v. Cedar
Park Water Supply CGoG?on --' 479 S.W.2d 908, 911-912 (Tex. 1972);

                               p. 2129
         Honorable Ann Postma Musgrme   - Page 5    ,(X+464)
     I

,-

         Attorney General Opinion MW-430 (1982). That notwithstanding, it is
         clear that the court in both Fertitta and Leander construed the Texas
         Constitution to require acwal , exclusive use for a public purpose in
         order to qualify for exenlption from ad valorem taxes.
         State v. Bouston Lighting k Power Compan& 609 S.W.2d 263,=F266 Tex.
         Civ. App. - Corpus Christi 1980, writ ref'd n.r.e.1.

              In order for property to be exempt from ad valorem taxation, such
         property must be exempt under both the applicable Texas statutory
         provisions and the Texas Constitution as well. Normally, such a
         determination involves reso:lutionsof factual matters upon which this
         office is not empowered t'3 rule. However, in light of the express
         disapproval of the City of Abilene case by the supreme court and the
         requirement of actual, exclusive use for a public purpose in order for
         public property to be held ‘tax-exempt, we conclude as a matter of law
         that, in the instance you #describe,the city is not exempt from ad
         valorem taxation on the city-owned land surrounding the airport which
         is leased for commerctal and agricultural purposes.

                                        SUMMARY

                      In the fact s,ituation herein described, the
                   city is not exempt:from ad valorem taxation on the
                   city-owned land surrounding the airport which is
                   leased for commercial and agricultural purposes.

                                                   Very   ruly your,
                                                          .

                                                  d-b
                                                    JIM     MATTOX
                                                    Attorney General of Texas

         JACK HIGETOWKR
         First Assistant Attorney Gtxvral

         MARY KELLER
         Executive Assistant Attonwy    General

         ROBERT GRAY
         Special Assistant Attorney General

         RICK GILPIN
         Chairman, Opinion Comnittec:

         Prepared by Jim Moellinger
         Assistant Attorney General

                                         p. 2130