Untitled Texas Attorney General Opinion ( 1989 )

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
1700 North Congress Avenue School Fund is exempt from
Austin, Texas 78701 property taxes when it is
leased to a private business
(RQ-1408)
Dear Mr. Mauro:
You ask five questions regarding the taxability of
certain interests in real property comprising part of the
permanent school fund, specifically, the interest retained
by the state when it has leased land to private 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 on behalf of the permanent school fund to
a Texas corporation. A commercial strip shopping center is
located on one tract: no improvements are located on the
second tract. The permanent school fund owns only the real
property; it owns none of the improvements located thereon.
The Texas corporation to which you leased the first tract
owns the improvements and, in turn, has subleased the tract
to the occupants of the stores. In October of 1987, Tarrant
County and an independent school district located in Tarrant
County sent tax statements to the General Land Office,
imposing ad valorem taxes on the real property but not on
the improvements.
The second situation you ask'about involves the tax-
ability of coastal and upland lands that are dedicated by
statute to the permanent school fund. Pursuant to chapter
33 of the Natural Resources Code, the School Land Board, of
which you are a member, has the authority to grant easements
for private use of coastal and upland public land and
leases for use by public entities. It is your understanding
P. 5442
Honorable Garry Mauro - Page 2 (JM-1049)
that local taxing units intend to impose ad valorem taxes
against easement holders that engage in private businesses
(such as oil and gas pipelines and commercial marina
operations) based upon the property values of the permanent
school fund property encumbered by the easements.
You contend that both the permanent school fund land
leased to a private business enterprise, as well as any
leasehold interest encumbering it, is exempt from property
taxation. In other words, you contend that both the real
property in the hands of the state and the leasehold
interest in the hands of the private lessee are exempt from
property taxation. In the alternative, you contend that, if
the permanent school fund land that is leased to a private
business enterprise is taxable, then only the leasehold
estate is taxable to the private business enterprise: YOU
contend that the real property itself is not taxable to the
state.
You first ask:
Does TEX. CONST. art. VIII, 52 and art. VII,
~$5, in conjunction with Tex. Tax Code Ann.
§ll.ll(a) (Vernon 1982), exempt Permanent
School Fund property from ad valorem,property
taxes even though leased to a private busi-
ness 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 if the state has leased the land to a private
concern to be used for a private purpose.
Article VIII, section 1, of the Texas Constitution
provides in relevant part: "All real property and tangible
personal property in this State . . . shall be taxed in
proportion to its value, which shall be ascertained as may
be provided by law." Article VIII, section 2, provides in
relevant part that "the legislature may, by general laws,
exempt from taxation public property used for public
purposes."1 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)
P. 5443
Honorable Garry Mauro - Page 3 (JM-1049)
legislature enacted section 11.11 of the Tax Code, governing
the taxation of public property:
(a) Except as provided by Subsections (b)
and (c) of this section, property owned by
this state or a political subdivision of this
state is exempt from taxation if the orouerty
is used for DubliC oUrIJOSeS.2
(b) Land owned by the Permanent Univer-
sity 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 in behalf of the state in
any protest or appeal relating to taxation of
Permanent University Fund land.
(c) Agricultural land or grazing land
owned by a county for the benefit of public
schools under Article VII, section 6, of the
Texas Constitution is taxable for all pur-
poses. The county shall pay 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 bal-
ance from the county general fund.
(d) Pronertv owned bv the state that is
not used for wublic nurnoses is taxable.
Prowertv owned bv a state aaencv or institu-
tion is not used for DUbliC 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 in order that it receive exempt status. Leander
IndeD. School Dist. v. Cedar Park Water SUDD~V Corp., 479
S.W.2d 908 (Tex. 1972).
p. 5444
Honorable Garry Mauro - Page 4 (JM-1049)
prowertv is rented or leased for comoensation
to a orivate business enternrise to be used
by it for a wurwose not related to the
performance of the duties and functions of
the state aaencv or institution or used to
provide private residential housing for
compensation to members of the public other
than students and employees of the state
agency or institution owning the property,
unless the residential use is secondary 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 the property, and it shall appear
in behalf of the state in any protest or
appeal related to taxation of the property.
(e) It is provided, however, that pro-
perty that is held or dedicated for the
support, maintenance, or benefit of an
institution of higher education as defined by
Section 61.003(7), Texas Education Code, but
is not rented or leased for compensation to a
private business enterprise to be used by it
for a purpose not related to the performance
of the duties and functions of the state or
is not rented or leased to provide private
residential housing to members of the public
other than students and employees of the
state is not taxable. (Emphasis added.)
By the terms of subsection (d), it might appear that the
state's interest in the Tarrant County lands you ask about
are taxable to the state, since both are leased for
compensation to a private business enterprise to be used by
it for a purpose not related to the performance of the
duties of the School Land Board. You contend, however, that
leasing such property for compensation that will inure to
the benefit of the permanent school fund is precisely the
public purpose for which the permanent 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 some background information
regarding the taxation of the various constitutional school
funds in Texas.
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Honorable Garry Mauro - Page 5 (JM-1049)
Article VII of the~Texas Constitution governs public
education on both the ublic elementary and secondary school
and university levels. I: Sections 10 through 18 of article
VII set forth the provisions regarding university level
education: sections 1 through 8 of 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 such purposes, as well as the proceeds 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 1930 by the addition of section 16(a), which
provides that all land mentioned in sections 11, 12, and 15
of article VII, then belonging to the University of Texas,
shall be subject to taxation for county purposes to the same
extent as lands privately owned.4 See also Tax Code,
§ 11.11(b).
Sections 2 and 6 of article VII create two distinct
types of trust funds in what has been termed a dual system
for public 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 ~to the policy of the Board of Regents
withholding the university lands from sale in
spite of Art. 7, § 12 of the constitution,
some of the poorer counties contained large
areas of untaxable land. In order to assist
these counties this amendment was adopted in
1930.
See also 2 Braden, The Constitution of the State of Texas:
An Annotated and Comparative Analysis, at 551-52 (1977).
p. 5446
Honorable Garry Mauro - Page 6 (JM-1049)
fund,l15 while section 6 grants certain lands to counties
also for the benefit of the public schools. -2 Braden,
suwra, at 530-31. Income derived from the state "permanent
school fund" is designated by article VII, section 5, as the
"available school fund." Section 6 creates what is, in
effect, a system of permanent school funds for the various
counties, with the income derived from permanent county
school fund investments dedicated to each county's
"available school fund." Article VII was amended in 1927 by
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 to designate the fund is
confusing: section 2 refers to it as the "perpetual school
fund".and "perpetual public school fund:" section 4 refers
to it as the "public free school fund;" and section 5 labels
it the "permanent school fund." The Texas Supreme Court
long ago opted for the appellation of section 4, stating
that sections 2 and 5 provided 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 it the "permanent school fund."
Educ. Code 5 15.01. By your use of the phrase "Permanent
School Fund land," we understand you to mean that real
property dedicated by section 2 of article VII, whose
components have been added to by 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 and held
for public purposes.' In 1888, the Texas
Supreme Court held that no tax could be
levied on a lease-holder of school lands:
t*County school lands, when leased to raise an
available school fund, are as exclusively
devoted to the use and benefit of the public
as they would be if covered with school-
(Footnote Continued)
P. 5447
Honorable Garry Mauro - Page 7 (JM-1049)
Therefore, land comprising the state permanent
university fund is taxable for county purposes only. Land
comprising the permanent school funds of the various
counties is taxable for all, except state, purposes. YOU
ask about the taxability of lands comprising neither the
permanent university fund nor the various 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 of the 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 in the event that they are leased for
compensation to private business enterprises to be used for
purposes not related to the performance 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 do not construe section 11.11 of the Tax Code
to require the taxation of permanent school fund land. By
the very terms of subsection 11.11(a) of the Tax Code,
subsections (b) and (c) of section 11.11, which require the
taxation in certain instances of permanent university fund
(Footnote Continued)
houses; and the constitution forbids the
taxation of the means through which such
lands may be made to yield a revenue, without
sale, as fully as does 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." (Daugherty v. Thompson, 71
T. 192, 9 S.W. 99)
In order to permit such taxation, except
for state purposes, Sec. 6a was added to the
Constitution in 1927.
See also 2 Braden, m, at 533-34.
P- 5448
Honorable Garry Mauro - Page 8 (JM-1049)
land and land comprising the various county permanent school
funds, serve as exceptions to the general principles set
forth in subsections (a) and (d). The express mention or
enumeration of one person, 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 agree with 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 for which such land was dedicated in
the first instance. Even a cursory reading of the relevant
provisions of article VII of the constitution makes it clear
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 in such 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 a political subdivision is
exempt from taxation if the property is used for a public
purpose; (2) that property so owned that is not used for a
public purpose is taxable: and, (3) that property so owned
that is rented or leased for compensation to a private
business enterprise to be 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, is not used for a public purpose and therefore
is taxable.
If the legislature had intended that land owned by
either the permanent university fund, the various county
permanent school funds, or the permanent school fund fall
within the ambit of (3) above (or, more specifically,
subsection (d) of section ll.ll), it would have been
P. 5449
Honorable Garry Mauro - Page 9 (JM-1049)
unnecessary to include subsections (b) and (c) in section
11.11, making land owned by the permanent university fund
and by the various county permanent school funds taxable.
The very terms of subsection (d) ordinarily would require
the taxation of such dedicated lands. If the legislature
had assumed that such dedicated lands would be taxable,
subsections (b) and (c) would be mere suf;;z;a;z and the
earlier amendments adding section 6a and article
VII would have been unnecessary. The legislature is never
presumed to do a useless act. H unter 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 of Austin, 331 S.W.Zd 737 (Tex. 1960). Had the
legislature intended that permanent school fund lands be
taxable, it is reasonable to assume that it would have so
provided.
Finally, when construing section 11.11 of the Tax Code,
we must 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 to do so would violate
subsection (a) of section 5 of article VII. That subsection
provides in relevant part: "Except as provided by this
section, no law shall ever be enacted appropriating any part
of the permanent or available school' fund to any other
purpose whatever . . . .@I This subsection has been con-
strued to prevent the use of any proceeds for any 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 to be expended for ad
valorem taxation, either in the Texas Constitution or in the
Tax,~ Education, or Natural Resources Codes.
We deem it significant that those constitutional
provisions that govern both the permanent university fund
and the various county permanent school funds do not contain
restrictive language comparable to that found in section 5
governing the permanent school fund. Moreover, we deem it
significant that sections 6a, 6b and 16(a) of article VII
had to be added before permanent university land and the
lands comprising the various county permanent school funds
were taxed.
P- 5450
Honorable Garry Mauro - Page 10 (JM-1049)
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 is exempt from ad valorem taxation.
You next 'ask:
If any of the tracts mentioned above are not
fully exempt, are the leasehold estates taxed
according to Tex. Tax Code Ann. 523.13 and if
so, to what extent, if any, is the Permanent
School Fund liable for any taxes that may be
assessed?
Section 25.07 of the Tax Code requires that certain
leasehold and other possessory interests in exempt property
be listed in the appraisal rolls in the name of the owner of
the possessory interest. Section 25.07 of the Tax Code
provides in part:
(a) Except as provided 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 the possessory interest
if the duration of the interest may be at
least one year.
(b) Except as provided by Subsections (b)
and (c) of Section 11.11 of this code, a
leasehold or other possessory interest in
exempt property may not be listed if:
(1) the property is permanent
university fund land;
(2) the property is county public
school fund agricultural land.
Section 23.13 of the Tax Code governs the appraisal of
such taxable leaseholds and provides:
A taxable leasehold or other possessory
interest in real property that is exempt from
taxation to the owner of the estate or
interest encumbered by the possessory
interest is appraised at the market value of
P. 5451
Honorable Garry Mauro - Page 11 (JM-1049)
the leasehold or other possessory interest.
However, the appraised value may not be less
than the total rental paid for the interest
for the current tax year.
Sections 25.07 and 23.13 of the code and their
predecessor statutes have been construed to provide for the
taxation of a leasehold interest in real 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 to be 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 the permanent school fund are taxable to
the owners of those interests. The permanent school fund
itself is not liable for such taxes.
We have already concluded that permanent school fund
land is not taxable to the state; we know of no 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 fund would not be 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 cases which rely upon Dauahertv,
Davis v. Burnett, 13 S.W. 613 (Tex. 1890), and Montaomerv v.
Peach River Lumber Co., 117 S.W. 1061 (Tex. Civ. App. 1909),
in suwoort 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 of Texas 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, 361 U.S. 376
(1959).
p- 5452
Honorable Garry Mauro - Page 12 (JM-1049)
If a leasehold estate is subject to taxation,
and the lease is terminated or forfeited for
failure to comply with the lease agreement,
what party remains liable for the payment of
taxes? If the tract of land is subsequently
leased to another entity, does the tax
liability continue to encumber the property
or does it remain a personal liability of the
previous lessee?
The person owning the possessory interest when the
assessment is imposed is the person who remains liable for
any unpaid taxes. Section 32.01 of the Tax Code governs the
creation of tax liens and provides:
On January 1 of each year, a tax lien
attaches to property to secure the payment of
all taxes, penalties, and interest ultimately
imposed for the year on the property, whether
or not the taxes are imposed in the 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 in an 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 the person who owns or
acquires the property on January 1 of the
year for which the tax is imposed. A nerson
is not relieved of the obliaation because he
no lonaer owns the wroaertv. (Emphasis
added.)
Section 32.07 of the code and its predecessor 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 San Antonio 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 in whose name the possessory
interest is listed remains personally liable for any unpaid
taxes, penalty, and interest. We note, however, that the
taxable interest in the property is itself subject to sale
P* 5453
Honorable Garry Mauro - Page 13 (JM-1049)
for the satisfaction of unpaid taxes validly assessed
against it, whoever might have been its owner when the taxes
originally accrued. Tax Code 5 32.01; Attorney General
Opinions MN-523 (1982); H-1108 (1977).
You next 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
is the value of the taxable interest? Is the
value equal to the consideration paid for the
easement or the value of the property encum-
bered or some other measure?
Section 33.103 of the Natural 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 for public 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 of previously 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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Honorable Garry Mauro - Page 14 (JM-1049)
Section 33.111 of the Natural Resources Code governs
the granting of easements by the board and provides:
(a) The board may grant easement rights
to the owner of adjacent littoral property
authorizing-the placement or location of a
structure~on coastal public land for purposes
connected with the, ownership of littoral
property.
(b) The board may grant easement rights
to construct channels, wharves, docks, and
marinas to an existing corporation that was
issued articles of incorporation under
Chapters 13 and 14, Title 32, Revised Stat-
utes.
(c) Notwithstanding any provision in its
charter or articles of incorporation to the
contrary, a corporation described in Sub-
section (b) of this section may only obtain
the use of or acquire property from the state
as provided by that subsection.
We understand you to ask about the taxability of these
easements granted by the board.
As we stated in answer to your third question, sections
23.13 and 25.07 of the Tax Code impose tax liability on
"leaseholds and other possessory interests in property that
is exempt 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 real property in question was exempt
in the hands of the owner; second, there had to be a
determination that the rights conferred by the owner of the
fee constitute a llpossessory interest in property." We have
already concluded that the real property comprising the
permanent school fund is exempt in the hands of the state.
We held in Attorney General Opinion JM-59 that concession
rights in a state park for the construction and operation of
a golf course granted by the Department of Parks and
Wildlife was a sufficient "possessory interest" for purposes
of section 25.07 of the Tax Code. The issue is whether an
easement granted by the board likewise constitutes such a
"possessory interest."
‘;)
P. 5455
Honorable Garry Mauro - Page 15 (JM-1049)
Section 1.04(16) of the Tax Code defines ``possessory
interest" in the following way:
\Possessory interest' means an interest
that exists as a result 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" is a right one person 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 the purpose for which the
board can grant easements, i.e., "the placement or location
of a structure on coastal public land for purposes connected
with the ownership of littoral property." By the cl;;:
terms of section 33.111 of the Natural Resources Code,
interest or easement granted is clearly a tVpossessory
interest" for purposes of the Tax Code. Therefore, we
conclude that an easement granted by the board pursuant to
section 33.103 of the Natural 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:
If any interest held by the Permanent School
Fund is not exempt from ad valorem taxation,
and if the Permanent School Fund has cause to
question the notice given by the taxing
authority, the listing of the property in the
name of the Permanent School Fund, or the
valuation of the subject property, what is
the appropriate procedure for the Permanent
School Fund to protest such notice, listing,
or valuation and to what extent would the
Attorney General be required to represent the
Permanent School Fund in such protest?
In view of our answers to your previous questions, we
need not answer your last question.
P. 5456
Honorable Garry Mauro - Page 16 (JM-1049)
SUMMARY
The state's interest in real property
comprising the permanent school fund '
exempt from ad valorem 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 in the leasehold estate, the
tax liability becomes a personal liability of
the lessee who possessed the leasehold estate
when the tax was 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 the permanent 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.
Ll iii&L
Very truly yo
L
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Jim Moellinger
Assistant Attorney General
P- 5457