Untitled Texas Attorney General Opinion ( 1977 )

Honorable Joe Resweber Opinion No. H-1059
Harris County Attorney
Houston, Texas 77002 Re: Tax exemption for
building to house the Courts
of Civil Appeals in Harris
County.
Dear Mr. Resweber:
You have posed a tax exemption question.
A group of citizens in Harris County plans to form a
non-profit corporation in order to acquire an old bank building
in downtown Houston for use by the Courts of Civil Appeals.
Under the plan, the building will be officially designated
a Texas historical landmark by the Texas Historical Commis-
sion; it will be used solely as a public courthouse. Upon
acquiring the building, the group plans to dedicate it imme-
diately and irrevocably to public use, but title to it will
not be conveyed to Harris County until after the long-term
(30 years) purchase-money mortgage against it has been re-
tired by the corporation. In the meantime Harris County,
under the plan, will pay rent for its use at a rate sufficient
to discharge the mortgage but insufficient to afford the cor-
poration a profit. You ask:
Would the proposed Court of Civil Appeals
Building be exempt from State and County
ad valorem taxes?
We cannot answer categorically because tax exemption
questions turn on particular facts, and many pertinent facts
are unavailable.
The Texas Constitution authorizes the Legislature to
grant certain statutory exemptions from taxation, including one
for public property used for public purposes. Tex . Const. art.
8, 5 2. Article 11, section 9 of the Constitution automatically
exempts by its own terms "[tlhe property of counties, cities
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Honorable Joe Resweber ,- Page 2 (H-1059)
and towns. owned and held only for public purposes, such as
public buildings and the sites therefor . . . and all other
property devoted exclusively to the use and benefit of the
public." For either of these "public property" exemptions
to apply, however, it is essential that the property be
used for public purposes; and wholly apart from its use, it
must be publicly owned, not privately owned. Leander Ind.
Sch. Dist. v. Cedar Park Water Supply Corp., 479 S.W.2d 908
(Tex. 1972).
We do not believe that the proposed transaction can be
structured to take advantage of the "public property" exemption,
for if Harris County owns the property itself, it will have no
apparent cause to pay rent for its use. -See Tex. Const., art.
3, 5 52; art. 11, § 3.
The Legislature is also permitted by article 8, section
2 of the Constitution to exempt from taxation certain property
of purely public charities. In San Antonio Conservation
Society, Inc. v. City of San Antonio, 455 S.W.2d 743 (Tex.
‘1970)I the Texas Supreme Court upheld the exempt status of an
historic property known as the Navarro House. The house was
owned by a nonprofit corporation chartered for the purpose of
preserving historical buildings and sites, and the corporation
was operated as such in fact. It used the property exclusively
as an historical site and museum for the benefit of all the
public, and it never leased it or otherwise used it with a
view to profit. The Supreme Court concluded that preservation
of the house qualified as a "purely public charity" because
the Constitution lays upon government an obligation to pre-
serve the evidences of Texas' historical heritage: the pres-
ervation of the house affected all the people by assuming to
a material extent that which otherwise might become the duty
or obligation of the community or state. Moreover, the duty
to provide courtroom space for the First and Fourteenth Courts
of Civil Appeals is a governmental obligation which is statu-
torily imposed on Harris County. .V.T.C.S. art. 1817.
If facts surrounding the building under consideration
here meet the criteria set out in San Antonio Conservation
Society we believe that the same reasoning would be applied
to It. V.T.C.S. art. 7150, §5 20, 22. Assuming it acquires
tax-exempt status as an historical building, the anticipated
rental and use of the old bank building by Harris County need
not destroy that status. The Supreme Court recently held in
City of McAllen v. Evangelical Lutheran Good Samaritan Society,
530 S.W.2d 806 (Tex. 1976), that an exemption will not be with-
drawn so long as the charitable requirements are met, even
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. . .
Honorable Joe Resweber - Page 3 (H-1059)
though the charitable purposes are joined with other, non-
charitable purposes. --
But see River Oaks Garden Club v.
City of Houston, 370 S.W.2d 851 (Tex. 1963).
SUMMARY
It is unlikely that the planned acquisi-
tion by a non-profit corporation of an
old building to be rented to Harris County
as a courthouse can be structured to make
the building tax-exempt as "public prop-
erty," but the building might become a
tax-exempt historical site. A building
owned by a non-profit corporation and
rented to Harris County as a courthouse
would not be exempt from taxation as
"public property," but it might be exempt
as an historic site under article 7150,
sections 20 and 22, V.T.C.S.
ery truly,yours,
Attorney General of Texas
APPROVED:
C. ROBERT HEATH, Chairman
Opinion Committee
jst
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