Untitled Texas Attorney General Opinion

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