AETC II Privatized Housing, LLC v. Tom Green County Appraisal District
03-13-00463-CV
| Tex. App. | Aug 10, 2015Background
- AETC II Privatized Housing, LLC (AETC) entered into a MHPI (10 U.S.C. §§ 2871–2885) arrangement with the U.S. to finance and construct military housing near Goodfellow AFB on Tract G in Tom Green County.
- Tract G is owned by the United States; AETC provided financing, built and operated the housing under restrictive agreements subject to federal control and reversion rights.
- The United States retained operational restrictions, the ability to regain title on default or misuse, and controls limiting AETC’s ability to sell or repurpose the property.
- The appraisal district (defendant) concluded the property was taxable because legal title rested with AETC (or private entities) rather than the U.S.
- Appellant argues the transaction must be viewed substantively: federal law authorized the arrangement, the U.S. holds equitable title, and federal supremacy bars state taxation of federal property used to house military personnel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the property is exempt from local property taxation because the U.S. holds equitable title | AETC (plaintiff) says substance controls: the U.S. used MHPI authority, retains control and reversion rights, and therefore holds equitable title making property immune from local taxation | Appraisal district says legal title held by private entity means property is taxable; transactions must be parsed technically | Court ruled against AETC (allowed taxation / rejected exemption) — appellant seeks rehearing/en banc review alleging error and conflict with precedent |
| Whether federal MHPI authority transforms a private financing arrangement into federal ownership for tax purposes | AETC: MHPI shows Congressional intent to enable the U.S. to provide housing using private financing while retaining federal ownership/equitable title | Appraisal district: The statutory financing mechanism does not automatically convert private legal title into exempt federal ownership for property-tax purposes | Court accepted the appraisal district’s view, prompting appellant’s Supremacy Clause and equitable-title arguments on rehearing |
| Whether equitable title doctrine applies when a private entity holds legal title but federal government retains control and reversion remedies | AETC: Equitable title exists where the U.S. can compel conveyance or regain title and controls use; Texas cases treat equitable title as sufficient for exemption | Appraisal district: Emphasizes legal title/form over equitable substance to impose taxation | Lower court favored form/legal-title analysis; appellant contends this conflicts with multiple Texas appellate and Supreme Court precedents |
| Whether the court’s decision conflicts with other Texas authorities and violates Supremacy Clause by permitting state taxation of U.S. military housing | AETC: Decision conflicts with Texas Supreme Court and appellate cases recognizing equitable ownership and federal interest; taxation offends federal supremacy | Appraisal district: Implicitly maintains state taxing power over property held in private name absent clear federal immunity | Appellant asserts the opinion conflicts with precedent and authorizes unconstitutional state taxation; seeks en banc reconsideration |
Key Cases Cited
- Texas Dep’t of Corrections v. Anderson Cnty. Appraisal Dist., 834 S.W.2d 130 (Tex. App.—Tyler 1992, writ denied) (equitable title can make property exempt from taxation where state can compel conveyance)
- AHF-Arbors at Huntsville I, LLC v. Walker Cnty. Appraisal Dist., 410 S.W.3d 831 (Tex. 2012) (legal title not required; equitable title may suffice for tax exemption)
- Galveston Cent. Appraisal Dist. v. TRQ Captain's Landing, 423 S.W.3d 374 (Tex. 2014) (equitable ownership supports claim of exemption)
- Harris Cnty. Appraisal Dist. v. Southeast Tex. Hous. Finance Corp., 991 S.W.2d 18 (Tex. App.—Amarillo 1998, no writ) (state agency holding equitable title despite legal title in subsidiary supports exemption)
- Orange Cnty. Appraisal Dist. v. Agape Neighborhood Improvement, Inc., 57 S.W.3d 597 (Tex. App.—Beaumont 2001, no writ) (equitable ownership by parent CHDO supports exemption)
- Travis Cent. Appraisal Dist. v. Signature Flight Support Corp., 140 S.W.3d 833 (Tex. App.—Austin 2001, no writ) (equitable title defined as present right to compel legal title; may determine tax ownership)
- Sweetwater Indep. Sch. Dist. v. ReCor, Inc., 955 S.W.2d 703 (Tex. App.—Eastland 1997, pet. denied) (equitable title for government function rendered property exempt from taxation)