624 S.W.3d 535
Tex.2021Background
- Odyssey 2020 Academy, an open-enrollment charter school (a public entity), leased privately owned real property and used it exclusively as a public-school campus.
- Odyssey’s lease made the school directly responsible for paying ad valorem property taxes on the leased campus.
- The legal question: whether Article XI, §9 of the Texas Constitution (Article 11) exempts property from ad valorem taxation when a public entity uses—but does not own—the property exclusively for public purposes.
- The Texas Supreme Court majority held that Article 11’s exemption requires public ownership; Justice Guzman filed a dissent (joined by Chief Justice Hecht and Justice Huddle) arguing the exemption covers exclusively used property even if not publicly owned.
- Justice Guzman’s dissent (dated June 11, 2021) contends Article 11 should be read as providing three separate exemptions (publicly owned improved property, public grounds, and “all other property” devoted exclusively to public use) and that Odyssey preserved its constitutional claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Article XI, §9 requires public ownership for exemption | Exclusive public use suffices; leased property used exclusively for public education is exempt | Article 11 requires the property be publicly owned and held for public purposes | Majority: public ownership required; Guzman (dissent): exclusive-use exemption applies |
| Proper grammatical/structural reading of Article 11 | Article 11 contains three separate exemptions (owned & held property; public grounds; all other property devoted exclusively to public use) | Article 11 contains a single exemption; "owned and held only for public purposes" modifies all listed property | Majority adopted single-exemption/public-ownership reading; Guzman: three-exemption reading is grammatically and substantively correct |
| Whether Chemical Bank precedent forecloses an exclusive-use reading | Chemical Bank did not address exclusive-use and is distinguishable; it does not negate a separate exclusive-use exemption | Chemical Bank supports reading Article 11 as requiring public ownership for exemption | Majority treated Chemical Bank as supporting ownership requirement; Guzman rejects that extension |
| Preservation of Article 11 claim | Article 11 claim was preserved because statutory (Tax Code §11.11) and Article 8 constitutional claims below relied on the same exclusive-public-use premise | Article 11 was first raised only in this Court and therefore not preserved | Majority found the issue not properly preserved; Guzman would deem it preserved as an alternative argument |
Key Cases Cited
- Lower Colo. River Auth. v. Chem. Bank & Tr. Co., 190 S.W.2d 48 (Tex. 1945) (historic discussion of Article XI §9 exemptions)
- El Paso Educ. Initiative, Inc. v. Amex Props., LLC, 602 S.W.3d 521 (Tex. 2020) (recognizing open-enrollment charter schools act as arms of the state)
- Leander Indep. Sch. Dist. v. Cedar Park Water Supply Corp., 479 S.W.2d 908 (Tex. 1972) (distinguishing public use from public property and requiring public ownership for certain exemptions)
- A. & M. Consol. Indep. Sch. Dist. v. City of Bryan, 184 S.W.2d 914 (Tex. 1945) (case addressing public-ownership exemption and public use)
- State v. City of San Antonio, 209 S.W.2d 756 (Tex. 1948) (consideration of property owned by public entities and public-purpose use)
- Galveston Wharf Co. v. City of Galveston, 63 Tex. 14 (Tex. 1884) (illustrative of partial exemption where municipal ownership and public use overlap)