Untitled Texas Attorney General Opinion
GA-1092
| Tex. Att'y Gen. | Jul 2, 2014Background
- Deaf Action Center (the “Center”) is a nonprofit serving deaf and hard-of-hearing persons and owns rental apartment property used for beneficiaries.
- The property historically received a full ad valorem tax exemption under Tex. Tax Code § 11.18.
- The Center proposes to demolish existing improvements, lease the real estate to a limited partnership (LP) it will control through a wholly owned general partner, and have the LP construct new improvements.
- The Center would retain legal title to the land, hold equitable title to the new improvements, and manage the enterprise; expanded rental revenue would fund the Center’s charitable services.
- The question presented: would the Center remain eligible for the § 11.18 charitable property tax exemption after this restructuring that separates legal and equitable title?
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equitable ownership can support a § 11.18 charitable exemption | Equitable title to improvements (plus nonprofit control) suffices for exemption | Appraisal authority must evaluate; statute requires property be "owned and used" by charity | It is likely a court would apply equitable ownership principles to § 11.18 claims, but final exemption determinations are for the chief appraiser |
| Whether § 11.18 requires both legal and equitable title to the same party | Center: equitable title and exclusive use for charity satisfy ownership/use requirements | Appraiser: legal title separation raises questions for exemption eligibility | AG: equitable title can be relevant; no definitive legal ruling here — facts and appraisal determination control |
| Whether prior case law on equitable title for other Tax Code exemptions governs § 11.18 | Center cites cases recognizing equitable ownership for other tax exemptions | Opposing view: those cases involved other statutory sections (e.g., § 11.182, § 11.11) not § 11.18 | AG: because those provisions and § 11.18 rest on the same constitutional authority, a court would likely extend equitable-ownership principles to § 11.18 |
| Who decides entitlement to exemption in practice | Center seeks legal certainty that exemption will continue | Appraisal district/ chief appraiser asserts statutory role in initial determination | Held: the chief appraiser makes the initial exemption determination; AG opinion cannot finally decide on a particular property |
Key Cases Cited
- Galveston Cnty. Appraisal Dist. v. TRQ Captain's Landing, 423 S.W.3d 374 (Tex. 2014) (equitable ownership supported tax exemption under § 11.182)
- AHF-Arbors at Huntsville I, LLC v. Walker Cnty. Appraisal Dist., 410 S.W.3d 831 (Tex. 2012) (equitable ownership sufficed for community housing development organization exemption)
- N. Alamo Water Supply Corp. v. Willacy Cnty. Appraisal Dist., 804 S.W.2d 894 (Tex. 1991) (discussing § 11.18’s enactment under the constitutional charitable-exemption grant)
- Travis Cent. Appraisal Dist. v. Signature Flight Support Corp., 140 S.W.3d 833 (Tex. App.—Austin 2004) (recognizing equitable title in public-property exemption context)
- Comerica Acceptance Corp. v. Dallas Cent. Appraisal Dist., 52 S.W.3d 495 (Tex. App.—Dallas 2001) (Tax Code does not define "owner"; courts may incorporate equitable-title concepts)