C-27 | Tex. Att'y Gen. | Jul 2, 1963
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Mr. Jules Damiani, Jr e Opinion No. C-27 Criminal Metrict Attorney Galve~ston County Galveston, Texas Re: Whether the Moody House is
exempt from the payment of ad valorem taxes under the
Dear Mr. Damiani: stated facts. You have requested our opinion a8 to whether or not the property set out in your statement of facts Is exempt from ad valorem taxes. The following facts are copied from your letter:
“The property originally known as the Buccaneer Hotel, including the Buccaneer Cabanas and Pool was acquired by The Methodist Homes for Older People, a charitable corporation Incorporated under the laws of the State of Texas, on the 29th day of December, 1961, as a gift from The Moody Fogdation, and commenced operating it as a home for. older people on the 1st day of Januaryp 1962 q
“The Methodist Homes for Older People was required to take title to the property subject to any and all leases and rental contracts then in existence. There were three (3) outstanding leases for store or office space that are still in effect and from which the pres&it owner receives a small rental D All of the rent8 received ftiom these three (3) tenants Is by action of the Board, befng plaoed In a special ‘Health Care Trust Fund’ and is used solely for health and welfare care of residents of Moody’ Abuse 0
“One of the rental units la oocupled as a barber shop which Is being operated almost entirely for the convenience of the residents of Moody House. The other
Mr. Jules Damianl, Jr., Page 2 (No. C-27) rental units are a small gift shop and the OalveStOn Merchaants Association, all of which have leases that were In effect at the time the property was acquired and as above stated, the .present owner was ~requlred to accept the title subject to these leases. The total reAta1 received from these units amounts to only $375.00 per month.
"This property la malntalAed aAd operated as a home for older people and offers full custodial and Aurslng care. Some of the present residents are Aot ln a financial posltlon to pay for their entlre care and maintenance which Is being subsidized from other fuAda. Moody House IA 1962, paid an average of approximately $l,OOO.OO per reslderat as subsldlzatlon. It will con- tinue to be the policy to accept residents at Moody House who will require some sub- sldlzatlon for thelr care and support.
"Moody House has been licensed by the State Health Department for a nursing 'home and this-service Is now being offered with ffve (5) nurses being provided. The care being offered to PesideAts of Noody House includes lodging, meals, medical and ~~rsl~g service.
'The Nethodlst Homes for Older People 1s incorporated under the Texas Nonptioflt Corporation Act for charitable and benevo- lent purposes, Moody .House, operated by said corporation, la a project of The Texas Conference of The Methodlst Church, and 1s operated by an admiAlstratOr aAd staff under the supervlslon of aA Executive Steering Committee appointed by the Board of Dlrec- tors of sald corporatloA aad approved by the Annual C6AfereAce of The Methodlst Church D
"The AdmlAlStPRtOr and SteerlAg Commltt&e have attempted to determflae what It will cost : to operate Moody House. The charges being made to resldelnts are expected to underwrite the cost of furnlshlng the residents' living quarteras all meala, a complete staff lncludlng
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Mr. Jules Damianl, Jr., Page 3 (No. C-27) an administrator, a full time Director of Social Activities, a resident doctor, a sufficient nursing staff which Includes registered nurse8 and licensed vocational nurses.
“There la AO admission fee or a fixed amount for admission to Moody House. In each case the matter of the amount to be paid by the resident Is negotiated and a mutual agreement as to the amount to be paid by the Individual Is determined from his needs and ability to pay. It Is not expeoted that every person will underwrite the cost of his or her care, and It Is not expected that any person will be In such financial circumstances as to require full financial aid D All funds received from residents, rentals or otherwise, will be used for the care and maintenance of the residents, and that such funds will be from time to time supplemented by The Methodist Church.
‘With ‘reference to paragraph three, you will note that there are vaPlous units rented o.ut In the Moody House to private lndlvlduals. Vernonts Annotated Civil Sta- tutes, Article 7150 aAd The Constitution of the State of Texas, Article 8--section 2, holds that to be an Institute of purely public charity no that its property may i be exempt for taxation, the fnstftutlon must be one whose property la used wholly and exclusively for charitable purposes. In BPOE L.od e WoQ. 151 vs City of Houston, 44 SW2nd 48!, there Is a holding that where lndlvldual COACefB3fOA~ were leased Out t0 lndfvfduala and were not used solely for the beneflt of the organlzatlon, -that said organlzatlon. would not be exempt from taxa- tion. It Is the wrlterqs opinion that the Moody House lu baslcally a charitable lnstl- tutlon, ‘howeverp under the holding herein before cited it would appear by leasing fOP a fee Its premises to lndfvfduals other than the resedents of the Institution and the allowance of the public to patronize and use these facllltles would result In the ruling that the Moody House was not a
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Mr. Jules Dsmlanl, Jr., Page 4 (No. C-27) charitable organization and Is Aot exempt from taxation. Your 0plAibn la Pespect- fully Pequested."
Under the facts stated, it appears that thd organization owning this property described has complied with theeAeCessaPy law and facts to make it a charitable fnatltution, aAd the pro- perty would be exempt from ad valorem taies were it not for the fact that certain parts of the property are being leased to tenants as stated IA your request. This matter has been dls- cussed at length IA opinions heretofore rendered by this depart- ment, being OPIAIOAS Nos. WW-12 7 dated March 16, 1962, W-1424 dated August 24, 1962, and WY-1 27aated August 30, 1962, copies 1 of which are enclosed herewith.
In Morris v. Lone Star.Cha ter No. 6, Royal Arch Masons, 68 Fe th f t h tha em f, s w 519 d87 Tej&e w:s ttei ~y'~lain~lff thebuilding &own ;s thi l&on& and other Masonic organizations to h6ld their meetings but that a part of the building was rented to'different pePsons, and plaintiff received a monthly rental for each of sald rooms rented amounting In the aggregate to about $15O,OO per month for all of the rooms in the ffrst and second stories In the .bulldlng.
The Court IA Its ?plnlon had the following to say: II D D D The burden of .showlng that an exempt.loA from taxatlon exists9 rests upon the party who olafma It, o' D D and when the constrmctlon of~the law Is doubtful, the doubt will be resolved In favor of:the state, and against the exemption, D + * Applying these rmles, we conclude that the buildlAg In questlon %s not @used exclusively' by appellee'ln the sense gIveA to these words in the constitutf0A~ the exclusive me meant being the actual aAd direct use for the pur- poses of the assOclatfOA, and not a use by others fop reveAue, although that revenue may be exclusively appropslated for the 'objects of the charity. The legislature IA exerclslng~ the power CoAfePPed by the constitution seems to follow,the constrmc- tloA we have adopted, .aAd exempt ‘all buIldlAgs belOAglAg t0 1AStltutlOns Of purely public charlty;together with the 1aAds belOnglAg to and occupfed.by such'. lnstlttitlons, ~'Aot leaaed or othepwlse used wlth a view td prof+t,' aAd all moneys and
Mr. Jules Damlanl, Jr., Page 5 (No. c-27) credits appropriated solely to sustaining suoh Institutions,’ This means that a building leased for profit 1s not exempt although such profit may be appropriated solely to the purposes of the charity, and not to the private gain of Its pro- moters or stockholders. o e *”
of Houston v. Scottish Rite Benev. hss’n., 0 S.W. 978 (19 21)-6f th e Ancient and Accepted Scottish Rite of Fre&nasonry of the City of Houston purchased certain property which was known as ScoMlsh Rite Cathedral. The lot and bulldlng situated thereon was actually used by members of the association, and no part of the same was rented or used by any other person or instltutlon. The asso- ciation owned no property used with a view tog;flt. It had no capital stock and declared no dlvldenda.
v”,f was used by the Masonic orders, Including San Jaclnto f&e Perfection No. 6 and the Houston Chapter of Rose Croix No. 5, each of which collected membership fees and dues whloh were used for charitable purposes other than the bare neceseltles for the lodge. No person received any salary or profit directly from the lodge or lodges. The building was used pplncipally for meetings of thn various Masonic orders.
The facts further showed that the association was not one that did nothing but dispense charity, but it did dispense charity. The main purpose of the association was to provide a lodge and place of meeting, and to look after and provide for lndlvldual Masons and their families.
The Court said in Its opinion: “By the very tinner and terms of this property’s acqulsltlon, It was required __ to be used9 as it was In fact used, by,. the two Masonic orders* ‘to enable them to pursue their work as Masonic lodges, I I. such work being, as agreed, only partly charitable.
“To the extent that the property was used by ~aonlc organizations, whoae actlvltles Included other fields than charity, It was not, aAd could not be, used exclusively by an lnstltutlon of purely public charity. Not.belng used exclusively by an institution of purely public charity, the claim to exemption under the constltutlonal prOViSIOn fails,
or. Jules Damlanl, Jr., Page 6 (No. C-27) and our answer to the certified question Is that the property was subJect to tax-a- Mon."
In the case of B.P.O.E., Lodge No. 151 v. City of Houston, 44 S.W.2d 488" date_filed="1931-12-01" court="Tex. App." case_name="Benevolent & Protective Order of Elks, Lodge No. 151 v. City of Houston">44 S.W.2d 488 lTex.Civ.App. 1931 , error ref.),. the City Houston sued the Elke Lodge for ad valorem tnxes on the property occupied by the lodge. The facts showed that the lodge dispensed charity but carried on other actlyitles such as games, daACeS and othe'r Social activities for the pur- pose of entertaining its members and securing new members.
The Court said that whether appellant Is a purely charitable lnstltutloA 1s one of fact. There was within the building a barbershop, the proprietor 6f which paid no rent but kept all the money he took In from services rendered to members of the lodge, a gymnasium IAstructor, and a restaurant operator, none of whom paid any rent or money to the lodge.
The Court said: "Under the law, for the property of appellant to be exempt from taxation, It must Aot only be owned, but also be used exclusively, by an lnstltutlon of purely public charity. Is It, so used here? The barbershop 1s operated by one who gets all the income. He pays no rent, but he gets free space' to operate his trade, aAd retains for himself all the income. The iaan who ruAs the gymnasium Is a paid lAstructoP. He not only receives $200 a month as Instructor, b t he keeps in the :gymnaslum his own sto,c of supplies and I: sells them 'to the membera, has free space9 and,retalAs the whole of the Income for his own use. The man who rune the reStaU- rant also keeps aAd furAfShsS all his supplies aAd PetalAs all the Income. He shares fn the use of space free of rent. The marp who gives electric batha furnishes the towels ana rubbing llnfmeaats aAd keeps all the Income. e D 0
11 D e . "ExemptlOAB from taxation are not favored,
and the law allowing exemptions should be given a strict Interpretation, It' Is then policy of the states aAd but justice between
Mr. Jules Dnmlanl, Jr., Page 7 (No. c-27) Its citizens, that all property should be taxed, and that no property shall escape this common burden, unlese It comes clearly within the exemption, and It wao Incumbent on the appellant to show that It comes within the exemption clauses of the Con- stitution and the statute. We do not think this has been shown."
It is.our opinion that since portions of the Moody House are rented to private lndlvlduals who pay rent to the operators of Woody House, that in accordanoe with the decisions above, this property is not uaed exclusively for oharltable pur- poses and therefore does not meet the requlr’ements to be exempt from taxation.
SUMMARY SUMMARY Under the facts stated the property Under the facts stated the property Involved In this opinion Is not used exclu- Involved In this opinion Is not used exclu- sively by an lnstltutlon of purely public sively by an lnstltutlon of purely public charity and la therefore not exempt from ad charity and la therefore not exempt from ad valorem taxes. valorem taxes.
Yours very truly,
WAQQONER
CARR Attorney General of Texas
JHB: pw . Enclosures
APPROVED:
OPINION COMMITTEE
W. V. Qeppert, Chairman Joe R. Long Brady Coleman Albert P+uett Jerry Brock APPROVBD FOR ‘i’RE ATTORNEY QENERAL By: Stanton St bne