Case Information
*1 The Attorney General of Texas Decf!mber 23, 1985 JIM MATTOX
Attorney General Honorable Ann Postnn Musgrove Opinion No. JM-405
Supreme Court Building Childress County At.tomey P. 0. Box 12548 County Courthouse He: Whether a building owned by a AUH,“, TX. 78711.2548 Childress, Texas '79201 hospital district is exempt from 5121475-2501 Tam 9101874.1367 taxation under section 11.11 of Telecopier 5121475.0260 the Tax Code Dear Ms. Musgrwe: 714 Jackson. Suite 700 Dallas, TX. 75202-l508 214i742-8S44
You ask whether a building owned by a hospital district but
leased to three oi:b.er entities is exempt from ad valorem taxation in 4524 Alberta Ave., Suite 160 El Paso, TX. 799052793 [91515333464] entities in the form of rental payments. Although we cannot as a matter of law conc.lude tha,t such property is tax-exempt, we conclude remuneration from the an instance in w1rtch the district receives
that the fact that the district receives remuneration in the situation ,001 Texas, suite [700] 77002-3111 ~ouston,TX. 713/2255888 you describe will :not deprive the district of tax-exempt status on will be subject to taxation on their leaseholds. such property. WI: do not understand you to ask whether the lessees
You inform us that the Childress County Hospital District is a 606 Broadway, Suite 312 political subdivlslon created pursuant to article 4494, V.T.C.S., and Lubbock, TX. 79401.3479 article IX, section 9 of the Texas Constitution. Acts 1965, 59th 806/747-5238 Leg., ch. 647, at 1483. You indicate that Panhandle Community Action
and Panhandle PlannNed Parenthood, two nonprofit corporations, and the 4309 N. Tenth. Suite S Texas Department cf health, a state agency, lease the building from ,&Allen, TX. 78501.1685 the hospital distr:ict. You further state: 5121882.4547
The leafsed building 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, including clothing and food, implementing federal An Equal OppOrtUnitYI housing programs, and implementing state rural Affirmatlve Action Employer transportation programs, and providing for 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.
Honorable Ann Postma Musgrove - Page 2 (JM-405)
YOU contend that the fact that the district receives rental payments from its lessees ahould not preclude the district's receiving 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 regardless of the character of the services provided by the lessees of the building. We disagree. Subsection (d) of section 11.11 provides the following in pertinent part:
(d) Property owned by the state that is not used for public purposes is taxable. Property owned by a state agency or institution is 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 applicable only tc property owned by the state.
Article VIII, section 1 of the Texas Constitution provides the following in pertinent part:
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 provided by law.
Article VIII, section 2 provides the following In pertinent part: [T]he legislature may, by general laws, exempt from taxation public property used for public purposes. . . . (Emphasis added).
Article XI, section 9 of the Texas Constitution provides the following in pertinent part:
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 exclusively to 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 pertinent part:
\
Honorable Ann Postma Musgrove - Page 3 ~(JM-405)
Except as prov:lded by Subsections (b) and (c) of this sectior. [which are here inapposite], property owned by this state or a political sub- division of this Istate is exempt from taxation if the property is used for public purposes. - Property of a politics,1 subdivision which would otherwise qualify for exemption from ad valorem taxation under one of the foregoing constitutional provisions will not lose its tax-exempt status merely because a charge is made :for use of the property or a profit is generated thereby, provided the charges are incident to 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 Independent School 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); Galveston Wharf 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:CLlo 1936. 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 compensation for the lease of its property will n,ot deprive the district of its tax-exempt status on the property if it would otherwise be tax-exempt.
We note that the Texas Supreme Court has consistently reaffirmed 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 exclusively to the use and benefit of the public. Satterlee v. Gulf Coast Waste Disposal Autho.Lk, 576 S.W.2d 773 (Tex. 1978); Leander Independent School 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 determining whether 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 ,'Ilat it 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,s benefit-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 determination that such property is so *4 Honorable Ann Postma Musgr~m - Page 4 ~(JM-4~aj I
, used in this instance is a factual matter upon which this office is not empowered to rule.
SUMMARY Tbe fact that: a hospital district receives remuneration for leasing a building owned by that district will not deprive that district of tax- exempt status on such property.
JIM MATTOX Attorney General of Texas JACK HIGHTOWRR
First Assistant Attorney G&era1
MARY KELLER
Executive Assistant Attorney General
ROBERT GRAY
Special Assistant Attorney Zenera
RICR GILPIN
Chairman, Opinion Comittee
Prepared by Jim Moellinger
Assistant Attorney General