Case Information

*1 The Attorney General of Texas :)ecember 27, 1984 JIM MAllOX

Attorney General Ronorable Mike Driscoll Opinion No. JM-269 Supreme Cowl BulldIng Rarris County Attorney P. 0. 80x 12S48 1001 Preston, Suite 634 Re: Whether the real and personal Austin. TX. 711711.2S4a

512l4752501 Rouston, Texas 77002 property of the Blue Bird Circle Telex 91ws7c13a7 is exempt from ad valorem taxes Telecopier 512/47402+6

Dear Mr. Driscoll: 714 Jackson. Suite 700 Dallas, TX. 75202-4SOS

You have asked this office to determine whether section 11.18 of 2lU742.SSU tne state Property Tax Code exempts from ad valorem taxation the real

and personal prope,rty of the Blue Bird Circle. Section 11.18 exempts organizations from taxation of their buildings and tangible 4824 Albwta Ave.. Sulle 160 provides the organization can meet certain stated El Paso. TX. 799052793 property. 915/533-3494 requirements. We conclude the Blue Bird Circle does not meet

these statutory for exemption under section 11.18. We limit our answer to the particular facts which you have given us. 4001 Texas. Suite 700 Houston, TX. 77W2.3111 You inform us that the Blue Bird Circle [hereinafter Circle] is a 713l223.5886 non-profit Texas corporation which owns a tract of land on which it maintains an offi’:s building and two resale shops. uses 505 Broadway. Suite 312 the office bulldir~e; for its various programs and meetings; the resale Lubbock. TX. 7S401-3419 shops sell merchandise which has been donated the Circle. The 80817476238 Circle uses all profits from its various activities to support Blue Bird Clinic for Pediatric Neurology, which located in the 4302 N. Tenth. Suite B Texas Uedical Center, several miles away in McAllm. TX. 78501.1685 question. 512/SS2-4S47 ll.lIl~:c) of the Texas Tax Code lists the requirements 200 Main Plaa. Suite 400 which an organir.ation must meet to qualify ‘-6 a San Antonio. TX. 781052797 organization under the statute: 5120254191

(c) To qualify as a charitable organixaiion the purposes of this section. an organization An Equal Opportunity/ (whethe:, Affirmative Action Employer operated by an lndlvldual. corporation, or as an association) must:

(1) be organized to perform relic ious, charitable, scientific, literary, educa,tlonal purposes rind. except as permitted by subsection (d) section, engage *2 - PaSe 2 (Jhi-269) in performing one or more of the folloving charitable functions:

(A) providing medical care without regard to the beneficiaries’ ability to pay; . . . .

As this office noted in Attornev General Ooinion MW-288 (1980). Inc. -v. Kerrvilie Independent School the court in Hilltop Villa:Qs, 426 S.W.2d 943 (Tax. 1968). indicated that the activity District, of providing facilities which m,eet special residential of the aged-might qualify as au institution for tax exemption as one of but only where it also qualified under the purely public charity, definition of such institutions for tax exemption purposes. the controlling st:a.tute (former article 7150. section 7, time restricted exemptions to property V.T.C.S.) at institutions dispensing aid “vithout regard to [the] poverty or riches of the reciuient.” a reauirement which the claimant failed to meet.

the exemption was denied: 426 S.W.2d at 948. See also City of (Waco v. Texas Retired Teacher Re!aidence Corporation, 464 S.W.Zd 346 Tex.

1971). Accordingly, if the F’roperty of the Circle is to be accorded a itself must be exempt under section exemption, 11.18.

We must conclude that the Circle does not qualify for a section tax exemption. We note that the burden of establishing the 11.18 taxation is on institurion exemptlox claiminn the exemution. and the exemption must be proved in such a manner as leave no doubt:. Willacy County Appt&d District v.

North Alamo Water Supply Corporation. No. 13-83-318-0 (Tex. App. - lTB4). Further, in such cases, exemptions Corpus Christi. June 28.

from taxation are never favored. and, in construing laws exempting an organization.’ all doubts uust be resolved against institution the exemption. HeQecroft v. City of Housron. 244 S.W.2d 632 claiming (Tex. 1951). Both statutory and constitutional provisions purporting to grant exemption from taxation will be given a narrow and strict construction. and all doubts must be resolved against the granting of the tax exemption. Hillto) Village v. Kerrvifie Independent School District, supra. 11.18(c)(3)(B) of the Tax Code requires that charter,

bylaws, or regulations adopted by the organization to govern affairs must

direct that on d::scontinuance of the organization by dissolution or otherwi.se the assets are to be transferred to this state or CO an educational, religious, charitable, or other similar organira- tion qualified

q - Prtge 3

organization under Section 501(c)(3). Internal Revenue Code of 1!154, as amended.

Article I, section 3 o:: the Circle's bylaws reads: Section 3. No part of this Corporation shall ever be utilized for the private gain or profit of any officer, director, member, as such, oi1 the Corporation. the Circle refers to section 3 as ensuring that its its brief, In

assets are "perpetually dedicated to use in performing organization's function." asserts provision satisfies the staeutory requirements of section 11.18(c)(3).

We disagree. There is no provision in the documents submitted to us that directs the Circle's assets to be transferred in the required manner in the event of its Hacontinuance.

The tax status of the c,orporation for this year is determined by its qualifications on January 1. 1984. Prop. Tax Code 511.42. does not meet the section 11.18(c) statutory of a charitat~le organization, we conclude

property is not exempt from ad valorem taxation.

SUMMARY The Blue Ri::d Circle does not meet to qualify as a charitable organization and, therefore, is not exempted from ad valorem taxaticn by section 11.18 of the state Property Tax Code.

JIM MATTOX Attorney General of Texas TOM GREEN

First Assistant Attorney G+eral

DAVID R. RlCRARDS

Executive Assistant Attorncfy General

RICK GILPIN

Chairman, Opinion Committee! *4 - Page 4

Prepared by Rick Gilpin

Assistant Attorney General

APPROVED:

OPINION COMMITTEE

Rick Gilpin. Chairman

Colin Carl

Susan Garrison

Tony Guillory

Jim Hoellinger

Jennifer Riggs

p. 1x3