April 21, 1987
Eonorable Grant Jones Opinion No..Jk-682
ChdISl8U
SallateFinance Cdttee Be: Exemption for biomedical re-
Texas State Senate search facilities under section
P. 0. Box 12068 11.23(h) of the Property Tax Code
Austin, Texas 78711
Dear Senator Jones:
Under a set of facts that you have submitted, you ask three
questions regarding whether the Southwest Foundation for Biomedical
Research [hereinafter the foundation] is entitled to exemption from
ad valorem taxation under the Property Tax Code and the Texas Consti-
tution. You also ask whether an applicant for exemption from ad
valorem taxation that satisfies the requirements contained in section
11.23(h) of the Tax Code will qualify automatically for exemption or
whether a separate determination must be made as to whether the
applicant further satisfies the court-imposed constitutional tests for
"purely public charities" under article VIII. section 2, of the Texas
constitution. We conclude that, assuming proof of the facts that you
have submitted co us, the foundation would be exempt from ad valorem
taxation under both the relevant statute and the Texas Constitution.
We further conclude that applicants for exemption from ad valorem
taxation under section 11.23(h) of the Tax Code must comply with the
requirements imposed by the Texas Constitution, in addition to those
set forth In the relevant exemption statute.
You first ask the following three questions regarding whether the
foundation is exempt from taxation:
1. Does the foundation meet the criteria for
exemption as a biomedical research corporation
under section 11.23(h) of the Texas Property Tax
Code and all applicable laws of the state?
2. Does the foundation qualify for an exemp-
tion under any other section of the Property Tax
Code?
3. Does the foundation meet the criteria for
an 'institution of purely public charity' under
p. 3146
Eouorable Grant Jones - Page 2 (m-682)
article VIII, section 2(a) of the Texas Constitu-
tion?
Your third question is whether the foundation satisfies the constiru-
tioual tests under article VIII, section 2, of the Texas Constitution.
You first ask whether~ the foundation satisfies the requirexeuts of
section 11.23(h) and "all applicable laws of the state." Although
"all applicable laws of the state" includes the Texas Constitution, we
understand your first question to refer only to applicable statutes.
We uote at the outset that the determination as to whether any
property is entitled to exemption from ad valorem taxation necessarily
requires the resolution of issues of fact. Benevolent and Protective
Order of Elks. Lodge No. 151 v. City of Houston. 44 S.W.2d 488 (Tex.
Civ. App. - Beaumont 1931. writ ref'd). Attorney General opinions
issued pursuant to article 4399, V.T.C.S., do not resolve issues of
fact. Accordingly. we predicate our conclusion on the facts that you
have submitted to us. We make uo findings of fact in this instance;
we merely accept as true the facts that you have submitted.
Both statutory and constitutional provisions purporting to grant
au exemption from ad valorem taxation should be given a narrow and
strict construction. Davies v. Meyer. 528 S.W.2d 864 (Tex. Civ. App. -
Fort Worth), aff'd, 541 S.W.Zd 827 (Tax. 1975). because exemptions
from taxation are not favored by the law and will not be construed
favorably. Daughters of St. Paul, Inc. v. City of San Autonio. 387
S.W.Zd 709 (Tex. Civ. App. - San Antonio 1965, writ ref'd n.r.e.).
Moreover, the burden to--establish the facts necessary to claim an
exempti& falls upon the institution seeking the exemption, Malone-
Hogan Eospital Clinic Foundation, Inc. v. City of Big Spring, 288
S.W.Zd 550 (Tex. Civ. App. - Eastland 1956. writ ref'd n.r.e.). with
all doubts being resolved against granting the exemption. McClure v.
City of Texarkana. 435 S.IJ.2d 599 (Tex. Civ. App. - Texarkana 1968,
writ dism'd); Methodist River Oaks Apartments. Inc. v. City of Waco.
409 S.W.2d 485 (Tax. Civ. App. - Waco 1966, writ raf'd n.r.e.), cert.
denied. 389 U.S. 848 (1967).
Article VIII, section 2(a), of the Texas Constitution provides in
pertinent part that "the legislature may, by general laws, exempt from
taxation . . . institurions of purely public charity." Section 11.18
of the Tax Code is the "geueral law" that the legislature has enacted
to exempt such institutions. But in addition to section 11.18 of the
Tax Code, the legislature has also enacted section 11.23 of the Tax
Code, which sets forth so-called "miscellaneous exemptions," many
of which were carried into the new Property Tax Code from the now-
repealed exemptions listed in articles 7150 et seq., V.T.C.S. The
section purporting to exempt biomedical research facilities was
contained in section 29 of article 7150, V.T.C.S. Acts 1977, 65ch
Leg., ch. 865. 51, at 2192. Section 11.23 of the Tax Code lists ten
p. 3147
Eonorable Grant Jones - Page 3 0X-682)
associations or organizations that it purports to exempt from
taxation. Subsection (h) provides the following:
Biomedical Research Corporations. A nonprofit
corporation as defined in the Texas Non-Profit
Corporation Act is entitled to au exemption from
taxation of the property it owns and uses
exclusively for biomedical research and education
for the public benefit.
You have provided us with the following information:
1. The foundation makes no gain by private
individuals. and there is no accrual of distri-
butable profits. The foundation is not even in
a position to use profits to reinvest in its
research activities. because after depreciation.
the foundation had a deficit of $1.298.092.00 for
1985.
2. The foundation. with work conducted in the
areas of cancer research, genetic research, heart
and lung diseases, hormone research, issauno-
logical and virological research. and other areas,
accomplishes ends wholly benevolent, work which is
intended to improve the well-being of others.
3. The foundation, through its work, is
helping to provide biomedical research and
education to the citizens of the State of Texas
and Is assuming. to a material extent, that which
might otherwise become the obligation or duty of
the community or the state.
4. The foundation, under its Trust Indenture,
has its assets pledged to Texas A h M University
and Yale University if the foundation were ever to
dissolve. Further, the Trust Indenture shows that
the purpose of the foundation is purely charitable
and intended for the public benefit.
5. The foundation is a trust and a Texas non-
profit corporation.
6. The foundation has been granted tax exempt
status by the Internal Revenue Service under
section 501(c)(3).
7. The legislative history of section 11.23(h)
of the Property Tax Code indicates that it was
p. 3148
Eouorable Grant Jones - Page 4 (JM-682)
enacted to exempt organizations such as the
foundation from ad valorem taxation because it was
considered a 'purely public charity.'
You first ask:
Does the foundation meet the criteria for
examptioa as a biomedical research corporation
under section 11.23(h) of the Texas Property Tax
Code and all applicable laws of the state?
By its very terms, section 11.23(h) of the Tax Code exempts a
biomedical research corporation that: (1) is a nonprofit corporation
as defined by the Texas Non-Profit Corporation Act; (2) owns the
property ou which exemption is sought; (3) uses exclusively the
property for biomedical research and education; and (4) does so for
the public benefit. Co the basis of the information that you have
submitted to us, it is evident that the foundation falls squarely
within section 11.23(h) of the Tax Code. Compliance with no other
statute, other than the application filing requirements of subchapter
C of chapter 11 of the Tax Code governing administration of exemp-
tions, is necessary in order to receive an exemption under section
11.23(h).
You next ask:
Does the foundation qualify for au exemption under
any other section of the Property Tax Code?
Section 11.18 of the Tax Code is the general law that the
legislature has enacted pursuant to article VIII, section 2. of the
Texas Constitution to exempt from taxation institutions of public
charity. Section 11.18 of the Tax Code sets forth the following in
relevant part:
(4 b orgauisatiou that qualifies as a
charitable organization as provided by Subsection
(c) of this section is entitled to au exemption
from taxation of the buildings and tangible
personal property that:
(1) are owned by the charitable organisa-
tiou; and
(2) except as permitted by Subsection (b)
of this section, are used exclusively by
qualified charitable organizations.
. . . .
p. 3149
I-
Eouorable Grant Jones - Page 5 (JM-682)
(c) To qualify as a charitable organization
for the purposes of this section, an organization
(whether operated by au individual, as a corpora-
tion, or as an association) must:
(1) be organized exclusively to perform
religious, charitable, scientific, literary, or
educational purposes and, except as permitted by
Subsection (d) of this section [an exception not
here relevant], engage exclusively in performing
one or more of the following charitable functions:
(A) providing medical care without regard
to the beneficiaries' ability to pay;
(B) providing support or relief to orphans,
delinquent, dependent, or handicapped children
In need of residential care, abused or battered
spouses or children in need of temporary
shelter, the impoverished, or victims of
natural disaster without regard to the
beneficiaries' ability to pay;
(C) providlng'support to elderly persons or
the handicapped without regard to the bene-
ficiaries' ability to pay.;
(D) preserving a historical landmark or
site;
(E)~ promoting or operating a museum, zoo'
library, theater of the dramatic arts, or
symphony orchestra or choir;
(P) promoting or providing humane treamant
of animals;
W acquiring. storing, transporting,
selling, or distributing water for public use;
(H) answering fire alarms and extinguishing
fires with no compensation .or only nominal
compensation to the members of the organiza-
tion;
(I) promoting the athletic development of
boys or girls under the age of 18 years;
(J) preserving or conserving wildlife;
P. 3150
Honorable Grant Jones - Page 6 (J&682)
(K) promoting educational development
through loaus or scholarships to students:
(L) providing halfway house services
pursuant to a certification as a halfway house
by the Board of Pardons and Paroles:
(Ii) providing permanent housing and related
social, health care, and educational facilities
for persons who are 62 years of age or older
without regard to the residents' ability to
Pax
(N) promoting or operating an art gallery,
museum, or collection, in a permanent location
or on tour. that is open to the public; or
(0) 'providing for rhe organized solicita-
tion and collection for distributions through
gifts, grants, and agreements to nonprofit
charitable, education, religious, and youth
organizations that provide direct human.
health, and welfare services. . . . (Emphasis
added):
Assuming proof of the facts that you have submitted to us. we
conclude that the foundation does not fall within subsection Cc). It
is clear that the foundation is organized exclusively to perform
scientific and educational purposes, but the foundation does not
"engage exclusively in performing one or more of the . . . charitable
functions" listed in subsection (c)(l). The only function in which
the foundation even arguably engages is the providing of medical care
without regard to the beneficiaries' ability to pay. But the informa-
tion that you have submitted to us indicates that the foundation
engages in scientific and medical research, not madical treatment. As
this office declared in Attorney Geueral Opinion MW-288 (1980);
In our opinion, the definition of 'charitable
f"nCtions' in section 11.18(c)(l) clearly serves
not to enlarge the meaning of 'purely public
charity,' but to deny tax exemptions to property
owned by institutions of purely public charity
that are not organized to perform the charitable
functions defined. Where section 11.18 has the
effect of denying tax exemptions to organizations
that might otherwise have been properly allowed
them. it will be enforced. See Eilltop Village,
Inc. v. Kerrvilla IndependentSchool District, 426
S.W.2d 943 (Tax. 1968). Where it is used to
bestow tax exemptions on property that does not
P. 3151
honorable Grant Jones - Page 7 (m-682)
meet the 'purely public charity' test, it will
be held unconstitutional as applied. city of
Amarillo v. Amarillo Lodge, s.
You claim in your letter that the foundation "is helping to
provide biomedical research and education to the citizens of the state
of Texas." Section 11.21 of the Tax Code exempts schools from
taxation and provides the following in pertinent part:
(a) A person is entitled to an exemption from
taxation of the buildings and tangible personal
property that he owns and that are used for a
school that is qualified as provided by Subsection
(d) of this section if:
(1) the school is operated exclusively by
the person owning the property;
(2) except as permitted by Subsection (b)
of this sectiou, the buildings and tangible
personal property are used exclusively for
educational functions; and
(3) the buildings and tangible personal
property are reasonably necessary for the
operation of the school.
. . . .
(d) To qualify as a school for the purposes of
this section, an organization (whether operated by
au individual, as a corporation, or as au associa-
tion) must:
(1) normally maintain a regular faculty
and curriculum and normally have a regularly
organized body of students in attendance at the
place where its educational functions are
carried on;
(2) be operated in a way that does not
result in accrual of distributable profits,
realisation of private gain resulting from
payment of compensation in excess of a
reasonable allowance for salary or other
compensation for services rendered, or realiza-
tion of any other form of private gain and, if
the organization is a corporation, be organized
as a nonprofit corporation as defined by the
Texas Non-Profit Corporation Act; and
p. 3152
Honorable Grant Jones - Page 8 (JM-682)
(3) by charter, bylaw, or other regulation
adopted by the organization to govern its
affairs:
(A) pledge its assets for use in per-
forming the organlxation's educational
functions; and
(B) direct that on discontinuance of
the organization by dissolution or other-
wise the assets are to be transferred to
this state or to an educational, charic-
able, religious, or other similar organi-
zation that is qualified as a charitable
organixation under Section 501(c)(3),
Internal Revenue Code of 1954. as amended
[26 U.S.C. 1501(c)(3)]. (Emphasis added).
Assuming proof of the facts that you have submitted to us, we conclude
that the foundation fails to satisfy subsection (d)(l) and cannot
avail itself of section 11.21 of the Tax Code. Our examination of the
remaining sections of chapter 11 of the Tax Code does not disclose any
other statutory ad valorem tax exemption that even arguably could
apply.
You next ask:
Does the foundation mset the criteria for 'an
'institution of purely public charity' under
article VIII, section 2(a) of the Texas
Constitution?
Aa we noted earlier, article VIII. section 2(a), of the Texas
Constitution provides that "the legislature may, by general laws,
exempt from taxation . . . institutions of purely public charity."
The Texas Supreme Court has set forth a three-part test for deter-
mining whether an association or organieatioa is an "institution of
purely public charity" for purposes of article VIII, section 2(a), of
the Texas Constitution:
This Court suggested a definition of an in-
stitution of purely public charity, without
reference to the statutory definition but largely
in the same terms, in City of Rouston v. Scottish
Rite Benev. Ass'n. 111 Tex. 191. 230 S.W. 978,
981. where we said:
'In our opinion' the Legislature might reason-
ably conclude that an institution was one of
'purely public charity' where: First, it made
p. 3153
Honorable Gram Jones - Page 9 (JM-682)
no gain or profit; second, it accomplished ends
wholly benevolent; and, third, it benefited
persons, indefinite in numbers and in per-
sonalities, by preventing them, through
absolute gratuity, from becoming burdens to
society and to the state.'
Here, again, the primary purpose of the definition
suggested was to meet the contention that an
institution which dispensed aid only to its own
members was not an institution of purely public
charity; but here again, also, is the concept that
an institution of purely public charity is one
whose charity benefits persons 'by preventing
them. through absolute gratuity, from becoming
burdens to society and to the state.' We did not
leave our meaning in that respect in doubt. We
continued:
'Charity need not be universal to be public.
It IS public when it affects all the people
of a community or state. by assuming, to a
material extent, that which otherwise might
become the obligation or duty of the community
or the state.'
The necessary converse of that statement is that
an organization is not an institution of purely
public charity within the meaning of the constitu-
tional exemption unless it assumes, to a material
extent, that which otherwise might become the
obligation or duty of the community or the state.
(Emphasis added).
River Oaks Garden Club v. City of Houston' 370 S.W.2d 851, 854 (Tax.
1963) [hereinafter River Oaks]. The language of the Scottish Rite
test, first set forth in 1921, has been restated consistently by the
considerably the scope of the amendment.
In River Oaks' the court denied tax exempt status to a garden
club in Rouston. The club was formed as a nonprofit corporation,
maintained a landmark of historical value, and had as its main
activity "the educatiou and enlightenment" of its members and the
p. 3154
Honorable Grant Jones - Page 10 (JM-682)
public in the art of growing and arranging flowers. The court quoted
a Massachusetts Supreme Court case in offering a rationale for its
strict construction:
In Massachusetts General Hospital v. In-
habitants of Belmont. 233 Mass. 190. 124 N.E. 21,
25, the Supreme Judicial Court of Massachusetts
stated the rationale for exemption from taxes of
property of charitable institutions as well as a
sound reason for strict construction in these
words:
'One ground upon which exemptions from
raxation of charitable institutions like the
complainant can be justified in a constitu-
tional sense is that they minister to human and
social needs which the state itself might and
does to a greater or less extent undertake to
satisfy. The ultimate obligation of the state
thus is discharged by the private charity. To
that extent the state is relieved of its
burden. [In re] Opinion of [the] Justices, 195
Mass. 607, 609, 84 N.E. 499. An exemption from
taxation is in the nature of an appropriation
of public funds, because, to the extent of the
exemption. it becomes necessary to increase the
rate of taxation upon other properties in order
to raise money for the support of government.'
370 S.W.Zd at 855.
The court than concluded that the corporation failed the third
constitutional test:
We hold .on the facts here stated that
petitioner is not an institution of purely public
charity. Admittedly, its main activity is to
educate and enlighten its members, and such other
persons as care to attend its meetings or read its
book, in the art of growing and arranging flowers.
That activity may be one which the state or local
government could finance from taxes, a question we
need not decide, but it is certainly not an
activity which either the state or local govern-
ment is under a duty or an obligation to finance
in providing educational opportunities and
benefits to its society.
If petitioner may claim tax exemption as a
constitutional 'institutiou of purely public
p. 3155
Honorable Grant Jones - Page 11 m-682)
charity.' there can be no end of exemptions
accorded clubhouses and meeting places owned by
small groups of persons of common aesthetic
interests who associate themselves to promote and
enjoy their particular interests. All they would
need do would be to declare theirs to be a society
of fine arts, devoted exclusively to education and
learning in the field of their particular
interests, and admit the public, without charge,
to their clubhouse and meetings. It is but a half
stride from the art of gardening to the art of
interior decorating' and less than a half stride
to the art of dramatics. Many others are but a
stride away. (Emphasis added).
370 S.W.Zd at 855-56.
In a case decided only five years after River Oaks, the court
continued its strict construction of the purely public charity
constitutional tests. In Hilltop Village, Inc. v. Kerrvilla Indepen-
dent School District, 426 S.W.Zd 943 (Tex. 1968). the court denied tax
exempt status as a purely public charity to a home for the aged. The
court acknowledged that the factual situation preseuted was one of
first impression in the state and reviewed cases from other jurisdic-
tions that had dealt with the same issue. While pointing out that the
out-of-state cases were not controlling in Texas because the require-
ments of Texas constitutional and statutory law differ from those of
other states, the court noted rationales common to those cases clred.
The decisions recognizing tax exemption are
rested principally upon the conclusion that people
in later years have special care and residential
requirements, the alleviation of which is of
social value; and that exemption should be allowed
where such needs are being met by institutions not
organized or operated for private profit. The
decisions denying exemption have emphasized that
the occupants of the homes were the principal
beneficiaries rather than society in general' and
that society was not relieved of responsibility
for persons in need. All of the courts appear to
pay homage to the rule that tax exemptions are
subject to strict construction since they are the
antithesis of equality and uniformity.
426 S.V.Zd at. 947-48. The court then affirmed the lower court's
judgment that the home was not a purely public charity, but did so on
different grounds. The court disagreed with the lower court holding
that providing homes for the elderly cannot qualify as a purely public
charity, but concluded that, in an inscaace in which such aid was not
P. 3156
Eonorable Grant Jones - Page 12 (m-682)
dispensed "without regard to the poverty or riches of the recipient,"
such institution would not qualify.
But it is apparent that Hilltop Village is not
accepting residents without regard to their
financial circumstances nor is it bound to assume
charitable obligations or to engage in dispensing
relief to those in need. The requisite elements
of dedication and use in fact of its properties
are not present. There is no assurance that
society is being or will be relieved of the care
and expense of those in need. This is not to say
that all residents must be indigent or that the
acceptance of payment from some will defeat tax
exemption. It is to say that the institution must
be one whose properties and assets are pledged in
perpetuity to the relief of persons in financial
need and to their assistance in obtaining the care
they must have to prevent their becomiug a burden
on society. Laudable as it is in origin and
operation, Hilltop Village does not meet the
requirements of the Constitution and statutes of
Texas for exemption from taxation as an institu-
tion of purely public charity. (Emphasis added).
426 S.W.Zd at 949. See also City of Amarillo v. Amarillo Lodge No.
731, A.F. ii A.U.. 488 S.W.Zd 69, 71 (Tex. 1972). wherein the court
declared:
The characteristics of an institution of purely
public charity have been considered in several
other cases. While the benevolent ends sought CO
be accomplished may take some form other than
almsgiving, it Is essential that the organization
assume, to a material extent, that which otherwise
might become the obligation or duty of the com-
munity or the state. . . . (Emphasis added).
In San Antonio Conservation Society, Inc. v. City of San Antonio,
455 S.W.Zd 743 (Tex. 1970) [hereinafter Conservation Society] the
Texas Supreme Court held that a nonprofit organization chartered for
the purpose of preserving historical buildings and sites was a purely
public charity for purposes of article VIII, section 2' of the Texas
Constitution. While restating the tests that have traditionally been
imoosed.
--r-m-~.
the
~~
court exwanded their aoulication in two important
respects. First, unlikd the factual situations presented in Scottish
Rite, Billtop Village, or River Oaks, for example, in which the
beneficiaries of the charity could be individually identified. the
court in Conservarlon Society was confronted with a situation in which
the beneficiary was the public at large:
p. 3157
Honorable Grant Jones - Page 13 (JM-682)
We must measure the benefits to the whole
public against the rule announced in Scottish Rite
and restated in River Oaks Garden Club. That rule
is: 'It is public when it affects all the people
of a community or state by assuming, to a material
extent, that which otherwise might become the
obligation or duty of the community or the state.'
The City concedes that the whole public receives
the benefits of the Navaro House. (Emphasis
added).
455 S.W.2d at 746. Second, the court in River Oaks described the
activity of the River Oaks Garden Club and declared:
That activity may be one which the state or local
aovernment could finance from taxes. a auestioa
ve need not decide, but it is certainly'not an
activity which either the state or local govern-
ment is under a duty or an obligation to finance
in providing educational opportunities and
benefits to its society. (Emphasis added).
370 S.U.2d at 855. In San Antonio Conservation Society, the court
examined various constitutional and statutory provisions regarding the
preservation of Texas' historical heritage and concluded that, taken
together, they offer sufficient examples of a governmental interest in
proseming historical buildings and sites to warrant the cons,ervation
society's claim that it assumes to a material extent that which would
othervise become the oblisation or dutv of the communitv or state.
Unlike the factual situations in Santa Rosa Infirmary, Sc&tish Rite,
or even Eilltop Village, the court was dealing, not with indigents
needing care, but with a situation in which the state had assumed
voluntarily an obligation not otherwise imposed. Compare Tex. Const.
art. XI, 52. and Const. art. XVI, $8, and V.T.C.S. art. 2351, with
Tex. Coast. art. XVI, SP38 [Repealed by Acts 1969, 61st Leg., at
32301. 39.
And finally, in City of McAllen v. Evangelical Lutheran Good
Samaritan Society, 530 S.W.2d 806 (Tax. 1975). the court expanded the
doctrine of purely public charicy to reach a situation in which
"purely" was no longer a requirement. The charter of the organization
that sought the tax exemption provided that the organization engage in
charitable and religious purposes. The court concluded that such a
defect was notfatal to the organization's claim that it was exempt as
a purely public charity.
Some 22 years after River Oaks, a Texas appeals court construed
the doctrine of purely public charity to reach a symphony orchestra.
In Dallas S*ymphony Association, Inc. v. Dallas County Appraisal
District, 695 S.W.2d 595 (Tex. App. - Dallas 1985, writ ref'd n.r.e.).
p. 3158
Honorable Grant Jones - Page 14 (JM-682)
that court held as a matter of law on summary judgment that the Dallas
Symphony Association, Inc.. a nonprofit corporation whose primary
purpose was the promotion of musical and educataonal activities, was
tax exempt as a purely public charity. The appraisal district
contended that the association failed to satisfy the three-part test
of Scottish Rite. The appeals court detenained that the appraisal
district had produced no controverting evidence and concluded that the
association did assume to a material extent that which would otherwise
become a burden on the community based oa the summaryjudgment proofs:
We take judicial notice of the fact that the
City of Dallas ranks seventh in size in the uation
based upon population. The needs of its citizens
vary fro's the basic essentials, such as streets,
garbage collection, and police and fire protec-
tion, to libraries, art museums, and cultural
activities. The well-being and economic growth of
a comaunity benefits all its citizens. A major
contributing factor to the growth of the City of
Dallas is its cultural achievements, which in turn
stimulates trade and commerce, and reduces un-
employment.
Our review of the affidavits in support of the
Symphony's motion for sumary judgment further
supports our couclusion that the Symphony is a
purely public charity as a matter of law.
695 S.W.2d at 599. The appeals court has taken the "half stride" that
the River Oaks court warned about. But see Nilitary Highway Water
Supply Corp. v. Boone, 688 S.W.2d 648 (Tax. App. - Corpus Christ1
1985. no writ); Willacy County Appraisal District v. North Alamo Water
Supply Corp., 676 S.W.2d 632 (Tax. App. - Corpus Christ1 1984, writ
ref'd n.r.e.).
Assuming proof of the facts that you have submitted to US, we
conclude that the first two constitutional tests are satisfied.
The most difficult of the three tests to meet in any determination
regarding whether an organization or association is an "institution
of purely public charity" is the third test, namely whether the
applicant assumes to a material extent that which otherwise might
become an obligation or duty of a community or state. You describe
the activities in which the foundation engages in the following
paragraph:
The foundation, with work conducted in the areas of
cancer research, genetic research' heart and lung
diseases, hormone research, isuaunological and
virological research, and other areas, accomplishes
p. 3159
Honorable Grant Jones - Page 15 (JM-682)
ends wholly benevolent, work which is intended to
improva the well-being of others.
Based upon our examination of Texas law and relying primarily
upon the Conservation Society case' we cannot conclude that d court
presented with the question would not grant the tax exemption. We
thus conclude that a nonprofit foundation that engages exclusively in
biomedical research and education could meet the requisite consritu-
tional tests. See, e.g., Educ. Code chs. 73, 74 (establishing various
medical schools and teaching and research hospitals); V.T.C.S. arts.
4477-40 (the Cancer Control Act); 4477-41 (the Texas Cancer Council);
4477-11 (the Tuberculosis Code); 4477-12 (prevention, eradication, and
control of tuberculosis); 4477-20 (Kidney Health Care Act); 4477-30
(hemophilia assistance program); 4477-50 (epilepsy program); 4477-60
(Texas Diabetes Council); 4477-70 (abnormal spinal curvature in
children); 4476-15, subchapter 7 (medical and research program
established by Texas Board of Health regarding certain controlled
subsrancrs); 4419b-1 (Communicable Disease Prevention and Control
Act).
And finally, you ask whether an applicant who satisfies the
criteria set forth in section 11.23(h) of the Tax Code, automatically
qualifies for exemption from ad valorem taxation or whether the
applicant must additionally satisfy the three-part constitutional
tests for "institutions of purely public charities." Article VIII,
section 2(a). of the Texas Constitution provides in relevant part that
"all laws exempting property from taxation other than the property
mentioned in this Section shall be null and void." Article VIII,
section 2(a), has been construed to prohibit the legislature from
allowing by statute charitable tax exemptions for property not owned
bv institutions of. uurelv oublic charity. as defined bv the Texas
Cbnstitution. See D'icki~on'v. Woodmen of the World Life Insurance
%&YD 280 Sad 315 (Tex. Civ. App. - San Antonio 1955. writ
. See also River Oaks Garden Club v. City of Houston, supra.
In order for a charitable exemption to apply, both the constitutional
and statutory requirements must be met. City of Amarillo v. Amarillo
Lodge No. 731, A.F. h A.M.. 488 S.W.2d 69 (Tax. 1972); Santa Rosa
Infirmary v. City of San Antonio, 259 S.W. 926, judgement adopted
(Tax. Comm'n App. 1924); Attorney General Opinion MU-288 (1980).
We conclude that, if it is determined that the facts regarding
the Southwest Foundation for Biomedical Research are as you describe,
the Southwest Foundation for Biomedical Research would be entitled to
be exempt from ad valorem taxation as an "institution of purely public
charity" pursuant to section 11.23(h) of the Tax Code and article
VIII, section 2(a), of the Texas Constitution. An applicant for
exemption from ad valorem taxation as a biomedical research facility
must satisfy both the requirements contained in section 11.23(h) of
the Tax Code and the court-imposed three-part tests for "institutions
p. 3160
Honorable Grant Jones - Page 16 (JM-682)
of public charity" under article VIII, section 2(a), of. the Texas
Constitution.
SUMMARY
If it is determined that the facts regarding
the Southwest Foundation for Biomedical Research
are as you describe, we cannot say that the
Southwest Foundation for Biomadical Research would
not be entitled to be exempt from ad valorem
taxation as an "institution for purely public
charity" pursuant to section 11.23(h) of the Tax
Code, and article VIII, section 2(a). of the Texas
Constitution. An applicant for exemption from ad
valorem taxation as a biomedical research facility
must satisfy both the requirements contained in
section 11.23(h) of the Tax Code and the
court-imposed three-part tests for "institutions
of purely public charity" under article VIII,
section 2(a), of the Texas Constitution.
Attorney General of Texas
JAClCIiIGHTONER
First Assistant Attorney General
MARY EELLFR
Executive Assistant Attorney General
JUDGE EOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Jim Moellinger
Assistant Attorney General
p. 3161
Untitled Texas Attorney General Opinion
Combined Opinion