The Attorney General of Texas
JIM MATTOX :&arch31. 1986
Attorney General
Supreme Court Building Honorable Am Postma Musgrove opinion No. m-464
P. 0. BOX 12549 Cbildrcss County A,ttomey
Austin, TX. 7871% 2549
Courthouse Ret Whether the city of Cbildress
51214752501
Telex 910/874-1387
Childress, Texas 79201 is exempt from taxes under section
Telecopier 512/4750288 11.11 of the Tax Code, on city-owned
airport land leased to individuals
714 Jackson, Suits 700
Dallas, TX. 752024506
Dear Ms. Musgrove:
21U7428944
You ask whet,ber real property med by a city but leased to
private indlviduale is exempt from ad valorem taxation which the
4S24 Alberta Ave., Suite 180 county and a hospi,taldistrict seek to impose. You inform us that the
El Paso. TX. 79905-2793
property includes an airport operated by the city in which some of the
915/53344B4
airport facilities are leased to an individual who sells fuel to
airplane operatom. The lessee operates the facility as a commercial
91 Texas, Suite 700 enterprise but sub,jectto the direction and control of the city as
JUS~O”, TX. 77W2.3111 specified in the lease agreement. Also, the federal government
71~2235886 operates a weather station and directs flight cdntrol at the airport.
The land surround,ingthe airport is leased by the city to private
808 Broadway, Suite 312 individuals and corporations that use the land for commercial
Lubbock, TX. 79401.3479 purposes, includ,lng farming and ranching. The city receives
905,747.5239 remuneration from the individuals in the form of rental payments which
are devoted exclusively, you assert, to the use and benefit of the
4309 N. Tenth, Suits S
public, specifically including the upkeep of the airport.
McAllen, TX. 7850%1685
51216824547 We understand you to .ask whether the city is exempt from ad
valorem taxes on ,the airport operation, oo the airport facilities
200 Main Plaza, suite 400
which are leasei. to an individual who sells fuel to airplane
San Antonio, TX. 782052797 operators, and on the land surrounding the airport which is leased for
5121225.4191 private commercial.purposes. We do not understand you to ask whether
the lessees willl~c:subject to taxation oo their leaseholds. We first
address the airport facilities question and will then address taxation
An Equal OpportunItyI
of the surroundins;land.
Aftlrmatlvs Action Employer
Article VIII, section 1, of the Texas Constitution provides the
following in pertLumt part:
Taxal:l.oa
shall be equal and uniform. All real
property and tangible personal property in this
tsltate, whether owned by natural persons or cor-
porations, other than municipal, shall be taxed in
p. 2126
. Honorable Ann Postma Musgrcve - Page 2 (JM-464)
proportion to it,s value, which shall be ascer-
tained as way be provided by law.
Article VIII, section 2, of the Texas Constitution. provides the
following in pertinent part:
[Tlhe legislature my, by general laws, exempt
from taxation public property used for public
purposes. . . . (Emphasis added).
Article XI, section !):,of the Texas Constitution provides the
following in pertinent part:
The property of s:ounties, cities and towns, owned
and held only folrpublic purposes, such as public
buildings and tl;! sites therefor . . . and all
other property debvotedexclusively to the use and
benefit of the-$blic shall be exempt from . . .
taxation. . . . emphasis added).
Section 11.11 of the lax Code sets forth the following:
511.11. Public Froperty
(a) Except 811 provided by Subsections (b) and
(c) of this sectjon [which are not here apposite],
property owned b:~ this state or a political sub-
division of this- state is exempt from taxation
if the property -is used for public purposes.
(Emphasis added).-
Property of a political 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 :Eor use of the property or a profit is
generated thereby, providei that charges are incident to its use by
the public and the proceeds inure to the benefit of the political
subdivision. Lower Colomdo River Authoritv v. Chemical Bank and
, 190 S.W.2d-48, ~50 CT&. 1945); A b M Consolidated
:hool Distrlcllv. City of Bryan, 184 S.W.2d 914, 915-16
See also City , 415 S.W.2d 902,
915 (Tex. 1967)( ,Walker, J.. dissenting); Galveston Wharf Company v.
City of Galveston, 63 Tex.. 14, 23 (1884): Cf. City of Dallas v.
Smith, 107 S.W.2d 872, 878 (Tex. 1937); SantaRosa Infirmary v. Cite
ofn Antonio. 259 S.W. 926, 931 (Tex. Ccmn'n App. 1924, judgmt
adopted); City of Palestfne v. Hissourl-Pacific Lines Hospital
Association, 99 S.W.2d 311,-314 (Tex. Civ. App. - Amarillo 1936, writ
ref'd) (cases involved not political subdivisions, but rather
institutions of purely prblic charity). The fact that the city
receives compensation for +le lease of its property will not deprive
p. 2127
.
Honorable Ann Postma Musgrove - Page 3 (JM-464)
the city of its tax-exanpt status on the property if it would
otherwise be tax-exempt.
But this discussion, of course, does not end our inquiry. The
Texas Supreme Court has consistently raafflrmed the principle that, in
order for public property to be exaupt from ad valorem taxation, it
rrmstbe held onlv for oub1.j.cDumoses and devoted exclusivelv to the
use and benefit df the bub:.ic.'Satterlee v. Gulf Coast Waste Disposal
Authority, 576 S.W.2d 773, 778 (Tex. 1978); Leander Independent School
District v. Cedar Park Watsr Supply Corporation, 479 S.W.2d 908, 912
(Tex. 1972); Daugherty v. Thompson, 9 S.W. 99, 102 (Tex. 1888). The
test for determining whethP:cuublic orooertv is tax exemDt is whether
it is used for the health, &fort. 'andweifare of the niblic. It is
not essmtial that it be used for "governmental" purposes. Lower
Colorado River Authority 12 Chemical Bank and Trust Company, supra;
Corporation of San Felipe I$ Austin v. State, 229 S.W. 845, 847 (Tex.
1921). It is sufficient t,hat it be used for "proprietary" purposes.
A 6 M Consolidated Independent School District -v. Cit; df Bryan,
supra. It is imaterial whether only residents of the district are
benefitted or whether others benefit as well; the fact that property
is owned by the public ctnd is used for the health, comfort, and
welfare of the public of gnomeportion of the state is sufficient to
entitle such property to tre:-exemptstatus. State v. Houston Lightins
-. & Power Co., 609 8.W.2d :!63, 270 (Tex. Civ. App. - Corpus Christi
1980, writ ref'd n.r.e.). See also Attorney General Opinions MW-430
(1982); IN-391 (1981).
We have no difficulty in statlng as a matter of law that the
city's airport and airpor,t facilities, Including those leased to a
private individual, are impressed with a public purpose sufficient to
meet Texas constitutional .and statutory tests regarding ad valorem
taxes. The Texas Legislature has specifically authorized all cities
and towns. including home rule cities, to build and purchase airports
and to mortgage or otherwillsencumber airports, as well as the land on
which they are situated. See V.T.C.S. art. 1015~; see also V.T.C.S.
arts. 126921;1269j; 46d-1 t!t:scq.("Municipal AirpOrtB Act"). Article
46d-16, V.T.C.S., specificcillyprovides %n relevant part:
Any property in this [sltate acquired by a munici-
paltry for airport purposes pursuant to the pro-
visions of this [slct [articles 46d-1 to 46d-221,
and any income derived by such municipality from
the ownership, operation or control thereof, shall
be exempt from taxation to the sane extent as
other property uc;edfor public purposes.
In fact, municipal airports constructed with public funds have been
said to differ In no water:lal element from other public facilities,
such as a public auditorium or a municipal hospital. Hayden V. City
p. 2128
Honorable Ann Postma Musgroyre- Page 4 (a-464)
of Houston, 305 S.W.2d 798, 802 (Tex. Civ. App. - Fort Worth 1957,
writ ref'd n.r.e.).
We mw turn to the iswle of taxation of the surrounding land. In
City of Abilene v. State, 113 S.W.2d 631 (Tax. Civ. App. - Eastland
1937, writ dism'd), real