The Attorney General of Texas
JIM MAllOX :)ecember 27, 1984
Attorney General
Supreme
Cowl BulldIng Ronorable Mike Driscoll Opinion No. JM-269
P. 0. 80x 12S48 Rarris County Attorney
Austin. TX. 711711.2S4a 1001 Preston, Suite 634 Re: Whether the real and personal
512l4752501 Rouston, Texas 77002 property of the Blue Bird Circle
Telex 91ws7c13a7
Telecopier 512/47402+6
is exempt from ad valorem taxes
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
4824 Albwta Ave.. Sulle 160 charitable organizations from taxation of their buildings and tangible
El Paso. TX. 799052793 property. provides that the organization can meet certain stated
915/533-3494 requirements. We conclude that the Blue Bird Circle does not meet
these statutory requirements for exemption under section 11.18. We
4001 Texas. Suite 700
limit our answer to the particular facts which you have given us.
Houston, TX. 77W2.3111
713l223.5886 You inform us that the Blue Bird Circle [hereinafter Circle] is a
non-profit Texas corporation which owns a tract of land on which it
maintains an offi’:s building and two resale shops. The Circle uses
505 Broadway. Suite 312
Lubbock. TX. 7S401-3419
the office bulldir~e; for its various programs and meetings; the resale
80817476238 shops sell merchandise which has been donated to the Circle. The
Circle uses all profits from its various activities to support the
Blue Bird Clinic for Pediatric Neurology, which is located in the
4302 N. Tenth. Suite B Texas Uedical Center, several miles away from the property in
McAllm. TX. 78501.1685
512/SS2-4S47 question.
Section 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 charitable
San Antonio. TX. 781052797
organization under the statute:
5120254191
(c) To qualify as a charitable organixaiion
An Equal Opportunity/ for the purposes of this section. an organization
Affirmative Action Employer (whethe:, operated by an lndlvldual. as a
corporation, or as an association) must:
(1) be organized exclusively to perform
relic ious, charitable, scientific, literary, or
educa,tlonal purposes rind. except as permitted
by subsection (d) of this section, engage
p. 1200
Honorable Mike Driscoll - PaSe 2 (Jhi-269)
exclusively 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).
the court in Hilltop Villa:Qs, Inc. -v. Kerrvilie Independent School
District, 426 S.W.2d 943 (Tax. 1968). indicated that the activity of
providing facilities which m,eet special residential requirements of
the aged-might qualify as au institution for tax exemption as one of
purely public charity, but only where it also qualified under the
statutory definition of such institutions for tax exemption purposes.
Because the controlling st:a.tute (former article 7150. section 7,
V.T.C.S.) at that time restricted exemptions to property of
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
charitable exemption, the Circle itself must be exempt under section
11.18.
We must conclude that the Circle does not qualify for a section
11.18 tax exemption. We note that the burden of establishing the
requirements for exemptlox from taxation is on the institurion
claiminn the exemution. and the exemption must be proved in such a
manner as to leave no doubt:. Willacy County Appt&d District v.
North Alamo Water Supply Corporation. No. 13-83-318-0 (Tex. App. -
Corpus Christi. June 28. lTB4). Further, in such cases, exemptions
from taxation are never favored. and, in construing laws exempting an
organization.’ all doubts uust be resolved against the institution
claiming the exemption. HeQecroft v. City of Housron. 244 S.W.2d 632
(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.
Section 11.18(c)(3)(B) of the Tax Code requires that charter,
bylaws, or regulations adopted by the organization to govern its
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 that is qualified as a charitable
p. 1201 .
q
Honorable Mike Driscoll - Prtge 3 (JM-269)
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 the property of this
Corporation shall ever be utilized for the private
gain or profit of any officer, director, or
member, as such, oi1 the Corporation.
In its brief, the Circle refers to section 3 as ensuring that its
assets are "perpetually dedicated to use in performing the
organization's charitable function." The Circle asserts that this
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.
Because the Circle does not meet the section 11.18(c) statutory
requirements of a charitat~le organization, we conclude that its
property is not exempt from ad valorem taxation.
SUMMARY
The Blue Ri::d Circle does not meet the
statutory requirements 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
TOMGREEN
First Assistant Attorney G+eral
DAVID R. RlCRARDS
Executive Assistant Attorncfy General
RICK GILPIN
Chairman, Opinion Committee!
p. 1202
Honorable Mike Driscoll - Page 4 (JM-269)
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