Honorable Joe Resweber Opinion No. M-1008
County Attorney
Harris County Courthouse Re: Effect of H.B. 1099,
Houston, Texas 77002 62nd Leg., R.S. 1971
on procedure in assessing
property, such as the
Harris County Domed
Stadium and other lease-
holds in the County, and
the proper application
Dear Sir: to such assessments.
You ask the following question:
"Does House Bill 1099 change the procedure
in the assessing of property such as the
Domed Stadium and other leasehold interests
in the county, and If so, how would It apply
to an assessment of the Domed.Stadium and
related facilities?"
House Bill 1099 is the bill passed by the 62nd
Legislature, Regular Session, 1971. We will assume
that the "Domed Stadium" you speak of is owned by the
County of Harris.
House Bill 1099 amends Articles 7173 and 7174,
Vernon's Civil Statutes.
Article 7173 before the amendment and Insofar as It
relates to leasehold Interests, read In part as follows:
"Property held under a lease for a term
of three year6 or more, or held under a
contract for the purchase thereof, belong-
ing to this State, or that Is exempt by law
from taxation in the hands of the owner
thereof, shall be considered for all the
purposes of taxation, as the property of
the person so holding the same, except as
otherwise specially provided by law. ...’
-4915-
Honorable Joe Resweber, page 2, (M-1008)
As amended, this Article now reads,ln its relevant
part:
"Leasehold interests In land, buildings,
or Improvements owned In whole or In part
by the State, a county, a city or cities,
a school district or any other governmental
or public entity or body politic.
"Property held under a lease for a term of
one year or more, or held under a contract
for the purchase thereof, belonging to the
State, a county, a city or cities, a school
district, or any other governmental or
public entity, authority or body politic
or that is exempt by law from taxation
in the hands of the owner thereof, except
for properties held, owned or dedicated,
in trust or otherwise, to the support,
maintenance or benefit of Institutions
of higher education, shall be considered
for all the purposes of taxation, as the
property of person so holding the same,
except as otherwise specially provided by
law; however this shall not Include:
1,...I'
The effect of the amendment to Article 7173 is to make
the leasehold estate held for a term of one year or longer
taxable to the lessee as owner, if owned In whole or In
I~ part by either the State, county, city, school district or
any public entity or body politic while the article prior
-to amendment required the lease to be for a term of three
years or more and also applied only to property owned by
the State or that Is exempt by law from taxation in the
hands of the owner thereof. Also, Article 7173 'VX.S.,
Ei as amended, excepts taxation of the leasehold interest to
the lessee as owner, for properties held, owned or dedicated,
In trust or otherwise, to the support, maintenance or benefit
of institutions of higher education.
-4916-
Honorable Joe Resweber, Page 3 (M-1008)
The amendment to Article 7173, insofar as leasehold
Interests In publicly owned property are concerned, changed
the length of the lease term from "three year6 or more" to
*one year or more," and broadened the entities of ownership.
House Bill 1099, supra, will not change the procedure in
assessing the value of the leasehold Interest in the Domed
Stadium. For the purpose of this opinion we are assuming
the term of the lease on the Domed Stadium was for three
years or more when House Bill 1099 was passed and also
that the Domed Stadium Is not dedicated to the support of
institutions of higher education.
Article 7174, before the amendment and insofar as it
related to leasehold Interests read, in part, as follows:
I,...
"Taxable leasehold estates shall b6
valued at such a price as they would
bring at a fair voluntary sale for cash..."
This Article as amended, in its relevant part, now
reads as follows:
II
...
"taxable leasehold estates on non-exempt
property shall be valued at such price as
such leasehold estates would bring at a
voluntary sale for cash, and taxable
leasehold estates on exempt property shall be
valued at such price as such leasehold estates
would bring at a voluntary sale thereof
for cash, based upon the value of a comparable
improvement If located on non-exempt
property, with reductions for reversionary
Interests, restrictions on use, and credit
for normal rental..."
Under Article 7174, before amendment, a taxable lease-
hold estate was valued at the price the leasehold would
bring at a fair voluntary sale for cash. Under Article 7174,
as amended, a taxable leasehold estate on exempt property
is to be valued at what a comparable Improvement located on
non-exempt property would bring at a voluntary sale~for
cash, with reductions for reversionary Interests, restric-
tions on use, and credit for normal rental.
-4917-
.
Honorable Joe Resweber, Page 4 (M-1008)
SUMMARY
House Bill 1099, 62nd Legislature, Regular
Session, 1971 amends Article 7173, V.C.S. It
does not change the procedure in assessing
the property known as the Domed Stadltm.
House Bill lo99, supra, also amends Article
7174, V.C.S. :The amendment changes the method
of valuation of a leasehold estate. In the
words of the statute the method Is:
..A
I,...[T]axable leasehold estates on exempt
property shall be valued at such price as
: such leasehold estates would bring at a voluntary
sale thereof for cash, based upon the value
of a comparable improvement If located on
V&j truly yours,
Prepared by Fisher A. Tyler
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
James Broadhurst
Bart Bollng
John Banks
Scott Garrison
SAM MCDANIEL
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant
-4918-