Honorable Robert S. Calvert Opinion No. M-310
Comptroller of Public Accounts
State of Texas Re: Whether property of
State Capitol Rullding the Housing Authority
Austin, Texas 78711 of the City of Harlln-
gen would be subject
to ad valorem taxes In
view of the fact that
a small portion of
said property will be
let to concessionaires
who would operate the
facilities to serve
Dear Mr. Calvert: the residents.
You recently requested the oplnlon of this department on
the following question:
“Whether any part of a five story hotel
purchased by the Housing Authority of the
City of Harllngen to be utilized as low Income
housing for the elderly, would be subject to
ad valorem taxes, If a small portion of the
lower floor of such hotel be let to concesslon-
sires who would operate facilities to serve the
residents. ”
The Housing Authority of the City of Rarllngen is
authorized by Article 1269k of Vernon’s Civil Statutes.
Section 22 of said Article provides:
“The property of an authority Is declared
to be public property used for essential public
and governmental purposes and such property
and an authority shall be exempt from all taxes
and special assessments of the city, the county,
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Hon. Robert S. Calvert, Page 2 (M-310)
the State or any political subdivision there-
of; provided, however, that In lieu of such
taxes or special assessments, an authority
may agree to make payments to the city or the
county or any such political subdivision for
Improvements, services, and ‘facilities furnlsh-
ed by such city, county, or political sub-
division for the benefit of a housing project,
but In no event shall such payments exceed the
estlmated cost to such city, county, or political
subdivision of the Improvements, services, or
facilities to be so furnlshed.“~
In Attorney Qeneral Opinion No. O-1921 (1940), the
Attorney General’s Department ruled that the statutory
exemption given In Section 22 of Article 1269k, supra, was
a constitutional exercise of power by the legislature. In
conclusion this opinion provided:
“In our opinion, Section 22 of Article 1269k,
Vernon’s Annotated Civil Statutes, commonly known
and cited as the ‘Housing Authorities Law’ is a
constitutional exemption from taxation, and
property owned by the Housing Authority of Browns-
ville, Texas, duly created under sald Act as a
public body corporate and politic, and an agency
or Instrumentality of the State of Texas, under
its police power, is ‘public property used for
public purposes, ’ entitled to exemption from State
and County ad valorem taxes under said ‘Housing
Authorities Law’ and controlling constitutional
provisions. ”
The controlling constitutional provision referred to in
that opinion is Article VIII, Section 2, Constitution of
Texas, which provides, in part:
11 the Legislature may, by general
laws,‘e;empt from taxation public property used
for public purposes. . .”
Although the result reached in that opinion is still
correct, the Supreme Court of Texas In City of Beaumont v.
i
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Hon. Robert S. Calvert, Page 3 (M- 310)
Fertitta, 415 S.W.2d 902 (Tex.Sup. 1967)~ has held
that Article VIII, Section 2, supra, did not apply to
publicly owned property, and accordingly Attorney General
Opinion No. O-1921 (1940) is modified to the extent of
such holding and any conflict with this opinion. Regard-
ing lands owned by the City of Beaumont, the Court stated
at page 909:
Respondents contend that since
this property is public property not used
for public purposes the Leglslature is
prohibited from exempting It from taxation
by Article VIII, Section 2, of the Consti-
tution. While property owned by cities Is
public property, It is not the type of
public property to which Article VIII,
Section 2 is applicable . . .'
In the course of its opinion. the Court reaffirmed its
holding In Daugherty v. Thompson,-71 Tex. 192, 9 S.W. 99,
wherein it -what by the words "public proper-
ty used for public purposes as used in Article VIII, Sec-
tion 2, in these words:
-That section
of the constitution
seems to apply to owned bye
property
persons or corporations in private right,
but which, from the use to which it is
applied, Is, in a qualified sense, deemed
public property.
This construction does not allow any application of
said provision to property of a Housing Authority. Further-
more, the Court in City of .Beaumsnt v. Fertitta, supra,
held in effect, that publicly owned property was not required
to be taxed by the Constitution:
"Itcan be readily seen that the
only propertyrequired to be taxed by
the Constitution Is private property
held by natural persons or private
corporations. (Emphasls ours.
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Hon. Robert S. Calvert, Page 4 (M-310)
Since publicly owned property is not required to
be taxed, the Legislature may tax or choose not to tax
such property. By exempting the property of Housing
Authorities in Section 22, of Article 1269k, the Legislature
has clearly chosen not to tax such property. City of Beau-
mont v. Fertltta, supra.
This opinion does not purport to pass on any question
of whether taxes can be lawfully assessed against the lease-
hold interest of a lessee of the Housing Authority, as where
the property is held under a lease for a term of three vears
or mbre‘under the provisions of Article 7173, Vernon's &Gil
Statutes. See City of Beaumont v. Fertltta, supbra, holding
that a tax on t'he leasehold was assessable not against the
City but against its lessees.
SUMMARY
.There is no constitutional pro-
hibition against a complete exemption
from taxation of property of a Housing
Authority and such an exemption is
clearly given In Article 1269k, Section 22,
Vernon's Civil Statutes. The Legislature
in said exemption chose not to tax the
property of a Housing Authority; there-
fore, the property of the Housing Authority
of the City of Harllngen is not taxable,
even though a portion of the property is
let to concessionaires operating the
facilities to serve the residents. Attorney
General Opinion No. O-1921 (1940) Is
modified to the extent that Article VIII,
Section 2 of the Constitution of Texas
does not apply to publicly owned property,
as determined In City of Beaumont v. Fertitta,
415 S.W.2d 902 (Tex.Sup. 1967) Thi I i
does not pass on the taxability of l~a~~h%~
interests of lessees of the Housing Authority
and arising under a lease for a term of three
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Hon. Robert S. Calvert, Page 5 (M- 310 1
years or more pursuant to the provisions
of Article 7173, Vernon's Civil Statutes.
Yours very truly,
AtFrney General of Texas
Prepared by Wardlow Lane
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns B. Taylor, Chairman
Alfred Walker
Bill Allen
Harold Kennedy
Arthur Sandlin
A. J. CARUBBI, JR.
Executive Assistant
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