.
The Honorable Fred P. Holub Opinion No. H- 729
County Attorney
P. 0. Box 1527 Re: Exemption from state
Bay City, Texas 77414 and county ad valorem
taxation of the fractional owner-
ship interests of the Cities of
San Antonio and Austin in a
nuclear power plant located
in Matagorda County, Texas.
Dear Mr. Holub:
You have asked our opinion as to whether or not the interests of the
Cities of San Antonio and Austin in a power generating plant located in
Matagorda County; Texas, are exempt from state and county ad valorem
taxes. You explain that an electric generating plant is to be constructed in
Matagorda County, to be fueled by nuclear power. Private utility companies
will own a portion of the plant, San Antonio will own a 28’70 undivided interest
in the plant and Austin will own a 16% undivided interest. It is these fractional
interests of San Antonio and Austin and their possible tax exempt status that
have prompted your opinion request.
Article II, section 9 of the Texas Constitution provides in pertinent
part:
The property of counties, cities and towns, owned
and held only for public purp0se.s. such as public
buildings and the sites therefor, fire engines and
the furniture thereof, and all property used, or
intended for extinguishing fires, public grounds
and all other property devoted exclusively to the
use and benefit of the pubHc shall be exempt from
forced sale and from taxation . . . .
p. 3112
The Honorable Fred P. Holub - page 2 (H-7291
Article 8, section 2, additionally provides:
:
. . . the Legislature may, by general laws,
exempt from taxation public property used for
public purposeA. . . .
Pursuant to this constitutional authority, the Legislature enacted article
7150, V. T. C.S., which exempts, together with other properties, “[a]11
property, whether real or personal, belonging exclusively to this State,
or any political subdivision thereof. . . . ”
It is not necessary to resolve the question of whether this statutory
exemption forecloses taxation of city property in view of the specific
constitutional exemption of article 11, section 9, since both the constitutional
and statutory language except municipal property from taxation. A. &M.
Consolidated Independent School District v. City of Bryan, 184 S. W. 2d 914
(Tex. Sup. 1945).
Howe-r, for either exemption to apply the property involved must be
public property used for “public purposes. ” Tex. Const. art. 11, 5 9 and
art. 8, § 2; Leander Independent School District v. Cedar Park Water Supply
Corporation, 479 S. W. 2d 908 (Tex. Sup. 1972) ; A. &M. Consolidated
Independent School District v. City of Bryan, supra.
Property owned by a municipality and used for the generation of
electric power and for the supplying of electrici,ty is “public property’“‘used
for a public purpose. ” V. T. C. S. art.~ ,1108 and art. 1175; A.&M. Consoli-
dated School District v. City of Bryan, supra at 915 and 916. This result
is not dependent upon whether the generating plant or some of the customers
served by the light and power facilities are located without the city’s
boundaries. City of New Braunfels v. City of San Antonio, 212 S. W. 2d
817 (Tex. Civ. App. -- San Antonio 1948, writ ref’d n. r. e.); A. &M. Con-
solidated Independent School District v. City of Bryan, supra.
p. 3113
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The Honorable Fred P. Holub - page 3 (H-729)
.
It has been suggested that because San Antonio and.Austin own
fractional interests in the Matagorda generating plant along with private
utilities, the plant may not be owned for a “public purpose. ”
However, it is well settled that properties can be jointly owned andi
that each interest must be assessed and taxed separately. F3ashara v.
Saratoga Independent School District, 163 S. W. 2d 631 (Tex. Sup. 1942);
Hager v. Stakes, 294 S. W. 835 (Tex. Sup. 1927). If follows that the interests
of San Antonio and Austin in the power plant are severable from the private
utility interests and must be treated separately for taxation purposes.
Moreover, the Legislature has provided that municipalities and other
public and private corporations may join together as co-owners in the
construction of electric generating plants (article 1435a, V. T. C. S.) and,
pursuant to its authority to legislate taxation exemptions bestowed by article
11, section 9 of the Constitution, has provided that:
Each participating entity shall be entitled to the
L same constitutional and statutory exemption from
ad valorem taxes and all other taxes. . .attributable
to the participating entity’s interest in the ownership
of the jointly owned electric facilities. . . to the extent
that the entity would have been exempt from the tax
if its undivided interest were an entire interest. . . .
V.T.C.S. art. 1435a, 5 4(3).
Accordingly, we think it is clear that the undivided interests of San
.Antonio and Austin in the Matagorda generating plant are not subject to the
state and county ad valorem tax.
SUMMARY
Fractional, undivided interests of cities in
electric generating plants are exempt from
ad valorem taxes.
Very truly yours,
Attorney General of Texas
p. 3114
The Honorable Fred P. Holub ~- Page 4 (H-729)
C. ROBERT HEATH,
HI Chairman
Opinion Committee
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p, 3115