Untitled Texas Attorney General Opinion ( 1992 )

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DAN MORALES December 141992
.ATTORNET
CESERAL
Honorable Marcus D. Taylor Opinion No. DM-187
Criminal District Anomey
Wood County Re: Whether property seized by the
P. 0. Box 689 state pursuant to the Code of Criminal
Quitman, Texas 75783 Procedure, chapter 59, is exempt from
property taxes (RQ-233)
Dear Mr. Taylor:
You ask whether property seized by the state pursuant to chapter 59 of the
Code of Criminal Procedure is exempt from ud vulorem property taxes. If it is tax-
exempt, you ask at what time the tax exemption takes effect and how long it applies.
We conclude that such property is exempted from taxation by section 11.11 of the
Tax Code. The tax exemption becomes effective on the date title vests in the state
under the terms of chapter 59 and applies for as long as title rests with the state and
the property is used for public purposes. ’
Chapter 59 of the Code of Criminal Procedure, enacted in 1989, provides for
the forfeiture of contraband seized by peace officers employed by law enforcement
agencies of the state and its political subdivisions. The chapter generally provides
that property classified as contraband is subject to seizure and forfeiture under the
chapter. Code Crim. Proc. art. 59.02(a). “Contraband” is defined as property of any
nature (including real, personal, tangible, or intangible property) that is used or
intended for use in the commission of certain enumerated felonies. Id. art.
59.01(2).1 A peace officer may seize property subject to forfeiture either with or
‘Property is contraband if it is used in the co mmission of first or wood degree felonies under
the Penal Codq felonies under chapters 29, 30, 31, or 32 of the Penal Code; or felonies under the
Texas Securities Act, V.T.C.S. art. 581-l et seq. Property that is used or is intended to be used in the
commission of felonies under the Texas Controlled Substances Act, Health and Safety Code chapter
481; chapter 483 of the Health and Safety Code; or V.T.C.S. article 350 is also chssifkd as contraband.
code Crh. Proc. art. 59.01(2).
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Honorable Marcus D. Taylor - Page 2 (m-18 7)
without a warrant in accordance with the chapter and must notify the attorney
representing the state of such a seizure within 72 hours of the event. Id. art. 59.03.
The attorney representing the state2 must commence forfeiture proceedings
by Eling a notice of the seizure and intended forfeiture with the clerk of the district
court not later than the 30th day after the date of the seizure. Id. art. 59.04(a), (b).
Notice is given to owners and interest holders of property seized pursuant to chapter
59 in accordance with the rules governing service of process in civil cases. Id. art.
59.04(b). If the seized property is real property, the attorney representing the state
must 6le with the county clerk in each county where the property is located a lir
pendens notice describing the property. Id. art. 59.04(g). Tbis notice must be filed
not later than the third day after the date forfeiture proceedings are commenced.
Id.
Forfeiture proceedings under chapter 59 are conducted in accordance with
rules and principles governing civil cases. See id, art. 59.05(a), (b). If the court finds
that the state has proven by a preponderance of the evidence that all or part of the
seized property is subject to forfeiture, the judge shall forfeit the property to the
state. Id. art. 59.05(b), (e). A final judgment of forfeiture under chapter 59 perfects
the state’s title to the forfeited property. Id art. 59.06(f). The attorney representing
the state acts as the state’s agent in receiving and disposing of forfeited property. Id.
art. 59.05(e). On final judgment of forfeiture, the attorney representing the state
shall dispose of the property as provided by article 59.06. Id.3
In the absence of an agreement with local law enforcement agencies
regarding the disposition of the property, forfeited property must be sold at public
auction on the 75th day after the date of final judgment of forfeiture. Id. art.
59.06(a). The sale is conducted under the direction of the county sheriff after notice
is provided in accordance with laws governing sheriffs sales. Id. Proceeds of the
sale are distributed in accordance with article 59.06.
2”Attomey representing the state” is defmed as the prosecutor with felony jurisdiction in the
county in which a forfeiture proceeding is held. Code Gin. Proc. art. 59.01(l).
hpter 59 allows owners and interest holders of seized property to replevy the property
pcrding the forfeihue hearing. Code Grim. Proc. art. 59.02(b). The chapter also allows holders of
nonforfeitable interests in seized property to protect their interests in the property prior to tinal
judgment of forfeiture. Id arts. 59.02(c) (describiig nonforfeitable interests), 59.05(e).
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Honorable Marcus D. Taylor - Page 3 &-187)
You expiain that on October 23, 1989, the Wood County Sheriffs
Department seized 723.796 acres in Wood County pursuant to a valid search
warrant. Following notice of the seizure to taxing tits and the holder of a Deed of
Trust to 564.796 acres of the property, the taxing units filed suit for taxes due in
1989. The interest holder subsequently sought to foreclose on the entire 723.796
acre tract, but ultimately agreed to foreclose on only the 564.796 acres.
You state that forfeiture could not be obtained on the remaining 159 acres
until October 26, 1990. We assume this to ~meanthat final judgment of forfeiture
was obtained on that date. You also state that the property was posted for sale in
accordance with chapter 59. At the sale the tax assessor-collector of a taxing unit
announced that over $8000 in delinquent property taxes were owed.on the property.
You indicate that the announcement resulted in the cancellation of the sale. The
property remains unsold.
You Srst ask whether property forfeited to the state pursuant to chapter 59 is
exempt from property taxes. Article VIII, section 1 of the Texas Constitution
provides in part that “[a]11real and tangible personal property in the State.. . shah
be taxed in proportion to its value, which shah be ascertained as provided by law.”
Article VLU, section 2(a) provides in pertinent part that the “legislature may, by
general laws, exempt from taxation public property used for public purposes.‘“4
Pursuant to this provision, the legislature has enacted section 11.11 of the Tax Code,
which provides the following in part:
(a) Except as provided by Subsections (b) and (c) of this
section, property owned by this state or a political subdivision of
this state is exempt from taxation if the property is used for
public purposes.
Subsections (b) and (c) provide for the taxation for county purposes of land owned
by the Permanent University Fund and for the taxation of certain land owned by
counties for the benefit of the public schools. Subsections (d) through (g) supply
additional qualXcations to the general tax exemption provided in subsection (a).
They are not relevant to this opinion.
‘ArtieIe XI., section 9 of the Texas Constitution ia pertinent part exempts fxom taxation
“property of coo&s, cities and towns, owned and held only for public poqwses, . . . aod all other
property &voted excbkvely to the use and benefit of the public.. . .” This provision is self-executing
but has not been interpreted to apply to property owned by the state. See Attorney General Opinion
M-1049 (1989) at 2 n.1.
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Honorable Marcus D. Taylor - Page 4 (m-187 1
The critical inquiry under these provisions is whether the public property in
question is used for a public purpose. The courts instruct that the test for public
purpose is whether the public property is used primarily for the health, comfort, and
welfare of the public. A & M Conso.l Indep. Sck Dirt. v. Ci@ of Btym. 184 S.W2d
914 (Tex. 1945); State v. Houston Lighting & Power Co., 609 S.W.2d 263 (Tex. Civ.
App.-Corpus Christi 1980, tit refd n.r.e.). Consequently, public property that is
acquired and held with the intention that it not be used primarily for the health,
comfort, and welfare of the public is not entitled to a tax exemption under these
provisions. See Gmnd Rabie Hosp. Auth. v. Dallas Cowtty Appmid Dirt., 730
S.W2d 849 (Tex. App.-Dallas 1987, w-ritrefd ar.e.).
As you note in your brief, no authority appears to address your tit question
directly. You argue, however, that property forfeited to the state should be con-
sidered tax-exempt, drawing an analogy to cases involving property acquired by
political subdivisions through tax foreclosures or tax sales. See Cify of Au.& v.
Sheppurd, 190 S.W.2d 486 (Tex. 1945). These cases uniformly hold that the
acquisition of property by a political subdivision under these circumstances and the
holding of such property for resale constitutes a public purpose under the
constitutional and statutory tests. Property so acquired and held is therefore tax-
exempt. See &o State v. Cz$ of San Antonio, 209 S.W.2d 756 (T’ex. 1948); State v.
Moak, 207 S.W.2d 894 (Tex. 1948); Eason v. David, 232 S.W.2d 427 (Tex. Civ. App.--
Beaumont 1950, writ refd n.r.e.); Lubbock Indep. Sch. D&. v. Owem, 217 S.W.2d
186 (Tex. Civ. App.-Amarillo 1948, writ refd).
We believe these cases plainly demonstrate that, where the state or its
political subdivisions are authorized to acquire and dispose of property pursuant to
express statutory authorization, the acquisition and use of the property pending its
disposal is prima facie a public purpose. Taxing units are authorized to acquire and
dispose of real property in satisfaction of taxes due on the property. Tax Code
#$34.01(c); 34.05. Thus, the legislature has anticipated and authorized public
ownership and sale of property for purposes of collecting property taxes.
Similarly, Attorney General Opinion JM-1049 (1989) concluded that lands
set aside by article VII, section 2 of the Texas Constitution for the benefit of the
public free schools are exempt from ad valorem taxation even where such property
is leased for compensation to private individuals to be used for purposes not related
to the performance of the duties and functions of the School Land Board. The
opinion concluded that the manifest public purpose of article VII, section 2 was not
that land set aside for educational purposes under the provision actually be used for
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Honorable Marcus D. Taylor - Page 5 (~~-187)
educational purposes, but that income from such property be used for such
purposes. See uko Attorney General Opinion JM-1085 (1989) (real property
comprising the Veterans’ Land Fund, including land forfeited to the state on default
of a purchaser, is exempted from ad valorem taxation to the state).
In our opinion, the public ownership of property forfeited to the state
pursuant to chapter 59 of the Code of Criminal Procedure undoubtedly serves a
public purpose within the meaning of the constitutional and statutory provisions
described above. Under chapter 59, forfeited property may be used by law
enforcement agencies for official purposes. Code Grim. Proc. art. 59.06(b). In the
alternative, the property may be sold, with the proceeds of the sale deposited in the
general revenue fund of the state treasury or distributed to law enforcement
agencies and the attorney representing the state for law enforcement purposes or
drug and alcohol abuse treatment and prevention programs. Id. art. 59.06(c), (h).
In either case, forfeited property (or its proceeds) clearly is used to promote the
health, comfort, and welfare of the public. Accordingly, we conclude that property
forfeited to the state pursuant to chapter 59 of the Code of Criminal Procedure is
exempt from ad valorem taxation so long as the property is used for public, as
opposed to private, purposes.
Your second question concerns the time at which the exemption takes effect.
It is clearly established that public property is tax-exempt during the time title is
vested in the political subdivision, provided, of course, that the property is used for
public purposes during that period. See Ciry of San Antonio, 209 S.W.2d 756; Moak,
207 S.W.2d 894; Lubbock Independent School District, 217 S.W.2d 186. Article
59.06(f) of the Code of Criminal Procedure provides the following:
(i) A tinal judgment of forfeiture under this chapter
perfects the title of the state to the property as of the date that
the contraband was seized or the date the forfeiture action was
filed, whichever occurred first, except that if the property forfeited
ir real properry, the title is perfected as of the date a notice of li.s
pendens &fled on thepropeq. [Emphasis added.]
The notice of lir pendens must be bled not later than the third day after the date
forfeiture proceedings are commenced. Code Crin~ Proc. art. 59.04(g). Conse-
quently, in accordance with article 59.06, forfeited real property becomes tax-
exempt from the time title vests in the state following a Snal judgment of forfeiture
under chapter 59, ie., the date notice of li~pendens is filed describing the property.
p. 983
Honorable Marcus D. Taylor - Page 6 (~~-187)
The tax exemption applies for as long as title rests with the state and the property is
used for public purposes.
SUMMARY
Real property forfeited to the state pursuan t to chapter 59,
Code of Criminal Procedure, is exempt from cld valorem
taxation. The exemption is effective as of the date title to the
property vests in the state following a final judgment of
forfeiture under chapter 59, ie., the date notice of lir pendenr is
filed describing the property. Code Crim. Proc. art. 59.06(f).
The tax exemption applies for as long as title rests with the state
and the property is used for public purposes.
Very truly yours, /
DAN MORALES
Attorney General of Texas
WILL PRYOR
First Assistant Attorney General
MARY KELLER
Deputy Assistant Anomey General
RENEAHIcKs
Special Assistant Attorney General
MADELEINE B. JOHNSON
Chair, Opinion Committee
Prepared by Steve Arag6n
Assistant Attorney General
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