Texas Student Housing Authority v. Brazos County Appraisal District and Appraisal Review Board for Brazos County Appraisal District , 440 S.W.3d 779 ( 2013 )

In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-11-00421-CV
TEXAS STUDENT HOUSING AUTHORITY, APPELLANT
V.
BRAZOS COUNTY APPRAISAL DISTRICT AND APPRAISAL REVIEW BOARD FOR
BRAZOS COUNTY APPRAISAL DISTRICT, APPELLEE
On Appeal from the 272nd District Court
Brazos County, Texas
Trial Court No. 06-002328-CV-272, Honorable Travis B. Bryan III, Presiding
June 27, 2013
OPINION
Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
Texas Student Housing Authority (TSHA) appeals the trial court’s judgment in
favor of Brazos Central Appraisal District (BCAD) (formerly known as Brazos County
Appraisal District) and its Appraisal Review Board in which the trial court denied TSHA
tax exempt status on certain real and business personal property for the years 2005
through 2008. On appeal, TSHA contends the trial court erred by concluding that it was
not entitled to tax exemptions under any of the several asserted tax exemptions it
claimed. We will affirm in part and reverse and render in part.
Factual and Procedural History
The Dispute Leading up to This Appeal
After enjoying exemption from ad valorem taxes for the years 2002 through 2004,
TSHA was denied tax exempt status beginning in the year 2005 through the year 2008.
TSHA unsuccessfully protested the denials, maintaining that it was entitled to exemption
from ad valorem taxes by way of the Texas Education Code. See TEX. EDUC. CODE
ANN. § 53.46 (West 2012). Initially, the parties disagreed over the valuation of the
property as well, though that disagreement seems to have been resolved, leaving only
the issue of the application of a tax exemption to the TSHA property. The simplicity of
that statement, however, belies the maze of factual and legal issues involved in the
interpretation and application of various tax exemptions as they may or may not apply to
the TSHA property.
About TSHA
TSHA is a higher education facility authority created in 1995 by the Town of
Westlake, Texas, and is duly organized and existing under the Texas Higher Education
Authority Act. See TEX. EDUC. CODE ANN. §§ 53.02(3), 53.11 (West 2012); see
generally id. §§ 53.01–53.49 (West 2012). TSHA holds title to the property at issue,
The Cambridge at College Station, which is a residential facility in College Station,
Brazos County, Texas. The Cambridge consists of approximately 196 ―dorm-like‖
2
rooms, a cafeteria, a swimming pool, and related amenities on approximately eight
acres near the campuses of Texas A & M University (TAMU) and Blinn College.
Creation and Mission of Texas A & M University1
The Legislature created the TAMU System and provided that the government of
the TAMU System would be vested in a nine-member board of regents which would
have a number of specific duties but would be charged generally with the following duty:
The board shall make bylaws, rules, and regulations it deems necessary
and proper for the government of the university system and its institutions,
agencies, and services. The board shall regulate the course of study and
prescribe the course of discipline necessary to enforce the faithful
discharge of the duties of the officers, faculty, and students.
Id. § 85.21(a) (West 2002); see also id. § 85.11 (West 2002). The Texas Education
Code designates TAMU as an institution of higher education located in the city of
College Station and places it under the ―the management and control of the board of
directors of The Texas A & M University System.‖ Id. § 86.02 (West 2002). The code
then outlines TAMU’s general mission as follows:
The leading object of the university shall be, without excluding other
scientific and classical studies, and including military tactics, to teach such
branches of learning as are related to agriculture and the mechanical arts,
in such manner as the legislature may prescribe, in order to promote the
liberal and practical education of the industrial classes in the several
pursuits and professions in life.
Id. § 86.03 (West 2002).
1
Because none of the identified programs or events at issue involve Blinn
College, we concentrate our analysis on TAMU and note only that Blinn College’s
mission as a public junior college is outlined in the Texas Education Code. See id. §
130.0011 (West 2002).
3
In addition to outlining TAMU’s general mission statement, the Texas Education
Code also provides a number of other educational programs with which TAMU is
charged:
The board shall provide for a special summer school of at least two
months each year for the training of special students who shall be
admitted without an entrance examination, and may make provisions for
the summer school, purchase the necessary equipment, and generally do
and perform all acts necessary to establish and maintain the summer
school.
Id. § 86.14 (West 2002). Additionally, ―[t]he board shall require the teaching of
elementary agriculture for teachers in the summer sessions.‖ Id. § 86.15 (West 2002).
Further, TAMU is charged with the following educational duty:
The Texas A & M University System shall conduct and maintain a
firemen’s training school through the Texas Engineering Extension
Service as a unit of the university system in the manner deemed
expedient and advisable by the system’s board of regents. The Texas
Engineering Extension Service shall serve as the recognized statewide
fire and rescue training agency liaison to the National Fire Academy. In
their capacity as the National Fire Academy liaison, the extension service
shall distribute National Fire Academy student manuals on request to
associations, fire departments, state agencies, and institutions of higher
education which meet National Fire Academy qualifications.
Id. § 86.16(a) (West 2002).
The Texas Education Code also designates a number of ―agencies and services‖
of the TAMU System: (1) the Texas Forest Service, (2) the Texas Agricultural
Experiment Station, (3) the Texas Agricultural Extension Service, (4) the Texas
Engineering Experiment Station, (5) the Texas Engineering Extension Service, and (6)
other agencies and services that may be established by law or by action of the board of
directors. See id. § 88.001 (West 2002). Within the Texas AgriLife Extension Service
4
(TAES) (formerly known as Texas Cooperative Extension) operates the Texas 4-H and
Youth Development program.2
Summer Programs at TAMU
The parties stipulated to the majority of the underlying facts. Indeed, they
seemed to agree as to many of the details surrounding the summer programs at issue.
Summer 2005
The 4-H Roundup
In the summer of 2005, TSHA provided housing to participants attending the 4-H
Roundup. This event is organized and administered by the Texas 4-H and Youth
Development Program service of TAES, an entity which, again, is categorized as one of
the ―agencies and services‖ of the TAMU System. See id. §§ 88.001(3), 88.821. 4-H
Roundup attendees were district qualifiers who ranged in age from fifteen to nineteen
years of age. At the Roundup, attendees competed in various educational challenges
and attended various educational workshops. Scholarships were also awarded at the
Roundup. All Roundup events were held on the TAMU campus. TAES was required to
go through the application and approval process with TAMU’s Office of Student Affairs,
2
―Agricultural Extension‖ and ―Agrilife Extension‖ seem to be used
interchangeably. See id. §§ 88.001(3), 88.821 (West Supp. 2012). According to the
Texas A & M AgriLife Extension website, the mission of Texas 4-H is as follows:
―Prepare youth to meet the challenges of childhood, adolescence and adulthood,
through a coordinated, long-term, progressive series of educational experiences that
enhance life skills and develop social, emotional, physical and cognitive competencies.‖
See Tex. A & M AgriLife Extension, Learn about 4-H, TEXAS 4-H AND YOUTH
DEVELOPMENT, http://texas4-h.tamu.edu/learn (last visited June 7, 2013).
5
and TAES made arrangements with and paid fees to TAMU for the use of campus
facilities.
Joint Admission Medical Program (JAMP)
Also beginning in the summer of 2005, TSHA provided housing for those
individuals attending JAMP. JAMP was created by the state legislature to achieve the
following objectives:
The Joint Admission Medical Program is a program administered by the
Joint Admission Medical Program Council to:
(1) provide services to support and encourage highly qualified,
economically disadvantaged students pursuing a medical education;
(2) award undergraduate and graduate scholarships and summer stipends
to those students; and
(3) guarantee the admission of those students to at least one participating
medical school, subject to the conditions under Section 51.827 and under
other provisions of this subchapter.
Id. § 51.822 (West 2012). Medical schools participating in JAMP include the University
of Texas Health Science Center at Houston, the University of Texas Southwestern
Medical Center at Dallas, the University of Texas Health Science Center at San
Antonio, the University of Texas Medical Branch at Galveston, the medical school at
Texas Tech University Health Sciences Center at Lubbock, Texas Tech University
Health Sciences Center at El Paso, Baylor College of Medicine, the college of
osteopathic medicine at the University of North Texas Health Science Center at Fort
Worth, and Texas A & M University System Health Science Center. See id. §
51.821(4)(A)–(I) (West 2012).
6
JAMP participants are students of an institution of higher learning who have
completed at least twenty-seven credit hours as college freshmen. The participants
attend a six-week program at TAMU which includes course studies and rotations with
doctors who practice in various fields of medicine. Participants must apply to and be
accepted into the program. JAMP participants have library and parking privileges at
TAMU in addition to their courses of study. TAMU contacted TSHA and requested
TSHA’s bid for housing and board for JAMP participants. TSHA submitted a winning
bid, and TAMU issued a purchase order. TSHA submitted invoices to and was paid by
TAMU.
Summer 2006
Summer Athletic Camps
Beginning in 2006, TSHA provided housing for participants in TAMU’s tennis,
volleyball, and swim camps in addition to continuing to provide housing for the 4-H
Roundup and JAMP.3 TAMU officials solicited bids from TSHA for housing the athletic
camp attendees. As with JAMP, TSHA sent invoices to TAMU directly, and TAMU paid
those invoices. The parties stipulated that the TSHA property was used solely to
provide housing and board to the faculty and students who were attending the TAMU
summer athletics camps. Each of the TAMU summer athletics camps was conducted
directly by TAMU’s Athletic Department.
Hockey Ministries International Hockey Camp
3
In 2008, TSHA also provided housing for attendees of TAMU’s golf camp.
7
Also beginning in the summer of 2006, TSHA began housing attendees of a
hockey camp organized by Hockey Ministries International (HMI), a Christian charity
registered in Canada and the United States. The parties’ stipulated facts provide that,
in coordination with the TAMU ice hockey teams, HMI conducted one-week camps
during the summers of 2006–2008 for the purpose of instructing children on hockey
skills. The parties also stipulated that, at TAMU, ice hockey is a club sport. The men’s
team competes in the West Region of the American Hockey Association Division II; the
TAMU Women’s Hockey Club is ―a recognized organization‖ at TAMU.
Team members from the men’s and women’s team serve as counselors at the
HMI hockey camp, and at least one of the TAMU hockey coaches participates in the
hockey camp each year. TSHA property was used solely to provide housing to the
counselors and participants who participated in the annual event. The instructional
activities of HMI’s hockey camp took place at the Arctic Wolf Ice Center, a privately
owned facility. The parties stipulated that, ―[a]lthough the HMI hockey camp is
sponsored by TAMU’s Recreational Sports Department and the TAMU Men’s Hockey
and Women’s Hockey Clubs, TSHA directly invoices HMI and HMI pays TSHA for the
housing provided to the hockey camp participants.‖ The record reveals an open letter
from TAMU’s Recreational Sports Department confirming its sponsorship of the HMI
hockey camp in 2006: ―I would like to confirm that the Texas A & M Ice Hockey Team
will proudly sponsor the Hockey Ministries International hockey camp held the summer
of 2006 at the Arctic Wolf Ice Center.‖
In stipulated testimony, Doug Halcomb, an HMI officer who is personally involved
in the hockey camp in College Station, explained that ―The Cambridge provides quality,
8
safe, and secure housing for the participants in hockey camp. Use of the Cambridge for
the hockey camp benefits TAMU, its students, faculty, and members, because it
favorably promotes TAMU, and its enrollment at TAMU.‖ Halcomb went on to explain
that ―HMI does not profit from the hockey camp, or the use of the Cambridge. The
expense to conduct the camp exceed[s] the revenues received by HMI, and HMI relies
on donations to cover the shortfall.‖
Summer 2007
TSHA continued to provide housing and board for participants in JAMP, TAMU’s
summer athletics camps, and HMI hockey camp. Apparently, TSHA no longer provided
housing for the 4-H Roundup.
Summer 2008
UCA Cheer Camp
In summer 2008, TSHA again provided housing for JAMP participants and
attendees of both TAMU’s summer athletics camps and HMI’s Hockey Camp.
Additionally, it provided housing for UCA Cheer Camp in June and August 2008. UCA
is an assumed name of Varsity Spirit Corporation, a Tennessee for-profit corporation.
UCA provides training for college and high school cheerleaders through summer camps
and clinics held on college campuses. The parties stipulated that the TAMU’s
Recreational Sports Department sponsored the UCA summer camps at TAMU. UCA
was required to register and receive approval through TAMU. TAMU did approve the
event. Nonetheless, TSHA billed UCA directly, and UCA paid the invoice from TSHA.
9
In stipulations regarding testimony, Paula Opal, who works in TAMU’s
Recreational Sports Department and is responsible for budgeting and coordinating
certain camps, including UCA Cheer Camp, would have testified that TAMU’s
Recreational Sports Department receives revenues and generates a profit from its
association with UCA Cheer Camp. Opal explained that housing the participants at The
Cambridge increases the number of participants, which generates more profits for
TAMU which, then, permits the Recreational Sports Department to offer more activities
and better facilities to TAMU’s students, faculty, and staff. Additionally, the parties
stipulated, Opal would have testified that UCA Cheer Camp furthers TAMU’s
educational purposes.
Trial Testimony
The sole witness to testify at the trial to the bench was Peter Ehrenberg, TSHA’s
Executive Director. He testified at the trial that demand for housing and board at The
Cambridge is naturally lower in the summer. He testified that only approximately ten
percent of The Cambridge’s rooms were occupied by ―regular students that would go to
Texas A & M University or Blinn College.‖ Ehrenberg explained how the summer use of
The Cambridge benefits the university, its faculty, staff, and students:
I think that there’re a number of ways that it does that. Obviously, one of
the ways is that The Cambridge is able to provide housing for the summer
school students that attend both A & M and Blinn, and I think that gives
some revenue to the university which they may not otherwise be able to
get. As I understand it, the majority of the dorms at A & M are closed
during the summer. And so we do have the ability to be able to do that.
Ehrenberg also described how, without supplementing the summer occupancy at The
Cambridge with summer program attendees in the manner TSHA had been doing, it
10
would be nearly impossible to keep The Cambridge open during the summer months.
This closing would mean laying off approximately fifty people and displacing the
traditional university students who did choose to stay at The Cambridge during the
summer while attending regular summer school at either TAMU or Blinn College.
The Underlying Proceedings and the Trial Court’s Judgment
TSHA sought judicial review of BCAD’s denials of TSHA’s exempt status for the
years 2005 through 2008. In its petition, it re-urged its entitlement to the tax exemption
provided in the Texas Education Code. See TEX. EDUC. CODE ANN. § 53.46. It also
contended that it is entitled to a tax exemption based on the Texas Constitution and
provisions of the Texas Tax Code. See TEX. CONST. art. XI, § 9; TEX. TAX CODE ANN. §
11.11(a), (e) (West Supp. 2012).
The trial court found that, during the years 2005 through 2008, although The
Cambridge’s primary use was housing and boarding students of an institution of higher
learning, The Cambridge also housed and boarded ―persons who were not students,
faculty or staff members of an institution of higher learning.‖ The trial court went on to
conclude that, because the TSHA property was ―not used exclusively for housing or
boarding, or housing and boarding students, faculty or staff of an institution of higher
learning,‖ that TSHA was not entitled to a tax exemption under section 53.46 of the
Texas Education Code.
TSHA objected to the proposed findings of fact and conclusions of law not only
as to the conclusion that it was not entitled to an exemption under section 53.46 of the
Texas Education Code, but also as to the trial court’s failure to analyze the exemptions
11
TSHA claimed under the Texas Constitution and the Texas Tax Code. TSHA also
requested amended and additional findings of fact and conclusions of law in which it
similarly contended as follows:
The foregoing conclusion of law [that TSHA is not entitled to an exemption
under the Texas Education Code’s section 53.46] is not supported by the
evidence admitted at trial and is contrary to the law. Specifically, the law
establishes that TSHA is exempt from taxation pursuant to Art. X[I], § 9 of
the Texas Constitution and Section 11.11 of the Tax Code, as well as
Chapter 53 of the Education Code.
Accordingly, conclusion of law number 1 should be amended, or additional
conclusions of law be entered, to reflect that TSHA sought tax exemption
under all of the foregoing laws and why the provision of the Texas
Constitution and Tax Code were not applied by the Court.
Standards of Review
Findings of fact in a case tried to the bench have the same force and dignity as a
jury’s verdict upon questions. Anderson v. City of Seven Points, 806 S.W.2d 791, 794
(Tex. 1991); In re Marriage of Bivins, 393 S.W.3d 893, 899 (Tex.App.—Waco 2012, pet.
denied). We, therefore, evaluate the sufficiency of the evidence to support those
findings by the same standards for evaluating the legal and factual sufficiency of the
evidence to support a jury verdict. See Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.
1994); Harris Cnty. Appraisal Dist. v. Se. Tex. Hous. Fin. Corp., 991 S.W.2d 18, 20
(Tex.App.—Amarillo 1998, no pet.). Under the legal sufficiency standard, we must
credit evidence that supports the judgment if a reasonable fact-finder could, and we
must disregard contrary evidence unless a reasonable fact-finder could not. See City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). Unless there is no favorable
evidence to support the challenged finding or the contrary evidence renders supporting
evidence incompetent or conclusively establishes the opposite of the finding, we must
12
affirm. See id. at 810–11. In reviewing the factual sufficiency of the evidence, we
consider all the evidence and will set aside the finding only if the evidence supporting
the finding is so weak or so against the overwhelming weight of the evidence that the
finding is clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242
(Tex. 2001) (per curiam).
A trial court’s conclusions of law are always reviewable. Westech Eng’g, Inc. v.
Clearwater Constructors, Inc., 835 S.W.2d 190, 196 (Tex.App.—Austin 1992, no writ).
Conclusions of law may not be challenged for factual insufficiency, but the trial court’s
conclusions drawn from the facts may be reviewed to determine their correctness.
Harris Cnty. Appraisal Dist., 991 S.W.2d at 22. Because a trial court has no discretion
in determining what the law is or applying the law to the facts, we review a trial court’s
conclusions of law de novo. See Okorafor v. Uncle Sam & Assocs., 295 S.W.3d 27, 38
(Tex.App.—Houston [1st Dist.] 2009, pet. denied). Conclusions of law ―will be upheld
on appeal if the judgment can be sustained on any legal theory supported by the
evidence‖ and, unless erroneous as a matter of law, will not be reversed. Westech
Eng’g, Inc., 835 S.W.2d at 196. In conducting a de novo review, we may reexamine
legal conclusions drawn from specific findings of fact contained in the record. See id. at
196 n.1. We exercise our own judgment on each issue and afford no deference to the
original tribunal’s decision. See Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1999).
Rules of Construction
All real property in the State of Texas is taxable unless it is exempt as required or
permitted by the Texas Constitution. See TEX. CONST. art. VIII, § 1(b). ―To promote
13
uniformity and equality in taxation, we construe tax exemptions—and provisions
tantamount to tax exemptions—strictly against the taxpayer and in favor of the taxing
authority.‖ Gables Realty L.P. v. Travis Cent. Appraisal Dist., 81 S.W.3d 869, 872
(Tex.App.—Austin 2002, pet. denied) (quoting Tex. Utils. Elec. Co. v. Sharp, 962
S.W.2d 723, 726 (Tex.App.—Austin 1998, pet. denied)); see Hilltop Village, Inc. v.
Kerrville Indep. Sch. Dist., 426 S.W.2d 943, 948 (Tex. 1968). That is, when an entity
claims a tax exemption, we employ a presumption favoring the taxing entity rather than
the taxpayer. See Tracfone Wireless, Inc. v. Comm’n on State Emergency Commc’ns,
56 Tex. Sup. Ct. J. 458, 2013 Tex. LEXIS 269, at *25–26 (Apr. 5, 2013). Clearly,
―exemptions from taxation are not favored by the law.‖ See N. Alamo Water Supply
Corp. v. Willacy Cnty. Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991). Indeed, the
Texas Supreme Court has reiterated the reasoning behind the disfavor with which
courts treat tax exemptions and the rules of construction resulting from this disfavor and
by which we must analyze tax exemptions:
Statutory exemptions from taxation are subject to strict construction since
they are the antithesis of equality and uniformity and because they place a
greater burden on other taxpaying businesses and individuals. An
exemption cannot be raised by implication, but must affirmatively appear,
and all doubts are resolved in favor of taxing authority and against the
claimant. Simply stated, the burden of proof is on the claimant to clearly
show that it comes within the statutory exemption.
AHF Arbors at Huntsville I, LLC v. Walker Cnty. Appraisal Dist., 55 Tex. Sup. Ct. J. 835,
2012 Tex. LEXIS 465, at *18 n.30 (June 8, 2012) (quoting Bullock v. Nat’l Bancshares
Corp., 584 S.W.2d 268, 271–72 (Tex. 1979)).
14
Analysis
Exemption under the Texas Education Code
Again, TSHA asserted that it is entitled to an exemption from ad valorem taxation
based on the following exemption:
Because the property owned by authority will be held for educational
purposes only and will be devoted exclusively to the use and benefit of the
students, faculty, and staff members of an accredited institution of higher
education, it is exempt from taxation of every character.
TEX. EDUC. CODE ANN. § 53.46.
In our review of the provisions relevant to TAMU’s educational mission, its
legislative directives, and its legislatively designated agencies and services, the term
―student‖ in this factual context is broader than the definition proposed or envisioned by
BCAD. That is, the term ―student‖ would encompass more than the traditional, full-time
student enrolled in regular classes offered by the university. Chapter 53 of the Texas
Education Code does not define ―student.‖4 In the absence of statutory definition, we
4
TSHA points out in its brief that the Texas Education Code does define
―student‖ elsewhere as a person who ―is registered or in attendance at an educational
institution.‖ See id. § 37.151(4)(A) (West 2012) (relating to public school safety and
discipline, specifically hazing). We add that ―student‖ is also defined elsewhere as ―any
prospective, current, or former student of: (A) a career school or college; or (B) any
other school, educational institution, or business entity from which the commission
receives, or regarding which the commission reviews, information through its
administration or enforcement of this chapter.‖ See id. § 132.024(a)(1) (West Supp.
2012) (defining ―student‖ in relation to junior colleges and career schools and colleges,
still within Title 3 of the Texas Education Code covering higher education). ―[W]hen
construing a statutory word or phrase, we may consider the meaning assigned to the
term elsewhere in the act or in another act of similar nature.‖ Robertson v. Odom, 296
S.W.3d 151, 157 (Tex.App.—Houston [14th Dist.] 2009, no pet.) (citing Guthery v.
15
use the term in its ordinary and common usage. See TEX. GOV’T CODE ANN. §
311.011(a) (West 2013). In its ordinary and common usage, a ―student‖ is ―one who
attends a school‖ or ―one who studies,‖ ―an attentive and systematic observer.‖
MERRIAM-W EBSTER’S COLLEGIATE DICTIONARY 1239 (11th ed. 2003).
Here, in fulfilling its legislatively mandated general educational objective and in
consideration of the breadth of the classes and programs the legislature had directed
TAMU to offer in addition to its regular curriculum, TAMU is fairly characterized as a
multi-faceted institution of higher education. It naturally follows from its broad and
varied educational directives that TAMU has a wide variety of ―students‖ in the ordinary
and common sense of the word.
4-H Roundup and JAMP
There are distinctions to be made here among the various programs for which
TSHA provided housing and board. With the 4-H Roundup and JAMP programs, TAMU
has definite and intimate relationships, ones which are forged or supported by
legislative mandate. See TEX. EDUC. CODE ANN. §§ 51.821(4)(I), 88.001(3). Based on
these close relationships, TAMU’s considerable involvement, and the absence of other,
non-university related entities, program or camp participants in these events are
Taylor, 112 S.W.3d 715, 721 (Tex.App.—Houston [14th Dist.] 2003, no pet.)). To the
extent that sections 37.151 and 132.024 are similar in nature to Chapter 53, we
consider the definitions of ―student‖ advanced in those sections. See Robertson, 296
S.W.3d at 157; Guthery, 112 S.W.3d at 721. However, recognizing that the provisions
defining ―student‖ are aimed at rather diverse goals, we note that the common and
ordinary usage of the term ―student‖ as advanced in the common dictionary is, at a
minimum, not ―out of harmony or inconsistent with‖ the definitions of ―student‖ used in
other parts of the Texas Education Code. See Tex. Dep’t of Transp. v. Needham, 82
S.W.3d 314, 318 (Tex. 2002).
16
―students‖ of TAMU. The breadth of TAMU’s educational mission and objectives as
evidenced by the wide variety of programs with which it is charged, and TAMU’s
involvement with and connection to the 4-H Roundup and JAMP events lead us to
conclude that participants in those events are ―students‖ of TAMU.
We do remain mindful that we are to strictly construe exemptions and that they
are not favored in the law. See AHF Arbors, 2012 Tex. App. LEXIS 465, at *18 n.30; N.
Alamo Water Supply, 804 S.W.2d at 899. However, our conclusion does not run afoul
of such directive; when an individual attends an event or program with which the state
legislature has specifically charged a university, that individual is fairly considered a
―student‖ of that university such that provision of housing and board to that person
would not run afoul of the exclusivity element of section 53.46’s tax exemption.
With respect to the 4-H Roundup and the JAMP program, we conclude that such
programs fall within the ambit of section 53.46 when we consider the nature of the
programs, the legislatively mandated relationships between TAMU and the 4-H and
JAMP programs, and TAMU’s involved role in requisitioning and paying for the housing
and board provided by TSHA. See TEX. EDUC. CODE ANN. §§ 51.821(4)(I), 88.001(3).
So, not having provided housing and board in such a way as to step outside the scope
of section 53.46, The Cambridge should have continued to enjoy the previously granted
exemption from ad valorem taxes for the year 2005, when the programs for which it
provided housing and board included only 4-H and JAMP.
Beginning in 2006, TSHA began to house participants in TAMU’s officially
sanctioned, department-conducted athletics camps. Ultimately, the provision of housing
17
for the TAMU athletics camps will not be dispositive to the viability of the exemption for
the years 2006 through 2008 because additional concerns with regard to TSHA’s
exemption surface when it began to provide housing for HMI Hockey Camp in 2006 and
UCA Cheer Camp beginning in 2008. We, therefore, need not pass on the impact, if
any, the provision of housing for these athletics camps would have on TSHA’s eligibility
for a section 53.46 tax exemption beginning in the year 2006. TEX. R. APP. P. 47.1.
HMI Hockey and UCA Cheer Camps
The relationships between TAMU and the hockey and cheerleading camps are
distinguishable from those it maintains with the 4-H and JAMP events. The principle or
primary organizers of the hockey and cheerleading camps are wholly separate from the
university: HMI is a charitable organization entirely unrelated to TAMU, and UCA is an
out-of-state for-profit corporation. These entities paid TSHA directly for the housing
TSHA provided to camp participants. TAMU is involved to some degree by acting as
host and/or sponsor of these events and, at least with respect to UCA Cheer Camp, the
record shows that TAMU’s Recreational Sports Department receives revenues and
makes a profit from its involvement with the camp, funds which the department puts
back into the services and facilities which serve the university’s staff and student body.
Nonetheless, it was not TAMU which solely, perhaps not even primarily,
sponsored, was involved in, or benefitted from TSHA’s provision of housing and board
for hockey and cheerleading camp participants. The fact that non-university entities
organized, developed, and even profited in some sense from the programs serves to
underscore that TAMU and those particular programs—that is, HMI Hockey Camp and
18
UCA Cheer Camp—do not share relationships of any legislative origin such that the
participants in those programs could be fairly considered ―students‖ of TAMU. With
that, we cannot conclude with any amount of confidence that, during the years 2006
through 2008, The Cambridge was ―devoted exclusively to the use and benefit of the
students, faculty, and staff members of an accredited institution of higher education.‖
See TEX. EDUC. CODE ANN. § 53.46. For the years 2006 through 2008, we resolve the
doubt arising from the involvement of non-university entities against TSHA, against
exemption, and in favor of BCAD. See AHF Arbors, 2012 Tex. App. LEXIS 465, at *18
n.30.
The Relationship between Tax Code Exemptions and Section 53.46
In the myriad of contentions and alternative contentions, the issue has been
raised that the effect of certain provisions in the Texas Tax Code is to effectively repeal
section 53.46 of the Texas Education Code. This issue is one we need not resolve at
this point in time. Even if the proper interpretation of section 11.11 of the Texas Tax
Code and its impact as to section 53.46 of the Texas Education Code were to lead to
the conclusion that section 53.46 had been effectively repealed and is no longer of
force, we could nonetheless conclude that TSHA was entitled to a tax exemption under
Article XI, section 9, but, again, only with respect to the housing and boarding of
―students‖ attending the 4-H Roundup and JAMP.5
5
In arriving at this conclusion, we necessarily reject BCAD’s contention that
TSHA failed to preserve for our review issues relating to alternative exemptions; indeed,
the various exemptions were discussed at length in the trial to the bench and were
specifically raised in both TSHA’s objections to the proposed findings of fact and
conclusions of law and its request for additional or amended findings of fact and
19
Exemption under the Texas Constitution
In pertinent part, the Texas Constitution provides as follows:
The property of counties, cities and towns, owned and held only for public
purposes, 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 public shall be exempt from forced sale and from
taxation, provided, nothing herein shall prevent the enforcement of the
vendors lien, the mechanics or builders lien, or other liens now existing.
TEX. CONST. art. XI, § 9. Courts have traditionally treated Article XI, section 9, as self-
operative. See Leander Indep. Sch. Dist. v. Cedar Park Water Supply Corp., 479
S.W.2d 908, 912 (Tex. 1972); see also A & M Consol. Indep. Sch. Dist. v. City of Bryan,
143 Tex. 348, 184 S.W.2d 914, 915 (1945) (distinguishing the effect—not necessarily
the subject matter of—Article XI, section 9, which operates to exempt certain property
from taxation, from Article VIII, section 2, which authorizes the legislature to pass laws
that exempt certain property meeting the standard outlined in that article).
conclusions of law. See TEX. R. CIV. P. 298. TSHA’s proposed findings and
conclusions represent more than a ―bare request‖ for additional or amended findings
and conclusions. See Alvarez v. Espinoza, 844 S.W.2d 238, 241–42 (Tex.App.—San
Antonio 1992, writ dism’d w.o.j.) (en banc) (op. on reh’g) (per curiam). We conclude
that all the exemptions raised below are properly before this Court for our consideration.
That said, we do not rest our decision primarily and solely on the basis of Article
XI, section 9, because we should first decide the issue on a nonconstitutional basis if
possible. See VanDevender v. Woods, 222 S.W.3d 430, 432 (Tex. 2007) (noting that
courts should rest decisions on nonconstitutional grounds, if available, and not ―wade
into ancillary constitutional questions‖); In re B.L.D., 113 S.W.3d 340, 349 (Tex. 2003)
(―As a rule, we only decide constitutional questions when we cannot resolve issues on
nonconstitutional grounds.‖). In an attempt to maintain judicial restraint in the face of
the complex issues raised on appeal, we address the constitutional matter only insofar
as doing so is necessary to address the issues raised (1) whether provisions of the
Texas Tax Code effectively repealed section 53.46 of the Texas Education Code and
(2) whether any other of the provisions cited by TSHA operate to exempt the property in
light of TSHA’s provision of housing for these programs.
20
Traditionally, courts have analyzed matters relating to Article XI, section 9, in two
distinct phases: (1) public ownership issues and (2) exclusive public purpose issues.
See Leander Indep. Sch. Dist., 479 S.W.2d at 912 (observing that both public
ownership and public purpose elements must be satisfied); Tex. Tpk. Co. v. Dallas
Cnty., 153 Tex. 474, 271 S.W.2d 400, 401 (1954) (after concluding that disputed
property was not publicly owned, declining further analysis into ―nature of its use‖); A &
M Consol. Indep. Sch. Dist., 184 S.W.2d at 915 (addressing the applicability of Article
XI, section 9, by examining ownership and purpose issues in turn); see also Hays Cnty.
Appraisal Dist. v. Sw. Tex. State Univ., 973 S.W.2d 419, 422–23 (Tex.App.—Austin
1998, no pet.) (addressing separately the issues of public ownership and public
purpose); Cent. Appraisal Dist. of Erath Cnty. v. Pecan Valley Facilities, Inc., 704
S.W.2d 86, 89–90 (Tex.App.—Eastland 1985, writ ref’d n.r.e.) (same). To the extent
possible in light of binding Texas Supreme Court precedent interpreting ―counties, cities
and towns,‖ we adhere to the following general rule when examining a constitutional
provision: ―The language of the Constitution must be presumed to have been carefully
selected, and the words used are to be interpreted as the people generally understood
them.‖ Leander Indep. Sch. Dist., 479 S.W.2d at 912.
Public Ownership Element of Article XI, section 9
Though at first glance Article XI, section 9, would appear rather limited, we note
that the Texas Supreme Court provided an enduring, broad interpretation of Article XI,
section 9, equating its ―counties, cities or towns‖ to ―a governmental agency.‖ See
Lower Colo. River Auth. v. Chem. Bank & Trust Co., 144 Tex. 326, 190 S.W.2d 48, 50
(1945). This broad interpretation included the Lower Colorado River Authority (LCRA),
21
a creature of legislation which deemed it ―a governmental agency and body politic and
corporate.‖ See id. Although subsequent Texas Supreme Court cases have expressed
a reluctance or hesitance regarding the breadth of LCRA’s interpretation of ―counties,
cities and towns,‖ none has directly overruled or otherwise restricted it. See Satterlee v.
Gulf Coast Waste Disposal Auth., 576 S.W.2d 773, 779 (Tex. 1978) (op. on reh’g)
(noting the breadth of LCRA’s interpretation, declining to reconsider the holding, also
declining to apply that interpretation, and, instead, deciding the issue presented on
rehearing in terms of ―public purpose‖); Leander Indep. Sch. Dist., 479 S.W.2d at 911,
913 (in deciding issues concerning a different but related constitutional provision,
outlining LCRA’s interpretation and observing that what it characterizes as ―an
erroneous interpretation‖ is now ―firmly embedded in our jurisprudence‖).
Though no clear test has emerged to determine whether an entity falls within the
scope of LCRA’s interpretation of Article XI, section 9, the Texas Supreme Court has
found that the term ―counties, cities and towns‖ includes the following entities: (1) the
LCRA, created by statute as ―a governmental agency and body politic and corporate,
with the powers of government‖ and the creation of which was ―determined to be
essential to the accomplishment of the purposes of Section 59 of Article 16 of the
Constitution of the State of Texas,‖ and (2) the City of Bryan, Texas, a municipal
corporation. See LCRA, 190 S.W.2d at 50; A & M Consol. Indep. Sch. Dist., 184
S.W.2d at 915. We see that, though broad, LCRA’s interpretation does have outer
boundaries, however:
[T]he undisputed facts reveal that Pecan Valley is a nonprofit corporation
created by private individuals. Pecan Valley is not connected, in any way,
with a county, city, town, state, or any other political subdivision or
22
sovereignty. Pecan Valley’s only connection with a governmental agency
is its leasing arrangements with the Region. Such leasing arrangements
do not make Pecan Valley a governmental entity or agency. The evidence
conclusively establishes that Pecan Valley is a private, non-profit, Texas
corporation. It is, therefore, not entitled to an exemption under Article XI,
Section 9.
Pecan Valley Facilities, 704 S.W.2d at 89.
The Texas Education Code designates a higher education facility authority
created under its provisions as ―a body politic and corporate having the power of
perpetual succession.‖ TEX. EDUC. CODE ANN. § 53.13 (West 2012). ―It shall have a
seal; it may sue and be sued; and it may make, amend, and repeal its bylaws.‖ Id. A
―body politic‖ is defined as ―[a] group of people regarded in a political (rather than
private) sense and organized under a common governmental authority.‖ BLACK’S LAW
DICTIONARY 198 (9th ed. 2009); see Tex. Att’y Gen. Op. No. MW-177 (1980)
(characterizing a higher education authority created pursuant to Chapter 53 of the
Texas Education Code in terms of various statutory provisions). A higher education
facility authority ―has no power to tax‖ and ―does not have the power of eminent
domain,‖ however. See TEX. EDUC. CODE ANN. §§ 53.31, 53.32 (West 2012).
In light of the breadth of LCRA’s interpretation and application of Article XI,
section 9, TSHA, as a legislatively created body politic and corporate and an
instrumentality of a municipality, is an entity which would fall within LCRA’s broad
interpretation of ―counties, cities or towns‖ such that the public ownership prong of
Article XI, section 9, would be satisfied. Cf. LCRA, 190 S.W.2d at 50 (concluding that
the LCRA, ―a governmental agency and body politic and corporate,‖ falls within Article
XI, section 9’s ―counties, cities and towns‖).
23
Public Purpose Element of Article XI, section 9
What use constitutes exclusive public purpose within Article XI, section 9, has
long been a question Texas courts have considered. In fact, the very question we
address in the instant case was addressed in similar fashion by the Texas Supreme
Court in 1884 when, while considering the character of the use of Galveston Wharf in
terms of Article XI, section 9, it observed the following:
It is property held only for purposes essentially public, and may be said to
be devoted exclusively to the use and benefit of the public; indeed, it
would be hard to imagine a use more essentially public than is that of a
wharf which extends along the front of a city, and upon which is received a
large part of the articles which go to make up the inward and outward
commerce of the state. It is a property which all persons and vessels
have the right to use, under proper regulations, and without the use of
which the business of the city could not be conducted. That compensation
is received for its use does not withdraw from it its public character.
Galveston Wharf Co. v. City of Galveston, 63 Tex. 14, 23 (1884).
Over the years that would follow Galveston Wharf Company, we see certain rules
develop to aid in the determination of whether a property is ―devoted exclusively to the
use and benefit of the public.‖ For instance, generally speaking, property serves a
public purpose when ―it is used primarily for the health, comfort, and welfare of the
public,‖ and ―all the public has the right to use it under reasonable and uniform
regulations.‖ See A & M Consol. Indep. Sch. Dist., 184 S.W.2d at 915, 916.
Further, it is not essential that the property at issue be used for ―governmental
purposes.‖ See id. at 915 (citing Corp. of San Felipe de Austin v. State, 111 Tex. 108,
229 S.W. 845 (1921)). In San Felipe de Austin, a case with a factual background rich in
early Texas history, the Texas Supreme Court concluded that the land in question did
24
serve a public purpose when the municipality’s residents publicly used the land for
grazing purposes and as a source of firewood in accordance with the terms of the
original Mexican grant.6 San Felipe de Austin, 229 S.W. at 846. The Texas Supreme
Court recognized the LCRA as an entity ―essential to the accomplishment‖ of
constitutionally mandated purposes relating to the control, storage, and preservation of
the waters of the Colorado River. See LCRA, 190 S.W.2d at 50 (citing TEX. CONST. art.
XVI, § 59(a)).
―It appears that the use to which the property itself is put is of primary
importance‖ in determining whether the exclusive public purpose element of Article XI,
section 9, has been satisfied, regardless of any subsequent or indirect benefit such use
may inure to the public in the way of reinvested funds. See City of Beaumont v. Fertitta,
415 S.W.2d 902, 908 (Tex. 1967) (op. on reh’g). So, ―[g]overnmental receipt and use of
proceeds arising from commercial usage of the property does not, under article XI,
section 9, qualify the use of the property itself as public.‖ Hays Cnty. Appraisal Dist.,
973 S.W.2d at 423.
6
The Texas Supreme Court explained the historical origins of the public use of
the land in the very unique fact situation presented in San Felipe de Austin:
Following the independence of Texas, the town of San Felipe de Austin
was incorporated by a special act of the Congress of the Republic, in
1837. This act confirmed to the municipality title to all the public property
in it. This act was amended by one approved January 20, 1841, which
also confirmed to the citizens of the municipality all the powers and
property originally granted by the Mexican Government, and providing that
the powers and jurisdiction of the town should extend over the whole
territory belonging to it.
San Felipe de Austin, 229 S.W at 846.
25
4-H Roundup and JAMP Events
We refer to our previous discussion of the legislature’s directives aimed at
TAMU. TAMU is directed to hold certain educational courses and is specifically and
legislatively connected to the 4-H and JAMP programs. Indeed, the record suggests
that TAMU sponsored both of these events and specifically requested bids from The
Cambridge on housing for students attending these programs. Providing housing and
transportation for young people attending those programs which the legislature has
deemed in furtherance of the TAMU educational mission is a public purpose within the
purview of Article XI, section 9. Cf. LCRA, 190 S.W.2d at 50 (observing that entity at
issue aids in achieving goals established by Texas Constitution). Certainly, serving the
university’s activities in furtherance of its legislatively determined educational mission
and in its execution of the duly enacted laws of the State of Texas serves a public
purpose. Cf. id.
HMI Hockey and UCA Cheer Camps
The involvement of HMI and UCA beginning in 2006 and 2008, respectively,
raises doubts as to whether the housing of those participants serves an exclusive public
purpose as required by Article XI, section 9. That TAMU does receive some benefit
from its association with the programs is simply insufficient. Cf. City of Beaumont, 415
S.W.2d at 908 (observing that the fact that funds generated from private, commercial
use of property and received by a governmental entity may ultimately serve a public
purpose is inadequate to fulfill exclusive public purpose element of Article XI, section 9).
So, for reasons not dissimilar to our discussion of whether participants in the HMI
26
Hockey Camp and UCA Cheer Camp are ―students‖ of TAMU, we must resolve the
doubts concerning the exclusive public use aspect of TSHA’s provision of housing and
board to participants in the hockey and cheerleading camps against TSHA, against
exemption of its property from ad valorem taxation, and in favor of BCAD. See AHF
Arbors, 2012 Tex. App. LEXIS 465, at *18 n.30.
De minimus exception
TSHA cites this Court to one of its own opinions for the proposition that a de
minimus rule applies to ad valorem tax exemption given certain circumstances. See
Lamb Cnty. Appraisal Dist. v. S. Plains Hosp.-Clinic, Inc., 688 S.W.2d 896, 905
(Tex.App.—Amarillo 1985, writ ref’d n.r.e.). Lamb County Appraisal District, however, is
distinguishable from the instant case for a number of reasons, not the least of which is
that the Texas Tax Code provision at issue in that case expressly permitted a certain
degree of ―incidental‖ use. See id. at 901 (quoting TEX. TAX CODE ANN. § 11.18(b) (West
Supp. 2012)). None of the exemptions urged in the case at bar have comparable
language which could be read to permit incidental or de minimus use of the facilities in
such a way that would disqualify the property for tax exempt status. Further, Lamb
County Appraisal District becomes less persuasive in our current context in that the
language TSHA cites regarding the recognition of a de minimus rule is presented in the
context of the Court’s assumption for argument’s sake that the conduct at issue did fall
outside the scope of the exemption at issue. See id. at 904–05. Lamb County
Appraisal District does not establish a generally applicable de minimus rule that would
apply to the tax exemption context with which this Court is now confronted. Indeed,
application of such a rule would be inconsistent, if not antithetical, to the well- and
27
clearly-established rule of strict construction and the disfavor with which we are to treat
tax exemptions. See AHF Arbors, 2012 Tex. App. LEXIS 465, at *18 n.30.
Exemption under the Texas Tax Code
As we noted previously, the Texas Constitution encompasses two different
approaches regarding exemption of public property from taxation. First, in Article XI,
section 9, it is self-operative; the property falling within its ambit is exempt from taxation
pursuant to the constitutional provision itself. ―What the Constitution exempts from
taxation the Legislature has no power to require to be taxed.‖ Daugherty v. Thompson,
71 Tex. 192, 9 S.W. 99, 102 (1888). Secondly, by Article VIII, section 2, the
Constitution grants the legislature the authority to exempt public property, providing in
pertinent part that ―the legislature may, by general laws, exempt from taxation public
property used for public purposes.‖ TEX. CONST. art. VIII, § 2(a).
Section 11.11(a) of the Texas Tax Code
As authorized by Article VIII, section 2, the legislature enacted section 11.11 of
the Texas Tax Code , which provides, in pertinent part, the following:
(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.
TEX. TAX CODE ANN. § 11.11(a). TSHA contends that it is entitled to an exemption under
subsection (a) of section 11.11. Assuming arguendo that TSHA qualifies as ―a political
28
subdivision of the State,‖ TSHA must still bear the burden of clearly showing that its
property satisfies the public purpose element of section 11.11(a).7
Two cases from sister courts have directly addressed the issue whether section
11.11(a) requires exclusive public use. See Dallas Cnty. Appraisal Dist., 730 S.W.2d at
851; Grand Prairie Hosp. Auth. v. Tarrant Appraisal Dist., 707 S.W.2d 281, 284
(Tex.App.—Fort Worth 1986, writ ref’d n.r.e.). The Grand Prairie Hospital Authority
cases dealt with the same factual scenario: a hospital authority leased part of a medical
office building, which adjoined the hospital, to doctors who maintained their private
practices there. Dallas Cnty. Appraisal Dist., 730 S.W.2d 850; Tarrant Appraisal Dist.,
707 S.W.2d at 282. Both courts were asked to determine whether the fact that a portion
of the property was leased for private, commercial purposes destroyed the property’s
previously enjoyed tax-exempt status; both courts concluded that it did. See Dallas
Cnty. Appraisal Dist., 730 S.W.2d 851 (citing Satterlee, 576 S.W.2d at 779, for exclusive
public use and benefit standard); Tarrant Appraisal Dist., 707 S.W.2d at 284 (also
7
We do not specifically pass on the application of section 11.11(a) to a higher
education facility authority such as TSHA, again created as ―a body politic‖ and treated
in some respects as an instrumentality of the city of Westlake. Satterlee would arguably
support the position that it does. See Satterlee, 576 S.W.2d at 774–75 (treating waste
disposal authority created by legislation as a political subdivision of the State); see also
Grand Prairie Hosp. Auth. v. Dallas Cnty. Appraisal Dist., 730 S.W.2d 849, 850
(Tex.App.—Dallas 1987, writ ref’d n.r.e.) (concluding that hospital authority, an entity
organized under relevant statutory provisions, fell within section 11.11(a)’s scope and
observing that it was ―undisputed that the property is publicly owned since it is held by
the [authority]‖). Further, unlike LCRA in the Article XI, section 9 context, no case
advances an arguably broad interpretation of the entities to which section 11.11(a)
would apply. Cf. LCRA, 190 S.W.2d at 50.
It is on this basis that BCAD maintains section 11.11(a) is not applicable to
TSHA. It is also the distinction among the entities identified that BCAD maintains that
there is no conflict between section 53.46 of the Texas Education Code and section
11.11 of the Texas Tax Code. Because, as we will discuss, the property at issue does
not serve a public purpose, we need not decide this particular issue.
29
relying on Satterlee); accord Tex. Att’y Gen. Op. No. JC-0311 (2000); Tex. Att’y Gen.
Op. No. JC-0571 (2002). Indeed, both cases rely on Satterlee, which does apply an
exclusive public use standard—albeit in an Article XI, section 9 context. See Satterlee,
576 S.W.2d at 779. The effect of the Grand Prairie Hospital Authority cases’ adoption
of the Satterlee standard is to imprint upon section 11.11(a) an exclusivity element. The
Texas Supreme Court refused two opportunities to correct this imprint, had it
determined that such was unsound. As it stands, however, the Grand Prairie Hospital
Authority holdings have remained undisturbed since 1986 and 1987, respectively.
Here, TSHA’s provision of housing to HMI hockey and UCA cheerleading camps
is not, for the reasons we have discussed in relation to Article XI, section 9, a public
purpose. That being so, provision of housing and board for those events—albeit for a
rather short period of time—means that The Cambridge was not ―devoted exclusively to
the use and benefit of the public.‖ See Dallas Cnty. Appraisal Dist., 730 S.W.2d at 851;
Tarrant Appraisal Dist., 707 S.W.2d at 284; see also Satterlee, 576 S.W.2d at 779. We
conclude that, to the extent section 11.11(a) of the Texas Tax Code would apply in this
situation and would apply to TSHA, TSHA has failed to carry its burden of clearly
showing that it comes within the statutory exemption. See AHF Arbors, 2012 Tex.
LEXIS 465, at *18 n.30.
Section 11.11(e) of the Texas Tax Code
TSHA also contends that it is entitled to an exemption under subsection (e) of
section 11.11, which provides the following:
(e) Property that is held or dedicated for the support, maintenance, or
benefit of an institution of higher education as defined by Section 61.003,
30
Education Code, but is not rented or leased for compensation to a private
business enterprise to be used by it for a purpose not related to the
performance of the duties and functions of the state or institution or is not
rented or leased to provide private residential housing to members of the
public other than students and employees of the state or institution is not
taxable. If a portion of property of an institution of higher education is
used for public purposes and a portion is not used for those purposes, the
portion of the property used for public purposes is exempt under this
subsection. All oil, gas, and other mineral interests owned by an
institution of higher education are exempt from all ad valorem taxes.
Property bequeathed to an institution is exempt from the assessment of ad
valorem taxes from the date of the decedent’s death, unless:
(1) the property is leased for compensation to a private business
enterprise as provided in this subsection; or
(2) the transfer of the property to an institution is contested in a
probate court, in which case ad valorem taxes shall be assessed to
the estate of the decedent until the final determination of the
disposition of the property is made. The property is exempt from
the assessment of ad valorem taxes upon vesting of the property in
the institution.
TEX. TAX CODE ANN. § 11.11(e).
A plain reading of subsection (e) of section 11.11 yields the conclusion that it
contemplates application to property owned by an institution of higher learning. We add
that public ownership is determined by examining the facts surrounding the property,
and, here, there is no evidence—indeed, no contention—that The Cambridge is owned
by an institution of higher learning. See Tex. Tpk. Co., 271 S.W.2d at 402. From
subsection (e)’s plain language, it was not intended to apply to property owned by a
higher education facility authority; we are not at liberty to construe subsection (e)
otherwise. See AHF Arbors, 2012 Tex. LEXIS 465, at *18 n.30; Gables Realty, 81
S.W.3d at 872.
31
Pro Rata Exemption
TSHA invites this Court to remand this cause to the trial court with instructions to
determine the portion of the property that is used for public purposes and entitled to an
exemption under section 11.11(e) of the Texas Tax Code. 8 As is pertinent to this
invitation, subsection (e) provides the following: ―If a portion of property of an institution
of higher education is used for public purposes and a portion is not used for those
purposes, the portion of the property used for public purposes is exempt under this
subsection.‖ TEX. TAX CODE ANN. § 11.11(e). Again, having concluded that The
Cambridge does not qualify as ―property of an institution of higher education,‖ we
decline the invitation to remand for calculation of a pro rata tax exemption under Section
11.11(e).
Summary
With respect to the summer 2005 housing and boarding of students who
attended the 4-H Roundup and JAMP events, TSHA should have continued to enjoy the
previously granted tax exemption applied to The Cambridge; those participants are fairly
considered students of TAMU in light of the programs’ closely connected and
legislatively created relationships to TAMU. With that, the provision of housing and
board to those participants would not undermine section 53.46’s requirement that the
8
Parenthetically, the notion of a pro rata approach to exemption pursuant to
Article XI, section 9, has been rejected outright: ―We . . . reject the procedure of
subdividing property to determine whether part of the property’s use is exclusive for the
purposes of article XI, section 9 of the Texas Constitution.‖ Hays Cnty. App. Dist., 973
S.W.2d at 423. We see no authority which would support such an approach. In fact,
such a practice would also appear to contradict the exclusivity required by Article XI,
section 9. See id.
32
property be ―devoted exclusively to the use and benefit of the students, faculty, and staff
members of an accredited institution.‖ See TEX. EDUC. CODE ANN. § 53.46.
Beginning in the summer of 2006, when TSHA began to provide housing to HMI
hockey camp attendees, such use of The Cambridge fell outside section 53.46’s
exclusivity requirement. That is, the direct and substantial involvement of and benefit to
a non-university entity means that the property was no longer ―devoted exclusively to
the use and benefit of the students, faculty, and staff members of an accredited
institution.‖ See id. Adhering to the strict construction disfavoring exemptions from
taxation, we resolve the doubts raised by the facts of this case against TSHA and in
favor of BCAD with respect to the tax year 2006. The same resolution applies to the tax
year 2007 when TSHA again provided housing and board to HMI Hockey Camp
attendees. Beginning in the summer of 2008 and in addition to providing housing for
hockey camp, TSHA began to provide housing for participants in UCA Cheer Camp, an
event organized and developed by a for-profit corporation. Although there is evidence
that TAMU did benefit financially from its involvement with the cheerleading camp, the
record suggests that it was not only TAMU who benefitted from the housing and board
TSHA provided to the camp attendees. The record establishes that TSHA dealt directly
with UCA in terms of arranging for payment for the housing provided to those
participants. We resolve the doubts associated with the facts surrounding UCA Cheer
Camp against TSHA and in favor of BCAD for the tax year 2008.
Likewise, none of the other cited exemptions would operate on these facts to
exempt TSHA’s property from ad valorem taxation during the tax years 2006 through
2008. Assuming that TSHA is an entity to which Article XI, section 9, would apply, the
33
use of The Cambridge during these years does not meet the exclusive public purpose
test. See TEX. CONST. art. XI, § 9. Similarly, such use failed to meet the exclusive
public use requirements of section 11.11 of the Texas Tax Code. See TEX. TAX CODE
ANN. § 11.11(a). Further, the property at issue is not ―property owned by an institution
of higher education‖ as contemplated by subsection (e). See id. § 11.11(e).
Conclusion
As to the tax year 2005, we sustain TSHA’s point of error with respect to the trial
court’s conclusion that it was not entitled to the tax exemption provided by section 53.46
of the Texas Education Code. Accordingly, we reverse in part the trial court’s judgment,
render judgment that TSHA’s property is exempt from ad valorem taxation for the year
2005, and order that BCAD remove TSHA’s property from its tax roll for the year of
2005. As to the tax years 2006 through 2008, we overrule TSHA’s points of error and,
accordingly, affirm the trial court’s judgment that the TSHA property is not exempt from
ad valorem taxation for those years. BCAD’s tax rolls for those years will so reflect.
Mackey K. Hancock
Justice
34