Texas Attorney General Opinion: JC-311 Page: 3 of 5
The following text was automatically extracted from the image on this page using optical character recognition software:
The Honorable Robert L. Busselman - Page 3
be tax-exempt, property must be held only for public purposes and be devoted exclusively to the use
and benefit of the public. See Grand Prairie Hosp. Auth. v. Dallas County Appraisal Dist., 730
S.W.2d 849, 851 (Tex. App.-Dallas 1987, writ ref'd n.r.e.); 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.). Opinions of
this office have also articulated a single standard. See, e.g., Tex. Att'y Gen. Op. Nos. DM-436
(1997) at 4; DM-188 (1992) at 3; DM-78 (1992) at 2; JM- 523 (1986) at 3; JM-464 (1986) at 3; JM-
405 (1985) at 2; MW- 430 (1982) at 4-5.
In a 1987 decision, the Dallas Court of Appeals determined that a hospital authority-owned
medical office building leased in part to hospital staff physicians and utilized for their private
practices was not tax exempt under section 11.11 (a) of the Tax Code. See Dallas County Appraisal
Dist., 730 S.W.2d 849, 851. In Dallas County Appraisal District, the appellant hospital authority
contended that the building was tax-exempt under section 11.11 of the Tax Code because "the
physician's use of the property was related to the [hospital authority's] use of the property for public
purposes" and, therefore, exempt under former article 4437e, section 16, Texas Revised Civil
Statutes Annotated (1976),3 as a matter of law, because the hospital authority was the owner of the
property. Id. at 850. The court disagreed, holding, first, that article 4437e, section 16 was repealed
by the enactment of the Tax Code. Id. at 851. More importantly, the court stated that the test in
these cases "is whether the property in question is held only for public purposes and is devoted
exclusively to the use and benefit of the public[,]" citing Satterlee, notwithstanding that the Texas
Supreme Court in Satterlee enunciated this standard under article XI, section 9. Id.; see also
Satterlee, 576 S.W.2d at 779. The court concluded that the medical office building at issue "was
not used exclusively for the use and benefit of the public since private doctors were leasing part of
the property for their own commercial enterprises." Dallas County Appraisal Dist., 730 S.W.2d at
851. Significantly, the fact that the physician's use of the property might serve the hospital
authority's public purpose, as the hospital authority contended, appears to have been irrelevant under
this analysis given that the court did not even address it. See id.
In an earlier 1986 decision, the Fort Worth Court of Appeals reached the same conclusion
utilizing the exclusive public use standard. See Tarrant Appraisal Dist., 707 S.W.2d at 284. The
hospital authority asserted that its medical office building leased to private doctors was tax-exempt
as a matter of law under former article 4437e, section 16. Id. at 282. But the court held that it was
taxable because the building "was not used exclusively for the use and benefit of the public since
the private doctors were leasing part of the property for their own commercial enterprise[,]" citing
Attorney General Opinion MW-430. Id. at 284.
3Former article 4437e, 16 stated that: "Recognizing the fact that the property owned by [Municipal Hospital]
Authority will be held for public purposes only and will be devoted exclusively to the use and benefit of the public, it
shall be exempt from taxation of every character." See Dallas County Appraisal Dist., 730 S.W.2d at 850. The
substance of section 16 is now codified at section 262.004 of the Health and Safety Code. See TEx. HEALTII & SAFETY
CODE ANN. 262.004 (Vernon 1992); see also id. historical note (prior law) [Act of May 17, 1957, 55th Leg., R.S., ch.
472, 16, 1957 Tex. Gen. Laws 1379].
Here’s what’s next.
This text can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Text.
Texas. Attorney-General's Office. Texas Attorney General Opinion: JC-311, text, 2000; (texashistory.unt.edu/ark:/67531/metapth274620/m1/3/: accessed December 17, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.