Texas Attorney General Opinion: JC-311 Page: 4 of 5
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The Honorable Robert L. Busselman - Page 4 (JC-0311)
In Attorney General Opinion MW-430, this office concluded that an office building and
parking lot to be constructed by a hospital authority and leased to doctors would not be tax-exempt
even though the lease revenues generated would be placed in the hospital authority's general funds
or be used for the office building. See Tex. Att'y Gen. Op. No. MW-430 (1982). The opinion
considered the provisions of both article VIII, section 2 and article XI, section 9. See id. at 2. But,
relying on the test enunciated by the Texas Supreme Court in Satterlee-that property must be
devoted exclusively to the use and benefit of the public--this office concluded that "by the [lease]
arrangement here contemplated, the property would lose its tax exempt status because it is not
used exclusively for the benefit of the public." Id. at 5. Compare id. with Tex. Att'y Gen. Op. No.
JM-405 (1985) (concluding that attorney general cannot resolve fact question as to whether hospital
district-owned building leased to two nonprofit corporations, Panhandle Community Action and
Panhandle Planned Parenthood, and Texas Department of Health was used for public purposes). But
see Tex. Att'y Gen. Op. No. DM-188 (1992) at 8 (stating that "public property put to a private use
will remain tax-exempt where the private use can either be characterized as a public purpose or
in direct support of a public purpose of the political subdivision," citing Tex. Att'y Gen. Op. Nos.
JM-1049 (1989), JM-464 (1986)).
Based on Dallas County Appraisal District and Tarrant Appraisal District, we believe the
District's building is not tax-exempt. The District's building here is not held only for public
purposes and devoted exclusively to the use and benefit of the public, given that it is used by the
lessee physicians for their private medical practice. See Dallas County AppraisalDist., 730 S.W.2d
at 851; Tarrant Appraisal Dist., 707 S.W.2d at 284; see also Tex. Att'y Gen. Op. No. MW-430
(1982). The exclusive public use requirement is not met by the use of the revenues generated by the
private commercial use to benefit the residents ofKarnes County. See Hays County AppraisalDist.,
973 S.W.2d at 423. Moreover, the argument that the leased building serves the hospital purposes
of the District is unavailing. See Dallas County Appraisal Dist., 730 S.W.2d at 851; Tarrant
Appraisal Dist., 707 S.W.2d at 284; see also Tex. Att'y Gen. Op. No. MW-430 (1982).
Because we conclude that the building is not tax-exempt, we do not address your second
question: whether the leasehold interest is taxable if the building is tax-exempt.
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JC-311, text, 2000; (texashistory.unt.edu/ark:/67531/metapth274620/m1/4/: accessed January 16, 2019), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.