Honorable J. Albert Dickle             Opinion No. M-897
County Attorney
Coryell County Courthouse              Re : Exemption from ad valorem
Gatesvllle, Texas 76528                     taxes of property owned
                                            by a non-profit corpora-
                                            tion organized for the
                                            purpose of promoting
                                            Industrial development
                                            in Copperas Cove, Texas,
Dear Mr. Dickle:                            and contiguous trade area.
     You have requested that we advise you as to the taxability
of properties belonging to Copperas Cove Industrial Foundation,
Inc., hereinafter referred to as “Copperas”, a non-profit corpor-
ation organized pursuant to the provisions of the Texas Non-
Profit Corporation Act.l The corporate purpose is stated In
Article Four of the charter of Copperas:
     “The purpose or purposes for which the corporation
     is organized are:  Promoting Industrial development
     for and within said city of Copperas Cove, Texas, and
     Its contiguous trade territory and area, and with the
     intent of exercising all of the general powers author-
     ized by Article 2.02 of the Texas Non-Profit Corpora-
     tion Act .‘I
The charter also states that Copperas shall have perpetual dura-
tion.
     Section 3 of the By-Laws of Copperas provides that no offl-
cer or director shall ever draw compensation and that an,vassets
held by Copperas at the time of corporate dissolution would
pass to a successor corporation or organization having a similar


l 3 V.C.S.,   Ch. 9, Art. 1396-1.01,    et. seq.




                               -4368-
Honorable J. Albert Mckle,   page 2    (M-897)


purpose and like exempt status.

     With regard to the operation of Copperas, you have given us
the following information In a letter pertaining to your opinion
request.
            The Initial assets of the corporation was obtained
     &r&h    the purchase of memberships, a list of which and
     the amounts donated Is also enclosed. For each $100.00
     membership entitles a member to vote. Contributions of
     less than $100.00 entltles the person contributing to a
     non-voting membership. Any single member Is limited to
     the number of votes that he or It can cast, which is 5%
     of the total number of votes. This Is a protection
     against large contributors, such as the~~~cove
                                                  Bank, being
     able to control the organization.2
     There is a continuation of the solicitation of members.
     The membership Is non-redeemable and cannot be resold to
     the corporation.
     The assets of the corporation conslst~approximately of
     $600.00 cash and a 51-acre tract of land, 3 or 4 acres
     of which lie within the city limits of Copperas Cove and
     the balance lying outside the city limits. The acreage
     within the city limits had previously been subdivided
     for residential purposes before It was purchased. It Is
     not the Intention of the corporation to subdivide for
     residential purposes, however, due'to financial problems,
     the corporation Is attempting to sell the tit limit
     acreage. The property was purchased on the 28 th day of
     November 1969 from the Erby Wolfe Estate for $25,OOO.OO,
     payable 55,OOO.OO down and $5,000.00 per year. Because
     of the lack of funds to pay the next payment of $5,000.00


2 The membership list, as furnished us, shows that there are a
total of 72 contributing members. 51 members are voting members.
Of these 51, only five contributors have as many as five votes,
the two largest of these contributors being the Cove State Bank
which contributed $2,000.00, and an Individual who made a contri-
bution In the amount of $1,650.00.




                              -4369-
Honorable J. Albert mckle,   page 3    (M- 897)


     It is necessary to sell the city limit acreage as above
     indicated. At the present time there Is a balance of
     $15,000.00 owing on the property. No individual member
     may purchase any of the assets of the corporation except
     upon competitive bids.
     There are no options to purchase or sell or purchase con-
     tracts existing at the present time.  The corporation is
     attempting to attract investors, and does Intend to sell
     small tracts for the purpose of attracting business ven-
     tures. One such instance and apparently the only one that
     continued any length of time was a garment factory that
     apparently was not located on the above referred to acre-
     age, but was housed at another location. The corporation
     paid approximately 6 months rent for this venture before
     It turned sour. The nature of the activities of the cor-
     poration Is contracting and carrying on correspondence
     with prospective businesses, and attending industrial and
     business seminars. No expense Is paid to individuals for
     attending these seminars nor is anyone In the corporation
     receiving expense money or a alary and this includes the
     attorney for the corporation.3


3 The above described corporate activities are well within the
powers conferred by Section 10 of the,By-Laws which read, in par
as follows:
     1,
      . . . Without prejudice to such general powers and the
     other powers conferred by statute, by the charter and by
     these by-laws, it Is hereby expressly declared the board
     of directors shall have the following powers, that is to
     say: (1) To purchase, or otherwise acquire for the cor-
     poration, any property, rights, or privileges which the
     corporation Is authorized to acquire, at such price or
     consideration and generally on such terms and conditions
     as they think fit; and at their discretion to pay there-
     for either wholly or partly In money, stock, bonds, de-
     bentures, or.other securities of the Corporation; (2) To
     create, make and Issue notes, mortgages, bonds, deeds of
     trust, trust agreements and negotiable or transferrable
     Instruments and securities, secured by mortgage or deed




                              -4370-
Honorable J. Albert Dickle, page 4         (M-897)


                           .   .   .   .

     "There seem to be adequate provisions to prevent lndlv-
     idual members from profiting by being members of the
     corporation and when taking Into consideration the broad
     base of membership and the general small amounts of con-
     tribution and considering the corporation from all per-
     tinent data it appears that the assets have been accu-
     mulated from contributions made for the development of
     the business of Copperas Cove as distinguished from
     contributions made by Investing in capital stock of a
     corporation."
     Three provisions of the Texas Constitution will be considered
here.
     Article VIII, Section 1 provides, In part, as follows:

      . . . All property in this state, whether owned by
     natural persons or corporations, other than munici-
     pal, shall be taxed in proportion to Its value,
     which shall be ascertained as may be provided by
     law . . .It
     Article XI, Section 9 provides, in part, as follows:
     "The property of counties, cities, and towns, owned
     and held only for public purposes, . . . and all


(3 cont'd) of trust on any real property of the corporation
     or otherwise, and to do every other act and thing nec-
     essary to effect the same; (3) To sell or lease the
     real or personal property of the corporation on such
     terms as the boa~rdmay see fit and to execute all deeds,
     leases and other conveyances or contracts that may be
     necessary for carrying out the purposes of this corpor-
     ation and (4) To delegate any of the powers of the board
     in the course of the"current business of the corporation
     to any standing or special committees or to any officer
     or agent, and to appoint any persons the agents of the
     corporations, with such powers (Including the power to
     subdelegate and upon such terms as they think flt.)N




                               -4371-
Honorable J. Albert Dlckie, page 5      (~-897)



     other property devoted exclusively to the use and
     benefit of the public shall be exempt . . . from
     taxation . . .'
Article XI, Section 9 Is self-executing.4
     Article VIII, Section 2 provides, in part, as follows:
     1,
      . . .   The legislature may, by general laws,
     exempt   from taxation public property used for
     public   purposes . . . and Institutions of
     purely   public charity . . ."
Article VIII, Section 2 Is permissive In nature rather than self-
executing, and Is dependent for Its effectiveness upon the stat-
utes enacted In pursu nce to Its authorizations and In compliance
with its llmltations.8
     Even though it Is our opinion that Article VIII, Section 2
and the valid statutes thereunder are determinative of exemption
in this case, we have set out the above quoted portions of Ar-
ticle VIII, Section 1 and Article XI, Section 9 because these
provisions are so frequently Inexorably Intertwined in court
decisions determining questions of taxability for ad valorem
tax purposes.
     We are aware of the ever-expanding scope of the terms
"public" and "charitable" under applicable constitutional and
statutory provisions effectuating exemption from ad valorem
taxes. Although the progression has been largely legislative,
it has embraced both public and private property. The judicial
branch has recently carefully preserved exemption for municipal
property in the absence of legislative action subjecting It to


4 A & M Consolidated Independent School Dist. v. City of Bryan,
143 T    348 184 s W 2d 914 (1945). L ower Colorado River Author-
                     l

lty v?6hemlial Bank i Trust Co., 164 Fex. 32b, 190 S .W .2d 48 (1945).
5 City of Wichita Falls v. Cooper, 170 S.W.2d 777 (Tex. Civ. App.
1943, error ref.); Dlcklson v. Woodmen of the World Life Insurance
co.. 280 S.W.2d 315 (Tex. Clv. App. 1955, error ref.).




                               -4372-
      .




Honorable J. Albert Dlckle, page 6           (~-897)


          6 and even more recently, upheld the constitutionality of
t=,
legislation expressly recognl ed as broadening prior statutory
concepts of exempt charities.3t
     Since Copperas Is a private corporation, exemption cannot
be obtalne under the self-executing provisions of Article XI,
Section 9;8 but it is possible that properties belonging to
Copperas might be exempt by statutes within the constitutional
authorizations of Article VIII, Section 2 for “public property
used for public purposes” or for “institutions of purely public
charity. ” We will first consider that constitutional author-
ization for exemption of “public property used for public pur-
poses”.
     In the early case of Daugherty v. Thompson, 71 Tex. 192,
9 S.W. 99 (1888), the Supreme Court declared at page 101:
           I,
                  that section of the constitution seems to apply
           t; i&perty owned by persons or corporations in private


6 In City of Beaumont v. Fertltta, 415 S.W.2d go2 (Tex. s~p.~;z67),
the court h Id th t since municipalities are excepted from
constitutioEa1 re:ulrement of Article VIII, Section 1 that all
property belonging to natural persons or corporations be taxed,
the legislature could authorize taxation or not as it saw fits;
and since the legislature had not seen fit to authorize the tax-
ation of such properties but had provided for the taxation of
long-term leaseholds on municipal property whereby taxes are
paid by the lessors, municipal property, regardless of the use
to which it Is being put, is exempt from taxation.
7 San Antonio Conservation Society, Inc. v. City of San Antonio,
455 S.W.2d 743 (Tex. Sup. 1970) .
c 11      is the property ‘publicly owned’ so as to be exempt from
 taxis’u:der Article XI, Section 9 of the Constitution? Public
 ownership, for tax exemption purposes, must grow out of the facts:
 It Is a legal status based on facts, that may not be created or
 conferred by mere legislative, or even contractual declaration.”
                Company v. Dallas County, 153 Tex. 474, 271 S.W.2d
               .




                                   -4373-    ‘,
Honorable J. Albert Dlckle, page 7     (m-897)



     right, but which, from the use to which it Is
     applied, is, in a quallfl d sense, deemed public
     property." (Einphaslsour:.)
     This original interpretation was affirmed In Lower Colorado
River Authority v. Chemical Bank & Trust Co., 144 Tex. 326, 190
 . .   46 (1943) at page 49:

     "Nor are we under any obligation, under the facts of
     this  case, to harmonize Art. XI, Sec. 9, supra, with
     Art. VIII, Sec. 2, of the Constitution of Texas, which
     declares that the legislature 'may, by general laws,
     exempt from taxation public property used for public
     purposes.' That duty likewise   was performed for us
     a long time ago by Chief Justice Stayton when he said,
     in Daugherty v. Thompson, 71 Tex. 192, 9 S.W. 99, 102:
      'As before said,_section 2, art. 8 of the constitution,
     gave to the legislature power to exempt property held
     In private ownership, but used for purposes which give
     to it a public character.' (Italics ours.) . , .I'
     And In 1963, the Supreme Court quoted with approval the
above set out portions of the above two opinions at page 910
of City of Beaumont v. Fertitta, 415 S.W.2d 902, supra, foot-
note 6, page 6.
     This being the extent of the constitutional authorization
for exemption for "public property used for public purposes',
do any of the legislative enactments contained in Artic?e 7150,
20 Vernon's Civil Statutes, provide an exemption which may be
deemed applicable to Copperas under the submitted facts? We
think not.
     We will next consider the c~onstitutlonalauthorization for
exemption of "Institutions of purely public charity". Many
court decisions have been concerned with the meaning of this
provision. However, we think an analysis of the recent decision
of our Supreme Court In San Antonio Conserv. Sot. Inc. v. City
of San Antonio, 455 S.W.!?d743 (1970) will resolve the question
under consideration.
     In the Conservation Society case, the court was concerned
with the following facts. The Society was a non-profit corpor-
ation chartered for the purpose of preserving historical buildings




                              -4374-
Honorable J. Albert Mckie,   page 8   (~-897)


and sites, and, in fact, so operated. The specific piece of
property Involved was Navarro House1 named for a native Texas
hero of the Texas Revolution, "who,' said the court, "served
Texas as one of Its great public figures for many years." The
House was used as a museum for the benefit of all the public.
     At the outset of the opinion, the court quoted that por-
tion of Section 2 of Article VIII exempting "institutions of
purely public charity", and pointed out that it was not until
1905 that the legislature undertook to define that phrase more
fully. Acts 29th Leg., Ch. 127, pp. 314-315 (presently Section
7, Article 7150, V.C.S.). The court noted the subsequent amend-
ments to Section 7, as well as the additional sections which
have been added to Article 7150. Specifically, the section
under consldeKatlon was Section 20, the pertinent portions of
which exempt      . any non-profit organization chartered or
incorporated &d&   the Texas Statutes for the purpose of pre-
serving historical buildings, sites and landmarks, not leased
or otherwise used with a view to profit, . . .'I. The court
stated that Section 79 was concerned with charity in the sense
of almsgiving, but that Section 7 was not the exclusive basis


9 Section.7 reads as follows:
     "7. Public  Charities.  All buildings and personal
     property belonging to Institutions of purely public
     charity, together with the lands belonging to and
     occupied by such institutions * * * not leased or
     otherwise used with a view to profit, unless such
     rents and profits and all moneys and credits are
     appropriated by such Institutions solely to sustain
     such Institutions and for the benefit of the sick
     and disabled members and their families and the
     burial of the same, or for the maintenance of per-
     sons when unable to provide for themselves, whether
     such persons are members of such institutions or
     not. An institution of purely public charity
     under this article Is one which dispenses its aid
     to its members and others In sickness or distress,
     or at death, without regard to poverty or riches
     of the recipient, also when funds, property and
     assets of such institutions are placed and bound




                             -4375-
Honorable J. Albert Dlckle, page 9      (~-897)


for a claim that an institution was one of purely public char-
ity, and that the legislature In enacting Section 20 intended
to add to the existing-law and to change it.
     After havinn thus ascertained the Intent of the legisla-
ture, the court Fe-announced the rule stated In River Oaks
Garden Club v. City of Houston, 370 S.W.2d 851 ('Pex.Sup. 1963):
  t /charity/ is public when ft affects all the people of a com-
munlry or sFate by assuming,  to a material extent, ihat which
otherwise might become the obligation or duty of the community
or the state." It was conceded that the whole public received
benefits from the preservation of the House; therefore, the re-
maining question, said the court; was whether the Society In
preserving It had assumed to a material extent an obligation or
duty of the community or state. The court concluded that it
had. In so holding, the court traced, at some length, at pages
746, 747, various constitutional and statutory provisions ex-
pressing the governmental obligation to preserve evidence of
Texas' historical heritage from the time of the first Texas
Constitution until the time of the decision. See also Cedar
Pa;k iJa;er Su$r;yozi.   vnp;;";eru;;S.Di ($:)yet    report.

     There Is no constitutional provision expressing govern-
mental obligation to promote Industrial development for cities
or areas or even the state Itself. There are statutory evidences
of legislative concern about industrial development. A good
example is Article 12.03, Title 28, Taxation-General, Vernon's
Civil Statutes, exempting from franchise taxes "corporations
having no capital stock and organized for the exclusive purpose
of promoting-the public interest of any county, city or town or
other area within the state . . '.' We are also aware of the
fact that numerous non-profit corporations having corporate
purposes similar to those of Copperas have been formed.



tg   cont'd) by its law to relieve, aid and administer In any
       way to the relief of Its members when in want, slck-
       ness and distress, and provide homes for its help-
       less and dependent members and to educate and maln-
       taln the orphans of its deceased members or other
      persons;   * * *.‘I




                              -4376-
Honorable J. Albert Mckle,   page 10     (~-897)


     In the instant case, we do not question the bona fldes of
the incorporators of Copperas or Its contributors. Their de-
clared purposes are In the public Interest and, Insofar as Is
apparent, are entirely divorced fromany direct personal  gain.
Nevertheless, In the absence of any legislation specifically
exempting from ad valorem taxes property belonging to such
corporations, we must assume that the legislature did not in-
tend to accord them exemption. Finally, we are bound by the
well settled fundamental principles that exemptions from taxa-
tion are never favored and that all taxing provisions will be
strictly construed In favor of the taxing authorities and the
state. We are therefore of the opinion that Copperas cannot
obtain exemption from ad valorem taxes undoerany of the pres-
ently existing constitutional or statutory provisions.
                        SUMMARY
          Properties belonging to Copperas Cove Industrial
     Foundation, Inc .# a non-profit corporation organized
     for the purpose of promoting Industrial development
     In Copperas Cove, Texas, and contiguous trade areas,
     are not exempt from ad valorem taxes under any constl-
     tutlonal or statutory             of this State.




                              ciIzk$.C2*
                               Attor   y General of Texas
Prepared by Marietta McGregor Payne
Assistant Attorney General




                              -4377-
                                       .


Honorable J. Albert Dlckle, page 11    (~-897)


APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
James Broadhurst
Houghton Brownlee
,S. J. Aronson
Jim Swearingen
MEADE F. GRIFFIN
Staff Legal Assistant
ALFREDWALKER
Executive Assistant
NOLA WHITE
First Assistant




                              -4378-