Honorable Joe Resweber          Opinion No. M-1008
County Attorney
Harris County Courthouse        Re:   Effect of H.B. 1099,
Houston, Texas 77002                  62nd Leg., R.S. 1971
                                      on procedure in assessing
                                      property, such as the
                                      Harris County Domed
                                      Stadium and other lease-
                                      holds in the County, and
                                      the proper application
Dear Sir:                             to such assessments.
     You ask the following question:
            "Does House Bill 1099 change the procedure
            in the assessing of property such as the
            Domed Stadium and other leasehold interests
            in the county, and If so, how would It apply
            to an assessment of the Domed.Stadium and
            related facilities?"
     House Bill 1099 is the bill passed by the 62nd
Legislature, Regular Session, 1971. We will assume
that the "Domed Stadium" you speak of is owned by the
County of Harris.
     House Bill 1099 amends Articles 7173 and 7174,
Vernon's Civil Statutes.
     Article 7173 before the amendment and Insofar as It
relates to leasehold Interests, read In part as follows:
            "Property held under a lease for a term
            of three year6 or more, or held under a
            contract for the purchase thereof, belong-
            ing to this State, or that Is exempt by law
            from taxation in the hands of the owner
            thereof, shall be considered for all the
            purposes of taxation, as the property of
            the person so holding the same, except as
            otherwise specially provided by law. ...’
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   Honorable Joe Resweber, page 2,          (M-1008)


        As amended, this Article now reads,ln its relevant
   part:
             "Leasehold interests In land, buildings,
             or Improvements owned In whole or In part
             by the State, a county, a city or cities,
             a school district or any other governmental
             or public entity or body politic.
             "Property held under a lease for a term of
             one year or more, or held under a contract
             for the purchase thereof, belonging to the
             State, a county, a city or cities, a school
             district, or any other governmental or
             public entity, authority or body politic
             or that is exempt by law from taxation
             in the hands of the owner thereof, except
             for properties held, owned or dedicated,
             in trust or otherwise, to the support,
             maintenance or benefit of Institutions
             of higher education, shall be considered
             for all the purposes of taxation, as the
             property of person so holding the same,
             except as otherwise specially provided by
             law; however this shall not Include:
             1,...I'

         The effect of the amendment to Article 7173 is to make
    the leasehold estate held for a term of one year or longer
    taxable to the lessee as owner, if owned In whole or In
I~ part by either the State, county, city, school district or
    any public entity or body politic while the article prior
  -to amendment required the lease to be for a term of three
    years or more and also applied only to property owned by
    the State or that Is exempt by law from taxation in the
    hands of the owner thereof. Also, Article 7173 'VX.S.,
 Ei as amended, excepts taxation of the leasehold interest to
    the lessee as owner, for properties held, owned or dedicated,
    In trust or otherwise, to the support, maintenance or benefit
    of institutions of higher education.




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Honorable Joe Resweber, Page 3          (M-1008)


     The amendment to Article 7173, insofar as leasehold
Interests In publicly owned property are concerned, changed
the length of the lease term from "three year6 or more" to
*one year or more," and broadened the entities of ownership.
House Bill 1099, supra, will not change the procedure in
assessing the value of the leasehold Interest in the Domed
Stadium. For the purpose of this opinion we are assuming
the term of the lease on the Domed Stadium was for three
years or more when House Bill 1099 was passed and also
that the Domed Stadium Is not dedicated to the support of
institutions of higher education.
     Article 7174, before the amendment and insofar as it
related to leasehold Interests read, in part, as follows:
          I,...

         "Taxable leasehold estates shall b6
         valued at such a price as they would
         bring at a fair voluntary sale for cash..."
     This Article as amended, in its relevant part, now
reads as follows:
          II
           ...
         "taxable leasehold estates on non-exempt
         property shall be valued at such price as
         such leasehold estates would bring at a
         voluntary sale for cash, and taxable
         leasehold estates on exempt property shall be
         valued at such price as such leasehold estates
         would bring at a voluntary sale thereof
         for cash, based upon the value of a comparable
         improvement If located on non-exempt
         property, with reductions for reversionary
         Interests, restrictions on use, and credit
         for normal rental..."
     Under Article 7174, before amendment, a taxable lease-
hold estate was valued at the price the leasehold would
bring at a fair voluntary sale for cash. Under Article 7174,
as amended, a taxable leasehold estate on exempt property
is to be valued at what a comparable Improvement located on
non-exempt property would bring at a voluntary sale~for
cash, with reductions for reversionary Interests, restric-
tions on use, and credit for normal rental.

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.




    Honorable Joe Resweber, Page 4               (M-1008)



                               SUMMARY
              House Bill 1099, 62nd Legislature, Regular
              Session, 1971 amends Article 7173, V.C.S. It
              does not change the procedure in assessing
              the property known as the Domed Stadltm.
              House Bill lo99, supra, also amends Article
              7174, V.C.S. :The amendment changes the method
              of valuation of a leasehold estate. In the
              words of the statute the method Is:
             ..A
              I,...[T]axable leasehold estates on exempt
              property shall be valued at such price as
            : such leasehold estates would bring at a voluntary
              sale thereof for cash, based upon the value
              of a comparable improvement If located on



                                           V&j   truly yours,




    Prepared by Fisher A. Tyler
    Assistant Attorney General
    APPROVED:
    OPINION COMMITTEE
    Kerns Taylor, Chairman
    W. E. Allen, Co-Chairman
    James Broadhurst
    Bart Bollng
    John Banks
    Scott Garrison
    SAM MCDANIEL
    Staff Legal Assistant
    ALFRED WALKER
    Executive Assistant
    NOLA WHITE
    First Assistant
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