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              THE       ATTORNEY          GENERAL

                            OFTEXAS




     Hon. James E. Barlow          Opinion No. M-375
     CrFmi.nal District Attorney
     Bexar County                  Re: Is real estate owned by
     San Antonio, Texas 78204          an institution exempt from
                                       ad valorem taxation as a
                                       public charity, such as a
                                       general hospital, but used
                                       as an automobile parking
     Dear Mr. Barlow:                  lot, exempt from taxation?

            Your letter requests an opinion of this or‘fice concerning
     the exempt status of "certain parking lots" owned by the
     Baptist Memorial Hospital.  For the purpose of your request,
     you have assumed that the hospital itself is an institution
     of 'purely public charity" as-defined in River Oaks Garden
     Club v. City of Houston, 370 S.W.2d 851 (Tex.Sup. lgb3).
     Hence. for the uurnoses of this oninion the auestion of the
     exemption of the "Baptist Memoriai Hospital"-is not involved
     and it is assumed that such hospital is an institution of
     "purely public charity" as defined in Article. 7150, Section
     7, Vernon's Civil Statutes.

            You have submitted, as an exhibit to your request, a
     map which clearly, and in detail, shows all of the real estate,
     by lot numbers, which is involved in your request. Your
     letter makes references to this map and details the use being
     made by the hospital of the various numbered lots. Your re-
     quest classifies these parking areas and which we briefly
     summarize as follows:

            (1) A pay parking lot across Dallas Street
          from the main hospital building, wherein the
          public is charged for parking priv~ileges. How-
          ever, doctors and ministers are allowed free
          parking at any time and employees and volunteer
          workers may park free, during regular working
          hours.

            (2) Parking lots contiguous to the main
          hospital building, restricted to doctors and
          interns for whom there is no charge.
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Hon. James E. Barlow, page 2 (M- 375)



       (3) Parking spaces on lots to the rear of
     or in between other buildings in the hospital
     complex, for doctors, nurses, administrative
     personnel and their employees free of charge.

       (4) Parking lots set aside for the use of
     employees only, free of charge.

       (5) Free employee parking spaces on lots
     contiguous to a work shop, repair shop, and
     paint shop, for use of hospital in its main-
     tenance work.

       Article VIII, Section 2 of the Constitution of Texas,
presently reads, in part:
      11. . . the Legislature may, by general laws,
    exempt from taxation . . . property used ex-
    clusively and reasonably necessary in conduct-
    ing any association engaged in promoting the
    religious, educational and physical development
    of boys, girls, young men or young women
    operating under a State or National organization
    of like character; . . . and institutions of
    purely public charity; . . . ." (Emphasis added.)

        Thus "property" of institutions of purely public
charity may be exempted from taxation by the Legislature
when "used exclusively and reasonably :necessary in con-
ducting (such institutions." Attorney General's Opinion
NO. c-203  (19 A4).

       Pursuant to Article VIII, Section 2 of our Constitu-
tion, the Legislature passed Article 7150, Section 7, Vernon's
Civil Statutes, which reads as follows:

      "Public Charities. All buildings and personal
    property belonging to institutions of purely public
    charity, together with the lands belonging to and
    occupied bg such institutions not leased or other-
    wise used with a view to profit, unless such rents
    and profits and all moneys and credits are appro-
    priated 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 persons T,lhen
    unable to provide for themselves, whether such per-
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        Hon. James E. Barlow, Page 3 (M- 375)



             sons are members of such institutions or not. An
             institution of purely public charity under this
             article is one which dispenses to its members and
             others in sickness or distress, or at death, with-
             out regard to poverty or riches of the recipient,
             also when the funds. property and assets of such
             institutions are placed and bound by its laws to
             relieve, aid and administer in any way to the
             relief of its members when in want, sickness and
             distress, and provide homes for its helpless and
             dependent members and to educate and maintain the
             orphans of its deceased members or other persons."

               Even before the admendments to Article VIII, Section 2
        of our Constitution, when it exempted only buildings owned and
        used exclusively by institutions of public charity, the word
        "building" was construed to embrace the land necessary for
        the proper and economical conduct of the institution. The
        Texas Supreme Court would give the constitutional exemption
        a "broader signification, consonant with the purpose of the
        exemntion and the settled nolicv of the state." Cassiano
        v. u&line   Academy, 64 Tei. 671, 676 (1885).~

               While we are unable to find any pertinent Texas authority
        which has passed upon the extent of the tax exemption for a
        charitable institution whose property in question is being
        utilized for uarkine: areas in connection with the c,onduct of
        the activities of s;ch institution, we do find a pertinent
        decision by the Ohio Supreme Court, Bowers v. Akron City
        Hospital, 16 Ohio St.2d 94, 243 N.E.2> 91, (lgbt5), which held
        Xhat a parking facility operated in connection with a hospital
        is exempt from real property taxes, even though a charge for
        the parking privilege was made to regulate and exclude those
        not having a legitimate connection with the institution.

               In the Bowers case, supra, the Ohio Constitution,
        which is substantially similar in substance to the Texas
        Constitution, permits the adoption of general laws exempting
        institutions used exclusively for charitable purposes from
        taxation. The Ohio Legislature, similarly to the Texas
        Legislature, passed a statute exempting the "property" of
        such institutions "used exclusively for charitable purposes."
        In the course of the opinion, the Court held:
               II
                . . . In the instant case, the record shows
             the pay lot was converted from part of a free
             parking area when it was discovered that the
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Hon. James E. Barlow, Page 4 (M- 375)



     general public was using it and visitors could
     find no parking spaces. The existence of a
     $19,000 'profit' from the lot in 1965 and $15,000
     in 1966 does not remove it from the statutory
     category of exempt property.  It is the use of
     the property-rather than the fact that revenues
     are collected and received from property which
     is controlling. . . Nor do reasonable charges
     exacted from beneficiaries of a charitable insti-
     tution detract from its eleemosynary character. . .
     Here the evidence shows that the parking lot
     is an essential and integral part of the hospital's
     function and not property used mainly for income
     purposes. The lot provides visitors and patients
     a safe and convenient place to park. The fees are
     not diverted to purposes ulta vires of the insti-
     tution, but are used to pay expenses of maintaining,
     regulating and expanding the parking area which is
     necessary for the hospital complex." (Emphasis added)

       In Texas, it is settled law that the fact that charges
are made by the charitable institutions, or "profits" were
derived therefrom and used by it for its charitable purposes,
in and of itself, will not deprive the organization of its
tax emption as a purely public charity. Santa Rosa Infirmary
v. City of San Ant:Jnio, 259 S.W. 926 (Tex. Comm.App. 1924).

       On the other hand exemptions fr,om taxation are not
favored, and are strictly construed against the one claiming
the exemption.

        The rule of exemptions from tavntion is tersely stated
in 511 Tex.Jur.2d 203, Taxation, Sec. 65 et seq. as follows:

      "Construction oV exemption provisions.
      "Exemptions from taxation are not favored. And
    it is a universal rule, applicable to constitutional
    and statutory provisions exempting property from
    taxation, that when an exemption 1s found to exist
    it should not be enlarged by construction.   On the
    contrary, it should receive a strict construction,
    ?or the reasonable presumption is that the state
    has granted in express terms all it intended to
    grant, and that unless the priv~ilege is limited to
    the very terms of the statute the favor would be
    extended beyond what was meant.~ Furthermore, the

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Hon. James E. Barlow, Page 5 (M-375)



     exemption 01' certain property throws a greater
     tax burden on property that is taxable; there-
     fore, any exemption derogates from the common
     right of equality of burden, and for this reason,
     also, both the constitutional provision authorizing
     the exemption and the statute granting it must
     be found to cov~er a claimed exemption unambiguously.
     Accordingly, if the construction-of the law id
     doubtful, the doubt will be resolved in favor of
     th taxing power and against the claim. . . ."
     (Eiphasis added.)

       It is apparent that the question of what lands are
reasonably necessary to the support and maintenance'9   a'part i-
cular charitable institution may be the subject of much
confusion.  It could be said that the nature or the opera-
tion of an institution will determine what additional lands
are necessary to its support and occupancy. The necessity
of a distinct and separate use of property in connection
with the occupancy of the building, by a charitable institu-
tion, would have to be determined from evidence not before
US.  Parking lots may or may not be an essential and integral
part of the hospital's function under the evidence.   Such
a determination cannot be made without such evidence as to
any and all of the parking lots occupied by the Baptist
Memorial Hospital.

        In view of the rule of strict construction that must
be applied, for tax exemption, any use made of adjoining
property or property apart from the building of the insti-
tution would have to be essential and reasonably necessary
to the conduct of the charitable activities of the institu-
tion. Parking lots as such cannot be said to be reasonably
necessary in this sense as a matter of law. The nature of
the institution, and the availability of the use of other
property in the immediate vicinity, and all other circum-
stances  must be considered to determine whether parking lots
are required, and how many are sufficient to meet the
essentiality or reasonably necessary test.

       Under the facts submitted in your request for an
opinion, there is not sufficient showing that all of the
parking lots in question are reasonably necessary for the
operation of the institution to be classified, as a matter
of law, for tax exemption. These facts should be determined


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Hon. James E. Barlow, Page   6 (M-375)



by the proper officials, and after determining the facts,
the law as set forth in this opinion should be applied to
the taxable status of the various lots involved. In accord-
ance with the settled policy of this office, we leave these
issues for the factual determination of the local tax authori-
ties under the guide lines herein set out. Attorney General's
Opinion No. R-2225 (1950).

                        SUMMARY

       Parking lots owned by a hospital operated as
     a purely public charity, and determined to be
     reasonably necessary in operating the hospital,
     and an essential, necessary and integral part
     of the hospital's function, may be accorded a
     tax exemption under Article VIII, Section 2, Con-
     stitution of Texas, and Article 7150, Section 7,
     Vernon's Civil Statutes. The factual determina-
     tion of what lots, if any, are reasonably necessary
     for the use of the hospital as an integral part of
     its function, is the duty of the local tax authorities,
     and this office cannot make   is determination.


                              /
                             -j/*;7y&$y7a

                             Attorn        General of Texas
Prepared by John R. Grace
Assistant Attorney General

APPROVD:
OPINION COMMITTEE

Kerns Taylor, Chairman
George Kelton, Vice-Chairman
Aian Minter
Al,'red Walker
Larry Craddock
Z.T. Fortescue
James Broadhurst

W. V. Geppert
Staff Legal Assistant

Hawthorne Phillips
Executive Assistant
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