                                The Attorney General of Texas
JIM MAllOX                                          :)ecember 27,    1984
Attorney General


Supreme
      Cowl BulldIng           Ronorable Mike Driscoll                       Opinion   No. JM-269
P. 0. 80x 12S48               Rarris  County Attorney
Austin. TX. 711711.2S4a       1001 Preston, Suite 634                       Re: Whether the real and personal
512l4752501                   Rouston, Texas     77002                      property of the Blue Bird Circle
Telex 91ws7c13a7
Telecopier 512/47402+6
                                                                            is exempt from ad valorem taxes

                              Dear Mr. Driscoll:
714 Jackson. Suite 700
Dallas, TX. 75202-4SOS
                                    You have asked this office    to determine whether section      11.18 of
2lU742.SSU                      .
                              tne state Property Tax Code exempts from ad valorem taxation the real
                              and personal prope,rty of the Blue Bird Circle.       Section 11.18 exempts
4824 Albwta Ave.. Sulle 160   charitable  organizations   from taxation   of their buildings   and tangible
El Paso. TX. 799052793        property.   provides    that the organization     can meet certain      stated
915/533-3494                  requirements.     We conclude that the Blue Bird Circle        does not meet
                              these statutory    requirements  for exemption under section       11.18.    We
4001 Texas. Suite 700
                              limit our answer to the particular     facts which you have given us.
Houston, TX. 77W2.3111
713l223.5886                        You inform us that the Blue Bird Circle [hereinafter      Circle]   is a
                              non-profit   Texas corporation     which owns a tract of land on which it
                              maintains an offi’:s     building   and two resale shops.   The Circle    uses
505 Broadway. Suite 312
Lubbock. TX. 7S401-3419
                              the office   bulldir~e; for its various programs and meetings; the resale
80817476238                   shops sell merchandise which has been donated to the Circle.               The
                              Circle uses all profits        from its various activities   to support the
                              Blue Bird Clinic      for Pediatric    Neurology,  which is located     in the
4302 N. Tenth. Suite B        Texas Uedical      Center,    several   miles  away from the property        in
McAllm. TX. 78501.1685
512/SS2-4S47                  question.

                                    Section ll.lIl~:c)  of the Texas Tax Code lists    the requirements
200 Main Plaa. Suite 400      which    an organir.ation    must meet   to qualify   ‘-6   a charitable
San Antonio. TX. 781052797
                              organization  under the statute:
5120254191

                                             (c)   To qualify  as a charitable       organixaiion
An Equal Opportunity/                    for   the purposes of this section.     an organization
Affirmative Action Employer              (whethe:,    operated  by    an    lndlvldual.     as    a
                                         corporation,   or as an association)    must:

                                                    (1)  be organized     exclusively        to perform
                                               relic ious, charitable,    scientific,      literary,   or
                                               educa,tlonal  purposes rind. except as permitted
                                               by subsection     (d)   of    this     section,     engage




                                                                p.   1200
Honorable   Mike Driscoll     - PaSe 2    (Jhi-269)




                exclusively    in performing one        or   more of    the
                folloving   charitable  functions:

                        (A) providing    medical         care     without
                    regard to the beneficiaries’        ability   to pay;
                    . . . .

       As this office       noted in Attornev General Ooinion MW-288 (1980).
the court in Hilltop           Villa:Qs,    Inc. -v. Kerrvilie       Independent School
District,    426 S.W.2d 943 (Tax. 1968). indicated                that the activity    of
providing    facilities       which m,eet special      residential      requirements   of
the aged-might qualify           as au institution     for tax exemption as one of
purely public       charity,      but only where it also qualified             under the
statutory    definition      of such institutions       for tax exemption purposes.
Because the controlling             st:a.tute (former     article     7150. section    7,
V.T.C.S.)      at     that     time    restricted    exemptions        to   property   of
institutions      dispensing aid “vithout regard to [the] poverty or riches
of the reciuient.”         a reauirement which the claimant failed               to meet.
the exemption was denied:             426 S.W.2d at 948.        See also City of (Waco
v. Texas Retired Teacher Re!aidence Corporation,                  464 S.W.Zd 346 Tex.
 1971).    Accordingly,      if the F’roperty of the Circle is to be accorded a
charitable     exemption,       the Circle itself     must be exempt under section
 11.18.

      We must conclude that the Circle does not qualify               for a section
11.18 tax exemption.          We note that the burden of establishing             the
requirements     for    exemptlox    from taxation      is   on the institurion
claiminn the exemution. and the exemption must be proved in such a
manner as to leave        no doubt:.     Willacy County Appt&d          District   v.
North Alamo Water Supply Corporation.            No. 13-83-318-0       (Tex. App. -
Corpus Christi.       June 28. lTB4).      Further,   in such cases,      exemptions
from taxation are never favored. and, in construing              laws exempting an
organization.’    all    doubts uust be resolved        against    the institution
claiming the exemption.         HeQecroft    v. City of Housron. 244 S.W.2d 632
(Tex. 1951).      Both statutory     and constitutional     provisions    purporting
to grant exemption from taxation will be given a narrow and strict
construction.    and all doubts must be resolved against the granting of
the tax exemption.         Hillto)   Village   v. Kerrvifie     Independent School
District,   supra.

       Section  11.18(c)(3)(B)     of the Tax Code requires             that charter,
bylaws,     or regulations     adopted by the organization             to govern its
affairs   must

             direct    that on d::scontinuance    of the organization
             by dissolution      or otherwi.se the assets are to be
             transferred    to this state or CO an educational,
             religious,    charitable,    or other similar organira-
             tion     that    is     qualified     as   a   charitable




                                          p. 1201                                           .
q



    Honorable Mike Driscoll          - Prtge 3   (JM-269)




               organization  under Section    501(c)(3).               Internal
               Revenue Code of 1!154, as amended.

         Article     I,   section    3 o:: the Circle's      bylaws reads:

                  Section 3.    No part of the property        of this
               Corporation shall ever be utilized    for the private
               gain or profit     of any officer,       director,    or
               member, as such, oi1 the Corporation.

    In  its brief,     the Circle     refers to section     3 as ensuring that its
    assets    are    "perpetually       dedicated     to  use    in    performing   the
    organization's      charitable    function."      The Circle    asserts   that this
    provision   satisfies     the staeutory requirements of section 11.18(c)(3).
    We disagree.      There is no provision        in the documents submitted to us
    that directs     the Circle's      assets    to be transferred     in the required
    manner in the event of its Hacontinuance.

          The tax status of the c,orporation    for this year is determined by
    its   qualifications   on   January 1. 1984.       Prop.  Tax Code 511.42.
    Because the Circle      does not   meet  the section     11.18(c) statutory
    requirements      of a charitat~le organization,     we conclude  that   its
    property is not exempt from ad valorem     taxation.


                                           SUMMARY

                       The Blue      Ri::d Circle  does    not  meet    the
                   statutory    requirements to qualify   as a charitable
                   organization    and, therefore, is not exempted from
                   ad valorem taxaticn by section      11.18 of the state
                   Property Tax Code.




                                                          JIM     MATTOX
                                                          Attorney General of Texas

     TOMGREEN
     First Assistant      Attorney     G+eral

     DAVID R. RlCRARDS
     Executive Assistant Attorncfy General

     RICK GILPIN
     Chairman, Opinion Committee!




                                                 p.   1202
Honorable Mike Driscoll   - Page 4    (JM-269)




Prepared by Rick Gilpin
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin. Chairman
Colin Carl
Susan Garrison
Tony Guillory
Jim Hoellinger
Jennifer Riggs




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