          THEATTOWNEY                 GENERAL
                      Q3F TEXAS




Honorable Ted Butler           Opinion No. M- 676
Criminal District Attorney
Bexar County                   Re:    Do the installers and
San Antonio, Texas                    operators of the city's
                                      skyride hold a taxable
                                      leasehold interest in
                                      real property or a mere
                                      operating agreement or
Dear Mr. Butler:                      license not taxable?
       We have received your request for an opinion on the
captioned subject from which we quote as follows:
          "A question has arisen as to the tax status
          of an elevated skyride located on certain
          city-owned property known as HemisFair within
          the Civic Center Urban Renewal Project No. 5,
          City of San Antonio, which is operated by a
          Concessionaire as a sight-seeing and enter-
          tainment ride for the public at a patronage
          charge per ride from which the City is paid
          compensation in an amount equal to a percentage
          of gross annual receipts agreed upon by written
          contract between the parties.
          "Your opinion is respectfully sought on the
          following question:
          "Does the use, operation and maintenance of
          the elevated skyride as more fully described
          below constitute a leasehold interest which
          is taxable by the State of Texas, and the
          County of Bexar, under Article 7173> Vernon's
          Civil Statutes?
          "Pursuant to a contract executed on 18 October,
          1966, Austin Hemphill and Billy J. McCombs,
          hereinafter referred to as 'Hemphill-McCombsP,
          in conjunction with Aerial Transportation, Inc.,
          hereinafter referred to as sConcessionaires,


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Honorable Ted Butler, Page 2 (M- 676)

         agreed to install, operate and maintain
         an elevated skyride on City of San Antonio-
         owned property within Urban Renewal Civfc
         Center Project No. 5, during the exposition
         known as HemisFair 1968, and for a period of
         years thereafter. (See copy of contract
         attached hereto).
         'Construction was at the expense of Hemphill-
         McCombs and ownership remained in Hemphill-
         McCombs until it was completed and accepted
         by the City of San Antonio upon delivery of
         a Bill of Sale, dated 29 May, 1968. Since
         said conveyance to the City of San Antonio,
         the skyride has been operated by Concessionaire.
         "Charles G. Davis, Tax Assessor-Collector for
         Bexar County, has assessed the property and
         established an account on the tax rolls for
         the taxation of the Skyride property as a
         leasehold interest in public lands in accord-
         ance with Articles 7145, 7143, and 7174,
         Vernon's Annotated Texas Statutes. The lease-
         hold interest is not presently taxed by the
         City or School District.
         "A contrary vfew that has been expressed is
         that the property, being wholly owned by the
         City of San Antonio, is exempt, and further,
         that it is not taxable to Hemphill-McCombs
         or Concessionaire under Article 71739 V,A.T.S.,
         for the reason that it is befng operated under
         a mere operating agreement 05 license as dis-
         tinguished from a leasehold.
      The general distinction between a lease and a license is:
         "A lease is a grant of an estate in land for
         a lfmited term with conditions attached, and
         it creates both privity of estate and privity
         of contract between the parties. The relatfon
         of landlord and tenant is created where the
         owner of land consents to the occupancy thereof
         by another and the occupant holds in recognition
         of, or subordination to the title of the owner.
              " 35 Tex.Jur.2d 464-485, Landlord and
         ;enallt,Sec. 1. (Emphasis added.)

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Honorable Ted Butler, Page 3 (M-.676)

           . .  . in the law of real property a
          license is a privilege or authority given
          mined       by one to do some particular
          act or series of acts upon the land of
          another, but which~does not amount to an
          estate or interest in the land itself."
          36 Tex.Jur.2d 587-588, License, Sec. 1.
          (Emphasis added.)
       Our Supreme Court has recently reiterated thenprincipal
that ". . . ordinarily licenses are revocable;
Eagle Rock Ranch, 364 S.W.2d 196, 203 (Tex.Sup.'1465); %%-&d
been declared in the early case of Merriwether v. Dixon, 28 Tex.
15, 18 (1866).
       In thencase of Priddy v. Green, 220 S.W. 243 (Tex.Civ.
ADV. 1920, no writ), involvina the construction of an oil and
gas lease-for a primary term of five years and as long there-
after as oil or gas is produced from the land, the Court said,
in part:
         "We think the instrument evidences~more
         than a mere license to go uvon the land.
         A mere license is a personal privilege
         to do some act on the land without pass-
            g   y estate therein. The conveyance
         t",t% licensee or licenser would revoke
         - t. . . .   (at p. 248) (Emphasis added.)
       The contract in question unequivocally conveys to the
named installers and operators of the concession the exclusive
use and control of an area defined therein for the I-
ti         tion and maintenance of such concession, referred
       P
to":: 'S?yzide"  for definite,primary and secondary terms
from 1968 conti&ously through October 31, 1983, at a stated
consideration passing from such installers and operators to
the City, as owner of the concession and land upon which it is
situated. The consideration is based upon the annual gross
receipts gleaned from patronage by the public of such conces-
sion during the life of the contract. Also, such contract
specifically uses the term "leasehold improvements" wherein
the concessionaire is required to procure and maintain fire
and extended coverage insurance on the improvements.
       We point out that a conveyance by the City of its free-
hold interest in the property involved would not, in any way,


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Honorable Ted Butler, Page 4 (‘M-
                                676)

affect the leasehold interest of such named installers and
operators or otherwise restrict their rights and obligations
under such contract. The contract by its express terms pro-
hibits said installers and operators from assigning, trans-
ferring, conveying~or otherwise disposing of the contract or
any portion thereof without permission of the City. Therefore,
under the terms of such contract, the operation of the conces-
sion in question cannot be a mere ersonal privilege revocable
by a conveyance of either party's nterest therein, as would be
true in the case of a mere license to do some act on the land
without passing~any estate therein. Settegast v. Foley Bros.
Dry Goods Co., 114 Tex. 4.52,270 S.W. 1014 (1925)
R. I. & G. Ry. Co. v. Johnson, 156 S.W. 253, 256 ;=?@
                                                 (Tex.C v.App.
11913,error ref.), and Pridd v. Green,:supra; Hancock v.
Bradshaw, 350 S.W.2d 95vTex.Civ.m      1.961,no writ). A
lease confers more comprehensive rights than does a license.
Texas Pacific Coal & Oil Co. v. Fox, 228 S.W. 1021 (Tex.Civ.
App. 1921, no writ).
       It seems clear that the instrument in question granted
a leasehold interest in property for a term of more than three
years which Is taxable as the property of the installers and
operators under the terms and provisions of Article 7173,
Vernon's Civil Statutes, which provides in its portion which is
applicable here, as follows:
         'Property held under a lease for a term of
         three years or more, or held under a contract
         for the purchase thereof, belonging to this
         State, or that is exempt by law from taxation
         in the hands of the owner thereof, shall be
         considered for all the vurvoses of taxation,
         as the property of the person so holding the
         same, except as otherwise specially provided
         bylaw. . . ." (Emphasis added.)
       For related questions involving the scope and applicabilit
of Articles 7173 and 7174, we refer you to our Opinion M-319 (1965 ),
a copy of which is in yourpossession.
                     SUMMARY
               The contract in question, which granted a
          leasehold interest in property for more than




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.,   .




Honorable Ted Butler, Page 5 (M-676)

            three years, conveyed a leasehold estate
            in the elevated skyride property, which
            is taxable under Article 7173




Prepared by R. L. Lattlmore
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor3 Chairman
W. E. Allen,.-Co-Chairman
Harriet Burke
Howard Fender
Roland Allen
Rex White
MEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant




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