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                           THEATRY-ORNEY           GENEKAL
                                    OF     TEXAS


     WILL         WIJBON
A’ITORNEY           GENEHAL
                                     October 7, 1957

             Hon. Robert S. Calvert         Opdnion.No.WW-270
             Comptroller of Public Accounts                   : ~,     ;~
             Capitol Station                 & ; Whe.the,ror not the W: ,T.
             Austin 11, Texas                    Grant Company, Dallas,
                                                  Texas; is subject to
                                                  taxation under the lease-
                                                 hold agreement referred
             Dear Mr. Calvert:                    to in Article 7173, R.C.S.
                       You request the opinion of this office upon.the ad
             valorem taxablllty.ofthe lease-hold estate of W.,T. Grant
             Company In certain real estate located An Dallas, Texas, in::
             which the University of Texas Is the lessor and W. T. Grant
             Company is the lessee.
                       You submittedwith your request a copy of the lease
             involved. It is dated December 12, 19?6,,and expires June 30,
             1959. The real property,coveredby the lease is concededly
             State-ownedproperty and since it is for a term of more than
             three years its taxabllity is governed,byArticle 7173, Vernon's
             Civil Statutes, which provides in,part~,.as
                                                      followg:
                        "Property held under a lease for a
                   term of three years or more, orheld
                   under a contract for the purchase there-
                   of, belonging to :thisState, 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 pers,onso holding the same,
                   except as otherwise specificallyprovided
                   by law."
                       This Statute was construed by the Supreme Court of
             this State In the case of Tramwell v. Faught, Tax Collector,
             74 Tex. 557, 12 S.W.317, as applicable to the lease-hold estate
             and not to ownership of the fee In the following language.which
             we quote from the opinion:
             .         II   .If appellant had held the
                  lands kder an absolute lease for a
                  term of three years or more, his lease-
                  hold estate would have beensubject to '~ ~';, '~ ,~
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     Hon. Robert S. Calvert, Page 2 (W-270)


             taxation upon such value as it would
             bring at a fair voluntary sale for cash,
             but he would not have been liable to
             taxes upon the value of the freehold
             estate in the lands."
               Our research does not reveal that this ruling of the
     Supreme Court has been departed'from. Article 717&j V.C.S.
     provides how such lease-hold estate shall be valued. This
     Statute provides lfi'partas follows:
                  "Taxable leasehold estates shall
             be valued at such a price as they would
             bring at a fair voluntary sale for cash."
               You are, therefore,respectfullyadvised that the
     lease-hold estate of W. T. Grant Company In the real property
     In question is subject to ad valorem taxes,and,thevalue
     should be ascertainedas provided In Article 7174, V.C.S;
                                                             ,.)
                              SUMMARY            ,:,I,
                                                               :.,
                  A lease-hold estate of the ~lesseein
                  property owned by the Statewhich is
                  for a term of three or more years is
                  subject to ad valorem taxation;- The
                  value Should be ascertalned,as.provided
                  In Article 7174, V.C.S.
                                     Very truly yours,
                                     WILL WILSON
                                     Attorney General
     LPL:gs
     APPROVED:                              !" 4,&e      b/J
                                     By "(i,\
     OPINION COMMITTEE                  L. P. Lolla
     Geo. P. Blackburn,Chairman         A,sslstant
     Joe Rollins
     J. Milton Richardson      "
     B. H. Timmins, Jr.
     Houghton Brownlee,.J??.
     REVIEWED FOR THE ATTORNEY GENERAL
     By:
          James N. Ludlum
