                                            The Attorney          General of Texas
                                                             August 16, 1983
     JIM MATTOX
     Attorney General


                                          Mr. Charles D. Travis                  Opinion No. JM-59
     Supreme      Court Building
     P. 0. BOX 12548
                                          Executive Director
     Austin, TX. 78711. 2546              Texas Parks 6 Wildlife Department      Re: Ad valorem tax status of
     51214752501                          4200 Smith School Road                 state park concession rights
     T&X      9101674-1367                Austin, Texas      78744
     Telecopier     5121475-0266

                                          Dear Mr. Travis:
     1607 Main St., Suite 1400
     Dallas.   TX. 75201.4709                  The Texas Parks and Wildlife Department granted concession rights
     2141742.6944                         in a state park, pursuant to section 13.015 of the Parks and Wildlife
                                          Code, to a non-profit corporation which constructed and operates
     4624 Alberta     Ave.. Suite   160
                                          golf course on the property. You inform us that the chief appraiser
     El Paso. TX.     799052793           of the appraisal district of the county in which the state park is
     9151533.3464                         located seeks to tax the concessionaire’s possessory interest in the
r-                                        property pursuant to section 25.07 of the Tax Code. You wish to know
                                          whether the concession rights are taxable or whether they are
     1220 Dallas Ave., Suite 202
     tiousmn,   TX. 77002-6986
                                          presently exempt from ad valorem taxation. You also wish to know
     713/650-0666                         whether the concession rights will be exempt beginning January 1,
                                          1984, the effective date of an amendment to section 11.11 of the Tax
                                          Code. We conclude that the concessionaire’s possessory interest is
     606 Broadway.      Suite 312         taxable, both presently and after January 1, 1984.
     L”bbcxk.  TX.     79401.3479
     6061747tz236
                                               Section 25.07 of the Tax Code provides the following:

     4309 N. Tenth. Suite 6                           (a) Except as provided by Subsection (b) of
     McAllen.     TX. 78501~1665                   this section, a leasehold or other possessory
     5121662-4547
                                                   interest in property that is exempt from taxation
                                                   to the owner of the estate or interest encumbered
     200 Main Plaza. Suite 400                     by the possessory interest shall be listed in the
     San Antonio.  TX. 782052797                   name of the owner of the possessory interest if
     5121225-4191
                                                   the duration of the interest may be at least one
                                                   year.
      An Equal Opportunifyl
      Aftirmative    Action   Emplow                     (b) Except as provided by Subsections (b) and
                                                    (c) of Section 11.11 of this code, a leasehold or
                                                    other   possessory interest in exempt property say
                                                    not be listed ifs:

                                                          (1) the property is permanent university
                                                       fund land;

                                                          (2) the property is county public school
                                                       fund agricultural land;
Mr. Charles D. Travis - Page 2    (JM-59)




                (3) the property is a part of a public
             transportation    facility    owned by an
             incorporated city or town and:

                   (A) is an airport passenger terminal
                building or a building used primarily for
                maintenance of aircraft or other aircraft
                services, for aircraft equipment storage, or
                for air cargo;

                   (B) is    an    airport   fueling   system
                facility; or

                   (C) is    in    a    foreign-trade   zone
                established and     operating pursuant to
                federal law if the area of the zone does not
                exceed 250 acres;

                (4) the interest is in a part of a park,
             market, fairground, or similar public facility
             that is owned by an incorporated city or town;
             or

                 (5) the interest involves only the right to
             use   the property for grazing or other
             agricultural purposes. (Emphasis added).

     In order for section 25.07 to be invoked, it must first be
determined that the subject property "is exempt from taxation to the
owner of the estate or interest encumbered by the possessory
interest." Tax Code §25.07(a). Section 11.11(a) of the Tax Code
provides that, with two specified exceptions, "property owned by this
state or a political subdivision of this state is exempt from taxation
if the property is used for public purposes." Chapter 13 of the Parks
and Wildlife Code sets forth the Parks and Wildlife Department's
powers and duties regarding parks and other recreational areas.
Section 13.002 confers broad powers and specifically provides that:

          [t]he department may:

             (1) prepare, maintain, and revise a statewide
          comprehensive plan for the development of the
          outdoor recreation resources of this state;

             (2) develop, operate, and maintain        outdoor
          areas and facilities of the state; and

             (3) acquire land, water, and interests in land
          and water for outdoor recreation areas and
          facilities. (Emphasis added).



                                  p. 253
Mr. Charles D. Travis - Page 3   (JM-59)




We conclude that, because the department in its own right could
"develop, operate, and maintain" the subject property as a golf
course, the public purpose test is satisfied and this property in the
hands of the state is therefore exempt from ad valorem taxation.

     The next issue is whether the rights granted by the Parks and
Wildlife Department constitute a "possessory interest in property" for
purposes of section 25.07 of the Tax Code. We conclude that they do.
Section 1.04(6) of the Tax Code sets forth the following:

          "Possessory interest" means an interest that
          exists as a result of possession or exclusive use
          or a right to possession or exclusive use of a
          property and that is unaccompanied by ownership of
          a fee simple or life estate in the property.
          However, "possessory interest" does not include an
          interest,  whether of limited or indeterminate
          duration, that involves a right to exhaust a
          portion of a real property.

     A "concession" has been defined as "a grant given by the
government to use the land applied for." Winningham v. Dyo, 48 S.W.Zd
600, 603 (Tex. 1932). A concession is a grant or lease of a portion
of premises for some specific use or of a right to enter upon premises
for some purpose. Rendall v. Pioneer Hotel, 222 P.2d 986, 989 (Ariz.
1950). Though no Texas cases have yet addressed this issue, Michigan
courts have concluded that such rights fall within the ambit of the
Michigan counterpart to section 25.07. See County of Kent v. City of
Grand Rapids, 167 N.W.Zd 287, 292 (Mich. 1969); City of Detroit v.
Tygard, 161 N.W.Zd 1, 3 (Mich. 1968); Aero Realty Corporation v.
Clinton County, 250 N.W.2d 559, 560 (Mich. App. 1976). We have found
no other courts which have been confronted with this issue. We
conclude that the rights granted by the department are sufficient to
constitute a "possessory interest" for purposes of section 25.07 of
the Tax Code. Because we so conclude, we further hold that the terms
of section 25.07 clearly require that the concession rights be listed
on the appraisal rolls.

     You ask whether such a possessory interest, which section 25.07
of the Tax Code requires be listed in the name of the lessee, is
exempt from taxation. Specifically you ask whether section 11.11 of
the Tax Code serves to exempt such property now and, if not, whether
an amendment to section 11.11 effective in 1984 will serve to exempt
such property on January 1, 1984. We conclude that section 11.11 does
not now, nor will it in 1984, act to exempt such possessory interest
from ad valorem taxation.     Reliance upon section 11.11 would be
entirely misplaced.

     Section 11.11 of the Tax Code provides the following:



                             p. 254
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Mr. Charles D. Travis - Page 4   (JM-59)




            (a) Except as provided by Subsections (b) and
         (c) of this section, property owned by this state
         or a political subdivision of this state is exempt
         from taxation if the property is used for public
         purposes.

            (b) Land owned by the Permanent University
         Fund is taxable for county purposes. Any notice
         required by Section 25.19 of this code shall be
         sent to the State Property Tax Board, and the
         board shall appear in behalf of the state in any
         protest or appeal relating to taxation of
         Permanent University Fund land.

            (c) Agricultural or grazing land owned by a
         county for the benefit of public schools under
         Article VII, Section 6, of the Texas Constitution
         is taxable for all but state purposes. The county
         shall pay the taxes on the land from the revenue
         derived from the land. If revenue from the land
         is insufficient to pay the taxes, the county shall
         pay the balance from the county general fund.

The text of subsection (d) is added effective January 1, 1984.

            (d) Property owned by the state that is not
         used for public purposes is taxable. Property
         owned by a state agency or institution is not used
         for public purposes if the property is rented or
         leased for compensation to a private business
         enterprise to be used by it for a purpose not
         related to the performance of the duties and
         functions of the state agency or institution or
         used to provide private residential housing for
         compensation to members of the public other than
         students and employees of the state agency or
         institution owning the property, unless the
         residential use is secondary to its use by an
         educational     institution     primarily      for
         instructional purposes. Any notice required by
         Section 15.19 of this code shall be sent to the
         agency or institution that owns the property, and
         it shall appear in behalf of the state in any
         protest or appeal related to taxation of the
         property. (Emphasis added).

     Recourse could be had to section 11.11 if and only if the
appraisal district sought to impose ad valorem taxation upon the owner
of the property, in this case, the state. Section 11.11 merely
provides that public property not used for public purposes is taxable,
a situation which has always been the case. See Tex. Const. art.



                                     p. 255
.   .



        Mr. Charles D. Travis - Page 5   (JM-59)




        VIII, 581, 2; art. XI, 59; Leander Independent School District v.
        Cedar Park Water Supply Corporation, 479 S.W.Zd 908 (Tex. 1972);
        Attorney General Opinion MW-430 (1982). But see City of Beaumont v.
        Fertitta. 415 S.W.Zd 902 (Tex. 1967). The amendment to section 11.11
        which is effective on Januarv 1, 1984,        merely defines "public
        purposes" for the purposes of skction 11.11. Sec;ion 11.11 requires
        taxation in the hands of the owner, i.e. the political subdivision, of
        publicly-owned property not used for a public purpose. Section 25.07
        provides for the listing in the name of the lessee of public property
        leased to a private concern. In this instance, since the appraisal
        district is hot seeking to tax the owner of the property,.section
        11.11 is irrelevant. It clearly does not reach lessees of property,
        and the appraisal district is seeking to tax such a lessee. But this
        does not address the issue as to whether such possessory interest,
        which section 25.07 requires be listed in the name of the owner of the
        possessory interest, is taxable in the hands of the owner of that
        interest. We conclude that it is.

             Article VIII, sections 1 and 2 of the Texas Constitution require
        that all real and tangible personal property be taxed unless
        specifically exempted. Section 11.01(a) of the Tax Code provides that
        "[a]11 real and tangible personal property that this state has
        jurisdiction to tax is taxable unless exempt by law." Subsection (b)
        of section 11.01 provides that "[tlhis state has jurisdiction to tax
        real property if located in this state." We can find no statutory or
        constitutional provision, nor have you directed us to one, which
        purports to exempt the possessory interest at issue here. In support
        of this principle, we note in section 25.07(b)(4) of the Tax Code that
        a possessory interest in exempt property may not be listed if "the
        interest is in a part of a park, market, fairground, or similar public
        facility that is owned by an incorporated city or town." (Emphasis
        added).   In this instance, the property is owned, not by an
        incorporated city or town, but by the state. We therefore conclude
        that the possessory interest is not exempt from taxation.

                                     SUMMARY

                     The concession rights in state park lands are
                  not in this instance exempt from ad valorem
                  taxation.




                                                        MATTOX
                                                Attorney General of Texas

        TOM GREEN
        First Assistant Attorney General




                                           p. 256
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Mr. Charles D. Travis - Page 6    (JM-59)




DAVID R. RICHARDS
Executive Assistant Attorney General

Prepared by Jim Moellinger
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Acting Chairman
Joa Bible
David Brooks
Colin Carl
Jim Moellinger
Nancy Sutton




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