                                           GREG        A B B O T T




                                                April 12, 2007


The Honorable Ruth Jones McClendon                          Opinion No. GA-0537
Chair, Committee on Rules and Resolutions
Texas House of Representatives                              Re: Whether Juneteenth USA, a 501(c)(3)
Post Office Box 2910                                        charitable organization, is entitled to receive a
Austin, Texas 78768-29 10                                   property tax exemption (RQ-054 1-GA)

Dear Representative McClendon:

        Your predecessor as Chair of the Committee on Rules and Resolutions inquired on behalf
of the Harris County Appraisal District (the "District") whether Juneteenth USA, a 501(c)(3)
charitable organization, is entitled to a property tax exemption.' As background on the organization,
your predecessor informed us that Juneteenth USA "was organized for the purposes of preserving
the State Holiday and recognizing the end of slavery in Texas." Request Letter, supra note 1, at 1.
The organization "encourages the education and awareness of the African-American's place
in history and its culture." Id. Your predecessor further informed us that Juneteenth USA also
"participates in various aspects of the culture including gospel, community service, job training, and
volunteerism." Id.

        In addition, your predecessor informed us that Juneteenth USA acquired a historic property
-the Paris Majestic Theater-in 1993. See id. Juneteenth USA intended to "eventually restore and
use [the property] as its headquarters and to provide space for other community-based charitable
programs." Id. Subsequent to Juneteenth USA's acquisition, the property "sustained roof damage[,]
which presently makes it uninhabitable, and the organization does not currently have the funds to
make the repairs necessary for occupancy." Id. The District granted an exemption for the property
for the 1995 to 2005 tax years but cancelled the exemption for tax year 2006 because of reports that
the building was unoccupied. See id. We understand from your predecessor that the District has
restored the exemption for tax year 2006 pending this opinion request, but inquires "whether, given
that the building cannot presently be occupied, it is eligible for exemption under [section 11.18,
Property Tax Code] and under article VIII, [section 2 of the] Texas Constitution." Id. Another
question presented in your predecessor's request is "whether [the District] has the authority to
reinstate permanent tax exempt[] status to Juneteenth USA and the ability to remove taxes that have
been [charged] to the organization." Id.


        'See Letter from Honorable A1 Edwards, Chair, Committee on Rules and Resolutions, Texas House of
Representatives, to Honorable Greg Abbott, Attorney General of Texas, at 1 (Oct. 24,2006) (on file with the Opinion
Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].
The Honorable Ruth Jones McClendon - Page 2                    (GA-0537)



       The Property Tax Code, codified as Title I of the Tax Code, contains section 11.18, which
implements the charitable organization authorization of article VIII, section 2(a) of the Texas
Constitution. See Cent. Appraisal Dist. v. Pecan Valley Facilities, Inc., 704 S.W.2d 86, 88 (Tex.
App.-Eastland 1985, writ ref d n.r.e.). Article VIII, section 2(a) provides that "the legislature may,
by general laws, exempt from taxation . . . institutions engaged primarily in public charitable
functions." TEX.CONST.art. VIII, § 2(a). And Tax Code section 11.18 provides that

                 [a]n organization that qualifies as a charitable organization as
                 provided by this section is entitled to an exemption from taxation of:

                           (1) the buildings and tangible personal property that:

                                 (A) are owned by the charitable organization; and

                              (B) except as permitted by Subsection (b), are used
                 exclusively by qualified charitable organizations; and-

                         (2) the real property owned by the charitable organization
                 consisting of:

                                 (A) an incomplete improvement that:

                                       (i) is under active construction or other physical
                 preparation; and

                                    (ii) is designed and intended to be used exclusively
                  by qualified charitable organizations; and

                              (B) the land on which the incomplete improvement is
                  located that will be reasonably necessary for the use of the
                  improvement by qualified charitable organizations.

TEX.TAXCODEANN. $ 11.18(a) (Vernon Supp. 2006).

       For a charitable organization to qualify for a tax exemptionunder the constitution and section
11.18,the property in question must be used for charitable purposes.* See id. 5 11.18(a)(l)(B) ("used
exclusively by qualified charitable organizations"); see also N. Alamo Water Supply Corp, v. Willacy
County Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991) (stating that property must satisfy
applicable constitutional requirements). "[Mlere intentions, well-grounded plans and hopes cannot


         'See Santa Rosa Infirmary v. City of Sun Antonio, 259 S.W. 926,93 1-32 (Tex. Comrn'n App. 1924, judgm't
adopted); see also Hilltop Vill., Inc. v. Kerrville Indep. Sch. Dist., 426 S.W.2d 943,946-47 (Tex. 1968), overruled on
other grounds by City of McAllen v. Evangelical Lutheran Good Samaritan Soc 'y, 530 S.W.2d 806,s 11 (Tex. 1975);
City of Longview v. Markham-McRee Mem ' I Hosp., 152 S.W.2d 1112, 1113 (Tex. 1941); Morris v. Lone Star Chapter
No. 6, Royal Arch Masons, 5 S.W. 519,520-21 (Tex. 1887).
The Honorable Ruth Jones McClendon - Page 3                         (GA-0537)



confer the exemption[;] in other words . . . intention to use, without use, is not sufficient."
Hedgecroft v. City of Houston, 244 S.W.2d 632, 636 (Tex. 1951). Instead, "there must be a
dedication of the propert[y] to charitable uses accompanied by actual uses for such purposes."
Hilltop Vill., Inc. v. Kerrville Indep. Sch. Dist., 426 S.W.2d 943,947 (Tex. 1968), overruled on other
grounds by City ofMcAllen v. Evangelical Lutheran Good Samaritan Soc 'y, 530 S.W.2d 806,811
(Tex. 1975). Because the "building cannot presently be occupied," the District questions whether
the property is eligible for the tax exemption. See Request Letter, supra note 1, at 1.

        In Hedgecroft, the Texas Supreme Court allowed an exemption for a charitable organization
where the organization's property was not occupied. See Hedgecroft, 244 S.W.2d at 662. Though
unoccupied, the organization's building was being remodeled and adapted so that the property could
be put to its intended charitable use. See id. The court stated that the "constitutional clause which
admittedly exempts the property during operation likewise exempts the property during bona fide
necessary preparation." Id. Section 11.18 allows an exemption for "incomplete improvement[s]"
so long as the improvements are "under active construction or other physical preparation." TEX.TAX
CODEANN.5 11.18(a)(2) (Vernon Supp. 2006). But whether any specific property is exempt from
taxation depends on the facts and circumstances and is initially determined by the chief appraiser of
the appraisal district. See Tex. Tpk. Co. v. Dallas County, 271 S.W.2d 400,402 (Tex. 1954) (stating
that tax exemption is fact question); TEX.TAXCODEANN. 5 11.45(a) (Vernon 2001) ("The chief
appraiser shall determine . . . each applicant's right to an exemption."). Thus, the fact that
Juneteenth USA's building is unoccupied does not preclude it from being tax exempt. The fact
question of whether the building is being adapted or improved so that it is used for charitable
purposes under Hedgecroft and section 11.18, and thus is eligible for the exemption, is one we must
leave to the chief apprai~er.~

        According to your predecessor, the District also questions whether it has "authority to
reinstate permanent tax exempt[] status to Juneteenth USA and the ability to remove taxes that have
been [charged] to the organization." Request Letter, supra note 1, at 1. With respect to the District's
authority, the Tax Code requires each appraisal district to appraise property for the ad valorem taxing
units4 within the appraisal district. See TEX.TAXCODEANN. 5 6.01(a)-(b) (Vernon 2001). The
chief appraiser of the appraisal district determines a property owner's right to an exemption based
on the claimant's qualifications as of January 1. See id. fj 5 11.42(a) (Vernon Supp. 2006), 11.45(a)
(Vernon 2001). The chief appraiser prepares "appraisal records listing all property that is taxable
in the district and stating the appraised value of each" and submits the appraisal records to the


        3We do not consider whether Juneteenth USA satisfies the other aspects of section 11.18 because your
predecessor states that "[tlhere are no other questions regarding the eligibility of the organization for exemption."
Request Letter, supra note 1, at 1.

          4Ataxing unit is "a county, an incorporated city or town (including a home-rule city), a school district, a special
district or authority (including a junior college district, a hospital district, a district created by or pursuant to the Water
Code, a mosquito control district, a fire prevention district, or a noxious weed control district), or any other political unit
of this state, whether created by or pursuant to the constitution or a local, special, or general law, that is authorized to
impose and is imposing ad valorem taxes on property even if the governing body of another political unit determines the
tax rate for the unit or otherwise governs its affairs." TEX.TAXCODEANN. 5 1.04(12) (Vernon Supp. 2006).
The Honorable Ruth Jones McClendon - Page 4                   (GA-0537)



appraisal review board for review and approval pursuant to chapter 41. See id.5 5 25.01(a), .22(a),
4 1.01, .12 (Vernon 200 1). Once the appraisal review board reviews the appraisal records and
determines all protests, it approves the appraisal records. See id.$41.12(a). The approved appraisal
records constitute the appraisal roll, which cannot be changed "[elxcept as provided by Chapters 41
and 42 [and section 25.251." Id.$5 25.24 (Vernon 2001), 25.25(a) (Vernon Supp. 2006). But see
id. 5 11.43(i) (Vernon Supp. 2006) (authorizing back appraisal of erroneously exempted property).

         Chapter 41 authorizes a property owner to protest the chief appraiser's determination to
include property on the appraisal records upon filing written notice with the appraisal review board
pursuant to section 41.44. See id. $5 41.41(a) (Vernon 2001), 41.44 (Vernon Supp. 2006). And
chapter 42 authorizes a property owner to appeal an adverse appraisal review board decision to the
district court. See id. $42.01(a) (Vernon 2001). It does not appear and we have not been informed
that any protest has been filed. See Request Letter, supra note 1, at 1. Thus, absent a protest under
chapter 41 or 42 of the Tax Code, property may be removed from the appraisal roll by the chief
appraiser only as authorized by section 25.25.

        Section 25.25 authorizes the chief appraiser at any time to correct the appraisal roll to
"correct a name or address, a determination of ownership, a description of property, multiple
appraisals of a property, or a clerical error or other inaccuracy as prescribed by board rule that does
not increase the amount of tax liability." TEX.TAXCODEANN. 5 25.25(b) (Vernon Supp. 2006).
Seeking to have a property removed from an appraisal roll for the improper denial of an exemption
does not constitute a correction of a "name or address, a determination of ownership, a description
of property, [or] multiple appraisals of a property." Id. Nor does it constitute correction of a clerical
error because "clerical error" is defined to exclude "an error that is or results from a mistake in
judgment or reasoning in the making of [a] finding or determination." Id. 5 1.04(18). Thus, the
2006 appraisal roll may be corrected to remove Juneteenth USA's property only if the denial of an
exemption is an "other inaccuracy as prescribed by board rule5that does not increase the amount of
tax liability." Id.5 25.25(b) (footnote added).

        The Tax Code does not define the term "inaccuracy," and no judicial opinion or opinion from
this office has construed this language from section 25.25(b). But we believe it must mean
something other than challenging the chief appraiser's decision to deny a tax exemption. Property
owners have express statutory authority to protest the denial of an exemption before the board
and to seek judicial review of the appraisal review board's determination of the protest. See id.
$5 4 1.41(a)(3), 42.01(l)(A) (Vernon 200 1). To construe section 25.25(b) as authorizing review of
the exemption decision would circumvent the protest and judicial review procedures of chapters
41 and 42. We do not believe the Legislature intended the language allowing for correction of
inaccuracies in the appraisal rolls by the chief appraiser to be construed to provide property owners
a second opportunity or an alternative method to challenge the chief appraiser's decision.
Accordingly, absent a protest by Juneteenth USA under chapter 41 or 42, the District is without



        'Your predecessor did not indicate that there are any relevant board rules. See Request Letter, supra note 1,
at 1.
The Honorable Ruth Jones McClendon        -   Page 5   (GA-0537)



power to remove the property from the appraisal roll and reinstate the 2006 exemption under section
25.25(b) of the Tax Code.

        At the same time, appraisal districts have no authority over the levy of taxes. Instead, taxing
units are responsible for the assessment of taxes. See id.chs. 25 (appraisal districts), 26 (assessment
by taxing units) (Vernon 2001 & Supp. 2006). But, like appraisal districts, taxing units have only
limited authority to correct tax rolls. See id. 5 26.15 (Vernon 2001). Once the chief appraiser
certifies the appraisal rolls to the taxing unit's assessor, the assessor makes certain calculations and
submits the appraisal roll to the taxing unit's governmental body for adoption of a tax rate. See id.
$5 26.01(a), .04(a)-(b) (Vernon 2001)' 26.05(a) (Vernon Supp. 2006) (tax rate). "The appraisal roll
with amounts of tax entered as approved by the governing body constitutes the unit's tax roll." Id.
5 26.09(e) (Vernon 200 1). The "tax roll for a taxing unit may not be changed" except through action
under chapters 4 1 and 42 and section 26.15. Id.$ 26.15(a).

        Under section 26.15, the assessor may make changes that result from a chief appraiser's
correction under section 25.25, and the taxing unit's governing body may change the tax roll to
"correct errors in the mathematical computation of a tax." Id. 5 26.15(b)-(c). An error "in the
mathematical computation of a tax" clearly involves only mathematical errors and does not include
an effort to qualifj for an exemption or to have an exemption reinstated. And nowhere in section
26.15 or the entirety of the Tax Code is the taxing unit's assessor or governing body authorized to
simply remove a property and its tax obligation from the tax roll. Again, absent an action by
Juneteenth USA under chapter 41 or 42, the taxing units in which Juneteenth USA's property is
located are not authorized to remove the property and its tax obligation from the tax rolls under
section 26.15.
The Honorable Ruth Jones McClendon - Page 6         (GA-0537)



                                      S U M M A R Y

                       Whether any property is entitled to a tax exemption is a fact
              question within the authority of the chief appraiser of the appraisal
              district to initially determine. Once property is included on the
              appraisal roll and tax roll, absent any action by Juneteenth USA under
              chapters 41 and 42, Texas Tax Code, the appraisal district and
              applicable taxing units are without power, respectively, to reinstate
              Juneteenth USA's tax exemption or to remove it and its tax obligation
              from the tax rolls.

                                             Very truly yours,


                                          ,&@e?
                                             G R E G @eneral
                                             Attorney  B o T of
                                                             T Texas


KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee
