Monday, July 15, 2013
The Texas Court of Appeals (Seventh District) recently had occasion to consider the state's law relating to exemption from ad valorum taxes applicable to real and business personal property. While the factual details of the Texas Student Housing Authority v. Brazos Country Appraisal District decision may only be of interest to the parties involved, what is of more general interest is the court's lengthy discussion of both the statutory and constitutional grounds for such exemptions. For both the statutory provision, relating to property "held for educational purposes only" and "devoted exclusively to the use and benefits of the students, faculty, and staff members of an accredited institution of higher education," and the state constitutional provision, relating to "property of counties, cities and towns" (read broadly by the court) and "devoted exclusively to the use and benefit of the public," the court found that exclusively means, well, exclusively. The court therefore concluded under both provisions that while providing housing to participants in state legislatively sanctioned programs associated with the Texas A&M University system fell within these "exclusively" provisions, providing housing for participants in programs sponsored by a private charity unaffiliated with the state government or the Texas A&M system and by an out-of-state for-profit corporation did not, and so providing such housing caused the properties not to be exempt from tax during the years those activities occurred. The Texas Student Housing Authority therefore received a split decision, reacquiring exemption for one year but unable to reverse the lower court's decision denying exemption for three other years.