Texas Student Housing Authority v. Brazos County Appraisal District and Appraisal Review Board for Brazos County Appraisal District

IN THE SUPREME COURT OF TEXAS

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NO. 13-0593

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TEXAS STUDENT HOUSING AUTHORITY, PETITIONER,

v.

BRAZOS COUNTY APPRAISAL DISTRICT AND APPRAISAL REVIEW BOARD FOR

BRAZOS COUNTY APPRAISAL DISTRICT, RESPONDENTS

════════════════════════════════════════════

ON PETITION FOR REVIEW FROM THE

COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TEXAS

════════════════════════════════════════════

Argued December 10, 2014

JUSTICE WILLETT delivered the opinion of the Court.

Many university campuses remain abuzz during the summer months, hosting various sports

and other extracurricular camps for kids and teens. This property-tax dispute poses a question of

first impression: whether a dormitory-like facility owned by a “higher education facility authority”

forfeits its statutory property-tax exemption by providing summer housing to non-college students

attending university-sponsored instructional programs.

The appraisal district contends the exemption imposes an exclusive use/benefit condition—

meaning summer campers’ use of otherwise vacant rooms defeats the property’s tax-exempt status.

We need not decide whether housing aspiring golfers, doctors, or cheerleaders violates statutory

conditions—because there are no statutory conditions. The exemption is stated categorically, not

conditionally. As worded, the exemption does not turn on whether a university hosts short, on-

campus instructional programs. Although the housing authority may be subject to certain

limitations affecting its ability to further the university’s broad educational mission—terrain we

do not reach today—the exemption statute is not one of them.

We reverse the court of appeals’ judgment insofar as it denies tax-exempt status, and render

judgment for Texas Student Housing Authority (TSHA).

I. BACKGROUND

The relevant facts are undisputed.

The town of Westlake created the nonprofit TSHA in 1995.1 TSHA’s bylaws provide that

it “shall have all of the powers and authority granted to an authority under the Higher Education

Authority Act.”2 In 2002, TSHA acquired title to the Cambridge at College Station, a student-

residential facility near the campuses of Texas A&M University (TAMU) and Blinn College.

TAMU is an “[i]nstitution of higher education,”3 and TAMU’s board of regents4 is charged

with (1) making “bylaws, rules, and regulations it deems necessary and proper for the government

of the university system and its institutions, agencies, and services,” and (2) “regulat[ing] the

course of study and prescrib[ing] the course of discipline necessary to enforce the faithful

discharge of the duties of the officers, faculty, and students.”5 Like many universities, TAMU

hosts various short-term extracurricular and enrichment programs for high school and elementary

1

See TEX. EDUC. CODE § 53.11 (“When the governing body of a city finds that it is to the best interest of the

city and its inhabitants to create a higher education facility authority, it shall pass an ordinance creating the authority

and designating the name by which it shall be known.”).

2

See id. § 53.01 (“This chapter may be cited as the Higher Education Facility Authority for Public Schools

Act.”), et. seq.

3

See id. §§ 53.02(5) (“‘Institution of higher education’ means any institution of higher education as defined

by Subdivision 8 of section 61.003.”), 61.003(8) (“‘Institution of higher education’ means any public technical

institute, public junior college, public senior college or university, medical or dental unit, public state college, or other

agency of higher education as defined in this section.”), 61.003(6) (“‘Other agency of higher education’ means . . .

Texas A & M University System. . . .”).

4

The Education Code uses the term “board of directors” synonymously. See id. §§ 85.11, 86.02.

5

Id. § 85.21. See also id. § 85.11.

2

students. In the summers of 2005–2008, TSHA provided lodging at the Cambridge to participants

in TAMU-sponsored summer camps.6 This housing was in addition to that provided to traditional

university students who stayed at the Cambridge while attending regular summer school at either

TAMU or Blinn College. TSHA’s executive director testified that TSHA could have closed the

Cambridge for the summer, but that TSHA would have been unable to keep the Cambridge open

for summer school students without boosting the Cambridge’s occupancy by housing the summer

camp participants.

TAMU’s 2005–2008 summer programs included the 4-H Roundup,7 the Joint Admission

Medical Program,8 and various athletic camps. The athletic camps included tennis, volleyball,

swim, and golf camps conducted directly by TAMU’s Athletic Department, a hockey camp

conducted by Hockey Ministries International Hockey Camp,9 and a cheerleading camp conducted

by the UCA Cheer Camp.10 With the exception of participants in the Joint Admission Medical

6

During the rest of the year, TSHA used the Cambridge to house only persons enrolled at TAMU or Blinn

College.

7

The 4-H roundup is organized and administered by the Texas 4-H and Youth Development Program service

of the Texas Agricultural Extension Service.

The Joint Admission Medical Program is a program created by statute to “provide services to support and

8

encourage highly qualified, economically disadvantaged students pursuing a medical education.” Id. § 51.822.

Participants in the Joint Admission Medical Program are all enrolled at one of the participating Texas colleges and

universities and have completed at least 27 credit hours as a college freshman. See id. §§ 51.826(a)(1), (3), 51.821(4).

9

Hockey Ministries International is a Christian charity registered in Canada and the United States. Although

the hockey camp was not conducted directly by TAMU’s Athletic Department, the TAMU Recreational Sports

Department and the TAMU Men and Women’s Hockey Clubs sponsored the camps. Team members from the men

and women’s club teams at TAMU served as counselors, and at least one of the TAMU hockey coaches participated

in the camp each year. Hockey Ministries International does not profit from the camps or the use of the Cambridge as

Hockey Ministries International’s expenses in conducting the camps exceed the revenues received by the organization,

which relies on donations to cover the shortfall.

10

UCA is an assumed name of Varsity Spirit Corporation, a Tennessee for-profit corporation that provides

training for college and high school cheerleaders. TAMU’s Recreational Sports Department sponsored the UCA Cheer

Camps at TAMU, receiving revenues and generating a profit from its association with UCA Cheer Camp.

3

Program, most of the summer camp participants had not yet graduated high school. The parties

stipulated that none of the programs conducted instructional activities at the Cambridge itself.

The various camps utilized different payment structures for TSHA’s provision of housing.

The Texas Agricultural Extension Service made arrangements with and paid fees directly to

TAMU for the use of campus facilities for the 4-H Roundup. TSHA sent invoices directly to

TAMU for the housing provided for the Joint Admission Medical Program and the athletic camps

conducted directly by TAMU’s Athletic Department. TSHA billed Hockey Ministries

International and UCA Cheer Camp directly.

Citing the Cambridge’s housing of these summer campers, the Brazos County Appraisal

District (BCAD) voided TSHA’s tax-exempt status for the years 2005–2008, and assessed millions

of dollars in back taxes. TSHA unsuccessfully protested, then sought judicial review, arguing it

was entitled to the exemption provided by the Education Code, and alternatively, the Tax Code.

The trial court affirmed BCAD’s denial of exempt status, holding that TSHA forfeited the

exemption once the Cambridge hosted “persons who were not students, faculty or staff members

of an institution of higher learning.” The trial court concluded that making the property available,

even at TAMU’s request, for short-term housing of participants in various university-sponsored

summer programs violated conditions on which the exemption was premised.

TSHA appealed, and BCAD again contended that TSHA, by providing lodging to

participants in summer camps bearing the imprimatur of TAMU sponsorship, could not satisfy the

exemption’s requirement that the property be “devoted exclusively to the use and benefit of the

students, faculty, and staff members of an accredited institution of higher education.” 11 The court

of appeals reversed the denial of tax-exempt status for 2005 but affirmed for years 2006–2008.

11

See id. § 53.46.

4

The court of appeals distinguished 2005 on the basis that the only summer programs for which

TSHA housed participants at the Cambridge in 2005—the 4-H Roundup and the Joint Admission

Medical Program—had “definite and intimate relationships” with TAMU, “ones which are forged

or supported by legislative mandate.”12 The court of appeals also rejected TSHA’s alternative

contentions that the Cambridge was exempt under the Tax Code.

Both parties appealed to this Court.

II. DISCUSSION

This is our first opportunity to address the scope of the tax exemption provided by

Education Code Chapter 53. Our inquiry is straightforward: Did TSHA establish its tax-exempt

status as a matter of law? We answer yes, and accordingly do not reach TSHA’s alternative

argument that the property is also tax-exempt under the Tax Code.13

A. Standard of review

In tax-exemption cases, the claimant, here TSHA, bears the burden of “clearly showing”

that it falls within the statutory exemption.14 Tax exemptions may not “be raised by implication,

but must affirmatively appear, and all doubts are resolved in favor of taxing authority and against

the claimant.”15 Moreover, when construing any statute, including tax exemptions, the truest

manifestation of what lawmakers intended is what they enacted.16 We adhere to this maxim “unless

12

440 S.W.3d 779, 788 (citing TEX. EDUC. CODE §§ 51.821 (providing for the Joint Admission Medical

Program), 88.001 (listing the Texas Agricultural Extension Service as one of the agencies and services of TAMU)).

13

TSHA contends the property is also nontaxable under section 11.11 of the Tax Code, which generally

exempts from taxation (1) “property owned by this state or a political subdivision of this state” if it is “used for public

purposes,” and (2) property “held or dedicated for the support, maintenance, or benefit of an institution of higher

education.” TEX. TAX CODE § 11.11(a), (e).

14

N. Alamo Water Supply Corp. v. Willacy Cnty. Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991).

15

Bullock v. Nat’l Bancshares Corp., 584 S.W.2d 268, 271 (Tex. 1979).

16

Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006).

5

enforcing the plain language of the statute as written would produce absurd results.” 17 And we

focus not on isolated words or phrases but on the statute as a cohesive, contextual whole.18

B. TSHA did not forfeit its exemption under Education Code Chapter 53 by housing

summer program participants at the Cambridge.

At the time TSHA acquired the Cambridge, section 53.33 of the Education Code provided

that an authority “by purchase, purchase contract, or lease, may construct, or may enlarge, extend,

repair, renovate, or otherwise improve educational facilities or housing facilities. [The authority]

may . . . provide by contract, lease, or otherwise for the operation and maintenance of the

facilities.”19 Similarly, the current version of section 53.33 provides that an authority “may acquire,

own, hold title to, lease, or operate an educational facility or housing facility” if certain additional

requirements are met.20 Both housing and educational facilities are defined in terms of their use:

“Educational facility” means a classroom building, laboratory, science building,

faculty or administrative office building, or other facility used exclusively for the

conduct of the educational and administrative functions of an institution of higher

education. . . .

17

Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009).

18

City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008); see also TEX. GOV’T CODE § 311.011(a)

(“Words and phrases shall be read in context and construed according to the rules of grammar and common usage.”);

Jones v. Fowler, 969 S.W.2d 429, 432 (Tex. 1999) (“[W]e must read the statute as a whole and interpret it to give

effect to every part.”); Harris Cnty. Hosp. Dist. v. Tomball Reg’l Hosp., 283 S.W.3d 838, 842 (Tex. 2009) (“We

determine legislative intent from the statute as a whole and not from isolated portions.”).

19

Act of May 12, 1983, 68th Leg., R.S., ch. 200, § 5, 1983 Tex. Gen. Laws 860, 862–63. Section 53.33 was

amended in 2003 and 2005 to impose additional restrictions, however, those amendments provided that the changes

in the law would not “affect the acquisition, ownership, construction or improvement of a facility” that was approved

by official action before March 15, 2003, and that the law in effect immediately before the effective date of the

amendments “is continued in effect for that purpose.” Act of June 2, 2003, 78th Leg., R.S., ch. 1310, § 8, 2003 Tex.

Gen. Laws 4748, 4754–55, reenacted and amended by Act of May 24, 2005, 79th Leg., R.S., ch. 641, § 1, 2005 Tex.

Gen. Laws 1597, 1599–1601.

20

TEX. EDUC. CODE § 53.33(a), (a) (1)–(4) (listing additional conditions, e.g., that “the facility is or will be

located within the corporate limits of the city that created the authority”). The current version also expressly provides

that an authority may “acquire, own, hold title to, lease, or operate . . . any facility incidental, subordinate, or related

to or appropriate in connection with an educational facility or housing facility,” subject to the same additional

conditions imposed on housing and educational facilities. Id. § 53.33(a).

6

“Housing facility” means a single- or multi-family residence used exclusively for

housing or boarding, or housing and boarding students, faculty, or staff members

of an institution of higher learning. The term includes infirmary and student union

building, but does not include a housing or boarding facility for the use of a

fraternity, sorority, or private club.21

In conjunction with the limited grant of authority in section 53.33, these definitions place specific

restraints on an authority’s ability to diversify its property holdings.22

Section 53.46, titled “Authority Exempt From Taxation,” confers the exemption at issue

here:

Because the property owned by authority will be held for educational purposes only

and will be devoted exclusively to the use and benefit of the students, faculty, and

staff members of an accredited institution of higher education, it is exempt from

taxation of every character.

Although BCAD concedes that TSHA properly holds title to the Cambridge, BCAD argues

the exemption is not absolute but conditional and hinges upon the authority’s use of the property.

According to BCAD, the Legislature was “probably sensitive to the notion that any use of a

‘housing facility’ other than for students, faculty and staff, would give the authority an unfair

competitive advantage over other properties that did not enjoy a tax exemption.” As such, BCAD

insists that, in order to qualify for the tax exemption, an authority must conclusively establish that

its property is (1) “held for educational purposes only,” and (2) “devoted exclusively to the use

and benefit of the students, faculty, and staff members of an accredited institution of higher

education.”23 We reject BCAD’s reading of the statute as conditional.

21

Id. § 53.02 (6)–(7) (emphases added).

22

See City of Sherman v. Pub. Util. Comm’n of Tex., 643 S.W.2d 681, 686 (Tex. 1983) (“Agencies may only

exercise those powers granted by statute, together with those necessarily implied from the statutory authority conferred

or duties imposed.”).

23

TEX. EDUC. CODE § 53.46.

7

Both the title and text of section 53.46 declare rather emphatically that the authority is

exempt from taxation. That is, the language seems focused on who the property owner is, not on

how the property is used. The provision states a presumption (about how the property is held and

used) then an unconditional proclamation (the property is tax-exempt). The introductory clause

isn’t worded as a condition—if the property is so held and used, then it’s exempt. The exemption

does not speak to property being used “nonexclusively” or impose consequences for such use.24

Rather, the statute seems to state in absolute terms that the property is, in all events, exempt.

The Legislature is well acquainted with how to condition tax exemptions on specific

criteria or circumstances. The Tax Code includes numerous such exemptions, and their syntax

bears no resemblance to that used in section 53.46:

 “[P]roperty owned by this state or a political subdivision of this state is exempt

from taxation if the property is used for public purposes.”25

 “Property of a higher education development foundation . . . is exempt from

taxation if . . . the foundation or organization meets the requirements of Sections

11.18(e) and (f) and is organized exclusively to operate programs or perform

other activities for the benefit of institutions of higher education . . . [and] the

property is used exclusively in those programs or activities.”26

 “The surviving spouse of a disabled veteran . . . is entitled to an exemption

from taxation . . . if . . . the surviving spouse has not remarried since the death

of the disabled veteran. . . .”27

Under these statutes—and numerous other examples28—“if” the entity or person fails to meet the

24

See Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628, 638 (Tex. 2010) (“Even when

it appears the Legislature may have made a mistake, courts are not empowered to ‘fix’ the mistake by disregarding

direct and clear statutory language that does not create an absurdity.”).

25

TEX. TAX CODE § 11.11(a) (emphasis added).

26

Id. § 11.11(f) (emphasis added).

27

Id. § 11.131(c) (emphasis added).

28

See, e.g., id. §§ 11.132(c), 11.145(a), 11.181(a), 11.182(b), 11.1825(c)–(d), 11.1827(b), 11.183(a),

11.185(a), 11.23(a)–(c), (e), (g).

8

stated conditions, then the property is not entitled to the exemption.

By contrast, the exemption in today’s case is more akin to exemption statutes that use

unconditional language, such that the property is exempt “because” its use is consistent with the

limited powers of the identified type of entity:

 A municipal hospital authority’s “property is exempt from taxation because it

is held for public purposes only and devoted exclusively to the use and benefit

of the public.”29

 “Recognizing the fact that the property owned by an [athletic stadium] authority

will be held for public purposes only and will be devoted exclusively to the use

and benefit of the public, it is exempt from taxation of every character.”30

 The “property of [a municipal parking] authority is exempt from taxation.”31

 “The property of [a municipal housing] authority is public property used for

essential public and governmental purposes. The authority and the authority’s

property are exempt from all taxes. . . .”32

The gist of BCAD’s proposed construction—that no non-university persons or entities may

ever use the property or benefit from it—finds no home in the exemption’s language. BCAD’s

conditional reading is foreclosed by the statute’s unconditional text.

Today’s decision does not mean TSHA can use its property for any purpose it chooses.

“Agencies may only exercise those powers granted by statute, together with those necessarily

implied from the statutory authority conferred or duties imposed.”33 An authority thus has no

29

TEX. HEALTH & SAFETY CODE § 262.004 (conferring tax-exempt status on property of a hospital authority).

30

TEX. LOCAL GOV’T CODE § 45.160 (conferring tax-exempt status on property of an athletic stadium

authority).

31

Id. § 601.041(conferring tax-exempt status on property of a municipal parking authority).

32

Id. § 392.005 (conferring tax-exempt status on property of a municipal housing authority).

33

City of Sherman, 643 S.W.2d at 686.

9

power to acquire, hold, or use property beyond its statutory authorization.34 If an injured party with

standing brings and proves an action seeking to confine TSHA within its statutory constraints—

and BCAD sought no such relief in this case—courts may intervene to provide an appropriate

remedy, such as an injunction to prevent TSHA from continuing to exceed its limited statutory

authority.35 Even if TSHA has governmental immunity—an issue we do not decide here36—

governmental immunity would not protect its officials from suits to prevent ultra vires actions and

obtain prospective relief.37

The denial of a tax exemption might be an appropriate additional remedy against an

authority that commits its property to unauthorized or prohibited uses, de minimus or otherwise,38

but that is a policy judgment for the Legislature, which has provided no such remedy here. Instead,

the Legislature has unconditionally granted TSHA a tax exemption and presumed that TSHA will

34

See id.; cf. Mobil Oil Corp. v. Matagorda Cnty. Drainage Dist. No. 3, 597 S.W.2d 910, 913 (Tex. 1980)

(holding that the drainage district “acted beyond its limited powers” in “annexing lands upon which it cannot perform

the services that the water code authorizes it to perform” and rendering judgment that the district’s annexation order

“is a nullity”).

35

See, e.g., City of Sherman, 643 S.W.2d at 686 (upholding injunction to prevent agency from acting beyond

its authority); Westheimer Indep. Sch. Dist. v. Brockette, 567 S.W.2d 780, 785 (Tex. 1978) (holding that court

intervention “may be permissible when an agency is exercising authority beyond its statutorily conferred powers”).

36

Because TSHA instigated this action, we need not consider whether an authority has governmental

immunity or whether an ultra vires suit would be an appropriate remedy for any arguably unauthorized use of the

property, particularly as BCAD has never requested any such prospective relief. See Harris Cnty. Hosp. Dist., 283

S.W.3d at 849 (holding that remand was unwarranted because Tomball Hospital Authority “never requested relief

other than monetary damages” and did not “ask that we remand the case so that it may replead and request such

relief”).

37

See City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009) (holding that sovereign immunity does

not apply to suits to prevent ultra vires conduct); see also City of Dallas v. Albert, 354 S.W.3d 368, 378–79 (Tex.

2011) (holding that only prospective relief is available in ultra vires actions (citing Heinrich, 284 S.W.3d at 376)).

38

See, e.g., TEX. TAX CODE § 11.18(b) (“Use of exempt property by persons who are not charitable

organizations . . . does not result in the loss of an exemption authorized by this section if the use is incidental to use

by qualified charitable organizations and limited to activities that benefit the beneficiaries of the charitable

organizations that own or use the property.” (emphasis added)).

10

use the property only for authorized purposes. In short, we need not decide whether TSHA’s

property meets the exemption’s “conditions” because the exemption is not conditional.

Section 53.46 exempts property owned by a properly constituted higher education facility

authority, and it does so unequivocally. Because BCAD does not dispute TSHA’s assertion that

TSHA is such an authority, the Cambridge “is exempt from taxation of every character.”39

III. CONCLUSION

Rules of construction require us to resolve ambiguous language in favor of the taxing

entity,40 but BCAD has not identified any language susceptible to the strained meaning it ascribes.

We reject BCAD’s view that TSHA forfeited its tax-exempt status under Education Code section

53.46 by housing non-college students attending TAMU-sponsored summer camps. As worded,

the statute imposes no conditions but rather declares the property-tax exemption in absolute terms.

The Legislature is adept at qualifying its tax exemptions, and if it wishes to disqualify properties

that facilitate university-backed extracurricular programs, it can amend the statute.

We reverse the court of appeals’ judgment insofar as it denies tax-exempt status for the

Cambridge for any of the years at issue, and render judgment for TSHA.

_____________________________

Don R. Willett

Justice

OPINION DELIVERED: April 24, 2015.

39

TEX. EDUC. CODE § 53.46.

40

See N. Alamo Water Supply Corp., 804 S.W.2d at 899; Bullock, 584 S.W.2d at 271–72.

11