The opinion
Honorable Joe Resneber Opinion 190. (C- 357)
County Attorney
Harrle County Re: Whether Bayou Manor is
Houston, Texas exempt from ad ,valorem
taxee as an inst&tution
,Dear Mr. Resweber: of purely public charity.
We quote the following excerpt from the memorandum
brlaf which you submitted in connection with your request
on tha above captionad.queation:
“Brazes Presbytertan Homes, Inc., was
chartered in 1960, by the State of Texas as
8 non-profit corporation ‘to establish, con-
etruct, maintain, support and operate a
retirement home or homes- - -f&-worthy older
peopla . I The charter-state8 that it was
‘organized exclusively for +haritable pur-
poeee a8 a non-profit corpor8tlon.t
“The corporation le an agency of the
Praebytery of Brazes Presbyterian Church, U.S..
The building is a multi-story, modern structure
contaifilng:Yl~~~ unite consisting of 1 room
efficiency, 13 room and 2 room apartments
situated on 6 acres of land in Houston, Texas.
The apartments are-unfurnished except for
carpets and drapes and contain no kitchen
fscilities. There is a health center consisting
of 12 rooms with 6 bade and plane for expansion
to a 36 bed facility. A nurse is on duty at all
times and several doctors on call.
“Bayou Manor furnishes its residents with
living quarters, a health center, meals, religioue
services, a library complete with gamea, a sum
deck, and a meeting room for family gatherings.
-1691-
. .
Honorable Joe Resweber, Page 2 Opinion IVo. (C-357$1
“The letter recekved by this office from the
director of Bayou Manor’contains the following
statement:
‘Residents are admitted by the
Trustee8 on their ability to adjust to.
community living and their ability to
pay. A regular-schedule of fees calls
for entrance fees ranging from $6,goo.o0
to $10,500.00 and Monthly Life Care Fees
ranging from $200,.00 per month to $240.00
per month. These fees are adjusted to the
applicant’s ability to pay.’
“Information received by this office indicates
that as of September, 9, 1964, there were 33 persons
occupying 27 rooms at Bayou Manor. Of these 33
persons, 2 were full charity casea and 3 were partial
charity cases. One other partial charity case was
due to take up residence the following week.”
In addition to the facts contained in your memorandum
brief, you have furnished us the following Information..
Medical care is provided in the health center in the Manor
in accordance with the patient’s ability to pay. There is
a dietitian on duty who sees that any special diet, pre-
scribed’by CLresident’s doctor, is proper-lyypreparedt The
acting director of’ the Manor has stated that It Is their
intention to care for more charity cases ae~ funds become
available either from donations or from proflte,realieed
from full paying guests. The further point ie made that
when’the Indebtedness incurred in constructing the, Manor
is retired, there will be more openings for charity CaBBe.
Specifically, the Manor seeks as occupants those individuals
who are still mentally active but who need an atmosphere
such as the Manor provides in order’to prevent a developing
state of mental depression or a feeling on the part of the
individual of having ,outlrved his usefullness.
.1692-
Honorable Joe Resweber, Page 3 Opinion No. (C-357)
This office has written numerous opinions concerning
exemptions Prom state and county ad valorem taxes of hoppee
for the aged under various fact eituationr. Attorney Oeneral
0 inions Roe.- VW- 1 (l-7-60), VW-1277 [3-16-621, ,~ww-1318
&17-62), WY-14227 (8-24-62) and C-209 l-29-64 accorded
exemption in view of the facts considered therein. ,The Pacts
were held not to warrant exemption in Attdrne Qanaral
NOS. W-1427 (a-30-62), c-27 (3-6-63) and c-l 64 (11-26-i$9?@
Of these Opinions, we think Opinion No. WI-1277 le the
moet closely analogous In the Pacts therein coneidered to the
facts which you present for our consideration. In this
Opinion, Morningside Manor, Inc., herelrufter referred to a8
the Home, ~86 see- exemption from ad valorem kxas. Thir,
Home was incorporated under the Terns Non-Profit Corpora-
tion Act Por choritsble and beWvolant purpoaer. The Em WI
also a project of a church, specifically the S8n Antonio
District of the Mathodlst Church. xt was deeigned to house
approximately 109 residents. In contradistinction to tha
requirementa of tha Manor, the Home did not raquire an admir-
sion Pee; howevar, the Home did require a contract Prcm its
residents under the terma of which the resident p8id X dollara
to the Home to provide against any contlngenclas that might
arise with a provision for a refund bf any amount r&nWning
therein to the resident or to hie e&ate. Likeuire, thoea
who were financially able to pay were requlrad to do 80. The
facilities offered by the Home were much the same au thoue
that are offered by the Manor. There were’, at the time
this Opinion was written, 22 persons residing in the Rome,
of which number three were charity residents, a percentage
of 13.6$ as oppoeed to the 5M percentage presented by the
f8Ct8 in your case. The Methodist Church member8 h8d made
contributions to help underwrite the co&s of the Home and
will continue to contribute to its support.
The Opinion points out that in pursuance to the
authorieation contained in Section 2 of Article VIII OP the ~ .
gonstitution of the State of Texas to exempt fro! taxation
. , .institutlons of purely public charity. . . , the
Legislature enacted iktV%e 7150,‘V$~n~nla-.CfysI :Stattit;ea,
t~e~~,~aftb~eabrpootio~ of:.tihictCrbiids~~ as follows:
-1693-
Honorable Joe Resweber, Page 4 Opinion No. (C-357)
"The following property shall be exempt from
taxat;on, to-wit:
II;.* kblic charities. All buildings and
personal property belonging to institutions
of purely public charity, together with the
lands belonging to and occupied by such lnstl-
tutions not leased or otherwise used, with a
view to profit, unless such rents and profits
and all moneys and credit8 are appropriated by
such institutions solely to sustain such inatii:..'. :.
tutions and for the benefit of the sick and
disabled members and their families and the
burial of the same, of for the maintenance of
persons when unable to provide for themselves,
whether such persons are member6 of such ineti;L;-
tutions or not. An institution of purely public
charity under this article is one which dispenses
its aid to its members and others in sickness or
distress, or at death, without regard to poverty
or riches of the recipient, also when the funds,
property and assets of such institutions are
placed and bound by Its laws to relieve, aid and
administer in any way to the relief of its mem-
bers whin'in want, sickness and distress, and
provide homes for its helpless and dependent
members and to educate and maintain the orphans
of, its .deceased members ,or. otherpersons.'.'
Since we think holding of Opinion WW-1277 is correct
and the reasons therefor equally applicable to this case,
we quote the following excerpts therefrom:
"Itis clear that under the above section
an institution can gain exemption
@%?&ldings. .together with the lands
belonging to and occupied by such institutions
on1 if it is an 'institution of purely public
dity. 1
-1694-
Honorable Joe Resweber, Page 5 Opinion No. (C- 357)
“In City of Houston ‘v. Scottish Rite Benev.
Aee’n., 1’11 T 191 iga 230 s w g7a gtu 211,
thecourt eairthat :the &isla&e m&t reazn-
ably conclude that an institution was one of “purely
public charity” where: Firrt, it made no gain or
profit; second, It accomplished ends wholly benevo-
lenti and,,tNrd, it benefited persons, Indefinite
in numbers and in personalties, by preventing them,
through absolute gratuity, from~becomlng burdane to
eociety and to the state.’
@‘Admittedly, the Home meets the first requirement
since it makes no gain or profit. Doee it accomplieh
ends wholly benevolent and will it benefit perrone
indefinite in numbers by ,preventing them Prom bacom-
lng burdens to society and the State? In the brief
submitted In support of the proposition that tha
property is taxable, it is argued that nineteen oecu-
pants ara not faced with the probability that they will
become a public charge since they are paying their
room and board,accordlng to the schedule before quoted,
that three are partially doing so, that none are on a
‘Pull and exclusive charity basis. . .,I and that
‘neither the Constitution or the courts have established
a percentage of charitable use BE a baeistbr an exemp-
tion exceot 100 ner cent.’ We think that these arau-
ments are-refuted by the decision in Santa Rosa In?irmar
v. City of San Antonio, 259 S.W. 926, (T ex. om. pp., 96.
“In the Santa Ross case, the City of San Antonio
and the San Antonio Independent School District instituted
suit against the Sisters of Charity of the Incarnate Word,
hereinafter referred to 8s Sisters of Charity, and the
Santa Rosa Infirmary, hereinafter referred to,as the
Hospital, both incorporated for charitable purposes, to
recover taxes assessed against the real estata and im-
provements thereon owned by the Hospital. The Hospital
was a subsidiary of the Sisters of Charity and was con-
trolled by it in the management and operation of its
property.
-1695-
Honorable Joe Resweber, Page 6 Opinion No. (C-357)
11. . .
"All patient% whose financial condition per-
mitted them to pay for the hospital services did so.
The money so received was ueed for the maintenance,
upkeep and Improvements of the Hospital and main-
tenance of young Sisters, future member% of the
HospV~l, for the support of sick and disabled mem-
bers of the Hospital, and the'balance went to a
building fund. The Hospital had no other source of
revenue than that which it derived from it8 pay
patients. The Sisters of the Hospital engaged in
other charities and charitable work%. They conducted
St. Luke's Free Clinic, fed and clothed the needy,
aided unwed mothers -- all of these additional
charities being performed from the general fund% of
the Hospital. There wa8 testimony to the effect that
the large majority of patient% were pay patients,
that the applicants for charity were comparatively
small in number, that the institution was entirely
self-sustained and in no way dependent on any out-
side charity or solicitations from other organi-
zations connected with the church.
"The court discusses the ca%e of Morris v. Mason%,
68 Tex. 703, 5 S.W. 519 (1887) which held th t
building owned by a Masonic body claiming toabeaa
purely charitable organization was not entitled to
exemption since the building was largely leased to
tenant% from whom rental% were collected. The' court.
therefore did not decide whether the Masonic body was,
in fact, a 'purely public charity.' The court di,s-
tinguished the Morris case from the case under considera-
tion on the ground that although the constitutional pro-
vision authorizing exemption wa8 still the same, the
statutory provision implementing the constitutional pro-
vision had been amplified to include rents and profits
when appropriated by charitable institutions sole1 to
sustain such institutions. The court stated TIidSTpe
-rolling statute was to be given
effect, charitzble institutions might use funds derived
pas an incident of the administration of their charities.'
(Rmphaeis supplied) The court expreesly rejected the
contention that the Hospital lost Its status a% a purely
-1696-
IXonorabl% Joe ~Re%u%ber, Page 7 opinion lb. (c-397)
public aharity because the majority of the room%
in the hospital wa% used to take cue of pay patimmtr
and rtated,at page 932 that '. . .the mere faqf th8t
pay pa$ients largely predominated over the alyrJ,ty
patient%, or Uhat the inetitutlon did not o 0uJ;
into the highways snd by-way% eeeking out f hoee to
whom ite~charitabla officer might be extended, cot@&
not,, under the,great weight of authority, be uid
to,so detract from its charitiee a% to disqualify
It a% an institution of purely public charity.
“At page 935, the court eaid;
‘The theory upon which inetitutions
of thim character are exempted from
taxation is that they %erve the govern-
ment by relieving It 00 %ome extent of
what would otherwise be a public duty or
governmental function to care f,ar the
indigent sick and afflicted and It 1%
the assumption by such institutions of
thls burden which compenratas,the govern- ,
ment for the exemption granted them fra ,/,‘; ,,:~
the general obligation resting upon all
citizens to pay taxee. It 1% thhrefore
esrentially to the general public interest
that the facilities of these inrtitutione
tc carry on this burden be extended by
addition&l, new structure%, and building
fund%, looking to that end and keeping
pace with a growing pbEp~~Wm~~.~2 and it%
necesearily increasing demands for
charitable di%psn%afions.~
“Both the State and Federal Oovernmente are devoting
attention to the ever increasing problem of the aged who
constitute an ever increasing percentage of our pOpu@4Wri~~’ ”
We think it is self-evident that en aged person na%d ,& be
wholly without financial mean% in order to become a publ3.c (
aharge . The Home serve% the Government by relieving it
to some extent from what would otherwise be a public duty
or governmental function to care for the aged, and may be
deemed, therefore, an institution of ‘purely public
charity’ a% those word% are ueed In our Constitution.
-1697-
Honorable Joe Resweber, Page 8 Opinion No. (C-3573
"Wumerous decisions of our courts clearly
establish the rule that in order to gain the
exemption granted by Section 7 the linstitution
of purely public charity' must not only own the
property for which exemptionis sought, but must,
in addition, make an actual, direct and exclueive
use of said property for charitable purposes.
:ef submitted in support of the proposition-that
the Home is taxable, it is argued that the requi%iteLbf
lexclu%i've u%e' is not met in-this case since-some of
the rooms will be rented. We do not think that this
fact is determinative of the 'exclusive use' require-
ment but rather that that requirement is met by the
fact Iihat the property will be ueed exclusively for
,the charitable purpose of 'caring for the aged. We
are unable to distinguish the occupancy of the Hcme
by those aged persons who pay for their expenses and
the occupancy of hospitals by pay patients. Of cour%e,
any change in the existing factual situation which
prevents the Home from meeting the threefold require-
ments of (1) ownership of the property, (2) bona fide
charitable purpose as evidenced by actual charitable
work, and (3) exclustve use of the property by the
charitable institution itself would result in a loss
of the exemption accorded by Section 7. The deter-
mination of these controlling facts must always be
made by the proper local authorities in deciding whether
exemption will be accorded.v!,
We quote the following excerpt from a copy of a letter
from the attorney% for the Manor to the Tax Assessor and
Collector of Harris County:
-1698-
.
Honorable Joe Resweber, Page 9 Opinl.on Ho. (C-357)
"In discussing with your office the original
determination that Bayou Manor was not entitled to
exemption, It was indicated that a short time ago
there would have been little question concerning
the exempt status of Bayou Wanor under the then
existizig underetandlng of the provisions for exemp-
tion. It was stated, however, that the decision of
.the Supreme Court of-Texas in-River Oaks Garden club
v. City of Houeton, 370 S.Y.2d U51 -3) ha%
changed this understanding of the requirements for
exemption. . . .'I
We do not so construe the River Oak% Garden Club case.
The Club was a non-nrofit cornoration which maintained a
landmark of historical value~%nd had, a% its main activity,
the, education and enlightenment of its members and the public
in the art of growing and arranging flower%. Other non-
profit organizations were permitted to u%e the property
without charge. The Court of Civil Appeals had denied tax
exemption for that reason. The Supreme Court held that It
did not reach the question because there were far more basic
reason% for holding that the exemption of the Club's pro-
perty was not authorized by the Constitution under the pro-
vision of Section 2, Article VIII which empower%,,the Legis-
lature to exempt "inatltutlons of purely public charity."
The Club had not sought exemption under Section 7 of
Article 7150, quoted supra at pages 3. The Club's stated
charter purpose% were patterned after Section 14 .of Article
7150 (pertaining to Societies of Fine Arte) and Section 20
of Article 7150 pertaining to non-profit organizations
incorporated for the purpoae of preeervlng hietorical build-
ing site% and land markr. It therefore eought exemption
under these Sections.
At page 853, the SPpr~ma...~aurt:;,.ai~e~r;~~o~.;~~~s -which
tic!: &$ld 'tht- ac~tYon~ 5s da& ,.wilea acrperlrty: i% -.nC#~ymd
'r&&sivei$ &b) jJfg$~
,.&j$&&'~~f~~
frtupm&~ :of:~-m,&&$ @t\nLJ$&q&@&$y.
,T~O .of 'the cases cited are Ci!ty of LongtrieW v. Markham-McRee
Memorial Hospital ax&Benevolent and Protective Order of m
'v. city of Houston, also cited in Opinion RO. WW-1277
page 7 These cases are not in point in view of the San " 3= a
Rosa Infirmary case.
,.
-1699-
Honorable Joe Resweber, Page 10 Opinion No. (C- 357)
At page 854, the Court quotes the same excerpt from the
Scottish Rite Benev. AgeIn. case which Opinion No. WIT-1277
quotes as the accepted d finition of an lnstltutlon of purely
public charity. Supra, iage 4.
At page 855, the Court quotes fromMassachusetts General
, ‘233 Mass. 190 14h.E. 21,
on which exemp&ons from
can be justified in the
constitutional sense Is that they minister 50 human and social
needs which the State might and’does to a greater or less
extent undertake to satisfy, thus’dlrcharglng through the
private charity an ultimate obligation of the state. This
same theory was stated by the court in the Santa Rosa Infirmary
case and Is quoted, SUDrS, at page 6.
In the argument submitted to us In support of the
proposition that tax exemption should be denied, reliance
is placed on that ortlon-of the River Oaks Garden Club
o&nlon.
I at naaes 1 55 and 856. which states that lg
exemption weie-accorded the-Ciub there would be no end of
exemptions accorded Club houses and meeting places ‘owned
by small groups of persons of common aesthetic interest
who associate themselves to promote and enjoy their
particular interests. The Court said at page 8561
I, .It 1s but a half stride from
the ari Gf gardening to the art of interior
decorating, and leas than a half stride to
the art of dramatics. Many other are but
a stride away.”
We think, for the reasons stated ln the last paragraph
on page 6, au ra that there Is a vast distinction between
the examples% a ove given by the Supreme Court and the caring
for the aged. We are still unable to distinguish the oc-
cupancy of homes for the elderly by some residents who pay
for their expenses and the occupancy of hospitals by some
paying patients. It Is true that the Court, in the,,ltlver Oaks
Garden Club case stated at page 856:
- 1700-
. . . .
Honorable Joe Resweber, Page 11 Opinion No. (C-357)
. .The fact that an oragnlsation performs
some charitable acts or engages In some charitable
activity is not enough to qualify it for the tax
exemption provided ln Sec. 2, Art. VIII of the
Constitution."
But the cases cited In support of this statement involved
organizations engaged, not only ln charitable activities,
but also in unrelated activities distinctly non-charitable
ln nature.
For these reasons we do not think the River Oaks Garden
Club case affects the holding of Opinion No. WW-1277 and th
iiince the Manor meets the requirements of Opinion No. WW-12f;;,
It is exempt from ad valorem taxes.
SUMMARY
-------
Under the submitted facts, Bayou Manor,
operated by Braeos Presbyterian Homes, Inc., a
charitable corporation, managing a home for
older adults In Houston Is an institution of
purely public charity and Is exempt from ad
valorem taxes.
Yours very truly,
WAGGONER CARR
Attorney General of Texas
L
47 aZ,Z~& II &mL lz,,
Rarietta NcGregorpa
Assistant Attorney GE&
MMcGP:sjl
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
W. E. Allen
Brady Coleman
George Black
APPROVEDFORKTRE ATTORNBY
GENERAL
BY: Stanton Stone
-1701-