Can a group other than a chamber of commerce get Texas's 'community business organization' property tax exemption?

Plain-English summary

State Senator Mike Jackson, who chaired the Senate Committee on Economic Development, asked the Attorney General whether local boards of realtors qualify for a property tax exemption the Legislature created in 2009. Tax Code section 11.231 exempts the property of a "nonprofit community business organization." The senator said his original intent was to let chambers of commerce spend money on local economic development rather than property taxes, and several appraisal districts had since seen local realtor boards applying for the exemption.

The opinion drew a clear line between the legal standard and the factual call. Whether any specific property is tax exempt is a fact question that the Attorney General does not decide, and the statute puts that determination in the first instance with the chief appraiser of the appraisal district where the property sits. So the opinion would not say whether a realtor board, or any other particular organization, actually qualifies.

What the opinion could do was read the statute. Section 11.231(a) lists detailed requirements: the organization must have existed at least five years, be a nonprofit corporation and a 501(c)(6) entity (but not statewide), have kept at least 50 dues-paying members for three years, have an uncompensated member-elected board, be primarily supported by dues, not be tied to a political action committee, and be engaged primarily in one of the economic-development functions in subsection (d), promoting the common economic interests of commercial enterprises, improving business conditions, or otherwise aiding economic development. The opinion stressed the word "primarily," meaning the entity's chief or principal purpose must be one of those functions. As for the senator's stated intent, the opinion noted that under Texas Supreme Court precedent a single legislator's statement does not control, and where the text is clear the text governs. The statute grants the exemption to a "nonprofit community business organization," not specifically to a "chamber of commerce," and nothing in the text limits it to chambers. So an entity that is not a chamber of commerce but otherwise meets the requirements, as the chief appraiser determines, qualifies.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

The senator and the Legislature (as the opinion held for them): The opinion told the senator that, despite his stated intent to benefit chambers of commerce, the text of section 11.231 controls and does not limit the exemption to chambers; an entity that meets the listed requirements and is primarily engaged in the economic-development functions qualifies.

Appraisal districts and chief appraisers (as the opinion described their role): The opinion described the chief appraiser as the official charged in the first instance with deciding whether a given organization meets section 11.231, including whether its preeminent purpose is one of the listed functions.

On whether a realtor board qualifies (where the opinion stopped): The opinion expressly declined to decide whether a local board of realtors, or any specific organization, qualifies, calling that a question of fact outside the opinion process. Readers should not treat this page as a ruling that realtor boards do or do not get the exemption.

Common questions

Is the section 11.231 property tax exemption only for chambers of commerce?
According to the opinion, no. The exemption goes to a "nonprofit community business organization," and the opinion found nothing in the text limiting it to chambers of commerce.

What does an organization have to show to qualify?
The opinion listed the section 11.231(a) requirements (five years in existence, 501(c)(6) nonprofit, at least 50 dues-paying members for three years, an uncompensated member-elected board, primary support from dues, no PAC ties) plus being engaged primarily in one of the subsection (d) economic-development functions.

Does a local board of realtors qualify?
The opinion did not say. Whether a particular organization qualifies is a fact question for the chief appraiser, not something the Attorney General decides.

Why doesn't the senator's stated intent settle it?
The opinion explained that under Texas Supreme Court precedent the statement of a single legislator does not determine legislative intent, and where the statutory text is clear, the text controls.

Background and statutory framework

Section 11.231 of the Tax Code, added by the Eighty-first Legislature, exempts the property of a "nonprofit community business organization." Tex. Tax Code Ann. § 11.231 (West Supp. 2010). Subsection (a) sets the eligibility requirements and subsection (d) lists the economic-development functions the organization must primarily perform. Id. § 11.231(a); id. § 11.231(d); id. § 11.231(a)(4)(C). The chief appraiser determines each applicant's right to an exemption. Id. § 11.45(a) (West 2008). Statutory terms are read in context and by common usage, Tex. Gov't Code Ann. § 311.011(a) (West 2005), and statutes are presumed constitutional, id. § 311.021(1) (West 2005).

The opinion relied on cases recognizing the chief appraiser's role and strict construction of tax exemptions, and on plain-text statutory construction: Nootsie Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1996); St. Joseph Orthodox Christian Church v. Spring Branch Indep. Sch. Dist., 110 S.W.3d 477, 479 n.6 (Tex. App.-Houston [14th Dist.] 2003, no pet.); AT&T Commc'ns of Tex., L.P. v. Sw. Bell Tel. Co., 186 S.W.3d 517, 528-29 (Tex. 2006); Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009); and N. Alamo Water Supply Corp. v. Willacy Cnty. Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991).

Citations

Cases:

• Nootsie Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1996)
• St. Joseph Orthodox Christian Church v. Spring Branch Indep. Sch. Dist., 110 S.W.3d 477, 479 n.6 (Tex. App.-Houston [14th Dist.] 2003, no pet.)
• AT&T Commc'ns of Tex., L.P. v. Sw. Bell Tel. Co., 186 S.W.3d 517, 528-29 (Tex. 2006)
• Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009)
• N. Alamo Water Supply Corp. v. Willacy Cnty. Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991)

Statutes:

• Tex. Tax Code Ann. § 11.231 (West Supp. 2010)
• Tex. Tax Code Ann. § 11.231(a)
• Tex. Tax Code Ann. § 11.231(d)
• Tex. Tax Code Ann. § 11.231(a)(4)(C)
• Tex. Tax Code Ann. § 11.45(a) (West 2008)
• Tex. Gov't Code Ann. § 311.021(1) (West 2005)
• Tex. Gov't Code Ann. § 311.011(a) (West 2005)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0890
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2011/ga0890.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

October 28, 2011

The Honorable Mike Jackson Opinion No. GA-0890
Chair, Committee on Economic Development
Texas State Senate Re: Whether a local board of realtors is a
Post Office Box 12068 "nonprofit community business organization" for
Austin, Texas 78711-2068 purposes of section 11.231 of the Tax Code
(RQ-0970-GA)

Dear Senator Jackson:

You ask whether local boards of realtors qualify for the property tax exemption the Legislature created in section 11.231, Texas Tax Code.[1] Added in the Eighty-first Legislature, section 11.231 provides a property tax exemption for "nonprofit community business organizations." TEX. TAX CODE ANN. § 11.231 (West Supp. 2010); see Act of May 31, 2009, 81st Leg., R.S., ch. 1417, § 3, 2009 Tex. Gen. Laws 4472, 4474-75. You tell us that "[s]everal appraisal districts around the state ... have encountered local realtor boards applying for this exemption." Request Letter at 1. You state that your original intent in adopting the provision was to allow "chambers of commerce to spend money on local economic development initiatives rather than property taxes." Id.

"The question whether a particular property is exempt from taxation depends on the facts of the particular situation." Tex. Att'y Gen. Op. No. GA-0827 (2010) at 2. This office does not determine questions of fact, and we therefore cannot ultimately determine whether a tax exemption applies. See Tex. Att'y Gen. Op. No. GA-0485 (2006) at 4 (recognizing that question of property tax exemption involves questions of fact and is outside the purview of an attorney general opinion). Moreover, the chief appraiser of the appraisal district in which the property is located is statutorily charged in the first instance with determining whether property is tax exempt. See TEX. TAX CODE ANN. § 11.45(a) (West 2008) ("The chief appraiser shall determine ... each applicant's right to an exemption."); see also St. Joseph Orthodox Christian Church v. Spring Branch Indep. Sch. Dist., 110 S.W.3d 477, 479 n.6 (Tex. App.-Houston [14th Dist.] 2003, no pet.) (recognizing that chief appraiser initially determines right to a tax exemption). Thus, we cannot definitively determine whether any particular organization, including a local board of realtors, qualifies for the exemption under section 11.231. We can, however, address in general terms the legal issues raised by your request.

Subsection 11.231(a) defines a "nonprofit community business organization" to be an organization that meets certain requirements. See TEX. TAX CODE ANN. § 11.231 (West Supp. 2010). Specifically, the Legislature required that qualifying organizations must (1) have been in existence for at least the preceding five years; (2) be organized as a nonprofit corporation and as a 501(c)(6) organization, but not be a statewide organization; (3) have maintained, for at least the preceding three years, a dues-paying membership of at least 50 members; and (4) have an uncompensated, member-elected board of directors, be primarily supported by membership dues, not support or be supported by a political action committee, and be "engaged primarily in performing functions listed in Subsection (d)." Id. § 11.231(a) (emphasis added). In addition to the above requirements, subsection 11.231(d) further requires that

[t]o qualify for an exemption under this section, a nonprofit community business organization must be engaged primarily in performing one or more of the following functions in the local community:

(1) promoting the common economic interests of commercial enterprises;

(2) improving the business conditions of one or more types of businesses; or

(3) otherwise providing services to aid in economic development.

Id. § 11.231(d) (emphasis added).

Under the plain language of subsection 11.231(a), in order to receive the tax exemption an entity must be "engaged primarily in" performing one of the functions listed in subsection 11.231(d). See id. § 11.231(a)(4)(C). Section 11.231 emphasizes the word "primarily" by repeating it in the requirements listed in both subsection 11.231(a) and in the list of particular economic development functions in subsection 11.231(d). See id. § 11.231(a), (d). Absent a specific definition in the Tax Code or a judicial opinion construing the provision, we consider the ordinary meaning of the word "primarily." See TEX. GOV'T CODE ANN. § 311.011(a) (West 2005) ("Words and phrases shall be read in context and construed according to the rules of grammar and common usage."). In its most common usage, the term "primarily" means: "In the first place, first of all, preeminently, chiefly, principally; essentially." OXFORD ENGLISH DICTIONARY 472 (2d ed. 1989). As the term is used in the context of the statute, we believe an entity is primarily engaged in performing one of the functions listed in subsection 11.231(d) if the entity's preeminent, chief, or principal purpose is performing that function.

You indicate that your intent was to provide an exemption for local chambers of commerce. See Request Letter at 1. Although that statement may manifest your intent, the Texas Supreme Court has ruled that the statement of a single legislator does not determine legislative intent. See AT&T Commc'ns of Tex., L.P. v. Sw. Bell Tel. Co., 186 S.W.3d 517, 528-29 (Tex. 2006). The Texas Supreme Court has further stated that "[w]here [the] text is clear, text is determinative of [legislative] intent." Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009). Accordingly, we are required to rely on the plain text of the statute, which grants the exemption not to a "chamber of commerce" but to a "nonprofit community business organization." TEX. TAX CODE ANN. § 11.231(a) (West Supp. 2010). There is no indication in the text of section 11.231 that the exemption was meant exclusively for a chamber of commerce.

Under the plain language of section 11.231, an entity that is not a chamber of commerce but that otherwise satisfies the elements in subsections 11.231(a) and 11.231(d), as determined by the chief appraiser, is a "nonprofit community business organization" that qualifies for the exemption. Whether an entity's preeminent, chief, or principal purpose is the performance of one of the particular economic development activities specified in subsection 11.231(d) is a question of fact outside the scope of the opinion process.[2] Tex. Att'y Gen. Op. No. GA-0827 (2010) at 2.

SUMMARY

Under section 11.231, Texas Tax Code, an entity that is engaged primarily in performing one of the section's listed economic development functions, as determined by the chief tax appraiser, is a "nonprofit community business organization" that qualifies for the property tax exemption set forth in the section.

Very truly yours,

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee

[1] See Letter from the Honorable Mike Jackson, Chair, Committee on Economic Development, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas at 1 (May 10, 2011), https://www.oag.state.tx.us/opin/index_rq.shtml ("Request Letter"). Briefing we received in connection with your request asks us to consider section 11.231's constitutionality. Brief from Jon Miller, Law Offices of Rodgers & Miller, P.C., to Jason Boatright, Chair, Opinion Committee at 1, 3 (Oct. 18, 2011). We limit this opinion to the question you have asked about the interpretation of section 11.231, presuming, as a court is required to do, that the statute is constitutional. See TEX. GOV'T CODE ANN. § 311.021(1) (West 2005) (stating that the Legislature intends statutes to be constitutional); Nootsie Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1996) (presuming that a statute is constitutional); see also Tex. Att'y Gen. Op. No. GA-0762 (2010) at 4 n.5 (noting that opinions are limited to the specific question asked by an authorized requestor).

[2] As indicated earlier, the chief appraiser of the appraisal district in which the property is located is charged in the first instance with determining whether property is tax exempt. TEX. TAX CODE ANN. § 11.45(a) (West 2008); see also N. Alamo Water Supply Corp. v. Willacy Cnty. Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991) ("Statutory exemptions from taxation are subject to strict construction because they undermine equality and uniformity by placing a greater burden on some taxpaying businesses and individuals rather than placing the burden on all taxpayers equally. Accordingly, the burden of proof clearly showing that the organization falls within the statutory exemption is on the claimant.") (citations omitted).