South ½ Block 8 Venture v. Travis Central Appraisal District

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-23-00764-CV

South ½ Block 8 Venture, Appellant

v.

Travis Central Appraisal District, Appellee

FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-21-001040, THE HONORABLE MADELEINE CONNOR, JUDGE PRESIDING

OPINION

This case concerns whether a church’s equitable ownership and use of real property

can exempt that tract from property tax when another entity is the legal or deeded owner of that

tract. South ½ Block 8 Venture (Venture) claims that one of its partners—a church—has equitable

title to a parcel it conveyed to the Venture because the church can force the Venture to convey legal

title to the parcel back to the church. The Venture contends that the trial court erred by granting

Travis Central Appraisal District’s (TCAD’s) summary-judgment motion made on grounds that

the parcel is not owned by a religious organization. We will reverse the trial court’s judgment and

render judgment that the Church’s equitable ownership of one of the Venture’s parcels of real estate

plus the Church’s use of that parcel for religious purposes made it fully exempt from taxation under

the religious-organizations exemption. See Tex. Tax Code § 11.20.
BACKGROUND

The First Church of Christ, Scientist, Austin, Texas (“Church”), purchased a

building at 104 Trinity Street in Austin in 1993 (“the Parcel”). The Church converted the building

into a Christian Science Reading Room. A Church representative averred that the Church creates

reading rooms as quiet places for reading, study, prayer, and interactions between the public and

Christian Science. The denomination requires that each branch have a reading room. TCAD

granted the Church a religious-organizations exemption from property taxes on the Parcel for its

use of the building as the Reading Room. See Tex. Tax Code § 11.20.

In 2012, the Church formed the Venture, a partnership with two owners of adjacent

lots, whose land comprised the south half of Block 8 of the original City of Austin. Under the

partnership agreement, the partners were to convey to the Venture ownership of their land so the

Venture could “lease, sell, or otherwise turn [the south half of Block 8] into a joint income

producing property.” Each partner retained the power to manage the parcel each contributed to

the Venture, including making short-term rentals of the parcel they contributed until the partners

all agreed to a plan for the grouped properties. Each partner was liable for the costs and expenses

of operating the tract it contributed to the Venture and liable for acts on the tract each contributed.

The contributing owner had to indemnify other partners from any liability imposed on other

partners arising from the use of the contributor’s tract. If the Venture’s properties were sold as a

unit, the Church was to receive a one-sixth share of the net income or loss.

Any partner could withdraw at any time from the Venture on ten days’ written

notice; the agreement did not require a reason for the withdrawal and did not establish a penalty

for the withdrawal. On the effective date of withdrawal, the Venture was required to distribute to

the withdrawing partner the amounts and property the partner would have received if the Venture

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had wound up and liquidated that day. Such a windup and liquidation would require the Venture

to “convey back to the contributing partner the interest in the south ½ of Block 8 that the partner

conveyed to the partnership if the interest is still held” by the Venture.

In late 2014, the Church and the other Venture partners conveyed their tracts to the

Venture. The Parcel conveyed by the Church was leased by the Venture to the Church, which

continued to operate the Reading Room there until June 15, 2017.

The Church applied for a religious-organizations exemption on the Parcel in 2015.

Though TCAD initially denied that application, it reversed the denial and approved the exemption

for 2015. The exemption remained in effect until 2020, when TCAD revoked the exemption

retroactively to 2015. The revocation letter, sent to the Venture’s mailing address in Indiana, stated

that the “referenced exemption belonged to the previous owner and was left on the account

in error.”

The Appraisal Review Board heard the protest of “South ½ Block 8 Venture”

concerning the denial of the religious-organizations exemption for tax years 2015, 2016, and 2017.

The Appraisal Review Board adjusted the exemption to be 0% exempt in 2015 and 33.33% exempt

in 2016 and 2017, though the record does not reveal the basis for the distinction.

The Venture sued TCAD, seeking judicial review of the denial of the exemption,

describing itself as “the owner of real property” at 104 Trinity in Austin. 1 The Venture asserted

that the Parcel was “one hundred percent exempt . . . as property of a religious organization.” Both

parties filed traditional motions for summary judgment. TCAD argued that the Venture was not

entitled to the religious-organizations exemption for the Parcel because the Venture was not a

1
The Venture did not apply for a religious-organizations exemption on the other two
parcels that comprise the Venture’s property.
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religious organization; TCAD contended that the Venture—not the Church—owned the property

and that the Venture had an identity distinct from that of its component partners, including the

Church. The Venture responded that, because the Church could compel the Venture to return legal

title to the Church, the Church was the equitable owner of the Parcel; the Venture argued that the

Church’s equitable ownership and religious use of the Parcel as the Reading Room exempted the

Parcel from taxation.

The trial court granted TCAD’s motion and denied the Venture’s motion without

stating a basis for its decision.

APPLICABLE LAW

This appeal involves statutory and case law governing review of a summary

judgment, statutory construction, the property-tax exemption for religious organizations, and the

applicability of a court-recognized definition of “owner” that reaches beyond the name on the

property deed.

Where the trial court’s order does not specify the grounds for its summary

judgment, we must affirm the judgment if any theory presented to the trial court and preserved for

appellate review has merit. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.

2003). A movant who files a traditional summary-judgment motion must show that no genuine

issue of material fact exists and that it is entitled to judgment as a matter of law. Tex. R. Civ. P.

166a(c). To determine whether a movant established its right to summary judgment, we construe

the evidence in the light most favorable to the non-movant, crediting evidence favorable to the

nonmovant if a reasonable factfinder could and disregarding contrary evidence unless a reasonable

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factfinder could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844,

848 (Tex. 2009).

When cross-motions for summary judgment are filed, “[e]ach party bears the

burden of establishing that it is entitled to judgment as a matter of law.” Guynes v. Galveston

County, 861 S.W.2d 861, 862 (Tex. 1993). When reviewing a trial court’s rulings on cross-motions

for summary judgment, we review all the summary-judgment evidence, determine de novo all

issues presented, and render the judgment the trial court should have rendered. Merriman v. XTO

Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).

Statutory construction is a question of law that we review de novo. Southwest

Royalties, Inc. v. Hegar, 500 S.W.3d 400, 404 (Tex. 2016). Our primary objective is to give effect

to the Legislature’s intent, which we ascertain from the plain meaning of the words used in the

statute, if possible. Greater Houston P’ship v. Paxton, 468 S.W.3d 51, 58 (Tex. 2015). Tax

exemptions are narrowly construed, and the taxpayer has the burden to clearly show that an

exemption applies. See Davies v. Meyer, 541 S.W.2d 827, 829 (Tex. 1976); see also AHF-Arbors

at Huntsville I, LLC v. Walker Cnty. Appraisal Dist., 410 S.W.3d 831, 837 n.30 (Tex. 2012).

Religious organizations are entitled under certain conditions to exemption from

taxation of real property they own. See Tex. Tax Code § 11.20. As applicable here, the property

for which an exemption is sought must be used primarily as a place of regular religious worship

and be reasonably necessary for engaging in religious worship. Id. § 11.20(a)(1). Further, to

qualify as a religious organization entitled to an exemption, the organization must do the following:

(1) be organized and operated primarily for the purpose of engaging in religious
worship or promoting the spiritual development or well-being of individuals;

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(2) be operated in a way that does not result in accrual of distributable profits,
realization of private gain resulting from payment of compensation in excess of a
reasonable allowance for salary or other compensation for services rendered, or
realization of any other form of private gain;

(3) use its assets in performing the organization’s religious functions or the
religious functions of another religious organization; and

(4) by charter, bylaw, or other regulation adopted by the organization to govern its
affairs direct that on discontinuance of the organization by dissolution or otherwise
the assets are to be transferred to this state, the United States, or a charitable,
educational, religious, or other similar organization that is qualified as a charitable
organization under Section 501(c)(3), Internal Revenue Code of 1954, as amended.

Id. § 11.20(c).

The parties dispute the applicability of the Texas Supreme Court’s holding that a

property-tax exemption on land equitably owned by a community housing development

organization (CHDO) could be imputed to a non-CHDO legal-title holder. See AHF-Arbors,

410 S.W.3d at 839. An equitable owner is a party who has the present right to compel the legal-

title holder of land to convey its legal title to that party. Id. at 837. In AHF-Arbors, Atlantic

Housing Foundation, Inc. (Atlantic), was the sole member of both companies—AHF-Arbors at

Huntsville I, LLC and AHF-Arbors at Huntsville II, LLC—that held legal title to apartment

complexes in Texas. Id. at 834. The AHF-Arbors LLCs sought and were denied the CHDO

exemption for their properties, sued and lost on summary judgment, and lost on appeal. Id. The

trial court concluded that the AHF-Arbors LLCs had not proven that they were CHDOs or met any

of the related requirements. Id. The Texas Supreme Court reversed, noting that the Legislature

did not limit the term “own” to legal-title holders, id. at 836-37, and that Atlantic and the

AHF-Arbors LLCs were treated as one for federal income-tax purposes, id. at 839. The Texas

Supreme Court agreed with a lower court’s reasoning in a different case imputing an equitable

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owner’s CHDO status to its non-CHDO subsidiaries; the Texas Supreme Court noted that allowing

the exemption for equitable owners who are CHDOs was consistent with the purposes of the

exemption. Id. at 838-39 (citing TRQ Captain’s Landing v. Galveston Cent. Appraisal Dist.,

212 S.W.3d 726, 732 (Tex. App.—Houston [1st Dist.] 2006), aff’d, 423 S.W.3d 374 (Tex. 2014)).

The Texas Supreme Court concluded that, because Atlantic was a CHDO, completely controlled

the AHF-Arbors LLCs, and had complete control over the AHF-Arbors LLCs to compel transfer

of legal title to itself, Atlantic was the equitable owner of the property and that its CHDO status

could be imputed to the AHF-Arbors LLCs to obtain the property-tax exemption. Id.

DISCUSSION

This appeal turns on whether the religious-organizations exemption from property

tax is available based on an equitable owner’s status as a religious organization and its use of the

property, and whether a non-religious-organization legal-title holder can benefit from that tax

exemption. The Venture contends that the trial court erred by concluding that the Reading Room

is not owned by a religious organization and is not exempt from property taxes. The Venture

contends that the Church was an equitable owner of the Parcel and that its status as a religious

organization qualified the property for the religious-organizations exemption during taxable years

2015-17. TCAD defends its summary judgment on grounds that only religious organizations that

are legal-title holders are owners under the religious-organizations exemption; it argues that the

Venture was the legal-title holder, was not a religious organization, and was properly denied a

religious-organizations exemption on the Parcel. TCAD further argues that, even if the

equitable-title theory applies here, the Church does not hold equitable title because it does not have

the unqualified power to compel the Venture to convey legal title back to the Church.

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I. Religious organizations that are equitable owners of real property can, by their use of
the property for religious purposes, cause that property to qualify for a property-tax
exemption.

The Texas Tax Code allows tax exemptions for properties owned by various types

of entities and used for various specified purposes, including property owned by religious

organizations and by CHDOs. See Tex. Tax Code §§11.182 (CHDO exemption); .20 (religious-

organizations exemption); see generally id. §§ 11.11–.38 (other exemptions). But the Tax Code

does not expresssly define what type of “owner” merits such exemptions. See, e.g., id. §§ 1.04

(general definitions), 11.182 (CHDO exemptions), 11.20 (religious-organizations exemption). The

Texas Supreme Court has held that, for CHDOs, the terms “owner,” “owned,” and “owns” include

equitable ownership if the circumstances satisfy the other requirements for exemptions on

properties equitably owned by CHDOs. See AHF-Arbors, 410 S.W.3d at 837-39; see also Tex.

Tax Code § 11.182. The parties dispute whether the reasoning for the CHDO-related exemption

should be extended to the religious-organizations exemption.

In concluding that the term “owner” includes equitable owners, the Texas Supreme

Court relied on the equitable owner’s right to compel the legal-title holder to return legal title to

the equitable owner as well as the equitable owner’s general power to control the use of the

property to achieve the goals of the statute. See AHF-Arbors, 410 S.W.3d at 837, 839. The CHDO

tax exemption “provide[s] a tax exemption for the CHDO-controlled use of property for low-and

moderate-income housing without profit.” See id. at 837. As the CHDO exemption is intended to

encourage private investment in developing low-income housing and to allow charitable

organizations to operate with less revenue, the religious-organizations exemption is intended to

avoid taxation on a charitable organization so it can focus on its mission with reduced costs. See

id. (purposes for CHDO exemptions); Bexar Cnty. Appraisal Rev. Bd. v. First Baptist Church,

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846 S.W.2d 554, 558 (Tex. App.—San Antonio 1993, writ denied) (citing Walz v. Tax Comm’n,

397 U.S. 664, 673 (1970)). As discussed above, Atlantic, the CHDO, was the sole member of the

AHF-Arbors LLCs and had complete control of the LLCs, including the ability to require

conveyance of legal title to Atlantic. See AHF-Arbors, 410 S.W.3d at 839.

TCAD argues that equitable ownership is a limited exception to the general rule for

property-tax exemptions and should not be extended to the religious-organizations exemption,

citing a case declining to impose tax liability on equitable owners. See Bailey v. Cherokee Cnty.

Appraisal Dist., 862 S.W.2d 581, 584 (Tex. 1993) (“While it is true that the heirs hold equitable

title to estate property, this interest does not give rise to tax liability. The responsibility for taxes

lies with the administrator as holder of legal title.”) TCAD argues that the CHDO exemption is

distinct from the religious-organizations exemption in ways that make the inclusion of equitable

owners under AHF-Arbors inapplicable here. TCAD argues that the CHDO statute contemplated

a multi-layered ownership structure because of the realities of the commercial housing industry

and was intended to entice private funds to develop low-income housing. See AHF-Arbors,

410 S.W.3d at 839; see also Tex. Tax Code § 11.182(e). The religious-organizations exemption

has no similar focus on ownership structure or intent apparent in its terms. See Tex. Tax Code

§ 11.20. There is no evidence or argument that the federal government views the Church and the

Venture as a single entity for federal tax purposes—unlike its view of Atlantic and the AHF-Arbors

LLCs in AHF-Arbors, 410 S.W.3d at 834. TCAD argues that including equitable owners under

section 11.20 would ignore all formalities for conveying real estate and conflict with the text and

purpose of the statute. TCAD contends that the Legislature’s choice not to define “owners” as

including equitable owners is significant.

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We conclude that the terms “own,” “owners,” and their variants should have

consistent meaning within the property-tax exemptions provisions of the Tax Code. In construing

a statute, we may consider factors including the object sought to be obtained and the consequences

of a particular construction. See Tex. Gov’t Code § 311.023. We must presume that the Legislature

intended a just and reasonable result when enacting the statute. Id. § 311.021. We should not

assign a meaning to one statutory provision that would be inconsistent with other provisions of the

same act even if the provision, standing alone, might be susceptible to such a construction. Texas

Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002). We avoid disharmony within the

Tax Code by holding that the term “owner” and variations on that term are defined consistently

across the property-tax exemption provisions in Texas Tax Code Chapter 11. Interpreting the Tax

Code’s meaning of “owner” differently for different exemptions would inject disharmony and

inconsistency into the Tax Code. The purposes of the CHDO- and religion-related exemptions

regarding easing the tax burden on particular uses of property do not change based on whether the

CHDO or the religious organization is a legal or equitable owner. As the Texas Supreme Court

found no reason to deny a CHDO the benefits of the tax exemption based on its equitable-owner

status in AHF-Arbors, 410 S.W.3d at 839, we find no reason to deny the benefits of the tax

exemption to a religious organization using the property for religious purposes solely because it is

an equitable owner.

The trial court erred to the extent that it held that religious organizations that are

equitable, but not legal, owners of property used for religious purposes as a matter of law cannot

be owners entitled to a religious exemption from property tax.

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II. The Church is the equitable owner of the Parcel.

The Venture contends that the Church is the equitable owner of the Parcel as a

matter of law because the Church has the unqualified power to compel the Venture to convey legal

title to it. See AHF-Arbors, 410 S.W.3d at 837; TRQ, 212 S.W.3d at 737. TCAD counters that the

Church does not hold equitable title because (1) the deed made the Venture the clear legal-title

holder; (2) the Church does not automatically receive legal title at the expiration of the lease;

(3) the lease does not give the Church an unqualified purchase option; and (4) the Church does not

wholly own and control the legal-title holder, the Venture.

TCAD’s first three arguments are undisputed but irrelevant. The Venture’s

undisputed status as legal-title holder does not bar the Church from equitable ownership. See

generally AHF-Arbors, 410 S.W.3d at 837-39. The Church does not claim equitable ownership

under the lease or a right to purchase the Parcel but instead based on the right to compel

conveyance of legal title to itself.

TCAD contends that the Church’s role in the Venture and relationship to the

property do not reach the level of power and control that courts found gave CHDOs equitable

ownership and access to the CHDO-related exemption. See id. at 837-39; TRQ, 212 S.W.3d at

732; see also Harris Cnty. Appraisal Dist. v. Southeast Tex. Hous. Fin. Corp., 991 S.W.2d 18, 23

(Tex. App.—Amarillo 1998, no pet.). A parent company has equitable title to real property when

the parent company fully owns its subsidiary, the subsidiary holds legal title to real property, legal

title to the property reverts to the parent upon dissolution of the subsidiary, and the parent has the

power to dissolve the subsidiary at any time. TRQ, 212 S.W.3d at 732, cited with approval in

AHF-Arbors, 410 S.W.3d at 838-39; see also Southeast Texas Hous. Fin. Corp., 991 S.W.2d at 23.

Unlike the relationship between the CHDO and the legal-title holders in AHF-Arbors, the Church

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is not the parent or sole owner of the Venture, the Church does not have the exclusive power to

dissolve the Venture, the governing bodies of the Church and Venture are not identical, and there

is no evidence that the Church and the Venture are a single entity for income-tax purposes. See

AHF-Arbors, 410 S.W.3d at 834.

Nevertheless, we conclude that the Venture’s ownership structure and the Church’s

power to compel the return of title bring it within the scope of the AHF-Arbors definition of

“equitable owner” of the Parcel. See 410 S.W.3d at 837-39. Though the Church co-owns the

Venture with two others whose former properties the Venture also owns, the Venture was structured

so that the partners retained control over the tracts they contributed. The Church and its partners

were solely responsible for management of the tract they contributed, including making short-term

rentals and maintaining adequate insurance coverage on it (partnership agreement Section 3.1),

agreed to pay “the costs and expenses of the operation of the tract of land each contributed”

(Section 4.1); retained responsibility for debts, liabilities, obligations, and expenses regarding the

Parcel (Section 4.2); and were each allocated the income and expenses attributed to the rental of

their respective contributed tracts (Section 5.1). Any decision affecting the joint sale or lease of

all the tracts required unanimous consent of the partners (Section 3.1). These factors augment the

chief reason the Church is an equitable owner under the applied reasoning of AHF-Arbors—the

Church’s unqualified power to compel legal title by withdrawing from the Venture. Section 6.1 of

the Venture’s partnership agreement provides:

A partner may withdraw from the [Venture] at any time on ten days written notice
to that effect delivered to the other partners. Upon the effective date of withdrawal,
. . . the [Venture] must redeem and liquidate (and the withdrawing partner must
transfer) the withdrawing partner’s interest by distributing to the withdrawing
partner . . . the amounts and property that the partner would receive if the [Venture]
had wound up and liquidated on the date of withdrawal under Section 6.3.

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Under Section 6.3, “the Partnership must convey back to the contributing partner the interest in

the south ½ of Block 8 that the partner conveyed to the [Venture] if the interest is still held by the

[Venture].” These provisions are not a purchase agreement, but are an unqualified power to compel

a simple reconveyance upon an unqualified power to withdraw from the Venture. Thus, the Church

can compel the conveyance of legal title by exercising its unrestricted right to withdraw from the

Venture.

TCAD argues that this power to compel legal title is only a possibility of reverter

or contingent remainder, which are not taxable title interests (and thus not exempt). See Cypress

Fairbanks Indep. Sch. Dist. v. Glen W. Loggins, Inc., 115 S.W.3d 67, 70 (Tex. App.—San Antonio

2003, pet. denied) (defining “possibility of reverter” as grantor’s right to fee ownership reverting

if condition terminating determinable fee occurs); Texas Tpk. Co. v. Dallas County, 271 S.W.2d

400, 401-02 (Tex. 1954) (defining “contingent remainder” as condition where grantee’s right to

obtain title is dependent on performance of condition by grantor). Where a grantee’s right to obtain

title is “entirely dependent upon performance of conditions by the grantors,” the grantee’s right to

become the owner of legal title is not a vested interest, is purely contingent, and is not taxable.

Texas Tpk., 271 S.W.2d at 402.

But the Church’s right to regain legal title is not contingent on the actions of others.

In a CHDO-related case, the court of appeals held that the CHDO’s unqualified right to dissolve

the legal-title holder and compel the reversion of legal title to the CHDO showed that the CHDO

had “the present right to compel legal title to the apartments and thus holds equitable title to them.”

TRQ, 212 S.W.3d at 733, reasoning of case approved in AHF-Arbors, 410 S.W.3d at 839. TCAD

argues that the Church can compel return of legal title only if the Venture still possesses the Parcel,

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but that argument fails to defeat equitable ownership on practical grounds. Under the partnership

agreement, the Venture can dispose of the Parcel along with the others only with the Church’s

consent, and the Church retains the right to compel title until it consents to a transfer; if the Church

consented to a transfer to another party that was effectuated, it would have no claim to ownership

but would also not be liable for property tax or need an exemption. Unlike parties with a mere

possibility of reverter or a contingent remainder, the Church controls the circumstances under

which it can compel the Venture to return the Parcel to the Church; the Church needs no approval

or reason to exercise its right to exit the Venture. That is the essence of equitable title under

AHF-Arbors, 410 S.W.3d at 839.

The terms of the Venture’s partnership agreement show that the Church is the

equitable owner of the Parcel as a matter of law.

III. The Venture is entitled to the religious-organizations exemption on the Parcel.

While TCAD focused its argument on the equitable-ownership issue in defending

the summary judgment, the Venture must show as a matter of law that the Church—and by

imputation the Venture—is entitled to the religious-organizations exemption for its use of the

Parcel to prevail in this appeal and merit rendition of judgment in its favor,. See Tex. Tax Code

§ 11.20(c); cf. AHF-Arbors, 410 S.W.3d at 838-39. In light of the discussion above, we will review

the evidence regarding the Church’s nature and the use of the Parcel to determine whether, as a

matter of law, the Parcel was exempt from property tax during 2015, 2016, and 2017.

A. The evidence shows no dispute that the Church is a religious organization.

The Venture submitted evidence regarding each of the four elements necessary to

qualify an organization as “religious.” See id. § 11.20(c).

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• The Venture submitted evidence that the Church was organized and operated primarily for
the purpose of engaging in religious worship or promoting the spiritual development or
well-being of individuals. See id. § 11.20(c)(1). It introduced the statement from the
Church’s bylaws that the Church was formed “for the support of public worship according
to the teaching of Christian Science as set forth in the Bible” and other documents.

• The Venture submitted evidence that the Church was operated in a way that did not result
in accrual of distributable profits, realization of private gain resulting from payment of
compensation in excess of a reasonable allowance for salary or other compensation for
services rendered, or realization of any other form of private gain. See id. § 11.20(c)(2).

• The Venture introduced the section of the Church’s bylaws designating charitable uses for
Church funds. The Venture also submitted evidence of how it used its assets in performing
the organization’s religious functions or the religious functions of another religious
organization. See id. § 11.20(c)(3).

• The Venture also submitted evidence of the Church’s dissolution plan requiring the
Church’s assets to be distributed on dissolution to non-profit organizations as required by
law. See id. § 11.20(c)(4).

No evidence in the record challenges the Venture’s evidence on these elements.

The Venture’s unchallenged summary-judgment evidence reveals no genuine issue

of material fact regarding the Church’s status as a religious organization under the Texas Tax Code.

See id. § 11.20(c).

B. The record shows no dispute that the Parcel was used for religious purposes.

The Venture submitted evidence that the Reading Room was a use of the Parcel for

religious worship. The Tax Code defines “religious worship” as “individual or group ceremony or

meditation, education, and fellowship, the purpose of which is to manifest or develop reverence,

homage, and commitment in behalf of a religious faith.” Id. § 11.20(e). The Venture submitted

the affidavit of a Church representative who described the use of the Reading Room. He described

it as

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a quiet place for reading, study and prayer and an avenue for the public to come
into contact with Christian Science. It also offers Christian [S]cience books,
periodicals, and other media for sale. And also provides a place for quiet mediation
and prayer, where one may study the Bible and the Church’s denominational
textbook, Science and Health with Key to the Scriptures.

He also stated that each branch of the Church is required by its manual to have a Reading Room.

The Church purchased the Parcel in 1993, converted it into the Reading Room, and used it as the

Reading Room until June 15, 2017. The Church’s representative noted that the Parcel had been

fully exempt from property tax for decades before the transfer of legal title to the Venture; TCAD

did not revoke the exemption beyond the year after the transfer.

TCAD did not submit evidence challenging the religious nature of the use of the

Parcel as the Reading Room. There is no genuine issue of material fact regarding the use of the

Parcel for religious worship by its equitable owner, the Church, under the Texas Tax Code. See id.

§ 11.20(a), (e).

C. The Parcel is exempt from property tax.

TCAD observes that a partnership is treated as “an entity distinct from its partners.”

Tex. Bus. Orgs. Code § 152.056. TCAD argues that the Church’s status and use of the Parcel

should not be attributed to the Venture.

But the Texas Supreme Court was not troubled by the distinct identities of business

forms in AHF-Arbors, focusing instead on the exemption-qualifying entity’s control of the legal-

title holder and the use of the property. 410 S.W.3d at 837-39. The Church is an equitable owner

of the Parcel through its membership in the Venture, its responsibilities regarding the Parcel, and

its right to control the disposition of the Parcel. Cf. id. (considering Atlantic’s equitable ownership

of the AHF-Arbors LLCs’ deeded property). The Church’s nature and its use of the property entitle

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it to a religious-organizations property-tax exemption that can be imputed to the legal-title holder

of the Parcel, the Venture. Cf. id. at 839 (imputing CHDO property-tax exemption of equitable

owner of property to legal-title owners who were not CHDOs).

We sustain the Venture’s issue on appeal.

CONCLUSION

The trial court erred by granting TCAD’s motion for summary judgment. That

motion and judgment depended on a determination that the Parcel was not owned by a religious

organization during 2015, 2016, and 2017.

The trial court erred by denying the Venture’s motion for summary judgment. The

record lacks a genuine issue of material fact and shows as a matter of law that the Church is the

equitable owner of the Parcel, is a religious organization, and used the Parcel for religious purposes

during the disputed years 2015, 2016, and 2017.

We reverse the trial-court judgment. We render judgment that the Parcel was fully

exempt from property tax in 2015, 2016, and 2017.

__________________________________________

Darlene Byrne, Chief Justice

Before Chief Justice Byrne, Justices Theofanis and Ellis

Reversed and Rendered

Filed: November 26, 2025

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