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Inc. v. Galveston Central Appraisal District

Court of Appeals of Texas, Fourteenth District

July 23, 2019

ODYSSEY 2020 ACADEMY, INC., Appellant
v.
GALVESTON CENTRAL APPRAISAL DISTRICT, Appellee

          On Appeal from the 212th District Court Galveston County, Texas Trial Court Cause No. 17-CV-1133

          Panel consists of Chief Justice Frost and Justices Jewell and Bourliot.

          OPINION

          KEVIN JEWELL, JUSTICE

         Odyssey 2020 Academy, Inc., an open-enrollment charter school, appeals from a summary judgment denying it an ad valorem tax exemption. Odyssey contends the trial court erred in granting summary judgment in favor of appellee Galveston Central Appraisal District and in denying Odyssey declaratory relief. For the claimed exemption to apply, the property at issue, at a minimum, must be owned by the State of Texas or a political subdivision of the State. Because we conclude the property is not so owned, we affirm the trial court's judgment.

         Background

         Odyssey is an open-enrollment charter school that is part of the Texas public school system.[1] Odyssey's campus at issue is located on real property in Galveston County. Odyssey subleases the relevant part of the property from a private entity, HEB Grocery Company, LP ("HEB"), which leases it from another private entity or entities.[2] Under the sublease agreement between Odyssey and HEB, Odyssey is obligated to pay and remain current on ad valorem taxes assessed on the Property.

         In December 2016, Odyssey notified the Galveston Central Appraisal District (the "District") that it claimed the Property was exempt from ad valorem taxes under Texas Tax Code section 11.11. That section, entitled "Public Property," provides that "property owned by this state or a political subdivision of this state is exempt from taxation if the property is used for public purposes." See Tex. Tax Code § 11.11(a). Odyssey asserts, and the District agrees, that Odyssey has used the Property exclusively as a public school. As to whether the Property is owned by the State or one of its political subdivisions, Odyssey directed the District to Education Code section 12.128(a), which provides:

(a) Property purchased or leased with funds received by a charter holder . . .:
(1) is considered to be public property for all purposes under state law;
(2) is property of this state held in trust by the charter holder for the benefit of the students of the open-enrollment charter school; and
(3) may be used only for a purpose for which a school district may use school district property.

Tex. Educ. Code § 12.128(a).

         According to Odyssey, Education Code section 12.128 supports its request for a tax exemption because (1) Odyssey receives its funding from the State of Texas through the Foundation School Program[3] and (2) uses that state funding to make payments under the sublease. Thus, Odyssey argued to the District that the Property, being leased with state funds, is considered to be "public property for all purposes under state law." See id. Consequently, Odyssey contended the Property is "owned by this state" and is exempt from taxation under Tax Code section 11.11. Odyssey did not assert that it is a State agency itself or a political subdivision of the State for tax purposes.

         Based on the above rationale, Odyssey asserted exempt status for the Property beginning on July 31, 2009, [4] and continuing for "all subsequent and future tax years until such time as the Property ceases to be eligible for tax-exempt status." Odyssey also sought a refund of all personal ...


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