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Click here for the full text of this decision FACTS:This dispute centers around the Captain’s Landing Apartments (apartments), an apartment complex located in Galveston. In 1998, the apartments were purchased by TRQ Captain’s Landing LP (TRQ), who acquired them by special warranty deed from WHUD Real Estate LP (WHUD). In December 2003, American Housing Foundation (AHF) obtained ownership and control of TRQ through a wholly owned subsidiary, CD Captain’s Landing LLC (CD). In sum, following the relevant December 2003 transactions, AHF possessed a 100 percent interest in CD, TRQ’s limited partner; CD owned 99 percent of TRQ and 100 percent of TRQ Galveston, LLC; TRQ Galveston, the general partner of TRQ, owned the remaining 1 percent interest in TRQ; and, at all times, TRQ, through the special warranty deed it acquired from WHUD, continued to hold legal title to the apartments. The transactions described above were completed on Dec. 30, 2003. That same day, CD filed an application with the appraisal district seeking a 2003 ad valorem tax exemption for the apartments pursuant to �11.182 of the Texas Tax Code. Section 11.182 allows an organization qualifying as a Community Housing Development Organization (CHDO) to claim an exemption from ad valorem taxes if it meets the requirements of a charitable organization provided by ��11.18(e) and (f) of the Texas Tax Code; own the property for the purpose of building or repairing housing on the property to sell without profit or rent to low-income or moderate-income individuals or families satisfying certain eligibility requirements; and engage exclusively in the building, repair, and sale or rental of such housing and related activities. CD’s tax exemption application asserted that because 1. AHF would be entitled to an exemption for the apartments if it held legal title to them; 2. AHF owned a full interest in CD, the taxpayer, which owned a full interest in TRQ, the holder of legal title to the apartments; and 3. CD was entitled to the exemption. In essence, then, the application contended that the exemption should be imputed through the partnership chain and back to AHF. On April 5, 2004, the appraisal district denied CD’s application for an exemption. The district’s letter of denial stated that CD’s application had been rejected because the “applicant does not own the property.” On April 19, 2004, appellants filed a notice of protest with the district challenging its decision to deny the application. The district, after a hearing, denied appellant’s protest on July 6, 2004. Appellants then brought suit in district court seeking judicial review of the appraisal district’s denial of their application. Appellants’ original petition asserted that the appraisal district erred in concluding that AHF did not own the apartments, and it sought a declaratory judgment delineating appellants’ rights under �11.182 of the Texas Tax Code. In April 2005, the trial court granted the appraisal district’s motion for summary judgment and denied appellant’s cross-motion for partial summary judgment. This appeal followed. HOLDING:Reversed and remanded. Appellant presented present two issues on appeal: Whether equitable owners of property may obtain ad valorem tax exemptions pursuant to �11.182(b) of the Texas Tax Code; and whether �11.436 of the Texas Tax Code provides an exception extending the filing deadline for organizations which acquire property that qualifies for a �11.182 exemption to file an application for the exemption. First, the court stated that reversion of legal title for the apartments could be effectively compelled from TRQ to AHF at AHF’s behest. As a result, the court concluded that AHF has the present right to compel legal title to the apartments and thus holds equitable title to them. As the court read the CHDO statute, it stated that it would be inconsistent with the intent of the Legislature to interpret �11.182(b) in such a way that AHF, which holds equitable title to the apartments, would be ineligible to receive a tax exemption that it would otherwise qualify for if it held legal title to the apartments. The court stated: “The Legislature enacted section 11.182(b) in 1997 to promote the availability of low-income housing through the provision of tax exemptions for certain charitable organizations . . . . To tax TRQ separately, even though it is wholly owned and controlled by an exempt entity (AHF), would defeat the Legislature’s purpose in enacting section 11.182.” The court interpreted �11.182(b) to mean that an organization seeking an exemption on a property owned by a limited partner and built before Dec. 31, 2001 need not show that it controls a 100 percent interest in the limited partnership’s general partner. Rather, the court held that such organizations need only show that they own the property equitably or legally. Having held that AHF equitably owns the apartments, the court similarly held that AHF acquired the apartments for the purposes of �11.436 when AHF obtained an effective controlling interest in TRQ. It was not until the apartments were acquired by AHF that AHF qualified for an exemption under �11.182. Therefore, the court concluded that, pursuant to �11.436, AHF had 30 days from Dec. 30, 2003, in which to file its application for a tax exemption. OPINION:Keyes, J.; Keyes and Alcala, J.J. DISSENT:Bland, J. “Classifying business investors as equitable owners of property held by the businesses in which they invest departs from the general rule that the legal title holder is the owner for property tax purposes and creates uncertainty as to the real property rights and obligations of Texas business entities. The trial court correctly ruled that the property tax must be paid. I therefore respectfully dissent.”

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