
    HAYS COUNTY APPRAISAL DISTRICT, Appellant, v. SOUTHWEST TEXAS STATE UNIVERSITY and Southwest Texas State University Support Foundation, Appellees.
    No. 03-97-00603-CV.
    Court of Appeals of Texas, Austin.
    July 16, 1998.
    
      Lee Vickers, Overstreet, Winn & Edwards, P.C., Austin, for Appellant.
    Dan Morales, Atty. Gen., Terence L. Thompson, Asst. Atty., Gen., General Litigation Division, Austin, for Appellees.
    Before YEAKEL, C.J., and ABOUSSIE and JONES, JJ.
   JONES, Justice.

Southwest Texas . State University (“University”) and Southwest Texas State University Support Foundation (“Foundation”), ap-pellees, sued Hays County Appraisal District (“Appraisal District”), appellant, seeking to establish that certain property owned by the Foundation was exempt from taxation for the years 1992 through 1996. Following a trial to the court, the district court rendered judgment that the property was entitled to a partial exemption from property taxation. On appeal, the Appraisal District complains that the trial court erred in granting a partial exemption for the tax years in question. We will reverse the trial court’s judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In June 1991, the Foundation, a nonprofit Texas corporation, purchased property commonly known as the Fire Station Building in San Marcos, Texas, along with a nearby parking lot. The Fire Station Building has three stories. The first floor had office space and common areas such as the entrance, waiting room, conference room, copy room, kitchen, and bathrooms. The second floor contained a recording studio, offices, and rehearsal areas. The third floor consisted of men’s and women’s' locker room facilities. The parking lot is one block away and has fifty-one parking spaces. The properties were acquired by the Foundation in anticipation of the University’s developing a new academic program’in “sound recording technology.”

On December 1, 1992, the entire Fire Station Building and parking lot were leased by the Foundation to the University. The lease was for an initial three-year term, with an automatic extension for a ten-and-one-half-year term. Under the terms of the lease, the University was made liable for any taxes assessed against the property and was given the right to sublet the premises. The University subleased the first floor offices to local attorneys, who operated their private practices out of the offices. The recording studio on the second floor was operated commercially as well as in conjunction with the University’s sound recording technology program. Most of the parking lot was also subleased to commercial tenants for a monthly fee.

The University and the Foundation filed a protest with the appraisal review board of the Appraisal District requesting exemption status for the building and parking lot. The review board denied the exemption. Appel-lees filed an appeal of the review board’s decision to the Hays County district court. See Tex. Tax Code § 42.06 (West 1992). The district court ruled that the University and Foundation were entitled to an eighty percent exemption on the building and a one-third exemption on the parking lot because roughly eighty percent of the building and one-third of the parking lot were being used tor the benefit of the University. The Appraisal District perfected this appeal.

DISCUSSION

In point of error one, the Appraisal District argues that the tidal court erred in concluding that the building and parking lot were entitled to any exemption because each property was privately owned and was leased for compensation to one or more private businesses to be used for purposes not related to the performance of duties and functions of the University. A trial court’s conclusions of law are reviewed de novo. University of Texas Law Sch. v. Texas Legal Foundation, 958 S.W.2d 479, 481 (Tex.App.—Austin 1997, no pet.).

All real property in this state is taxable unless exempt as required or permitted by the Texas Constitution. Tex. Const, art. VIII, § 1(b). Statutes creating tax exemptions are to be construed strictly in favor of taxation. See Hilltop Village, Inc. v. Kerrville Ind. Sch. Dist., 426 S.W.2d 943, 948 (Tex.1968); Texas Util. Elec. Co. v. Sharp, 962 S.W.2d 723, 726 (Tex.App. — Austin 1998, pet. denied). Two constitutional provisions are identified as sources for the exemption here: article VIII, section 2 and article XI, section 9.

I. Article VIII, Section 2

“[T]he legislature may, by general laws, exempt from taxation public property used for public purposes.” Tex. Const, art. VIII, § 2(a). Because this provision only applies to “public property,” we will first determine whether the properties at issue here eonsti-tute public property. See Leander Ind. Sch. Dist. v. Cedar Park Water Supply Corp., 479 s.W.2d 908, 912 (Tex.1972) (article VIII, section 2 authorizes legislature to exempt only publicly owned property).

The Texas Supreme Court has concluded that, for tax-exemption purposes, public ownership must grow out of the facts; it is a legal status, based on the facts, that may not be created or conferred by mere legislative declaration. Texas Turnpike Co. v. Dallas County, 153 Tex. 474, 271 S.W.2d 400, 402 (1954). In Texas Turnpike, the petitioners were chartered as private corporations for the purpose of building, acquiring, owning, and maintaining toll roads within the State of Texas. 271 S.W.2d at 401. Petitioners contended that various statutes, considered with the corporations’ bylaws and certain escrow agreements, had the effect of placing taxable title to their property in the state. Id. The court noted that petitioners had conveyed legal title to the state in escrow, with deeds to be delivered upon certain conditions, some of which might never occur or exist. Id. at 402. The burden of taxation was held to rest upon the equitable title. Id. The court emphasized that, under the facts of that ease, the conditions for compelling conveyance of legal title were not within the power of the state as grantee, but depended entirely on performance by petitioners. Id. The conditions remained merely possibilities, and as long as the state’s interest in the property was purely contingent, equitable title and taxable ownership were in the petitioners rather than the state. Id.

In the present case, the property is owned by the Foundation, which is not a government entity but a private, nonprofit Texas corporation. Although the foundation is the mortgagor and makes the mortgage payments, appellees assert that the Foundation will pass title to the property to the University upon full payment of the mortgage. But the only agreement between the Foundation and the University in the record is the lease agreement, which is silent on the issue of transfer of title. At a.meeting of the trustees of the Foundation on July 15, 1996, the trustees approved a resolution of intent stating that the Foundation “reaffirms its original intent and expresses again its present intent to donate the Fire Station Studio property to Southwest Texas State University when the Foundation completes paying the note used to acquire the property.” Ap-pellees present no authority, however, under which such a resolution of intent establishes a legally enforceable obligation to transfer title. It is not enough that the Foundation currently intends to one day transfer title to the University. As long as the University’s interest in the property is contingent, taxable ownership is in the Foundation rather than the University.

Appellees cite Texas Department of Corrections v. Anderson County, 834 S.W.2d 130 (Tex.App.—Tyler 1992, writ denied), as support for their argument. In that case, however, it was undisputed that the state would acquire full legal title from the private nonprofit organization involved when all of its “lease” payments were made, and that the state would be able to compel delivery.of legal title at that time. Id. at 131. Thus, the state’s interest in the property was similar to the “equitable right”—as distinguished from equitable title—that arises from a contract for deed. See Johnson v. Wood, 138 Tex. 106, 157 S.W.2d 146, 148 (1941), and Graves v. Diehl, 958 S.W.2d 468, 471-72 (Tex.App.— Houston [14th Dist.] 1997, no pet.). Whether the proper standard for determination of public ownership is “equitable title” or “equitable right,” however, the University in the present case meets neither. The payment of the mortgage depends entirely on performance by the Foundation, and even if the mortgage were eventually paid off, there is no basis presented by which the University could compel the Foundation to deliver title.

Appellees also assert that the building and parking lot are public property because section 11.11 of the Tax Code, which is entitled “Public Property,” discusses property held or maintained for the benefit of a university, thereby implying that the legislature considers this type of property to be public. However, the heading of a title, chapter, subchapter, or section does not limit or expand the meaning of a statute. See Tex. Gov’t Code Ann. § 311.024 (West 1988). Status as publicly owned property is determined by the facts surrounding the property ownership, not implications of statutory headings. See Texas Turnpike, 271 S.W.2d at 402. We conclude that the property here is not public property. Accordingly, appel-lees may not rely on the exemption authorized by article VIII, section 2 of the Texas Constitution.

II. Article XI, Section 9

Another potential source for the claimed exemption is article XI, section 9, which states: “The propérty of counties, cities and towns, owned and held only for public purposes, ... and all other property devoted exclusively to the use and benefit of the public shall be exempt from forced sale and from taxation_” Tex. Const, art. XI, § 9. The Texas Supreme Court has held that this provision extends to property held by government agencies. See Satterlee v. Gulf Coast Waste Disposal Auth., 576 S.W.2d 773, 779 (Tex.1978); Lower Colorado River Auth. v. Chemical Bank & Trust Co., 144 Tex. 326, 190 S.W.2d 48, 51 (1945). However, appel-lees point to no case that extends the exemption created in article XI, section 9 to property that is not publicly owned. See Central Appraisal Dist. v. Pecan Valley Facilities, Inc., 704 S.W.2d 86, 89 (Tex.App.—Eastland 1985, writ ref d n.r.e.) (private nonprofit Texas corporation not entitled to exemption under article XI, section 9). We decline to extend the exemption of this article to nonpublic property. See Leander Ind. Sch. Dist., 479 S.W.2d at 912-13 (“the framers of the Constitution provided in Art. VIII, Sec. 2, that the Legislature might exempt public property used for public purposes.... [T]hey provided in Art XI, Sec. 9, that all such property would be automatically exempt from taxation_”).

Moreover, by the phrases “held only for public purposes” and “devoted exclusively to the use and benefit of the public,” article XI, section 9 requires that the public use of the property be exclusive. Governmental receipt and use of proceeds arising from commercial usage of the property does not, under article XI, section 9, qualify the use of the property itself as public. See City of Beaumont v. Fertitta, 415 S.W.2d 902, 908 (Tex.1967). Here the trial court found — and no party challenges — that approximately twenty percent of the building and two-thirds of the parking lot were leased for activities unrelated to the functions of the University during the relevant period. Thus, because the property was not held only for public purposes, nor devoted exclusively to the use and benefit of the public, appellees are precluded from relying on article XI, section 9 as the basis for tax exemption. See Satterlee, 576 S.W.2d at 779; Pecan Valley, 704 S.W.2d at 89-90.

Finally, appellees argue that, because eighty percent of the building was used for public purposes, the trial court was authorized to allow a partial exemption. They point to Highland Church of Christ v. Powell, 644 S.W.2d 177 (Tex.App.— Eastland 1982, writ ref'd n.r.e.), as support for this proposition. In Highland Church, the court allowed an exemption for the thirty-five percent of the building that the jury found to be used as an “actual place of religious worship.” Id. at 182. The “place of worship” exemption, however, is not based on article XI, section 9 of the Texas Constitution (which requires exclusive public use), but on Tax Code section 11.20 as authorized by article VIII, section 2 (which does not require exclusive public use). We therefore reject the procedure of subdividing property to determine whether part of the property’s use is exclusive for the purposes of article XI, section 9 of the Texas Constitution. We sustain point of error one.

CONCLUSION

Because we conclude that the Fire Station Building and parking lot are not public property and are not dedicated exclusively for public use, neither article VIII, section 2 nor article XI, section 9 provides for the exemption appellees seek. We reverse the trial court’s judgment and render judgment denying appellees any property-tax exemption for the Fire Station Building and parking lot for the years 1992-1996. 
      
      . Under authority of this provision, the legislature enacted an exemption for "property that is held or dedicated for the support, maintenance, or benefit of an institution of higher education ... .but is not rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the performance of the duties and function of the state or institution.” Tex. Tax Code Ann. § 11.11(e) (West 1992).
     
      
      . Although Texas Turnpike arose under article XI, section 9 of the Texas Constitution, the court’s discussion of public ownership seems to us equally applicable to article VIII, section 2.
     
      
      .It has been held that “equitable title” is such title as will support an action of trespass to try title and arises when, for example, a contract for the purchase of property has been fully performed by the purchaser. See Johnson v. Wood, 138 Tex. 106, 157 S.W.2d 146, 148 (1941); Graves v. Diehl, 958 S.W.2d 468, 471-72 (Tex.App.—Houston [14th Dist.] 1997, no pet.).
     
      
      . Appellees also identify chapter 2165 of the Texas Government Code as a basis for not requiring exclusive public use of the property. See Tex. Gov't Code Ann. § 2165.203 (West 1998). That provision, however, applies only to state-owned buildings. Id. § 2165.202. Because we have concluded the property here is not owned by the state, chapter 2165 does not apply.
     
      
      . The Appraisal District actually asserts that the evidence at trial demonstrates a higher percentage of non-public use in 1992, but that difference is not material to our conclusion.
     
      
      . In its second issue presented for review, the Appraisal District argues that the trial court erred in holding that the Fire Station Building and the parking lot were entitled to any exemption prior to December 1, 1992, as there is no evidence to support such finding or, in the alternative, insufficient evidence to support such a finding because the University’s use prior to December 1, 1992, was minimal. Because we conclude that the Foundation is not entitled to an exemption for any of the years sought, we need not address this second issue.
     