AETC II Privatized Hous., LLC v. Tom Green Cnty. Appraisal Dist., No. 03-13-00463-CV, 2015 Tex. App. LEXIS 6357 (Tex. App.—Austin June 24, 2015, no pet.)
AETC II Privatized Housing, LLC (“AETC”) provides housing for U.S. military personnel and their families. The U.S. owns 49% of AETC as an investor. In 2007, the U.S. and AETC entered into a ground lease under which the Air Force leased to AETC a land tract near Goodfellow Air Force Base for fifty years. The land tract was previously acquired by the U.S. from the City of San Angelo, and it is undisputed that the State of Texas has not ceded jurisdiction over the tract to the U.S. The Air Force also conveyed by quitclaim deed the title to improvements on the land tract. The Tom Green County Appraisal District began assessing the improvements on the land tract in 2010. AETC filed a protest with the Tom Green County Appraisal Review Board challenging the valuation and requesting an exemption for the property on the basis of ownership by the U.S. The appraisal review board denied AETC’s protest, and AETC filed suit in district court. Because the parties reached a settlement on the valuation issue, only the exemption denial was before the trial court. The parties filed competing motions for summary judgment, and the trial court granted the appraisal district’s motion and denied AETC’s motion. AETC appealed.
On appeal, the court of appeals looked to Texas Supreme Court precedent holding that where jurisdiction over land is not ceded to the U.S. by the state, privately owned property on that non-ceded land is taxable. Because it was undisputed that the land had not been ceded, the question before the court was whether the improvements on the land tract were privately or publicly owned. The court of appeals held that, notwithstanding evidence of the amount of the U.S.’s capital contribution to AETC, the percentage of the U.S.’s interest in AETC, and that the U.S. will retain the improvements at the end of the ground lease term if they are not removed by AETC, AETC did not establish as a matter of law that the U.S. had the present right to compel legal title to the improvements on the land tract. Further, while AETC raised on appeal the argument that AETC was a mere instrumentality of the U.S. and thus entitled to immunity from taxation, the court of appeals refused to consider this argument because it was not raised in AETC’s summary judgment motion. Finally, the court of appeals found persuasive the appraisal district’s argument that, as a Delaware limited liability company, AETC’s members, including the U.S., did not have an interest in personal property owned by the limited liability company. Having concluded that the trial court did not err in granting the appraisal district’s motion for summary judgment and denying AETC’s motion, the court of appeals affirmed the trial court’s judgment.