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TCU is denied tax break for bookstore

FORT WORTH — Walk into the Texas Christian University College Bookstore on South University Drive and suddenly you are swimming in a sea of purple.

Along the back wall are purple Horned Frog sweatshirts, T-shirts and caps. Down a center aisle is a rack with TCU coffee mugs. On the back wall upstairs, they've painted the school's alma mater.

But school officials are seeing red over a recent decision by the Tarrant Appraisal District. They've taken their case to court.

The appraisal district recently denied a property tax exemption for the $7.5 million, 34,000-square-foot bookstore. The district's position is that the bookstore caters to the general public as much as it does TCU students.

"The problem is that Barnes & Noble is running it, and it is not exclusively for educational purposes," said John Marshall, the district's executive director. "It is not a typical situation — a bookstore owned by a university and run by someone else."

TCU sued in Tarrant County civil court protesting the denial. In its lawsuit, the school claims that textbook sales have historically accounted for 75 percent of the revenue from the bookstore and that it also sells other education-related merchandise such as athletic gear, class rings and book bags.

"The university strongly believes that the bookstore is fulfilling its stated purpose and mission," said Tracy Syler-Jones, a TCU spokeswoman.

h5College and community

The front door sits at an angle facing the intersection of South University Drive and West Berry Street, and the bookstore has tall, pedestrian-friendly windows on three sides. A brick plaza beside the northern entrance has outdoor seating and purple sidewalk umbrellas.

Inside, on the first floor, there's a Starbucks with a long bar and tables at which visitors can eat, study or even nap.

The bookshelves resemble those in other Barnes & Noble bookstores; there are even bargain book tables near the front registers.

But there is also a Clinique cosmetic counter, complete with a saleswoman in a white lab coat. Go up the escalator, and you are greeted by a display of jewelry-draped light fixtures and candlesticks.

In a display nearby are Crabtree & Evelyn products, floor lamps, laundry bags, fans and Xbox video-game consoles.

The textbooks are on white metal shelves in the southeast corner of the second floor.

In the lawsuit, the school says that any noneducational functions on the bookstore property are incidental and benefit the students and faculty.

"Students have access to the needed textbooks as well as a place to study individually or in groups. So the university feels it should receive tax-exempt status," Syler-Jones said.

h2Tight control

TCU points out that it is a nonprofit, educational facility under the IRS code. The school maintains broad control over the store, with "strict veto authority over any item which it finds objectionable," the lawsuit states.

TCU also stresses that Barnes & Noble does not have any interest in the property and that the university has the ability to select the store manager. The textbooks are chosen by university faculty, and TCU students work at the bookstore.

"We just manage the inventory for TCU," said Llisa Lewis, a store manager for Barnes & Noble. "The building is TCU's. The property is TCU's, and it is considered a part of the campus."

Higher value

The property-tax code states that an exemption is allowed if property is operated exclusively by the school for educational functions and is reasonably necessary for the school's operations.

But an exemption requires more than ownership by the university, Marshall said. He said that property owned by churches must be used as part of religious activities to qualify for a tax exemption.

The TCU bookstore appears to be a retail strip and a business that is not exclusively for the use of the school, he said. But he said that the appraisal district's decision is for one year only.

"It has to meet certain criteria," Marshall said. "We want to discuss it with them and see if we can settle and make the right decision. Based on the information we have, we don't think it's exempt."