A build-to-suit lease between an exempt nonprofit entity and a nonexempt landlord that agreed to acquire, construct, and lease a new facility to the nonprofit entity qualified as an exempt contract for Texas sales tax purposes to improve real property for the primary use and benefit of an exempt entity. As a result, the landlord’s purchases of tangible personal property for incorporation into realty and taxable services for use in the performance of the contract were exempt. In Texas, for situations involving an exempt lessee and a nonexempt lessor, a two-prong test is used to determine whether improvements to realty are for the primary use and benefit of the exempt entity. First, the lessee must qualify for exempt status under Texas law. Second, the term of the lease must be sufficiently long in relationship to the life of the improvements themselves. Both prongs of the test were satisfied. The lessee was a qualified tax-exempt entity and the term of the lease (25 years) was sufficiently long in relationship to the life of the improvements to ensure that the exempt entity would have the primary use and benefit of the improvements. (Letter No. 201411980L (PLR #142750488), Texas Comptroller of Public Accounts, November 6, 2014)