By Craddick H.B. No. 925 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the appraisal of oil and gas property for ad valorem 1-3 tax purposes. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter B, Chapter 23, Tax Code, is amended by 1-6 adding Section 23.175 to read as follows: 1-7 Sec. 23.175. OIL OR GAS INTEREST. (a) If a real property 1-8 interest in oil or gas in place is appraised by a method that takes 1-9 into account the future income from the sale of oil or gas to be 1-10 produced from the interest, the method must use the average price 1-11 of the oil or gas from the interest for the preceding year as the 1-12 price at which the oil or gas produced from the interest is 1-13 projected to be sold in the current year of the appraisal. The 1-14 average price for the preceding year is calculated by dividing the 1-15 sum of the prices for which oil and gas from the interest was 1-16 selling on each day of the preceding calendar year, excluding 1-17 February 29, by 365. If there was no production of oil or gas from 1-18 the interest on any day during the preceding calendar year, the 1-19 average price for which similar oil and gas from comparable 1-20 interests was selling on that day is to be used. If market 1-21 conditions warrant, the average price from the preceding year may 1-22 be increased or decreased in the second and/or succeeding years of 1-23 an appraisal that takes into account the future income from the 1-24 sale of oil or gas to be produced from the interest. If the 2-1 average price from the preceding year is increased in the second or 2-2 any succeeding year of an appraisal that takes into account the 2-3 future income from the sale of oil or gas from the interest, the 2-4 annual percentage rate of increase may be no greater than the 2-5 annual percentage rate increase projected for that year by the 2-6 comptroller for revenue estimating purposes; however, in no event 2-7 may the price used in the second or any succeeding year of an 2-8 appraisal exceed 150 percent of the price used in the current year 2-9 of the appraisal. The price used in the current year may be 2-10 decreased by any amount in the second and succeeding year of an 2-11 appraisal. 2-12 (b) The comptroller by rule shall develop and distribute to 2-13 each appraisal office appraisal manuals that specify methods and 2-14 procedures to discount future income from the sale of oil or gas 2-15 from the interest to present value. 2-16 (c) Each appraisal office shall use the methods and 2-17 procedures specified by the appraisal manuals developed under 2-18 Subsection (b) of this section. 2-19 SECTION 2. This Act takes effect September 1, 1993. 2-20 SECTION 3. The importance of this legislation and the 2-21 crowded condition of the calendars in both houses create an 2-22 emergency and an imperative public necessity that the 2-23 constitutional rule requiring bills to be read on three several 2-24 days in each house be suspended, and this rule is hereby suspended.