1-1  By:  Ogden (Senate Sponsor - Turner)                  H.B. No. 1096
    1-2        (In the Senate - Received from the House April 19, 1993;
    1-3  April 19, 1993, read first time and referred to Committee on
    1-4  Finance; May 5, 1993, reported adversely, with favorable Committee
    1-5  Substitute by the following vote:  Yeas 13, Nays 0; May 5, 1993,
    1-6  sent to printer.)
    1-7                            COMMITTEE VOTE
    1-8                          Yea     Nay      PNV      Absent 
    1-9        Montford           x                               
   1-10        Turner             x                               
   1-11        Armbrister         x                               
   1-12        Barrientos         x                               
   1-13        Bivins             x                               
   1-14        Ellis              x                               
   1-15        Haley              x                               
   1-16        Moncrief           x                               
   1-17        Parker             x                               
   1-18        Ratliff            x                               
   1-19        Sims               x                               
   1-20        Truan              x                               
   1-21        Zaffirini          x                               
   1-22  COMMITTEE SUBSTITUTE FOR H.B. No. 1096                  By:  Turner
   1-23                         A BILL TO BE ENTITLED
   1-24                                AN ACT
   1-25  relating to exempting from ad valorem taxation property owned by
   1-26  certain charitable organizations.
   1-28        SECTION 1.  Subchapter B, Chapter 11, Tax Code, is amended by
   1-29  adding Section 11.181 to read as follows:
   1-31  LOW-INCOME HOUSING.  (a)  An organization is entitled to an
   1-32  exemption from taxation of improved or unimproved real property it
   1-33  owns if the organization:
   1-34              (1)  meets the requirements of a charitable
   1-35  organization provided by Sections 11.18(e) and (f);
   1-36              (2)  owns the property for the purpose of building or
   1-37  repairing housing on the property primarily with volunteer labor to
   1-38  sell without profit to an individual or family satisfying the
   1-39  organization's low-income and other eligibility requirements; and
   1-40              (3)  engages exclusively in the building, repair, and
   1-41  sale of housing as described by Subdivision (2), and related
   1-42  activities.
   1-43        (b)  Property may not be exempted under Subsection (a) after
   1-44  the third anniversary of the date the organization acquires the
   1-45  property.
   1-46        (c)  An organization entitled to an exemption under
   1-47  Subsection (a) is also entitled to an exemption from taxation of
   1-48  any building or tangible personal property the organization owns
   1-49  and uses in the administration of its acquisition, building,
   1-50  repair, or sale of property.  To qualify for an exemption under
   1-51  this subsection, property must be used exclusively by the
   1-52  charitable organization, except that another individual or
   1-53  organization may use the property for activities incidental to the
   1-54  charitable organization's use that benefit the beneficiaries of the
   1-55  charitable organization.
   1-56        (d)  For the purposes of Subsection (e), the chief appraiser
   1-57  shall determine the market value of property exempted under
   1-58  Subsection (a) and shall record the market value in the appraisal
   1-59  records.
   1-60        (e)  If the organization that owns improved or unimproved
   1-61  real property that has been exempted under Subsection (a) sells the
   1-62  property to a person other than an individual or family satisfying
   1-63  the organization's low-income or other eligibility requirements, a
   1-64  penalty is imposed on the property equal to the amount of the taxes
   1-65  that would have been imposed on the property in each tax year that
   1-66  the property was exempted from taxation under Subsection (a), plus
   1-67  interest at an annual rate of 12 percent calculated from the dates
   1-68  on which the taxes would have become due.
    2-1        (f)  The charitable organization and the purchaser of the
    2-2  property from that organization are jointly and severally liable
    2-3  for the penalty and interest imposed under Subsection (e).  A tax
    2-4  lien in favor of all taxing units for which the penalty is imposed
    2-5  attaches to the property to secure payment of the penalty and
    2-6  interest.
    2-7        (g)  The chief appraiser shall make an entry in the appraisal
    2-8  records for the property against which a penalty under Subsection
    2-9  (e) is imposed and shall deliver written notice of the imposition
   2-10  of the penalty and interest to the charitable organization and to
   2-11  the person who purchased the property from that organization.
   2-12        SECTION 2.  Section 11.42(a), Tax Code, is amended to read as
   2-13  follows:
   2-14        (a)  Except as provided by Subsection (b) <of this section>
   2-15  and by Sections 11.421, 11.422, 11.434, <and> 11.435, and 11.436
   2-16  <of this code>, eligibility for and amount of an exemption
   2-17  authorized by this chapter for any tax year are determined by a
   2-18  claimant's qualifications on January 1.  A person who does not
   2-19  qualify for an exemption on January 1 of any year may not receive
   2-20  the exemption that year.
   2-21        SECTION 3.  Subchapter C, Chapter 11, Tax Code, is amended by
   2-22  adding Section 11.436 to read as follows:
   2-24  USED FOR LOW-INCOME HOUSING.  (a)  An organization that acquires
   2-25  property that qualifies for an exemption under Section 11.181(a)
   2-26  may apply for the exemption for the year of acquisition not later
   2-27  than the 30th day after the date the organization acquires the
   2-28  property, and the deadline provided by Section 11.43(d) does not
   2-29  apply to the application for that year.
   2-30        (b)  If the application is granted, the exemption for that
   2-31  year applies only to the portion of the year in which the property
   2-32  qualifies for the exemption, as provided by Section 26.111.  If the
   2-33  application is granted after approval of the appraisal records by
   2-34  the appraisal review board, the chief appraiser shall notify the
   2-35  collector for each taxing unit in which the property is located.
   2-36  The collector shall calculate the amount of tax due on the property
   2-37  in that year as provided by Section 26.111 and shall refund any
   2-38  amount paid in excess of that amount.
   2-39        SECTION 4.  Chapter 26, Tax Code, is amended by adding
   2-40  Section 26.111 to read as follows:
   2-42  ORGANIZATION.  (a)  If an organization acquires taxable property
   2-43  that qualifies for and is granted an exemption under
   2-44  Section 11.181(a) for the year in which the property was acquired,
   2-45  the amount of tax due on the property for that year is calculated
   2-46  by multiplying the amount of taxes imposed on the property for the
   2-47  entire year as provided by Section 26.09 by a fraction, the
   2-48  denominator of which is 365 and the numerator of which is the
   2-49  number of days in that year before the date the charitable
   2-50  organization acquired the property.
   2-51        (b)  If the exemption terminates during the year of
   2-52  acquisition, the tax due is calculated by multiplying the taxes
   2-53  imposed for the entire year as provided by Section 26.09 by a
   2-54  fraction, the denominator of which is 365 and the numerator of
   2-55  which is the number of days the property does not qualify for the
   2-56  exemption.
   2-57        SECTION 5.  This Act takes effect January 1, 1994.
   2-58        SECTION 6.  The importance of this legislation and the
   2-59  crowded condition of the calendars in both houses create an
   2-60  emergency and an imperative public necessity that the
   2-61  constitutional rule requiring bills to be read on three several
   2-62  days in each house be suspended, and this rule is hereby suspended.
   2-63                               * * * * *
   2-64                                                         Austin,
   2-65  Texas
   2-66                                                         May 5, 1993
   2-67  Hon. Bob Bullock
   2-68  President of the Senate
   2-69  Sir:
   2-70  We, your Committee on Finance to which was referred H.B. No. 1096,
    3-1  have had the same under consideration, and I am instructed to
    3-2  report it back to the Senate with the recommendation that it do not
    3-3  pass, but that the Committee Substitute adopted in lieu thereof do
    3-4  pass and be printed.
    3-5                                                         Montford,
    3-6  Chairman
    3-7                               * * * * *
    3-8                               WITNESSES
    3-9  No witnesses appeared on H.B. No. 1096.