BILL ANALYSIS



C.S.H.B. 947
By: Pitts
02-17-95
Committee Report (Substituted)


BACKGROUND

Buyers or sellers of agricultural land have at times found that
their lender requires them to waive their ad valorem tax
agriculture appraisal and pay the back taxes and penalties to
protect the lender from a subsequent change of use and possible
liability for the additional taxes and interest.

PURPOSE

This bill will eliminate the possibility that lenders could require
the waiver and loss of agricultural appraisal benefits.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter C, Chapter 23 of the Tax Code by
adding Section 23.47.

           Sec. 23.47 (a) A lender may not require a borrower to
waive the right to an ag           appraisal or agree not to apply
for or receive the appraisal.
           (b) Loan documents require the waiver are void.
           (c) Loan documents requiring the borrower to make
payments to protect the       lender from loss because of the
additional taxes and interest is void unless the       document:
               (1) requires the borrower to put the amount of
additional taxes into an                escrow account held by the
lender;
               (2) the escrow account would bear interest, credited
monthly;
               (3) permits the lender to apply the funds in escrow
to payment of additional                taxes and interest if
necessary during the life of the loan and requires the                lender to refund the balance to the borrower;
               (4) requires the lender to refund all escrowed
monies on payment of the                loan.
           (d) The tax assessor shall, on the request of the
borrower or the borrowers          representative, compute the
amount of additional taxes and interest that would          be due
the entity if a sale or change of use occurred on January 1 of that
year.          The assessor may charge a reasonable fee not to
exceed the actual cost of the           computing.
           (e) Lender is defined.

SECTION 2. Applies as Section 1 but to Open Space Land.

SECTION 3. Emergency clause, allows immediate effect.






COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute makes minor changes in the bill to specify that the
Act applies to Loans Secured by Lien on Agricultural-Use Land and
also to allow not only the borrower but also the borrower's
representative to interact with the tax assessor.

SUMMARY OF COMMITTEE ACTION

The committee convened in a public hearing on February 20, 1995 to
consider HB 947.  HB 947 was left pending.  

The committee convened in a public hearing on March 1, 1995 to
consider HB 947.  The following people testified in favor of the
bill:  Rep. Pitts and Jerry F. McCarty.  The following people
testified neutrally on the bill:  Merritt Lewis Hopson.  HB 947 was
left pending.

The committee convened in a public hearing on March 13, 1995 to
consider HB 947.  Chairman Marchant offered a complete committee
substitute for the bill which was adopted without objection.  The
motion to report HB 947 favorably as substituted with the
recommendation that it do pass and be printed prevailed by the
following record vote:  8 Ayes, 0 Nays, 0 PNV, 1 Absent.