BILL ANALYSIS
S.B. 1658
By: Gallegos (Coleman)
May 18, 1995
Committee Report (Unamended)
BACKGROUND
Subchapter C (Settlements, Refunds, and Credits), Chapter 111, Tax
Code, authorizes the Comptroller to issue tax credits in certain
situations. Chapter 55 (Financing Permanent Improvements),
Education Code, establishes procedures for institutions of higher
education to acquire, purchase, construct and operate any property,
buildings or structures and the methods to pay for those
improvements. Other than gift, there is often no other method for
institutions of higher education to obtain property for expansion
without incurring debt (issuing revenue bonds).
Currently there is no method for the state to issue tax credits for
an institution of higher education to acquire real property.
PURPOSE
This bill allows a landowner to donate property to a certain
institution of higher education in exchange for a tax credit from
the state in the amount of 50% of the fair market value of the land
against the payment of franchise taxes or sales & use taxes .
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 111, Tax Code, by adding
Section 111.110 TAX CREDIT FOR REAL PROPERTY CONTRIBUTED
TO AN INSTITUTION OF HIGHER EDUCATION.
(a) Authorizes the comptroller to issue a credit against the
payment of franchise taxes or sales & use taxes in exchange
for the donation of real property to an institution of higher
education.
(b) Credits must be used within 20 years of receipt.
(c) Limits the amount of credit claimed by a taxpayer for any
one calendar year, to 5% of the total credit issued to that
taxpayer.
(d) Requires the taxpayer to self-report the status of
credits. Reports must contain: (1) the original amount of the
credit and its date of issue; (2) the total amount of credit
previously claimed by the taxpayer; (3) the amount of credit
claimed on the attached return; (4) the remaining unused
credit amount; and (5) the calendar year in which the credit
expires.
(e) Allows the comptroller to recover an amount erroneously
claimed as a credit in a jeopardy or deficiency determination
before the 4th anniversary of the date on which the erroneous
claim is filed.
SECTION 2. Amends Chapter 55, Education Code, by adding Subchapter
D, TAX CREDIT FOR CONTRIBUTED REAL PROPERTY.
55.51 PETITION FOR TAX CREDIT; QUALIFICATIONS. (a) Requires
a public college or university to determine that revenue bond
financing is not available for the acquisition of real
property and allows for petitioning of the Texas Higher
Education Coordinating Board for the issuance of a tax credit
to the owner of such real estate in exchange for the owner's
transfer of the property.
(b) Establishes taxpayer qualifications: (1) the parcel of
real estate is located in a county with a population of more
than 2,500,000; (2) the institution seeking ownership of the
property has more than 29,000 students at its facility in the
county; and (3) the property is transferred on or before
August 31, 1996.
55.52 TAX CREDIT PETITION. Requires the petition to show:
(1) the desired parcel has been included in the most recent
campus facilities plan or similar master plan; (2) the desired
parcel is being offered or proposed for sale on the open
market; (3) an estimate of the current fair market value of
the parcel(s); and (4) the basis for the determination that
revenue bond funding may not be available. The estimate of
fair market value shall be completed and signed by an
independent certified real estate appraiser with at least 5
years experience.
55.53 RULING BY COORDINATING BOARD. Establishes procedures
for Coordinating Board action.
(a) Establishes that the Coordinating Board shall make a
ruling either granting or denying an application within 90
days.
(b) Prior to the decision to grant or deny an application, the
coordinating board shall receive from the comptroller a report
determining: (1) whether the estimate of fair market value in
the petition is derived in a reasonable and professional
manner; (2) whether the property owner currently owes any
outstanding taxes; and (3) whether the owner of the real
estate qualifies for the credit.
(c) The Coordinating Board shall issue written notice of its
ruling on a petition within 5 days.
55.54 ISSUANCE OF TAX CREDIT. (a) Requires the comptroller
to issue a written notice within ten days of the petition
being granted. The tax credit is equal to 50 percent of the
fair market value of the property, as reported on the
petition, conditioned upon the completion of the transfer of
the property on or before August 31, 1996.
(b) Requires the property owner to file a report with the
comptroller stating that the property has been transferred
before August 31, 1996, before the owner can claim any tax
credits.
55.55 EXPIRATION DATE. States that this subchapter expires
January 1, 1997.
SECTION 3. Effective Date: September 1, 1995.
SECTION 4. Emergency Clause.
SUMMARY OF COMMITTEE ACTION
On May 18, 1995, the committee convened in a formal meeting and
considered S.B. 1658. By a record vote of 8 ayes, 0 nays, 0
present not voting and 3 absent, the committee voted to report S.B.
1658 to the House without amendment with the recommendation that it
do pass.