By: Gallegos S.B. No. 1658 A BILL TO BE ENTITLED AN ACT 1-1 relating to tax credits for real property contributed to 1-2 institutions of higher education. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subchapter C, Chapter 111, Tax Code, is amended 1-5 by adding Section 111.110 to read as follows: 1-6 Sec. 111.110. TAX CREDIT FOR REAL PROPERTY CONTRIBUTED TO AN 1-7 INSTITUTION OF HIGHER EDUCATION. (a) Subject to the provisions of 1-8 Subchapter D, Chapter 55, Education Code, the comptroller shall 1-9 issue a credit to be used by a taxpayer who qualifies for the 1-10 credit under that subchapter against the payment of a tax imposed 1-11 on the taxpayer: 1-12 (1) for the franchise tax under Chapter 171; or 1-13 (2) if the taxpayer holds a direct payment permit for 1-14 the sales and use tax under Chapter 151, for that tax. 1-15 (b) The credit applies to a tax originally due on or after 1-16 the date the credit is issued but not later than the end of the 1-17 20th calendar year following the calendar year in which the credit 1-18 was issued. 1-19 (c) A taxpayer may not claim a credit issued under this 1-20 section in a calendar year in an amount greater than five percent 1-21 of the total credit issued to that taxpayer. 1-22 (d) A taxpayer shall include with a return or report showing 1-23 an amount of tax due against which a taxpayer claims a credit under 2-1 this section, a statement containing the following information: 2-2 (1) the original amount of the credit and its date of 2-3 issue; 2-4 (2) the total amount of the credit previously claimed 2-5 by the taxpayer; 2-6 (3) the amount of credit claimed on the attached 2-7 return; 2-8 (4) the remaining unused credit amount; and 2-9 (5) the calendar year in which the credit expires. 2-10 (e) The comptroller may recover an amount erroneously 2-11 claimed as a credit in a jeopardy or deficiency determination 2-12 issued before the fourth anniversary of the date on which the 2-13 erroneous claim is filed. 2-14 SECTION 2. Chapter 55, Education Code, is amended by adding 2-15 Subchapter D to read as follows: 2-16 SUBCHAPTER D. TAX CREDIT FOR CONTRIBUTED REAL PROPERTY 2-17 Sec. 55.51. PETITION FOR TAX CREDIT; QUALIFICATIONS. 2-18 (a) If the governing board of an institution determines that the 2-19 funds to acquire a parcel of real estate may not be provided 2-20 through the issuance of revenue bonds under this chapter, the 2-21 governing board may petition the Texas Higher Education 2-22 Coordinating Board, in accordance with the rules and regulations 2-23 adopted under Section 61.027, for the issuance of a tax credit to 2-24 the owner of the real estate in the amount provided by this 2-25 subchapter in exchange for the owner's transfer of the parcel of 3-1 real estate to the institution. 3-2 (b) A taxpayer may qualify for a tax credit under this 3-3 subchapter only if: 3-4 (1) the parcel of real estate that is the subject of 3-5 the petition is located in a county with a population of more than 3-6 2,500,000; 3-7 (2) the institution seeking ownership of the parcel 3-8 has more than 29,000 students enrolled or registered during its 3-9 regular term at a facility of the institution located in a county 3-10 with a population of more than 2,500,000; and 3-11 (3) the parcel of real estate owned by the taxpayer is 3-12 transferred to the institution on or before August 31, 1996. 3-13 Sec. 55.52. TAX CREDIT PETITION. (a) In the petition 3-14 before the Texas Higher Education Coordinating Board authorized by 3-15 Section 55.51, the governing board shall: 3-16 (1) show that the desired parcel has been included in 3-17 the most recent campus facilities plan or similar master plan 3-18 adopted by the governing board as a property proposed or targeted 3-19 for acquisition; 3-20 (2) show that the desired parcel is being offered or 3-21 proposed for sale on the open market; 3-22 (3) provide an estimate of the current fair market 3-23 value of the desired parcel; and 3-24 (4) show the basis for the governing board's 3-25 determination that revenue bond funding may not be available. 4-1 (b) The petition must include a fair market valuation study 4-2 of the desired parcel completed and signed by an independent, 4-3 certified real estate appraiser with not less than five years 4-4 experience. 4-5 Sec. 55.53. RULING BY COORDINATING BOARD. (a) Not later 4-6 than the 90th day after the date the Texas Higher Education 4-7 Coordinating Board receives a petition authorized by Section 55.51, 4-8 the board shall, in accordance with the rules and regulations 4-9 adopted under Section 61.027, grant or deny the petition. 4-10 (b) Before deciding whether to grant or deny the petition, 4-11 the Texas Higher Education Coordinating Board shall request, 4-12 receive, and consider a report from the comptroller indicating: 4-13 (1) whether the estimate of fair market value 4-14 presented in the petition is derived in a reasonable and 4-15 professional manner; 4-16 (2) whether the owner of the real estate currently 4-17 owes any outstanding taxes collected or administered by the 4-18 comptroller; and 4-19 (3) whether the owner of the real estate qualifies for 4-20 the tax credit under Sections 55.51(b)(1) and (2). 4-21 (c) The Texas Higher Education Coordinating Board shall 4-22 issue a written notice of its ruling on a petition authorized by 4-23 Section 55.51 not later than the fifth day after the date of the 4-24 ruling and deliver its decision to the petitioning institution and 4-25 to the comptroller. 5-1 Sec. 55.54. ISSUANCE OF TAX CREDIT. (a) Not later than the 5-2 10th day after the date the Texas Higher Education Coordinating 5-3 Board grants a petition authorized by Section 55.51, the 5-4 comptroller shall issue a written notice to the owner of the parcel 5-5 of real estate that a tax credit in an amount equal to 50 percent 5-6 of the fair market value reported on the petition has been granted 5-7 conditioned on the completion of the transfer of the parcel to the 5-8 petitioning institution on or before August 31, 1996. 5-9 (b) The owner may not claim a tax credit before the owner 5-10 files with the comptroller a statement signed by the property owner 5-11 and the petitioning institution that the property transfer has been 5-12 completed on or before August 31, 1996. 5-13 Sec. 55.55. EXPIRATION DATE. This subchapter expires 5-14 January 1, 1997. 5-15 SECTION 3. This Act takes effect September 1, 1995. 5-16 SECTION 4. The importance of this legislation and the 5-17 crowded condition of the calendars in both houses create an 5-18 emergency and an imperative public necessity that the 5-19 constitutional rule requiring bills to be read on three several 5-20 days in each house be suspended, and this rule is hereby suspended.