1-1 By: Gallegos S.B. No. 1658 1-2 (In the Senate - Filed April 19, 1995; April 19, 1995, read 1-3 first time and referred to Committee on Finance; May 9, 1995, 1-4 reported adversely, with favorable Committee Substitute by the 1-5 following vote: Yeas 8, Nays 1; May 9, 1995, sent to printer.) 1-6 COMMITTEE SUBSTITUTE FOR S.B. No. 1658 By: Ellis 1-7 A BILL TO BE ENTITLED 1-8 AN ACT 1-9 relating to tax credits for real property contributed to 1-10 institutions of higher education. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Subchapter C, Chapter 111, Tax Code, is amended 1-13 by adding Section 111.110 to read as follows: 1-14 Sec. 111.110. TAX CREDIT FOR REAL PROPERTY CONTRIBUTED TO AN 1-15 INSTITUTION OF HIGHER EDUCATION. (a) Subject to the provisions of 1-16 Subchapter D, Chapter 55, Education Code, the comptroller shall 1-17 issue a credit to be used by a taxpayer who qualifies for the 1-18 credit under that subchapter against the payment of a tax imposed 1-19 on the taxpayer: 1-20 (1) for the franchise tax under Chapter 171; or 1-21 (2) if the taxpayer holds a direct payment permit for 1-22 the sales and use tax under Chapter 151, for that tax. 1-23 (b) The credit applies to a tax originally due on or after 1-24 the date the credit is issued but not later than the end of the 1-25 20th calendar year following the calendar year in which the credit 1-26 was issued. 1-27 (c) A taxpayer may not claim a credit issued under this 1-28 section in a calendar year in an amount greater than five percent 1-29 of the total credit issued to that taxpayer. 1-30 (d) A taxpayer shall include with a return or report showing 1-31 an amount of tax due against which a taxpayer claims a credit under 1-32 this section, a statement containing the following information: 1-33 (1) the original amount of the credit and its date of 1-34 issue; 1-35 (2) the total amount of the credit previously claimed 1-36 by the taxpayer; 1-37 (3) the amount of credit claimed on the attached 1-38 return; 1-39 (4) the remaining unused credit amount; and 1-40 (5) the calendar year in which the credit expires. 1-41 (e) The comptroller may recover an amount erroneously 1-42 claimed as a credit in a jeopardy or deficiency determination 1-43 issued before the fourth anniversary of the date on which the 1-44 erroneous claim is filed. 1-45 SECTION 2. Chapter 55, Education Code, is amended by adding 1-46 Subchapter D to read as follows: 1-47 SUBCHAPTER D. TAX CREDIT FOR CONTRIBUTED REAL PROPERTY 1-48 Sec. 55.51. PETITION FOR TAX CREDIT; QUALIFICATIONS. 1-49 (a) If the governing board of an institution determines that the 1-50 funds to acquire a parcel of real estate may not be provided 1-51 through the issuance of revenue bonds under this chapter, the 1-52 governing board may petition the Texas Higher Education 1-53 Coordinating Board, in accordance with the rules and regulations 1-54 adopted under Section 61.027, for the issuance of a tax credit to 1-55 the owner of the real estate in the amount provided by this 1-56 subchapter in exchange for the owner's transfer of the parcel of 1-57 real estate to the institution. 1-58 (b) A taxpayer may qualify for a tax credit under this 1-59 subchapter only if: 1-60 (1) the parcel of real estate that is the subject of 1-61 the petition is located in a county with a population of more than 1-62 2,500,000; 1-63 (2) the institution seeking ownership of the parcel 1-64 has more than 29,000 students enrolled or registered during its 1-65 regular term at a facility of the institution located in a county 1-66 with a population of more than 2,500,000; and 1-67 (3) the parcel of real estate owned by the taxpayer is 1-68 transferred to the institution on or before August 31, 1996. 2-1 Sec. 55.52. TAX CREDIT PETITION. (a) In the petition 2-2 before the Texas Higher Education Coordinating Board authorized by 2-3 Section 55.51, the governing board shall: 2-4 (1) show that the desired parcel has been included in 2-5 the most recent campus facilities plan or similar master plan 2-6 adopted by the governing board as a property proposed or targeted 2-7 for acquisition; 2-8 (2) show that the desired parcel is being offered or 2-9 proposed for sale on the open market; 2-10 (3) provide an estimate of the current fair market 2-11 value of the desired parcel; and 2-12 (4) show the basis for the governing board's 2-13 determination that revenue bond funding may not be available. 2-14 (b) The petition must include a fair market valuation study 2-15 of the desired parcel completed and signed by an independent, 2-16 certified real estate appraiser with not less than five years 2-17 experience. 2-18 Sec. 55.53. RULING BY COORDINATING BOARD. (a) Not later 2-19 than the 90th day after the date the Texas Higher Education 2-20 Coordinating Board receives a petition authorized by Section 55.51, 2-21 the board shall, in accordance with the rules and regulations 2-22 adopted under Section 61.027, grant or deny the petition. 2-23 (b) Before deciding whether to grant or deny the petition, 2-24 the Texas Higher Education Coordinating Board shall request, 2-25 receive, and consider a report from the comptroller indicating: 2-26 (1) whether the estimate of fair market value 2-27 presented in the petition is derived in a reasonable and 2-28 professional manner; 2-29 (2) whether the owner of the real estate currently 2-30 owes any outstanding taxes collected or administered by the 2-31 comptroller; and 2-32 (3) whether the owner of the real estate qualifies for 2-33 the tax credit under Sections 55.51(b)(1) and (2). 2-34 (c) The Texas Higher Education Coordinating Board shall 2-35 issue a written notice of its ruling on a petition authorized by 2-36 Section 55.51 not later than the fifth day after the date of the 2-37 ruling and deliver its decision to the petitioning institution and 2-38 to the comptroller. 2-39 Sec. 55.54. ISSUANCE OF TAX CREDIT. (a) Not later than the 2-40 10th day after the date the Texas Higher Education Coordinating 2-41 Board grants a petition authorized by Section 55.51, the 2-42 comptroller shall issue a written notice to the owner of the parcel 2-43 of real estate that a tax credit in an amount equal to 50 percent 2-44 of the fair market value reported on the petition has been granted 2-45 conditioned on the completion of the transfer of the parcel to the 2-46 petitioning institution on or before August 31, 1996. 2-47 (b) The owner may not claim a tax credit before the owner 2-48 files with the comptroller a statement signed by the property owner 2-49 and the petitioning institution that the property transfer has been 2-50 completed on or before August 31, 1996. 2-51 Sec. 55.55. EXPIRATION DATE. This subchapter expires 2-52 January 1, 1997. 2-53 SECTION 3. This Act takes effect September 1, 1995. 2-54 SECTION 4. The importance of this legislation and the 2-55 crowded condition of the calendars in both houses create an 2-56 emergency and an imperative public necessity that the 2-57 constitutional rule requiring bills to be read on three several 2-58 days in each house be suspended, and this rule is hereby suspended. 2-59 * * * * *