SWB C.S.H.B. 1201 75(R)BILL ANALYSIS WAYS & MEANS C.S.H.B. 1201 By: Oliveira 5-5-97 Committee Report (Substituted) BACKGROUND Section 11.18, Tax Code (Charitable Organizations), provides tax exemptions to various organizations that provide housing for the elderly and the impoverished. In 1993, the state extended these exemptions to property held by some volunteer organizations that build affordable housing (Section 11.181, Tax Code). This change did not include community housing development organizations and other charitable organizations that provide affordable housing. PURPOSE The bill provides a property tax exemption by a county or municipality for community housing development organizations and other entities designated as charitable, who provide affordable housing to low and moderate income Texans. 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 B, Chapter 11, Tax Code (Taxable Property and Exemption), by adding Section 11.182. COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS IMPROVING PROPERTY FOR LOW-INCOME AND MODERATE- INCOME HOUSING. (a) Provides an exemption by a county or municipality for community housing development organizations who improve property of low and moderate income households. The organization is exempt from taxes on improved and unimproved property it owns. The organizations must meet the requirements of a charitable organization under section 11.18(e) and (f) of the tax code. It must own the taxexempt property for the purpose of building or repairing housing on the property. The organization must either sell without profit or rent without profit to lowincome or moderate-income individuals or families. The organization must engage exclusively in activities that provide affordable housing. (b) The property is exempt for three years or until the property is sold, without profit, to low or moderate income people. (c) Allows the organization an exemption by a county or municipality for the property it owns and uses to administer its affordable housing programs. (d) Federal law under 42 U.S.C. Section 12704 defines a community housing development organization. These organizations must be registered with the Texas Department of Housing and Community Affairs or a local governmental. SECTION 2.Section 11.436(a), Tax Code (Application for Exemption of Certain Property Used for Low-Income Housing), is amended to add the new section 11.182(a) to the list of qualifying exemptions. Section 11.436(b), Tax Code (Application for Exemption of Certain Property Used for Low-Income Housing), is amended to provide add that the collector for each taxing unit to which the exemption applies shall be notified by the chief appraiser if the application is granted after approval of appraisal records. Adds language to clarify that the collector for a taxing unit to which the exemption applies shall calculate the amount of tax due on a property in that year if the application is granted after approval of appraisal records. SECTION 3. Section 26.11(a), Tax Code (Prorating Taxes-Acquisition by Charitable Organization), is amended to add the new section 11.182(a) to the list of qualifying exemptions and describes how the prorated taxes will be calculated. SECTION 4. Effective Date: January 1, 1998. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1201 makes changes in the relating clause and elsewhere in the bill to specify that exemptions granted in the bill only apply only to county and municipality taxes. Section 11.436(b), Tax Code (Application for Exemption of Certain Property Used for LowIncome Housing), adds language to include taxing units to which the exemptions apply.