JWB H.B. 1614 75(R)BILL ANALYSIS WAYS & MEANS H.B. 1614 By: Jackson 4-7-97 Committee Report (Amended) BACKGROUND Chapter 23, Tax Code (Appraisal Methods and Procedures), provides for appraisal methods and procedures for property tax purposes. Section 23.01 (Appraisals Generally), requires all taxable property to be appraised at its market value as determined by the application of generally accepted appraisal techniques, and the same or similar appraisal techniques shall be used in appraising the same or similar kinds of property. Generally accepted appraisal technique requires an appraiser to apply all applicable approaches to value (market, income, or cost). Current law allows the appraisal of signs and billboards to use all applicable techniques. Some counties appraise signs or billboards based on the potential income derived from the location of a sign or billboard. PURPOSE This bill provides that the appraised value of signs be appraised by means of the cost approach to value. 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 23, Tax Code, by adding Section 23.145. SIGNS. (a) Provides the method for appraising signs: (1) determining the replacement or reproduction cost of the sign; (2) calculating the amount of the cost lost to depreciation; (3) subtracting the depreciation from the cost. (b) Prohibits appraised value form including intangible property interest. (c) Provides that permanent on-premise signs be appraised at their contributory value to the premises where the sign is located. Also prohibits the appraised value of land on which an off-premise sign is located from including any amount attributable to the value of the sign or to the location of the sign on the land. (d) Defines "sign," "off-premise sign," and "on-premise sign" to have the same meaning as in Section 216.002, Local Government Code. SECTION 2. Effective date: January 1, 1998. SECTION 3. Emergency clause. EXPLANATION OF AMENDMENTS Committee Amendment Number 1 by Heflin strikes all language in Section 23.145(c), Tax Code, (as added by this bill) and reletters subsequent sections accordingly. Section 23.145(c), Tax Code, would have provided that permanent on-premise signs be appraised at their contributory value to the premises where the sign is located. It also prohibited the appraised value of land on which an off-premise sign is located from including any amount attributable to the value of the sign or to the location of the sign on the land.