By Farrar, Puente, Davila, Hernandez,                 H.B. No. 1518

         75R3030 SMH-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to an exemption from ad valorem taxation of the property

 1-3     of a neighborhood association.


 1-5           SECTION 1.  Subchapter B, Chapter 11, Tax Code, is amended by

 1-6     adding Section 11.32 to read as follows:

 1-7           Sec. 11.32.  NEIGHBORHOOD ASSOCIATIONS.  (a)  A neighborhood

 1-8     association is entitled to an exemption from taxation of the

 1-9     property the association owns and uses exclusively for the purposes

1-10     for which the association is organized.

1-11           (b)  In this section, "neighborhood association" means a

1-12     nonprofit corporation, organization, partnership, association, or

1-13     other legal entity that:

1-14                 (1)  is organized to preserve, protect, improve, and

1-15     monitor matters affecting a defined residential area;

1-16                 (2)  has a membership of at least:

1-17                       (A)  50 households located in the defined

1-18     residential area; or

1-19                       (B)  10 percent of the households located in the

1-20     defined residential area;

1-21                 (3)  if located in a municipality that recognizes a

1-22     neighborhood association as a representative of the households

1-23     located in the defined residential area of the association, is

1-24     recognized by the municipality for that purpose;

1-25                 (4)  has elected officers or directors;

 2-1                 (5)  is exempt from taxation under Section 501(a) of

 2-2     the Internal Revenue Code of 1986 (26 U.S.C. Section 501(a)) as an

 2-3     organization described in Section 501(c)(3) or (4) of that code;

 2-4     and

 2-5                 (6)  meets the requirements of a charitable

 2-6     organization provided by Sections 11.18(e) and (f).

 2-7           SECTION 2.  Section 11.43(c), Tax Code, is amended to read as

 2-8     follows:

 2-9           (c)  An exemption provided by Section 11.13, 11.17, 11.18,

2-10     11.19, 11.20, 11.21, 11.22, 11.23(j), 11.29, 11.30, [or] 11.31, or

2-11     11.32 of this code, once allowed, need not be claimed in subsequent

2-12     years,  and except as otherwise provided by Subsection (e) of this

2-13     section, the exemption applies to the property until it changes

2-14     ownership or the person's qualification for the exemption changes.

2-15     However, the chief appraiser may require a person allowed one of

2-16     the exemptions in a prior year to file a new application to confirm

2-17     the person's current qualification for the exemption by delivering

2-18     a written notice that a new application is required, accompanied by

2-19     an appropriate application form, to the person previously allowed

2-20     the exemption.

2-21           SECTION 3.  Section 11.436(a), Tax Code, is amended to read

2-22     as follows:

2-23           (a)  An organization that acquires property that qualifies

2-24     for an exemption under Section 11.181(a) or 11.32 may apply for the

2-25     exemption for the year of acquisition not later than the 30th day

2-26     after the date the organization acquires the property, and the

2-27     deadline provided by Section 11.43(d) does not apply to the

 3-1     application for that year.

 3-2           SECTION 4.  Section 26.111(a), Tax Code, is amended to read

 3-3     as follows:

 3-4           (a)  If an organization acquires taxable property that

 3-5     qualifies for and is granted an exemption under Section 11.181(a)

 3-6     or 11.32 for the year in which the property was acquired, the

 3-7     amount of tax due on the property for that year is calculated by

 3-8     multiplying the amount of taxes imposed on the property for the

 3-9     entire year as provided by Section 26.09 by a fraction, the

3-10     denominator of which is 365 and the numerator of which is the

3-11     number of days in that year before the date the charitable

3-12     organization acquired the property.

3-13           SECTION 5.  This Act takes effect January 1, 1998, but only

3-14     if the constitutional amendment proposed by the 75th Legislature,

3-15     Regular Session, 1997, to authorize the legislature to exempt from

3-16     ad valorem taxation the property of a neighborhood association is

3-17     approved by the voters.  If that amendment is not approved by the

3-18     voters, this Act has no effect.

3-19           SECTION 6.  The importance of this legislation and the

3-20     crowded condition of the calendars in both houses create an

3-21     emergency and an imperative public necessity that the

3-22     constitutional rule requiring bills to be read on three several

3-23     days in each house be suspended, and this rule is hereby suspended.