By Hilbert H.B. No. 3495
75R2101 SMH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the determination of the market value of property for
1-3 purposes of appraisal of property for ad valorem taxation.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 23.01, Tax Code, is amended by amending
1-6 Subsection (b) and by adding Subsections (c) and (d) to read as
1-7 follows:
1-8 (b) The market value of property shall be determined by the
1-9 application of generally accepted appraisal techniques, including
1-10 those recognized by the Uniform Standards of Professional Appraisal
1-11 Practice. The [and the] same or similar appraisal techniques shall
1-12 be used in appraising the same or similar kinds of property.
1-13 However, each property shall be appraised based upon the individual
1-14 characteristics that affect the property's market value.
1-15 (c) In determining the market value of real property, the
1-16 chief appraiser shall:
1-17 (1) correctly employ the appropriate methods and
1-18 techniques;
1-19 (2) consider each easement, restriction, encumbrance,
1-20 lease, reservation, covenant, contract, agreement of sale, listing,
1-21 option, declaration, ordinance, or closing statement to which the
1-22 property is subject;
1-23 (3) consider each sale of the property that occurred
1-24 not later than one year before the date of the determination if the
2-1 property is residential real property;
2-2 (4) consider each sale of the property that occurred
2-3 not later than three years before the date of the determination if
2-4 the property is not residential real property;
2-5 (5) consider, if appropriate, that the property is an
2-6 undivided interest rather than the entire interest;
2-7 (6) consider existing and probable land use
2-8 regulations, economic demand, the physical adaptability of the
2-9 property, neighborhood trends, and the highest and best use of the
2-10 property;
2-11 (7) consider any public or private improvement
2-12 proposed to be located on or near the property;
2-13 (8) appraise the improvements to the property
2-14 according to their contribution to the value of the property;
2-15 (9) employ the cost, income, or market data comparison
2-16 method for appraisal, or a combination of those methods, as
2-17 applicable; and
2-18 (10) avoid employing an average of the prices of
2-19 comparable sales of property.
2-20 (d) The chief appraiser shall:
2-21 (1) adequately identify the property appraised;
2-22 (2) state the effective date of the determination of
2-23 market value;
2-24 (3) state each date on which and the extent to which
2-25 the property was inspected; and
2-26 (4) state the reason for omitting a recognized
2-27 valuation method.
3-1 SECTION 2. Subchapter A, Chapter 23, Tax Code, is amended by
3-2 adding Sections 23.011-23.013 to read as follows:
3-3 Sec. 23.011. COST METHOD OF APPRAISAL. If the chief
3-4 appraiser uses the cost method of appraisal to determine the market
3-5 value of real property, the chief appraiser shall:
3-6 (1) use cost data obtained from generally accepted
3-7 sources;
3-8 (2) make any appropriate adjustments for physical,
3-9 functional, or economic obsolescence;
3-10 (3) make available to the public on request cost data
3-11 developed and used by the chief appraiser and may charge a
3-12 reasonable fee to the public for the data;
3-13 (4) clearly state the reason for any variation between
3-14 generally accepted cost data and locally produced cost data if the
3-15 data vary by more than 10 percent; and
3-16 (5) make available on request any applicable market
3-17 data that demonstrate the difference between the replacement cost
3-18 of the improvements to the property and the depreciated value of
3-19 the improvements.
3-20 Sec. 23.012. INCOME METHOD OF APPRAISAL. If the chief
3-21 appraiser uses the income method of appraisal to determine the
3-22 market value of real property, the chief appraiser shall:
3-23 (1) use rental income and expense data pertaining to
3-24 the property if possible and applicable;
3-25 (2) make any projections of future rental income and
3-26 expenses only from clear and appropriate evidence;
3-27 (3) use data from generally accepted sources in
4-1 determining an appropriate capitalization rate; and
4-2 (4) determine a capitalization rate for
4-3 income-producing property that includes a reasonable return on
4-4 investment, taking into account the risk associated with the
4-5 investment.
4-6 Sec. 23.013. MARKET DATA COMPARISON METHOD OF APPRAISAL. If
4-7 the chief appraiser uses the market data comparison method of
4-8 appraisal to determine the market value of real property, the chief
4-9 appraiser shall use comparable sales data if possible.
4-10 SECTION 3. This Act takes effect January 1, 1998.
4-11 SECTION 4. The importance of this legislation and the
4-12 crowded condition of the calendars in both houses create an
4-13 emergency and an imperative public necessity that the
4-14 constitutional rule requiring bills to be read on three several
4-15 days in each house be suspended, and this rule is hereby suspended.