By: Nixon S.B. No. 1375
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the appraisal of certain leaseholds for tax purposes.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 23.13, Tax Code, is amended to read as
1-4 follows:
1-5 Sec. 23.13. TAXABLE LEASEHOLDS. (a) A taxable leasehold
1-6 or other possessory interest in real property that is exempt from
1-7 taxation to the owner of the estate or interest encumbered by the
1-8 possessory interest is appraised at the market value of the
1-9 leasehold or other possessory interest. Subject to the limitation
1-10 provided by Subsection (b), when appraising the leasehold or other
1-11 possessory interest in real property, the appraiser shall use the
1-12 equity method of valuation as follows:
1-13 (1) determine the market lease rate for comparable
1-14 properties with comparable restrictions;
1-15 (2) determine the actual lease rate for the property
1-16 being appraised;
1-17 (3) subtract the actual lease rate from the market
1-18 lease rate; and
1-19 (4) divide the remainder by a market capitalization
1-20 rate for property of comparable risk to determine the leasehold
1-21 value.
1-22 (b) The [However, the] appraised value may not be less than
1-23 the total rental paid for the interest for the current tax year.
2-1 SECTION 2. Subchapter A, Chapter 41, Tax Code, is amended by
2-2 adding Section 41.035 to read as follows:
2-3 Sec. 41.035. CHALLENGE RELATING TO CERTAIN TAXABLE
2-4 LEASEHOLDS. In a challenge filed under this subchapter that
2-5 relates to a taxable leasehold or other possessory interest in real
2-6 property, if the real property is owned by this state or a
2-7 political subdivision of this state, the state or political
2-8 subdivision, as appropriate, may intervene in or be a party to the
2-9 challenge. The state or political subdivision is not a necessary
2-10 party to the challenge.
2-11 SECTION 3. Subchapter C, Chapter 41, Tax Code, is amended by
2-12 adding Section 41.414 to read as follows:
2-13 Sec. 41.414. PROTEST RELATING TO CERTAIN TAXABLE LEASEHOLDS.
2-14 Notwithstanding Section 41.413 or any other law to the contrary,
2-15 the state or a political subdivision of this state, as appropriate,
2-16 may intervene in or be a party to a challenge filed under this
2-17 subchapter if the challenge relates to a taxable leasehold or other
2-18 possessory interest in real property that is owned by this state or
2-19 the political subdivision. The state or political subdivision is
2-20 not a necessary party to the protest.
2-21 SECTION 4. Section 42.031, Tax Code, is amended by adding
2-22 Subsection (c) to read as follows:
2-23 (c) If an order of the appraisal review board relates to a
2-24 leasehold or other possessory interest in real property that is
2-25 owned by this state or a political subdivision of this state, the
3-1 state or the political subdivision, as appropriate, may intervene
3-2 in or be a party to an appeal of the board order. To the extent of
3-3 a conflict between Subsection (b) and this subsection, this
3-4 subsection prevails. The state or political subdivision is not a
3-5 necessary party to the appeal.
3-6 SECTION 5. This Act takes effect September 1, 1997.
3-7 SECTION 6. The importance of this legislation and the
3-8 crowded condition of the calendars in both houses create an
3-9 emergency and an imperative public necessity that the
3-10 constitutional rule requiring bills to be read on three several
3-11 days in each house be suspended, and this rule is hereby suspended.