LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 23, 1997 TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 1048 Committee on Finance By: Truan Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB1048 ( Relating to exempting from ad valorem taxation property owned by certain organizations constructing, repairing, and providing housing for low-income and moderate-income persons.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB1048-As Introduced Section 403.302 of the Government Code requires the Comptroller to conduct a property value study to determine the total taxable value for each school district. Total taxable value is an element in the state's school funding formula. Passage of this bill could cause a reduction in school district taxable values reported to the Commissioner of Education by the Comptroller. Based on the state's school funding formulas, a reduction in taxable values could result in an increase in the cost of state aid for public education. FISCAL ANALYSIS The bill would amend Chapter 11 of the Tax Code to create a new property tax exemption for community housing development organizations. A community housing development organization would be entitled to a property tax exemption on its real and personal property under certain circumstances. The bill would require the organization to be a community housing development organization, as defined by federal law and meet the requirements of a charitable organization under Sec. 11.18 (e) and (f). The organization would be required to engage exclusively in building or repairing housing and selling or renting that property without profit to low or moderate income persons. The property could not be exempt from property taxation for more than three years after acquisition by the organization, unless rented without profit to low- or moderate-income persons. The property tax exemption also would extend to tangible personal property used in building, repairing, selling, or renting real property owned by the organization. The bill would take effect January 1, 1998. LOCAL There would be some revenue loss to local governments if organizations that would not otherwise qualify for existing property tax exemptions qualified under the proposed exemption. The amount of any loss to local governments would depend on the number of organizations qualifying and the value of real and tangible personal property owned and used exclusively as required by the bill. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,BR