HBA-JRA, RAR C.S.H.B. 873 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 873
By: Hochberg
Ways & Means
4/6/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Currently, certain nonprofit organizations are entitled to an exemption
from ad valorem taxation for certain real property owned by the
organization and used in accordance with the organization's nonprofit
mission.  There has been inconsistent treatment of this exemption by some
assessors, due to their interpretation that property on which improvements
are incomplete does not qualify for the exemption.  C.S.H.B. 873 provides
that an incomplete improvement of property belonging to certain
organizations qualifies for an exemption from ad valorem taxation for a
period of not more than three years. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 11.18, Tax Code, by amending Subsection (a) and
adding Subsections (l) and (m), as follows: 

(a)  Exempts from ad valorem taxation real property owned by a charitable
organization consisting of an incomplete improvement that is under active
construction or other physical preparation and is designed and intended to
be used exclusively by qualified charitable organizations and the land on
which it is located that will be reasonably necessary for the use of the
improvement. 

(l)  Prohibits such a property from being exempted for more than three
years. 

(m)  Provides that an incomplete improvement is under physical preparation,
for purposes of Subsection (a), if the owner has engaged in architectural
or engineering work, soil testing, land clearing activities, or site
improvement work necessary for the construction of the improvement; or
conducted an environmental or land study relating to the construction of
the improvement.  

SECTION 2.  Amends Section 11.19, Tax Code, by amending Subsection (a) and
adding Subsections (e) and (f), as follows: 

(a)  Exempts from ad valorem taxation real property owned by a youth
development association consisting of an incomplete improvement that is
under active construction or other physical preparation and is designed and
intended to be used exclusively by qualified youth development associations
and the land on which it is located that will be reasonably necessary for
the use of the improvement. 

(e)  Prohibits such a property from being exempted for more than three
years. 

(f)  Provides that an incomplete improvement is under physical preparation,
for purposes of Subsection (a), if the owner has engaged in architectural
or engineering work, soil testing, land clearing activities, or site
improvement work necessary for the construction of the  improvement; or
conducted an environmental or land study relating to the construction of
the improvement.  

SECTION 3.  Amends Section 11.20(f), Tax Code, to prohibit the property of
a religious organization from being exempted for more than three years. 

SECTION 4.  Amends Section 11.21, Tax Code, by amending Subsection (a) and
adding Subsections (g) and (h), as follows: 

(a)  Exempts from ad valorem taxation real property owned by a qualified
school consisting of an incomplete improvement that is under active
construction or other physical preparation and is designed and intended to
be used exclusively by a qualified school and the land on which it is
located that will be reasonably necessary for the use of the improvement. 

(g)  Prohibits such a property from being exempted for more than three
years. 

(h)  Provides that an incomplete improvement is under physical preparation,
for purposes of Subsection (a), if the owner has engaged in architectural
or engineering work, soil testing, land clearing activities, or site
improvement work necessary for the construction of the improvement; or
conducted an environmental or land study relating to the construction of
the improvement. 

SECTION 5.  Amends Section 11.23, Tax Code, by adding Subsection (1), as
follows: 

(l)   Exempts from ad valorem taxation real property owned and used by
veterans organizations, Federation of Women's Clubs, Nature Conservancy of
Texas, Congress of Parents and Teachers, private enterprise demonstration
associations, theater schools, community services clubs, medical center
development, and scientific research corporations, as described in
Subsections (a)-(e), (g), or (i)-(k), Section 11.23 (Miscellaneous
Exemptions), Tax Code, consisting of an incomplete improvement that is
under active construction or other physical preparation and is designed and
intended to be used exclusively by a qualified school and the land on which
it is located that will be reasonably necessary for the use of the
improvement.  Prohibits such a property from being exempted for more than
three years. Provides that an incomplete improvement is under physical
preparation if the owner has engaged in architectural or engineering work,
soil testing, land clearing activities, or site improvement work necessary
for the construction of the improvement; or conducted an environmental or
land study relating to the construction of the improvement. 
      
SECTION 6.  Amends Section 11.30, Tax Code, as follows:

(a)  Exempts from ad valorem taxation real property owned and used by a
corporation organized under Chapter 67 (Nonprofit Water Supply or Sewer
Service Corporations), Water Code, consisting of an incomplete improvement
that is under active construction or other physical preparation and is
designed and intended to be used exclusively by a qualified school and the
land on which it is located that will be reasonably necessary for the use
of the improvement. 

(b)  Prohibits such a property from being exempted for more than three
years. 

(c)  Provides that an incomplete improvement is under physical preparation,
for purposes of Subsection (a), if the owner has engaged in architectural
or engineering work, soil testing, land clearing activities, or site
improvement work necessary for the construction of the improvement; or
conducted an environmental or land study relating to the construction of
the improvement.  

SECTION 7.  Emergency clause.
  Effective date: upon passage.


 COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original by deleting proposed SECTION 1 of the
original, which amended Section 11.17 (Cemeteries), Tax Code, to exempt
from ad valorem taxation real property owned by a cemetery consisting of an
incomplete improvement of the same type and with the same restrictions as
described in the remaining sections of the bill. 

The substitute redesignates proposed SECTIONS 2-8 to SECTIONS 1-7.