1-1 By: Hochberg (Senate Sponsor - Lindsay) H.B. No. 873
1-2 (In the Senate - Received from the House April 19, 1999;
1-3 April 20, 1999, read first time and referred to Committee on
1-4 Finance; April 27, 1999, reported favorably by the following vote:
1-5 Yeas 9, Nays 0; April 27, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to an exemption from ad valorem taxation for property of
1-9 certain nonprofit organizations while improvements are under
1-10 construction.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 11.18, Tax Code, is amended by amending
1-13 Subsection (a) and adding Subsections (l) and (m) to read as
1-14 follows:
1-15 (a) An organization that qualifies as a charitable
1-16 organization as provided by this section is entitled to an
1-17 exemption from taxation of:
1-18 (1) the buildings and tangible personal property that:
1-19 (A) [(1)] are owned by the charitable
1-20 organization; and
1-21 (B) [(2)] except as permitted by Subsection (b)
1-22 [of this section], are used exclusively by qualified charitable
1-23 organizations; and
1-24 (2) the real property owned by the charitable
1-25 organization consisting of:
1-26 (A) an incomplete improvement that:
1-27 (i) is under active construction or other
1-28 physical preparation; and
1-29 (ii) is designed and intended to be used
1-30 exclusively by qualified charitable organizations; and
1-31 (B) the land on which the incomplete improvement
1-32 is located that will be reasonably necessary for the use of the
1-33 improvement by qualified charitable organizations.
1-34 (l) A property may not be exempted under Subsection (a)(2)
1-35 for more than three years.
1-36 (m) For purposes of Subsection (a)(2), an incomplete
1-37 improvement is under physical preparation if the charitable
1-38 organization has:
1-39 (1) engaged in architectural or engineering work, soil
1-40 testing, land clearing activities, or site improvement work
1-41 necessary for the construction of the improvement; or
1-42 (2) conducted an environmental or land use study
1-43 relating to the construction of the improvement.
1-44 SECTION 2. Section 11.19, Tax Code, is amended by amending
1-45 Subsection (a) and adding Subsections (e) and (f) to read as
1-46 follows:
1-47 (a) An association that qualifies as a youth development
1-48 association as provided by Subsection (d) [of this section] is
1-49 entitled to an exemption from taxation of:
1-50 (1) the tangible property that:
1-51 (A) [(1)] is owned by the association;
1-52 (B) [(2)] except as permitted by Subsection (b)
1-53 [of this section], is used exclusively by qualified youth
1-54 development associations; and
1-55 (C) [(3)] is reasonably necessary for the
1-56 operation of the association; and
1-57 (2) the real property owned by the youth development
1-58 association consisting of:
1-59 (A) an incomplete improvement that:
1-60 (i) is under active construction or other
1-61 physical preparation; and
1-62 (ii) is designed and intended to be used
1-63 exclusively by qualified youth development associations when
1-64 complete; and
2-1 (B) the land on which the incomplete improvement
2-2 is located that will be reasonably necessary for the use of the
2-3 improvement by qualified youth development associations.
2-4 (e) A property may not be exempted under Subsection (a)(2)
2-5 for more than three years.
2-6 (f) For purposes of Subsection (a)(2), an incomplete
2-7 improvement is under physical preparation if the youth development
2-8 association has:
2-9 (1) engaged in architectural or engineering work, soil
2-10 testing, land clearing activities, or site improvement work
2-11 necessary for the construction of the improvement; or
2-12 (2) conducted an environmental or land use study
2-13 relating to the construction of the improvement.
2-14 SECTION 3. Section 11.20(f), Tax Code, is amended to read as
2-15 follows:
2-16 (f) A property may not be exempted under Subsection (a)(5)
2-17 [of this section] for more than three [two] years.
2-18 SECTION 4. Section 11.21, Tax Code, is amended by amending
2-19 Subsection (a) and adding Subsections (g) and (h) to read as
2-20 follows:
2-21 (a) A person is entitled to an exemption from taxation of:
2-22 (1) the buildings and tangible personal property that
2-23 the person [he] owns and that are used for a school that is
2-24 qualified as provided by Subsection (d) [of this section] if:
2-25 (A) [(1)] the school is operated exclusively by
2-26 the person owning the property;
2-27 (B) [(2)] except as permitted by Subsection (b)
2-28 [of this section], the buildings and tangible personal property are
2-29 used exclusively for educational functions; and
2-30 (C) [(3)] the buildings and tangible personal
2-31 property are reasonably necessary for the operation of the school;
2-32 and
2-33 (2) the real property owned by the person consisting
2-34 of:
2-35 (A) an incomplete improvement that:
2-36 (i) is under active construction or other
2-37 physical preparation; and
2-38 (ii) is designed and intended to be used
2-39 for a school that is qualified as provided by Subsection (d); and
2-40 (B) the land on which the incomplete improvement
2-41 is located that will be reasonably necessary for the use of the
2-42 improvement for a school that is qualified as provided by
2-43 Subsection (d).
2-44 (g) A property may not be exempted under Subsection (a)(2)
2-45 for more than three years.
2-46 (h) For purposes of Subsection (a)(2), an incomplete
2-47 improvement is under physical preparation if the person has:
2-48 (1) engaged in architectural or engineering work, soil
2-49 testing, land clearing activities, or site improvement work
2-50 necessary for the construction of the improvement; or
2-51 (2) conducted an environmental or land use study
2-52 relating to the construction of the improvement.
2-53 SECTION 5. Section 11.23, Tax Code, is amended by adding
2-54 Subsection (l) to read as follows:
2-55 (l) Incomplete Improvements. A person described by
2-56 Subsection (a)-(e), (g), or (i)-(k) is entitled to an exemption
2-57 from taxation of the real property owned by the person consisting
2-58 of an incomplete improvement that is under active construction or
2-59 other physical preparation and that is designed and intended to be
2-60 used by the person for a purpose described by that subsection when
2-61 complete and the land on which the incomplete improvement is
2-62 located that will be reasonably necessary for the person's use of
2-63 the improvement for that purpose. A property may not be exempted
2-64 under this subsection for more than three years. For purposes of
2-65 this subsection, an incomplete improvement is under physical
2-66 preparation if the person has:
2-67 (1) engaged in architectural or engineering work, soil
2-68 testing, land clearing activities, or site improvement work
2-69 necessary for the construction of the improvement; or
3-1 (2) conducted an environmental or land use study
3-2 relating to the construction of the improvement.
3-3 SECTION 6. Section 11.30, Tax Code, is amended to read as
3-4 follows:
3-5 Sec. 11.30. NONPROFIT WATER SUPPLY OR WASTEWATER SERVICE
3-6 CORPORATION. (a) A corporation organized under Chapter 67, Water
3-7 Code [76, Acts of the 43rd Legislature, 1st Called Session, 1933
3-8 (Article 1434a, Vernon's Texas Civil Statutes)], that provides in
3-9 the bylaws of the corporation that on dissolution of the
3-10 corporation the assets of the corporation remaining after discharge
3-11 of the corporation's indebtedness shall be transferred to an entity
3-12 that provides a water supply or wastewater service, or both, that
3-13 is exempt from ad valorem taxation is entitled to an exemption from
3-14 taxation of:
3-15 (1) property that the corporation owns and that is
3-16 reasonably necessary for and used in the operation of the
3-17 corporation:
3-18 (A) [(1)] to acquire, treat, store, transport,
3-19 sell, or distribute water; or
3-20 (B) [(2)] to provide wastewater service; and
3-21 (2) the real property owned by the corporation
3-22 consisting of:
3-23 (A) an incomplete improvement that:
3-24 (i) is under active construction or other
3-25 physical preparation; and
3-26 (ii) is designed and intended to be used
3-27 in the operation of the corporation for a purpose described by
3-28 Subdivision (1) when complete; and
3-29 (B) the land on which the incomplete improvement
3-30 is located that will be reasonably necessary for the use of the
3-31 improvement in the operation of the corporation for a purpose
3-32 described by Subdivision (1).
3-33 (b) A property may not be exempted under Subsection (a)(2)
3-34 for more than three years.
3-35 (c) For purposes of Subsection (a)(2), an incomplete
3-36 improvement is under physical preparation if the corporation has:
3-37 (1) engaged in architectural or engineering work, soil
3-38 testing, land clearing activities, or site improvement work
3-39 necessary for the construction of the improvement; or
3-40 (2) conducted an environmental or land use study
3-41 relating to the construction of the improvement.
3-42 SECTION 7. The importance of this legislation and the
3-43 crowded condition of the calendars in both houses create an
3-44 emergency and an imperative public necessity that the
3-45 constitutional rule requiring bills to be read on three several
3-46 days in each house be suspended, and this rule is hereby suspended,
3-47 and that this Act take effect and be in force from and after its
3-48 passage, and it is so enacted.
3-49 * * * * *