1-1 AN ACT
1-2 relating to exempting property owned by organizations that provide
1-3 support to elderly persons from ad valorem taxation.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 11.18, Tax Code, is amended by amending
1-6 Subsection (d) and adding Subsection (l) to read as follows:
1-7 (d) A charitable organization must be organized exclusively
1-8 to perform religious, charitable, scientific, literary, or
1-9 educational purposes and, except as permitted by Subsections
1-10 [Subsection] (h) and (l) of this section, engage exclusively in
1-11 performing one or more of the following charitable functions:
1-12 (1) providing medical care without regard to the
1-13 beneficiaries' ability to pay, which in the case of a nonprofit
1-14 hospital or hospital system means providing charity care and
1-15 community benefits as set forth in Paragraph (A), (B), (C), (D),
1-16 (E), (F), (G), or (H):
1-17 (A) charity care and government-sponsored
1-18 indigent health care are provided at a level which is reasonable in
1-19 relation to the community needs, as determined through the
1-20 community needs assessment, the available resources of the hospital
1-21 or hospital system, and the tax-exempt benefits received by the
1-22 hospital or hospital system;
1-23 (B) charity care and government-sponsored
1-24 indigent health care are provided in an amount equal to at least
2-1 four percent of the hospital's or hospital system's net patient
2-2 revenue;
2-3 (C) charity care and government-sponsored
2-4 indigent health care are provided in an amount equal to at least
2-5 100 percent of the hospital's or hospital system's tax-exempt
2-6 benefits, excluding federal income tax;
2-7 (D) a nonprofit hospital that has been
2-8 designated as a disproportionate share hospital under the state
2-9 Medicaid program in the current year or in either of the previous
2-10 two fiscal years shall be considered to have provided a reasonable
2-11 amount of charity care and government-sponsored indigent health
2-12 care and shall be deemed in compliance with the standards in this
2-13 subsection;
2-14 (E) for tax years before 1996, charity care and
2-15 community benefits are provided in a combined amount equal to at
2-16 least five percent of the hospital's or hospital system's net
2-17 patient revenue, provided that charity care and
2-18 government-sponsored indigent health care are provided in an amount
2-19 equal to at least three percent of net patient revenue;
2-20 (F) beginning with the hospital's or hospital
2-21 system's tax year starting after 1995, charity care and community
2-22 benefits are provided in a combined amount equal to at least five
2-23 percent of the hospital's or hospital system's net patient revenue,
2-24 provided that charity care and government-sponsored indigent health
2-25 care are provided in an amount equal to at least four percent of
2-26 net patient revenue;
2-27 (G) a hospital operated on a nonprofit basis
3-1 that is located in a county with a population of less than 50,000
3-2 and in which the entire county or the population of the entire
3-3 county has been designated as a health professionals shortage area
3-4 is considered to be in compliance with the standards provided by
3-5 this subsection; or
3-6 (H) a hospital providing health care services to
3-7 inpatients or outpatients without receiving any payment for
3-8 providing those services from any source, including the patient or
3-9 person legally obligated to support the patient, third-party
3-10 payors, Medicare, Medicaid, or any other state or local indigent
3-11 care program but excluding charitable donations, legacies,
3-12 bequests, or grants or payments for research, is considered to be
3-13 in compliance with the standards provided by this subsection;
3-14 (2) providing support or relief to orphans,
3-15 delinquent, dependent, or handicapped children in need of
3-16 residential care, abused or battered spouses or children in need of
3-17 temporary shelter, the impoverished, or victims of natural
3-18 disaster without regard to the beneficiaries' ability to pay;
3-19 (3) providing support to elderly persons, including
3-20 the provision of recreational or social activities and facilities
3-21 designed to address the special needs of elderly persons, or to the
3-22 handicapped, without regard to the beneficiaries' ability to pay;
3-23 (4) preserving a historical landmark or site;
3-24 (5) promoting or operating a museum, zoo, library,
3-25 theater of the dramatic or performing arts, or symphony orchestra
3-26 or choir;
3-27 (6) promoting or providing humane treatment of
4-1 animals;
4-2 (7) acquiring, storing, transporting, selling, or
4-3 distributing water for public use;
4-4 (8) answering fire alarms and extinguishing fires with
4-5 no compensation or only nominal compensation to the members of the
4-6 organization;
4-7 (9) promoting the athletic development of boys or
4-8 girls under the age of 18 years;
4-9 (10) preserving or conserving wildlife;
4-10 (11) promoting educational development through loans
4-11 or scholarships to students;
4-12 (12) providing halfway house services pursuant to a
4-13 certification as a halfway house by the Board of Pardons and
4-14 Paroles;
4-15 (13) providing permanent housing and related social,
4-16 health care, and educational facilities for persons who are 62
4-17 years of age or older without regard to the residents' ability to
4-18 pay;
4-19 (14) promoting or operating an art gallery, museum, or
4-20 collection, in a permanent location or on tour, that is open to the
4-21 public;
4-22 (15) providing for the organized solicitation and
4-23 collection for distributions through gifts, grants, and agreements
4-24 to nonprofit charitable, education, religious, and youth
4-25 organizations that provide direct human, health, and welfare
4-26 services;
4-27 (16) performing biomedical or scientific research or
5-1 biomedical or scientific education for the benefit of the public;
5-2 (17) operating a television station that produces or
5-3 broadcasts educational, cultural, or other public interest
5-4 programming and that receives grants from the Corporation for
5-5 Public Broadcasting under 47 U.S.C. Section 396;
5-6 (18) providing housing for low-income and
5-7 moderate-income families, for unmarried individuals 62 years of age
5-8 or older, for handicapped individuals, and for families displaced
5-9 by urban renewal, through the use of trust assets that are
5-10 irrevocably and, pursuant to a contract entered into before
5-11 December 31, 1972, contractually dedicated on the sale or
5-12 disposition of the housing to a charitable organization that
5-13 performs charitable functions described by Subdivision (9); or
5-14 (19) providing housing and related services to persons
5-15 who are 62 years of age or older in a retirement community, if the
5-16 retirement community provides independent living services, assisted
5-17 living services, and nursing services to its residents on a single
5-18 campus:
5-19 (A) without regard to the residents' ability to
5-20 pay; or
5-21 (B) in which at least four percent of the
5-22 retirement community's combined net resident revenue is provided in
5-23 charitable care to its residents.
5-24 For purposes of satisfying Paragraph (F) of Subdivision (1),
5-25 a hospital or hospital system may not change its existing fiscal
5-26 year unless the hospital or hospital system changes its ownership
5-27 or corporate structure as a result of a sale or merger.
6-1 For purposes of this subsection, a hospital that satisfies
6-2 Paragraph (A), (D), (G), or (H) of Subdivision (1) shall be
6-3 excluded in determining a hospital system's compliance with the
6-4 standards provided by Paragraph (B), (C), (E), or (F) of
6-5 Subdivision (1).
6-6 For purposes of this subsection, the terms "charity care,"
6-7 "government-sponsored indigent health care," "health care
6-8 organization," "hospital system," "net patient revenue," "nonprofit
6-9 hospital," and "tax-exempt benefits" have the meanings set forth in
6-10 Sections 311.031 and 311.042, Health and Safety Code. A
6-11 determination of the amount of community benefits and charity care
6-12 and government-sponsored indigent health care provided by a
6-13 hospital or hospital system and the hospital's or hospital system's
6-14 compliance with the requirements of Section 311.045, Health and
6-15 Safety Code, shall be based on the most recently completed and
6-16 audited prior fiscal year of the hospital or hospital system.
6-17 The providing of charity care and government-sponsored
6-18 indigent health care in accordance with Paragraph (A) of
6-19 Subdivision (1) shall be guided by the prudent business judgment of
6-20 the hospital which will ultimately determine the appropriate level
6-21 of charity care and government-sponsored indigent health care based
6-22 on the community needs, the available resources of the hospital,
6-23 the tax-exempt benefits received by the hospital, and other factors
6-24 that may be unique to the hospital, such as the hospital's volume
6-25 of Medicare and Medicaid patients. These criteria shall not be
6-26 determinative factors, but shall be guidelines contributing to the
6-27 hospital's decision along with other factors which may be unique to
7-1 the hospital. The formulas contained in Paragraphs (B), (C), (E),
7-2 and (F) of Subdivision (1) shall also not be considered
7-3 determinative of a reasonable amount of charity care and
7-4 government-sponsored indigent health care.
7-5 The requirements of this subsection shall not apply to the
7-6 extent a hospital or hospital system demonstrates that reductions
7-7 in the amount of community benefits, charity care, and
7-8 government-sponsored indigent health care are necessary to maintain
7-9 financial reserves at a level required by a bond covenant, are
7-10 necessary to prevent the hospital or hospital system from
7-11 endangering its ability to continue operations, or if the hospital
7-12 or hospital system, as a result of a natural or other disaster, is
7-13 required substantially to curtail its operations.
7-14 In any fiscal year that a hospital or hospital system,
7-15 through unintended miscalculation, fails to meet any of the
7-16 standards in Subdivision (1), the hospital or hospital system shall
7-17 not lose its tax-exempt status without the opportunity to cure the
7-18 miscalculation in the fiscal year following the fiscal year the
7-19 failure is discovered by both meeting one of the standards and
7-20 providing an additional amount of charity care and
7-21 government-sponsored indigent health care that is equal to the
7-22 shortfall from the previous fiscal year. A hospital or hospital
7-23 system may apply this provision only once every five years.
7-24 (l) A charitable organization described by Subsection (d)(3)
7-25 that provides support to elderly persons must engage primarily in
7-26 performing charitable functions described by Subsection (d)(3), but
7-27 may engage in other activities that support or are related to its
8-1 charitable functions.
8-2 SECTION 2. (a) This Act takes effect as provided by this
8-3 section, but only if the constitutional amendment proposed by the
8-4 76th Legislature, Regular Session, 1999, to authorize the exemption
8-5 of property of institutions of public charity, as defined by
8-6 general law, from ad valorem taxation, is approved by the voters.
8-7 If that amendment is not approved by the voters, this Act has no
8-8 effect.
8-9 (b) This Act takes effect January 1, 2000, and applies only
8-10 to ad valorem taxes imposed in a tax year that begins on or after
8-11 that date.
8-12 SECTION 3. The importance of this legislation and the
8-13 crowded condition of the calendars in both houses create an
8-14 emergency and an imperative public necessity that the
8-15 constitutional rule requiring bills to be read on three several
8-16 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1978 was passed by the House on April
23, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1978 was passed by the Senate on May
13, 1999, by the following vote: Yeas 30, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor