By Hamric                                             H.B. No. 2269
         76R6397 GJH-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the exemption from ad valorem taxation of property
 1-3     owned by certain charitable organizations performing certain
 1-4     functions.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Section 11.18(d), Tax Code, is amended to read as
 1-7     follows:
 1-8           (d)  A charitable organization must be organized exclusively
 1-9     to perform religious, charitable, scientific, literary, or
1-10     educational purposes and, except as permitted by Subsection (h) of
1-11     this section, engage exclusively in performing one or more of the
1-12     following charitable functions:
1-13                 (1)  providing medical care without regard to the
1-14     beneficiaries' ability to pay, which in the case of a nonprofit
1-15     hospital or hospital system means providing charity care and
1-16     community benefits as set forth in Paragraph (A), (B), (C), (D),
1-17     (E), (F), (G), or (H):
1-18                       (A)  charity care and government-sponsored
1-19     indigent health care are provided at a level which is reasonable in
1-20     relation to the community needs, as determined through the
1-21     community needs assessment, the available resources of the hospital
1-22     or hospital system, and the tax-exempt benefits received by the
1-23     hospital or hospital system;
1-24                       (B)  charity care and government-sponsored
 2-1     indigent health care are provided in an amount equal to at least
 2-2     four percent of the hospital's or hospital system's net patient
 2-3     revenue;
 2-4                       (C)  charity care and government-sponsored
 2-5     indigent health care are provided in an amount equal to at least
 2-6     100 percent of the hospital's or hospital system's tax-exempt
 2-7     benefits, excluding federal income tax;
 2-8                       (D)  a nonprofit hospital that has been
 2-9     designated as a disproportionate share hospital under the state
2-10     Medicaid program in the current year or in either of the previous
2-11     two fiscal years shall be considered to have provided a reasonable
2-12     amount of charity care and government-sponsored indigent health
2-13     care and shall be deemed in compliance with the standards in this
2-14     subsection;
2-15                       (E)  for tax years before 1996, charity care and
2-16     community benefits are provided in a combined amount equal to at
2-17     least five percent of the hospital's or hospital system's net
2-18     patient revenue, provided that charity care and
2-19     government-sponsored indigent health care are provided in an amount
2-20     equal to at least three percent of net patient revenue;
2-21                       (F)  beginning with the hospital's or hospital
2-22     system's tax year starting after 1995, charity care and community
2-23     benefits are provided in a combined amount equal to at least five
2-24     percent of the hospital's or hospital system's net patient revenue,
2-25     provided that charity care and government-sponsored indigent health
2-26     care are provided in an amount equal to at least four percent of
2-27     net patient revenue;
 3-1                       (G)  a hospital operated on a nonprofit basis
 3-2     that is located in a county with a population of less than 50,000
 3-3     and in which the entire county or the population of the entire
 3-4     county has been designated as a health professionals shortage area
 3-5     is considered to be in compliance with the standards provided by
 3-6     this subsection; or
 3-7                       (H)  a hospital providing health care services to
 3-8     inpatients or outpatients without receiving any payment for
 3-9     providing those services from any source, including the patient or
3-10     person legally obligated to support the patient, third-party
3-11     payors, Medicare, Medicaid, or any other state or local indigent
3-12     care program but excluding charitable donations, legacies,
3-13     bequests, or grants or payments for research, is considered to be
3-14     in compliance with the standards provided by this subsection;
3-15                 (2)  providing support or relief to orphans,
3-16     delinquent, dependent, or handicapped children in need of
3-17     residential care, abused or battered spouses or children in need of
3-18     temporary shelter, the impoverished, or victims of natural disaster
3-19     without regard to the beneficiaries' ability to pay;
3-20                 (3)  providing support to elderly persons or the
3-21     handicapped without regard to the beneficiaries' ability to pay;
3-22                 (4)  preserving a historical landmark or site;
3-23                 (5)  promoting or operating a museum, zoo, library,
3-24     theater of the dramatic or performing arts, or symphony orchestra
3-25     or choir;
3-26                 (6)  promoting or providing humane treatment of
3-27     animals;
 4-1                 (7)  acquiring, storing, transporting, selling, or
 4-2     distributing water for public use;
 4-3                 (8)  answering fire alarms and extinguishing fires with
 4-4     no compensation or only nominal compensation to the members of the
 4-5     organization;
 4-6                 (9)  promoting the athletic development of boys or
 4-7     girls under the age of 18 years;
 4-8                 (10)  preserving or conserving wildlife;
 4-9                 (11)  promoting educational development through loans
4-10     or scholarships to students;
4-11                 (12)  providing halfway house services pursuant to a
4-12     certification as a halfway house by the Board of Pardons and
4-13     Paroles;
4-14                 (13)  providing permanent housing and related social,
4-15     health care, and educational facilities for persons who are 62
4-16     years of age or older without regard to the residents' ability to
4-17     pay;
4-18                 (14)  promoting or operating an art gallery, museum, or
4-19     collection, in a permanent location or on tour, that is open to the
4-20     public;
4-21                 (15)  providing for the organized solicitation and
4-22     collection for distributions through gifts, grants, and agreements
4-23     to nonprofit charitable, education, religious, and youth
4-24     organizations that provide direct human, health, and welfare
4-25     services;
4-26                 (16)  performing biomedical or scientific research or
4-27     biomedical or scientific education for the benefit of the public;
 5-1                 (17)  operating a television station that produces or
 5-2     broadcasts educational, cultural, or other public interest
 5-3     programming and that receives grants from the Corporation for
 5-4     Public Broadcasting under 47 U.S.C. Section 396 and its subsequent
 5-5     amendments;
 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; or
5-24                 (20)  providing housing on a cooperative basis to
5-25     students of an institution of higher education if the organization
5-26     is exempt from federal income taxes under Section 501(a) of the
5-27     Internal Revenue Code of 1986, and its subsequent amendments, by
 6-1     being listed as an exempt entity under Section 501(c)(3) of that
 6-2     code.
 6-3           For purposes of satisfying Paragraph (F) of Subdivision (1),
 6-4     a hospital or hospital system may not change its existing fiscal
 6-5     year unless the hospital or hospital system changes its ownership
 6-6     or corporate structure as a result of a sale or merger.
 6-7           For purposes of this subsection, a hospital that satisfies
 6-8     Paragraph (A), (D), (G), or (H) of Subdivision (1) shall be
 6-9     excluded in determining a hospital system's compliance with the
6-10     standards provided by Paragraph (B), (C), (E), or (F) of
6-11     Subdivision (1).
6-12           For purposes of this subsection, the terms "charity care,"
6-13     "government-sponsored indigent health care," "health care
6-14     organization," "hospital system," "net patient revenue," "nonprofit
6-15     hospital," and "tax-exempt benefits" have the meanings set forth in
6-16     Sections 311.031 and 311.042, Health and Safety Code.  A
6-17     determination of the amount of community benefits and charity care
6-18     and government-sponsored indigent health care provided by a
6-19     hospital or hospital system and the hospital's or hospital system's
6-20     compliance with the requirements of Section 311.045, Health and
6-21     Safety Code, shall be based on the most recently completed and
6-22     audited prior fiscal year of the hospital or hospital system.
6-23           The providing of charity care and government-sponsored
6-24     indigent health care in accordance with Paragraph (A) of
6-25     Subdivision (1) shall be guided by the prudent business judgment of
6-26     the hospital which will ultimately determine the appropriate level
6-27     of charity care and government-sponsored indigent health care based
 7-1     on the community needs, the available resources of the hospital,
 7-2     the tax-exempt benefits received by the hospital, and other factors
 7-3     that may be unique to the hospital, such as the hospital's volume
 7-4     of Medicare and Medicaid patients.  These criteria shall not be
 7-5     determinative factors, but shall be guidelines contributing to the
 7-6     hospital's decision along with other factors which may be unique to
 7-7     the hospital.  The formulas contained in Paragraphs (B), (C), (E),
 7-8     and (F) of Subdivision (1) shall also not be considered
 7-9     determinative of a reasonable amount of charity care and
7-10     government-sponsored indigent health care.
7-11           The requirements of this subsection shall not apply to the
7-12     extent a hospital or hospital system demonstrates that reductions
7-13     in the amount of community benefits, charity care, and
7-14     government-sponsored indigent health care are necessary to maintain
7-15     financial reserves at a level required by a bond covenant, are
7-16     necessary to prevent the hospital or hospital system from
7-17     endangering its ability to continue operations, or if the hospital
7-18     or hospital system, as a result of a natural or other disaster, is
7-19     required substantially to curtail its operations.
7-20           In any fiscal year that a hospital or hospital system,
7-21     through unintended miscalculation, fails to meet any of the
7-22     standards in Subdivision (1), the hospital or hospital system shall
7-23     not lose its tax-exempt status without the opportunity to cure the
7-24     miscalculation in the fiscal year following the fiscal year the
7-25     failure is discovered by both meeting one of the standards and
7-26     providing an additional amount of charity care and
7-27     government-sponsored indigent health care that is equal to the
 8-1     shortfall from the previous fiscal year.  A hospital or hospital
 8-2     system may apply this provision only once every five years.
 8-3           SECTION 2.  This Act takes effect January 1, 2000.
 8-4           SECTION 3.  The importance of this legislation and the
 8-5     crowded condition of the calendars in both houses create an
 8-6     emergency and an imperative public necessity that the
 8-7     constitutional rule requiring bills to be read on three several
 8-8     days in each house be suspended, and this rule is hereby suspended.