1-1 By: Hamric, et al. (Senate Sponsor - Barrientos) H.B. No. 2269
1-2 (In the Senate - Received from the House May 11, 1999;
1-3 May 12, 1999, read first time and referred to Committee on Finance;
1-4 May 14, 1999, reported favorably by the following vote: Yeas 7,
1-5 Nays 0; May 14, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the exemption from ad valorem taxation of property
1-9 owned by certain charitable organizations performing certain
1-10 functions.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 11.18(d), Tax Code, is amended to read as
1-13 follows:
1-14 (d) A charitable organization must be organized exclusively
1-15 to perform religious, charitable, scientific, literary, or
1-16 educational purposes and, except as permitted by Subsection (h) of
1-17 this section, engage exclusively in performing one or more of the
1-18 following charitable functions:
1-19 (1) providing medical care without regard to the
1-20 beneficiaries' ability to pay, which in the case of a nonprofit
1-21 hospital or hospital system means providing charity care and
1-22 community benefits as set forth in Paragraph (A), (B), (C), (D),
1-23 (E), (F), (G), or (H):
1-24 (A) charity care and government-sponsored
1-25 indigent health care are provided at a level which is reasonable in
1-26 relation to the community needs, as determined through the
1-27 community needs assessment, the available resources of the hospital
1-28 or hospital system, and the tax-exempt benefits received by the
1-29 hospital or hospital system;
1-30 (B) charity care and government-sponsored
1-31 indigent health care are provided in an amount equal to at least
1-32 four percent of the hospital's or hospital system's net patient
1-33 revenue;
1-34 (C) charity care and government-sponsored
1-35 indigent health care are provided in an amount equal to at least
1-36 100 percent of the hospital's or hospital system's tax-exempt
1-37 benefits, excluding federal income tax;
1-38 (D) a nonprofit hospital that has been
1-39 designated as a disproportionate share hospital under the state
1-40 Medicaid program in the current year or in either of the previous
1-41 two fiscal years shall be considered to have provided a reasonable
1-42 amount of charity care and government-sponsored indigent health
1-43 care and shall be deemed in compliance with the standards in this
1-44 subsection;
1-45 (E) for tax years before 1996, charity care and
1-46 community benefits are provided in a combined amount equal to at
1-47 least five percent of the hospital's or hospital system's net
1-48 patient revenue, provided that charity care and
1-49 government-sponsored indigent health care are provided in an amount
1-50 equal to at least three percent of net patient revenue;
1-51 (F) beginning with the hospital's or hospital
1-52 system's tax year starting after 1995, charity care and community
1-53 benefits are provided in a combined amount equal to at least five
1-54 percent of the hospital's or hospital system's net patient revenue,
1-55 provided that charity care and government-sponsored indigent health
1-56 care are provided in an amount equal to at least four percent of
1-57 net patient revenue;
1-58 (G) a hospital operated on a nonprofit basis
1-59 that is located in a county with a population of less than 50,000
1-60 and in which the entire county or the population of the entire
1-61 county has been designated as a health professionals shortage area
1-62 is considered to be in compliance with the standards provided by
1-63 this subsection; or
1-64 (H) a hospital providing health care services to
2-1 inpatients or outpatients without receiving any payment for
2-2 providing those services from any source, including the patient or
2-3 person legally obligated to support the patient, third-party
2-4 payors, Medicare, Medicaid, or any other state or local indigent
2-5 care program but excluding charitable donations, legacies,
2-6 bequests, or grants or payments for research, is considered to be
2-7 in compliance with the standards provided by this subsection;
2-8 (2) providing support or relief to orphans,
2-9 delinquent, dependent, or handicapped children in need of
2-10 residential care, abused or battered spouses or children in need of
2-11 temporary shelter, the impoverished, or victims of natural disaster
2-12 without regard to the beneficiaries' ability to pay;
2-13 (3) providing support to elderly persons or the
2-14 handicapped without regard to the beneficiaries' ability to pay;
2-15 (4) preserving a historical landmark or site;
2-16 (5) promoting or operating a museum, zoo, library,
2-17 theater of the dramatic or performing arts, or symphony orchestra
2-18 or choir;
2-19 (6) promoting or providing humane treatment of
2-20 animals;
2-21 (7) acquiring, storing, transporting, selling, or
2-22 distributing water for public use;
2-23 (8) answering fire alarms and extinguishing fires with
2-24 no compensation or only nominal compensation to the members of the
2-25 organization;
2-26 (9) promoting the athletic development of boys or
2-27 girls under the age of 18 years;
2-28 (10) preserving or conserving wildlife;
2-29 (11) promoting educational development through loans
2-30 or scholarships to students;
2-31 (12) providing halfway house services pursuant to a
2-32 certification as a halfway house by the Board of Pardons and
2-33 Paroles;
2-34 (13) providing permanent housing and related social,
2-35 health care, and educational facilities for persons who are 62
2-36 years of age or older without regard to the residents' ability to
2-37 pay;
2-38 (14) promoting or operating an art gallery, museum, or
2-39 collection, in a permanent location or on tour, that is open to the
2-40 public;
2-41 (15) providing for the organized solicitation and
2-42 collection for distributions through gifts, grants, and agreements
2-43 to nonprofit charitable, education, religious, and youth
2-44 organizations that provide direct human, health, and welfare
2-45 services;
2-46 (16) performing biomedical or scientific research or
2-47 biomedical or scientific education for the benefit of the public;
2-48 (17) operating a television station that produces or
2-49 broadcasts educational, cultural, or other public interest
2-50 programming and that receives grants from the Corporation for
2-51 Public Broadcasting under 47 U.S.C. Section 396 and its subsequent
2-52 amendments;
2-53 (18) providing housing for low-income and
2-54 moderate-income families, for unmarried individuals 62 years of age
2-55 or older, for handicapped individuals, and for families displaced
2-56 by urban renewal, through the use of trust assets that are
2-57 irrevocably and, pursuant to a contract entered into before
2-58 December 31, 1972, contractually dedicated on the sale or
2-59 disposition of the housing to a charitable organization that
2-60 performs charitable functions described by Subdivision (9); [or]
2-61 (19) providing housing and related services to persons
2-62 who are 62 years of age or older in a retirement community, if the
2-63 retirement community provides independent living services, assisted
2-64 living services, and nursing services to its residents on a single
2-65 campus:
2-66 (A) without regard to the residents' ability to
2-67 pay; or
2-68 (B) in which at least four percent of the
2-69 retirement community's combined net resident revenue is provided in
3-1 charitable care to its residents; or
3-2 (20) providing housing on a cooperative basis to
3-3 students of an institution of higher education if:
3-4 (A) the organization is exempt from federal
3-5 income taxation under Section 501(a) of the Internal Revenue Code
3-6 of 1986, and its subsequent amendments, by being listed as an
3-7 exempt entity under Section 501(c)(3) of that code;
3-8 (B) membership in the organization is open to
3-9 all students enrolled in the institution and is not limited to
3-10 those chosen by current members of the organization;
3-11 (C) the organization is governed by its members;
3-12 and
3-13 (D) the members of the organization share the
3-14 responsibility for managing the housing.
3-15 For purposes of satisfying Paragraph (F) of Subdivision (1),
3-16 a hospital or hospital system may not change its existing fiscal
3-17 year unless the hospital or hospital system changes its ownership
3-18 or corporate structure as a result of a sale or merger.
3-19 For purposes of this subsection, a hospital that satisfies
3-20 Paragraph (A), (D), (G), or (H) of Subdivision (1) shall be
3-21 excluded in determining a hospital system's compliance with the
3-22 standards provided by Paragraph (B), (C), (E), or (F) of
3-23 Subdivision (1).
3-24 For purposes of this subsection, the terms "charity care,"
3-25 "government-sponsored indigent health care," "health care
3-26 organization," "hospital system," "net patient revenue," "nonprofit
3-27 hospital," and "tax-exempt benefits" have the meanings set forth in
3-28 Sections 311.031 and 311.042, Health and Safety Code. A
3-29 determination of the amount of community benefits and charity care
3-30 and government-sponsored indigent health care provided by a
3-31 hospital or hospital system and the hospital's or hospital system's
3-32 compliance with the requirements of Section 311.045, Health and
3-33 Safety Code, shall be based on the most recently completed and
3-34 audited prior fiscal year of the hospital or hospital system.
3-35 The providing of charity care and government-sponsored
3-36 indigent health care in accordance with Paragraph (A) of
3-37 Subdivision (1) shall be guided by the prudent business judgment of
3-38 the hospital which will ultimately determine the appropriate level
3-39 of charity care and government-sponsored indigent health care based
3-40 on the community needs, the available resources of the hospital,
3-41 the tax-exempt benefits received by the hospital, and other factors
3-42 that may be unique to the hospital, such as the hospital's volume
3-43 of Medicare and Medicaid patients. These criteria shall not be
3-44 determinative factors, but shall be guidelines contributing to the
3-45 hospital's decision along with other factors which may be unique to
3-46 the hospital. The formulas contained in Paragraphs (B), (C), (E),
3-47 and (F) of Subdivision (1) shall also not be considered
3-48 determinative of a reasonable amount of charity care and
3-49 government-sponsored indigent health care.
3-50 The requirements of this subsection shall not apply to the
3-51 extent a hospital or hospital system demonstrates that reductions
3-52 in the amount of community benefits, charity care, and
3-53 government-sponsored indigent health care are necessary to maintain
3-54 financial reserves at a level required by a bond covenant, are
3-55 necessary to prevent the hospital or hospital system from
3-56 endangering its ability to continue operations, or if the hospital
3-57 or hospital system, as a result of a natural or other disaster, is
3-58 required substantially to curtail its operations.
3-59 In any fiscal year that a hospital or hospital system,
3-60 through unintended miscalculation, fails to meet any of the
3-61 standards in Subdivision (1), the hospital or hospital system shall
3-62 not lose its tax-exempt status without the opportunity to cure the
3-63 miscalculation in the fiscal year following the fiscal year the
3-64 failure is discovered by both meeting one of the standards and
3-65 providing an additional amount of charity care and
3-66 government-sponsored indigent health care that is equal to the
3-67 shortfall from the previous fiscal year. A hospital or hospital
3-68 system may apply this provision only once every five years.
3-69 SECTION 2. This Act takes effect January 1, 2000.
4-1 SECTION 3. The importance of this legislation and the
4-2 crowded condition of the calendars in both houses create an
4-3 emergency and an imperative public necessity that the
4-4 constitutional rule requiring bills to be read on three several
4-5 days in each house be suspended, and this rule is hereby suspended.
4-6 * * * * *