By:  Nixon                                             S.B. No. 182
         99S0096/1                           
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to the appraisal of certain leaseholds for tax purposes.
 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-3           SECTION 1.  Section 23.13, Tax Code, is amended to read as
 1-4     follows:
 1-5           Sec. 23.13.  Taxable Leaseholds.  (a)  A taxable leasehold or
 1-6     other possessory interest in real property that is exempt from
 1-7     taxation to the owner of the estate or interest encumbered by the
 1-8     possessory interest is appraised at the market value of the
 1-9     leasehold or other possessory interest.  Subject to the limitation
1-10     provided by Subsection (b), when appraising the leasehold or other
1-11     possessory interest in real property, the appraiser shall use the
1-12     equity method of valuation as follows:
1-13                 (1)  determine the market lease rate for comparable
1-14     properties with comparable restrictions;
1-15                 (2)  determine the actual lease rate for the property
1-16     being appraised;
1-17                 (3)  subtract the actual lease rate from the market
1-18     lease rate; and
1-19                 (4)  divide the remainder by a market capitalization
1-20     rate for property of comparable risk to determine the leasehold
1-21     value.
1-22           (b)  The [however, the] appraised value may not be less than
1-23     the total rental paid for the interest for the current tax year.
1-24           SECTION 2.  This Act takes effect September 1, 1999.
 2-1           SECTION 3.  The importance of this legislation and the
 2-2     crowded condition of the calendars in both houses create an
 2-3     emergency and an imperative public necessity that the
 2-4     constitutional rule requiring bills to be read on three several
 2-5     days in each house be suspended, and this rule is hereby suspended.