By Haywood                                            S.B. No. 1481
         76R562 JD-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the appraisal of agricultural land for ad valorem
 1-3     taxation.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Sections 23.46(c) and (d), Tax Code, are amended
 1-6     to read as follows:
 1-7           (c)  If land that has been designated for agricultural use in
 1-8     any year is sold or diverted to a nonagricultural use, the total
 1-9     amount of additional taxes for the three years preceding the year
1-10     in which the land is sold or diverted [plus interest at the rate
1-11     provided for delinquent taxes] becomes due.  A determination that
1-12     the land has been diverted to a nonagricultural use is made by the
1-13     chief appraiser.  For purposes of this subsection, the chief
1-14     appraiser may not consider any period during which land is owned by
1-15     the state in determining whether the land has been diverted to a
1-16     nonagricultural use.  The chief appraiser shall deliver a notice of
1-17     the determination to the owner of the land as soon as possible
1-18     after making the determination and shall include in the notice an
1-19     explanation of the owner's right to protest the determination.  If
1-20     the owner does not file a timely protest or if the final
1-21     determination of the protest is that the additional taxes are due,
1-22     the assessor for each taxing unit shall prepare and deliver a bill
1-23     for the additional taxes [plus interest] as soon as practicable
1-24     after the change of use occurs.  If the additional taxes are due
 2-1     because of a sale of the land, the assessor for each taxing unit
 2-2     shall prepare and deliver the bill as soon as practicable after the
 2-3     sale occurs.  The taxes [and interest] are due and become
 2-4     delinquent and incur penalties and interest as provided by law for
 2-5     ad valorem taxes imposed by the taxing unit if not paid before the
 2-6     next February 1 that is at least 20 days after the date the bill is
 2-7     delivered to the owner of the land.
 2-8           (d)  A tax lien attaches to the land on the date the sale or
 2-9     change of use occurs to secure payment of the additional tax [and
2-10     interest] imposed by Subsection (c) of this section and any
2-11     penalties incurred.  The lien exists in favor of all taxing units
2-12     for which the additional tax is imposed.
2-13           SECTION 2.  Sections 23.47(c) and (d), Tax Code, are amended
2-14     to read as follows:
2-15           (c)  A provision in an instrument pertaining to a loan
2-16     secured by a lien in favor of the lender on land appraised
2-17     according to this subchapter that requires the borrower to make a
2-18     payment to protect the lender from loss because of the imposition
2-19     of additional taxes [and interest] under Section 23.46 is void
2-20     unless the provision:
2-21                 (1)  requires the borrower to pay into an escrow
2-22     account established by the lender an amount equal to the additional
2-23     taxes [and interest] that would be due under Section 23.46 if a
2-24     sale or change of use occurred on January 1 of the year in which
2-25     the loan is granted or amended;
2-26                 (2)  requires the escrow account to bear interest to be
2-27     credited to the account monthly;
 3-1                 (3)  permits the lender to apply money in the escrow
 3-2     account to the payment of a bill for additional taxes [and
 3-3     interest] under Section 23.46 before the loan is paid and requires
 3-4     the lender to refund the balance remaining in the escrow account
 3-5     after the bill is paid to the borrower; and
 3-6                 (4)  requires the lender to refund the money in the
 3-7     escrow account to the borrower on the payment of the loan.
 3-8           (d)  On the request of the borrower or the borrower's
 3-9     representative, the assessor for each taxing unit shall compute the
3-10     additional taxes [and interest] that would be due that taxing unit
3-11     under Section 23.46 if a sale or change of use occurred on January
3-12     1 of the year in which the loan is granted or amended.  The
3-13     assessor may charge a reasonable fee not to exceed the actual cost
3-14     of making the computation.
3-15           SECTION 3.  Sections 23.55(a), (b), and (e), Tax Code, are
3-16     amended to read as follows:
3-17           (a)  If the use of land that has been appraised as provided
3-18     by this subchapter changes, an additional tax is imposed on the
3-19     land equal to the difference between the taxes imposed on the land
3-20     for each of the five years preceding the year in which the change
3-21     of use occurs that the land was appraised as provided by this
3-22     subchapter and the tax that would have been imposed had the land
3-23     been taxed on the basis of market value in each of those years,
3-24     [plus interest at an annual rate of seven percent] calculated from
3-25     the dates on which the differences would have become due.  For
3-26     purposes of this subsection, the chief appraiser may not consider
3-27     any period during which land is owned by the state in determining
 4-1     whether a change in the use of the land has occurred.
 4-2           (b)  A tax lien attaches to the land on the date the change
 4-3     of use occurs to secure payment of the additional tax [and
 4-4     interest] imposed by this section and any penalties incurred.  The
 4-5     lien exists in favor of all taxing units for which the additional
 4-6     tax is imposed.
 4-7           (e)  A determination that a change in use of the land has
 4-8     occurred is made by the chief appraiser.  The chief appraiser shall
 4-9     deliver a notice of the determination to the owner of the land as
4-10     soon as possible after making the determination and shall include
4-11     in the notice an explanation of the owner's right to protest the
4-12     determination.  If the owner does not file a timely protest or if
4-13     the final determination of the protest is that the additional taxes
4-14     are due, the assessor for each taxing unit shall prepare and
4-15     deliver a bill for the additional taxes [plus interest] as soon as
4-16     practicable.  The taxes [and interest] are due and become
4-17     delinquent and incur penalties and interest as provided by law for
4-18     ad valorem taxes imposed by the taxing unit if not paid before the
4-19     next February 1 that is at least 20 days after the date the bill is
4-20     delivered to the owner of the land.
4-21           SECTION 4.  Sections 23.58(c) and (d), Tax Code, are amended
4-22     to read as follows:
4-23           (c)  A provision in an instrument pertaining to a loan
4-24     secured by a lien in favor of the lender on land appraised
4-25     according to this subchapter that requires the borrower to make a
4-26     payment to protect the lender from loss because of the imposition
4-27     of additional taxes [and interest] under Section 23.55 is void
 5-1     unless the provision:
 5-2                 (1)  requires the borrower to pay into an escrow
 5-3     account established by the lender an amount equal to the additional
 5-4     taxes [and interest] that would be due under Section 23.55 if a
 5-5     change of use occurred on January 1 of the year in which the loan
 5-6     is granted or amended;
 5-7                 (2)  requires the escrow account to bear interest to be
 5-8     credited to the account monthly;
 5-9                 (3)  permits the lender to apply money in the escrow
5-10     account to the payment of a bill for additional taxes [and
5-11     interest] under Section 23.55 before the loan is paid and requires
5-12     the lender to refund the balance remaining in the escrow account
5-13     after the bill is paid to the borrower; and
5-14                 (4)  requires the lender to refund the money in the
5-15     escrow account to the borrower on the payment of the loan.
5-16           (d)  On the request of the borrower or the borrower's
5-17     representative, the assessor for each taxing unit shall compute the
5-18     additional taxes [and interest] that would be due that taxing unit
5-19     under Section 23.55 if a change of use occurred on January 1 of the
5-20     year in which the loan is granted or amended.  The assessor may
5-21     charge a reasonable fee not to exceed the actual cost of making the
5-22     computation.
5-23           SECTION 5.  (a)  The changes in law made by Sections 1 and 3
5-24     of this Act apply only to additional taxes that become due because
5-25     of a sale, diversion, or change of use of land that occurs on or
5-26     after the effective date of this Act.  Additional taxes that become
5-27     due because of a sale, diversion, or change of use of land that
 6-1     occurred before the effective date of this Act are governed by the
 6-2     law in effect on the date of the sale, diversion, or change of use,
 6-3     and the former law is continued in effect for that purpose.
 6-4           (b)  The changes in law made by Sections 2 and 4 of this Act
 6-5     apply only to an instrument pertaining to a loan secured by a lien
 6-6     in favor of the lender that is executed on or after the effective
 6-7     date of this Act.  An instrument pertaining to a loan secured by a
 6-8     lien in favor of the lender that was executed before the effective
 6-9     date of this Act is governed by the law in effect on the date the
6-10     instrument was executed, and the former law is continued in effect
6-11     for that purpose.
6-12           SECTION 6.  The importance of this legislation and the
6-13     crowded condition of the calendars in both houses create an
6-14     emergency and an imperative public necessity that the
6-15     constitutional rule requiring bills to be read on three several
6-16     days in each house be suspended, and this rule is hereby suspended,
6-17     and that this Act take effect and be in force from and after its
6-18     passage, and it is so enacted.