SRC-SEW H.B. 2175 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 2175
77R9546 JD-FBy: Hochberg (Ellis)
Intergovernmental Relations
5/8/2001
Engrossed


DIGEST AND PURPOSE 

The Texas Medical Center Central Heating and Cooling Services Cooperative
Association (TECO) is a Texas nonprofit cooperative association that
currently has an exemption from ad valorem taxes. As a cooperative, TECO
has not yet been able to use tax-exempt financing for its plant capital
needs, but is attempting to change its status to a nonprofit corporation
exempt from federal income taxes under Section 501(c)(3) of the Internal
Revenue Code. However, TECO will no longer be exempt from ad valorem
taxation of its properties if TECO becomes a nonprofit corporation. A
change to the exemption of ad valorem taxation of property would eliminate
the benefit from the use of tax-exempt finances for its plant capital
needs. H.B. 2175 provides that a nonprofit corporation that engages
exclusively in providing chilled water and steam to an eligible
health-related institution is entitled to an exemption from taxation of the
property the corporation owns, as though such property were owned and used
by the state for health or educational purposes.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 11.11, Tax Code, by adding Subsection (i) to
provide that a corporation organized under the Texas Non-Profit Corporation
Act (Article 1396-1.01 et seq., V.T.C.S.) that engages exclusively in
providing chilled water and steam to an eligible institution, as defined by
Section 301.031, Health and Safety Code, is entitled to an exemption from
taxation of the property the corporation owns, as though the property of
the corporation were owned by this state and used for health or educational
purposes. 
 
SECTION 2.  Effective date: upon passage or September 1, 2001.