HBA-KDB H.B. 2175 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2175
By: Hochberg
Ways & Means
3/22/2001
Introduced



BACKGROUND 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.  House Bill 2175 provides that a nonprofit corporation that provides
water and steam to eligible institutions is exempt from all ad valorem
taxation as though such property were owned and held by the state for
health and educational purposes. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2175 amends the Tax Code to provide that all real and personal
property owned by a nonprofit corporation, as defined in the Texas
Non-Profit Corporation Act which provides chilled water and steam to
eligible institutions is exempt from all ad valorem taxation as though such
property were owned and held by the state for health and educational
purposes. 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.