HBA-KDB S.B. 1189 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1189
By: Ellis, Rodney
Ways & Means
5/2/2001
Engrossed



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.  Senate Bill 1189 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

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

Senate Bill 1189 amends the Tax Code to provide that a corporation
organized under the Texas Non-Profit Corporation Act 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 held
by the state and used for health or educational purposes. 

EFFECTIVE DATE

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