HBA-KDB S.B. 1711 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1711 By: Van de Putte Ways & Means 5/4/2001 Engrossed BACKGROUND AND PURPOSE According to a recent Attorney General opinion (JC-0300), tax abatements can only be granted to an owner of real property that is located in a reinvestment zone. The owner of a leasehold interest is thus subject to the state property tax. This may cause a problem for communities promoting economic development in reinvestment zones that may seek to use tax abatements to encourage individuals or corporations to lease property in such zones. Senate Bill 1711 authorizes a taxing unit to grant tax abatements to an owner of a leasehold interest of real property located in a reinvestment zone. 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 1711 amends the Tax Code to provide that the owner of a leasehold interest in real property is considered to be the owner of real property, for the purposes of the Property Redevelopment and Tax Abatement Act. The bill authorizes a tax abatement agreement entered into by a taxing unit with the owner of a leasehold interest to apply to the taxable value, if any, of the leasehold interest in the same manner as a tax abatement agreement with the owner of real property would apply to the taxable value of the real property and tangible personal property located on the leased premises in the same manner as a tax abatement agreement with the owner of real property would apply to the tangible personal property located on the real property. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.