By Brimer H.B. No. 3201
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to exempting certain charitable organizations from
1-3 ad-valorem taxation.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 11.18, Property Tax Code, is amended by
1-6 adding subdivision (21) to read as follows:
1-7 (d) A charitable organization must be organized exclusively
1-8 to perform religious, charitable, scientific, literary, or
1-9 educational purposes and, except as permitted by Subsections (h)
1-10 and (l) of this section, engage exclusively in performing one or
1-11 more of the following charitable functions:
1-12 (1) providing medical care without regard to the
1-13 beneficiaries' ability to pay, which in the case of a nonprofit
1-14 hospital or hospital system means providing charity care and
1-15 community benefits as set forth in Paragraph (A), (B), (C), (D),
1-16 (E), (F), (G), or (H):
1-17 (A) charity care and government-sponsored
1-18 indigent health care are provided at a level which is reasonable in
1-19 relation to the community needs, as determined through the
1-20 community needs assessment, the available resources of the hospital
1-21 or hospital system, and the tax-exempt benefits received by the
1-22 hospital or hospital system;
1-23 (B) charity care and government-sponsored
2-1 indigent health care are provided in an amount equal to at least
2-2 four percent of the hospital's or hospital system's net patient
2-3 revenue;
2-4 (C) charity care and government-sponsored
2-5 indigent health care are provided in an amount equal to at least
2-6 100 percent of the hospital's or hospital system's tax-exempt
2-7 benefits, excluding federal income tax;
2-8 (D) a nonprofit hospital that has been
2-9 designated as a disproportionate share hospital under the state
2-10 Medicaid program in the current year or in either of the previous
2-11 two fiscal years shall be considered to have provided a reasonable
2-12 amount of charity care and government-sponsored indigent health
2-13 care and shall be deemed in compliance with the standards in this
2-14 subsection;
2-15 (E) for tax years before 1996, charity care and
2-16 community benefits are provided in a combined amount equal to at
2-17 least five percent of the hospital's or hospital system's net
2-18 patient revenue, provided that charity care and
2-19 government-sponsored indigent health care are provided in an amount
2-20 equal to at least three percent of net patient revenue;
2-21 (F) beginning with the hospital's or hospital
2-22 system's tax year starting after 1995, charity care and community
2-23 benefits are provided in a combined amount equal to at least five
2-24 percent of the hospital's or hospital system's net patient revenue,
2-25 provided that charity care and government-sponsored indigent health
2-26 care are provided in an amount equal to at least four percent of
3-1 net patient revenue;
3-2 (G) a hospital operated on a nonprofit basis
3-3 that is located in a county with a population of less than 50,000
3-4 and in which the entire county or the population of the entire
3-5 county has been designated as a health professionals shortage area
3-6 is considered to be in compliance with the standards provided by
3-7 this subsection; or
3-8 (H) a hospital providing health care services to
3-9 inpatients or outpatients without receiving any payment for
3-10 providing those services from any source, including the patient or
3-11 person legally obligated to support the patient, third-party
3-12 payors, Medicare, Medicaid, or any other state or local indigent
3-13 care program but excluding charitable donations, legacies,
3-14 bequests, or grants or payments for research, is considered to be
3-15 in compliance with the standards provided by this subsection;
3-16 (2) providing support or relief to orphans,
3-17 delinquent, dependent, or handicapped children in need of
3-18 residential care, abused or battered spouses or children in need of
3-19 temporary shelter, the impoverished, or victims of natural disaster
3-20 without regard to the beneficiaries' ability to pay;
3-21 (3) providing support to elderly persons, including
3-22 the provision of recreational or social activities and facilities
3-23 designed to address the special needs of elderly persons, or to the
3-24 handicapped, without regard to the beneficiaries' ability to pay;
3-25 (4) preserving a historical landmark or site;
3-26 (5) promoting or operating a museum, zoo, library,
4-1 theater of the dramatic or performing arts, or symphony orchestra
4-2 or choir;
4-3 (6) promoting or providing humane treatment of
4-4 animals;
4-5 (7) acquiring, storing, transporting, selling, or
4-6 distributing water for public use;
4-7 (8) answering fire alarms and extinguishing fires with
4-8 no compensation or only nominal compensation to the members of the
4-9 organization;
4-10 (9) promoting the athletic development of boys or
4-11 girls under the age of 18 years;
4-12 (10) preserving or conserving wildlife;
4-13 (11) promoting educational development through loans
4-14 or scholarships to students;
4-15 (12) providing halfway house services pursuant to a
4-16 certification as a halfway house by the Board of Pardons and
4-17 Paroles;
4-18 (13) providing permanent housing and related social,
4-19 health care, and educational facilities for persons who are 62
4-20 years of age or older without regard to the residents' ability to
4-21 pay;
4-22 (14) promoting or operating an art gallery, museum, or
4-23 collection, in a permanent location or on tour, that is open to the
4-24 public;
4-25 (15) providing for the organized solicitation and
4-26 collection for distributions through gifts, grants, and agreements
5-1 to nonprofit charitable, education, religious, and youth
5-2 organizations that provide direct human, health, and welfare
5-3 services;
5-4 (16) performing biomedical or scientific research or
5-5 biomedical or scientific education for the benefit of the public;
5-6 (17) operating a television station that produces or
5-7 broadcasts educational, cultural, or other public interest
5-8 programming and that receives grants from the Corporation for
5-9 Public Broadcasting under 47 U.S.C. Section 396 and its subsequent
5-10 amendments;
5-11 (18) providing housing for low-income and
5-12 moderate-income families, for unmarried individuals 62 years of age
5-13 or older, for handicapped individuals, and for families displaced
5-14 by urban renewal, through the use of trust assets that are
5-15 irrevocably and, pursuant to a contract entered into before
5-16 December 31, 1972, contractually dedicated on the sale or
5-17 disposition of the housing to a charitable organization that
5-18 performs charitable functions described by Subdivision (9);
5-19 (19) providing housing and related services to persons
5-20 who are 62 years of age or older in a retirement community, if the
5-21 retirement community provides independent living services, assisted
5-22 living services, and nursing services to its residents on a single
5-23 campus:
5-24 (A) without regard to the residents' ability to
5-25 pay; or
5-26 (B) in which at least four percent of the
6-1 retirement community's combined net resident revenue is provided in
6-2 charitable care to its residents; or
6-3 (20) providing housing on a cooperative basis to
6-4 students of an institution of higher education if:
6-5 (A) the organization is exempt from federal
6-6 income taxation under Section 501(a) of the Internal Revenue Code
6-7 of 1986, and its subsequent amendments, by being listed as an
6-8 exempt entity under Section 501(c)(3) of that code;
6-9 (B) membership in the organization is open to
6-10 all students enrolled in the institution and is not limited to
6-11 those chosen by current members of the organization;
6-12 (C) the organization is governed by its members;
6-13 and
6-14 (D) the members of the organization share the
6-15 responsibility for managing the housing.
6-16 For purposes of satisfying Paragraph (F) of Subdivision (1),
6-17 a hospital or hospital system may not change its existing fiscal
6-18 year unless the hospital or hospital system changes its ownership
6-19 or corporate structure as a result of a sale or merger. For
6-20 purposes of this subsection, a hospital that satisfies Paragraph
6-21 (A), (D), (G), or (H) of Subdivision (1) shall be excluded in
6-22 determining a hospital system's compliance with the standards
6-23 provided by Paragraph (B), (C), (E), or (F) of Subdivision (1).
6-24 For purposes of this subsection, the terms "charity care,"
6-25 "government-sponsored indigent health care," "health care
6-26 organization," "hospital system," "net patient revenue," "nonprofit
7-1 hospital," and "tax-exempt benefits" have the meanings set forth in
7-2 Sections 311.031 and 311.042, Health and Safety Code. A
7-3 determination of the amount of community benefits and charity care
7-4 and government-sponsored indigent health care provided by a
7-5 hospital or hospital system and the hospital's or hospital system's
7-6 compliance with the requirements of Section 311.045, Health and
7-7 Safety Code, shall be based on the most recently completed and
7-8 audited prior fiscal year of the hospital or hospital system.
7-9 The providing of charity care and government-sponsored
7-10 indigent health care in accordance with Paragraph (A) of
7-11 Subdivision (1) shall be guided by the prudent business judgment
7-12 of the hospital which will ultimately determine the appropriate
7-13 level of charity care and government-sponsored indigent health care
7-14 based on the community needs, the available resources of the
7-15 hospital, the tax-exempt benefits received by the hospital, and
7-16 other factors that may be unique to the hospital, such as the
7-17 hospital's volume of Medicare and Medicaid patients. These
7-18 criteria shall not be determinative factors, but shall be
7-19 guidelines contributing to the hospital's decision along with other
7-20 factors which may be unique to the hospital. The formulas
7-21 contained in Paragraphs (B), (C), (E), and (F) of Subdivision (1)
7-22 shall also not be considered determinative of a reasonable amount
7-23 of charity care and government-sponsored indigent health care. The
7-24 requirements of this subsection shall not apply to the extent a
7-25 hospital or hospital system demonstrates that reductions in the
7-26 amount of community benefits, charity care, and
8-1 government-sponsored indigent health care are necessary to maintain
8-2 financial reserves at a level required by a bond covenant, are
8-3 necessary to prevent the hospital or hospital system from
8-4 endangering its ability to continue operations, or if the hospital
8-5 or hospital system, as a result of a natural or other disaster, is
8-6 required substantially to curtail its operations. In any fiscal
8-7 year that a hospital or hospital system, through unintended
8-8 miscalculation, fails to meet any of the standards in Subdivision
8-9 (1), the hospital or hospital system shall not lose its tax-exempt
8-10 status without the opportunity to cure the miscalculation in the
8-11 fiscal year following the fiscal year the failure is discovered by
8-12 both meeting one of the standards and providing an additional
8-13 amount of charity care and government-sponsored indigent health
8-14 care that is equal to the shortfall from the previous fiscal year.
8-15 A hospital or hospital system may apply this provision only once
8-16 every five years.
8-17 (21) providing child care for all day or part-day
8-18 directly utilizing charitable funds, state funds or federal funds
8-19 or a combination thereof without regard to the beneficiaries'
8-20 ability to pay or fees to be paid on a sliding fee scale basis in
8-21 facilities licensed by the Texas Department of Protective and
8-22 Regulatory Services or a Head Start program through a federal grant
8-23 in facilities licensed by the Texas Department of Protective and
8-24 Regulatory Services or child care through a contract with
8-25 facilities licensed by the Texas Department of Protective and
8-26 Regulatory Services to provide such care.
9-1 SECTION 2. This Act takes effect September 1, 2001.