1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation for certain
1-3 community housing development organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 11.182, Tax Code, is amended to read as
1-6 follows:
1-7 Sec. 11.182. Community Housing Development Organizations
1-8 Improving Property for Low-Income and Moderate-Income Housing. (a)
1-9 In this section:
1-10 (1) "Cash flow" means the amount of money generated by
1-11 a housing project for a fiscal year less the disbursements for that
1-12 fiscal year for operation and maintenance of the project,
1-13 including:
1-14 (A) standard property maintenance;
1-15 (B) debt service;
1-16 (C) employee compensation;
1-17 (D) fees required by government agencies;
1-18 (E) expenses incurred in satisfaction of
1-19 requirements of lenders, including reserve requirements;
1-20 (F) insurance; and
1-21 (G) other justifiable expenses related to the
1-22 operation and maintenance of the project.
1-23 (2) "Community housing development organization" has
1-24 the meaning assigned by 42 U.S.C. Section 12704.
2-1 (b) An organization is entitled to an exemption from
2-2 taxation of improved or unimproved real property it owns if the
2-3 organization:
2-4 (1) is organized as a community housing development
2-5 organization;
2-6 (2) meets the requirements of a charitable
2-7 organization provided by Sections 11.18(e) and (f);
2-8 (3) owns the property for the purpose of building or
2-9 repairing housing on the property to sell without profit to a
2-10 low-income or moderate-income individual or family satisfying the
2-11 organization's eligibility requirements or to rent without profit
2-12 to such an individual or family; and
2-13 (4) engages exclusively in the building, repair, and
2-14 sale or rental of housing as described by Subdivision (3) and
2-15 related activities.
2-16 (c) [(b)] Property owned by the organization may not be
2-17 exempted under Subsection (b) [(a)] after the third anniversary of
2-18 the date the organization acquires the property unless the
2-19 organization is offering to rent or is renting the property without
2-20 profit to a low-income or moderate-income individual or family
2-21 satisfying the organization's eligibility requirements.
2-22 (d) A multifamily rental property consisting of 36 or more
2-23 dwelling units owned by the organization that is exempted under
2-24 Subsection (b) may not be exempted in a subsequent tax year unless
2-25 in the preceding tax year the organization spent, for eligible
2-26 persons in the county in which the property is located, an amount
2-27 equal to at least 40 percent of the total amount of taxes that
3-1 would have been imposed on the property in that year without the
3-2 exemption on social, educational, or economic development services,
3-3 capital improvement projects, or rent reduction. This subsection
3-4 does not apply to property acquired by the organization using
3-5 tax-exempt bond financing after January 1, 1997, and before
3-6 December 31, 2001.
3-7 (e) In addition to meeting the applicable requirements of
3-8 Subsections (b) and (c), to receive an exemption under Subsection
3-9 (b) for improved real property that includes a housing project
3-10 constructed after December 31, 2001, and financed with qualified
3-11 501(c)(3) bonds issued under Section 145 of the Internal Revenue
3-12 Code of 1986, tax-exempt private activity bonds subject to volume
3-13 cap, or low-income housing tax credits, the organization must:
3-14 (1) control 100 percent of the interest in the general
3-15 partner if the project is owned by a limited partnership;
3-16 (2) comply with all rules of and laws administered by
3-17 the Texas Department of Housing and Community Affairs applicable to
3-18 community housing development organizations; and
3-19 (3) submit annually to the Texas Department of Housing
3-20 and Community Affairs and to the governing body of each taxing unit
3-21 for which the project receives an exemption for the housing project
3-22 evidence demonstrating that the organization spent an amount equal
3-23 to at least 90 percent of the project's cash flow in the preceding
3-24 fiscal year as determined by the audit required by Subsection (g),
3-25 for eligible persons in the county in which the property is
3-26 located, on social, educational, or economic development services,
3-27 capital improvement projects, or rent reduction.
4-1 (f) [(c) A person claiming an exemption for property
4-2 described under this section must comply with the requirements of
4-3 Sections 11.43(a) and (b).]
4-4 [(d)] An organization entitled to an exemption under
4-5 Subsection (b) [(a)] is also entitled to an exemption from taxation
4-6 of any building or tangible personal property the organization owns
4-7 and uses in the administration of its acquisition, building,
4-8 repair, sale, or rental of property. To qualify for an exemption
4-9 under this subsection, property must be used exclusively by the
4-10 organization, except that another person may use the property for
4-11 activities incidental to the organization's use that benefit the
4-12 beneficiaries of the organization.
4-13 (g) To receive an exemption under Subsection (b) or (f), an
4-14 organization must annually have an audit prepared by an independent
4-15 auditor. The audit must include a detailed report on the
4-16 organization's sources and uses of funds. A copy of the audit must
4-17 be delivered to the Texas Department of Housing and Community
4-18 Affairs and to the chief appraiser of the appraisal district in
4-19 which the property subject to the exemption is located.
4-20 (h) Subsections (d) and (e)(3) do not apply to property
4-21 owned by an organization if:
4-22 (1) the entity that provided the financing for the
4-23 acquisition or construction of the property:
4-24 (A) requires the organization to make payments
4-25 in lieu of taxes to the school district in which the property is
4-26 located; or
4-27 (B) restricts the amount of rent the
5-1 organization may charge for dwelling units on the property; or
5-2 (2) the organization has entered into an agreement
5-3 with each taxing unit for which the property receives an exemption
5-4 to spend in each tax year for the purposes provided by Subsection
5-5 (d) or (e)(3) an amount equal to the total amount of taxes imposed
5-6 on the property in the tax year preceding the year in which the
5-7 organization acquired the property.
5-8 [(e) In this section "community housing development
5-9 organization" has the meaning assigned that term by 42 U.S.C.
5-10 Section 12704.]
5-11 SECTION 2. This Act takes effect January 1, 2002, and
5-12 applies only to ad valorem taxes imposed on or after that date.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3383 was passed by the House on April
27, 2001, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 3383 on May 25, 2001, by a non-record
vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3383 was passed by the Senate, with
amendments, on May 21, 2001, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor