1-1     By:  Davis of Dallas (Senate Sponsor - Lucio)         H.B. No. 3383
 1-2           (In the Senate - Received from the House April 30, 2001;
 1-3     May 1, 2001, read first time and referred to Committee on
 1-4     Intergovernmental Relations; May 11, 2001, reported adversely, with
 1-5     favorable Committee Substitute by the following vote:  Yeas 5, Nays
 1-6     0; May 11, 2001, sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 3383                 By:  Lindsay
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the exemption from ad valorem taxation for certain
1-11     community housing development organizations.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Section 11.182, Tax Code, is amended to read as
1-14     follows:
1-15           Sec. 11.182.  Community Housing Development Organizations
1-16     Improving Property for Low-Income and Moderate-Income Housing. (a)
1-17     In this section:
1-18                 (1)  "Cash flow" means the amount of money received by
1-19     a community housing development organization from a housing project
1-20     for a fiscal year less the organization's disbursements for that
1-21     fiscal year associated with the project, including disbursements
1-22     for:
1-23                       (A)  standard property maintenance;
1-24                       (B)  debt service;
1-25                       (C)  employee compensation;
1-26                       (D)  fees required by government agencies;
1-27                       (E)  reserves required by lenders;
1-28                       (F)  insurance; and
1-29                       (G)  other justifiable expenses related to the
1-30     operation and maintenance of the project.
1-31                 (2)  "Community housing development organization" has
1-32     the meaning assigned by 42 U.S.C. Section 12704.
1-33           (b)  An organization is entitled to an exemption from
1-34     taxation of improved or unimproved real property it owns if the
1-35     organization:
1-36                 (1)  is organized as a community housing development
1-37     organization;
1-38                 (2)  meets the requirements of a charitable
1-39     organization provided by Sections 11.18(e) and (f);
1-40                 (3)  owns the property for the purpose of building or
1-41     repairing housing on the property to sell without profit to a
1-42     low-income or moderate-income individual or family satisfying the
1-43     organization's eligibility requirements or to rent without profit
1-44     to such an individual or family; and
1-45                 (4)  engages exclusively in the building, repair, and
1-46     sale or rental of housing as described by Subdivision (3) and
1-47     related activities.
1-48           (c) [(b)]  Property owned by the organization may not be
1-49     exempted under Subsection (b) [(a)] after the third anniversary of
1-50     the date the organization acquires the property unless the
1-51     organization is offering to rent or is renting the property without
1-52     profit to a low-income or moderate-income individual or family
1-53     satisfying the organization's eligibility requirements.
1-54           (d)  A multi-family rental property consisting of 36 or more
1-55     dwelling units owned by the organization that is exempted under
1-56     Subsection (b) may not be exempted in a subsequent tax year unless
1-57     in the preceding tax year the organization spent an amount equal to
1-58     at least 50 percent of the total amount of taxes that would have
1-59     been imposed on the property without the exemption in that year on
1-60     social, educational, or economic development services for eligible
1-61     persons in the county in which the property is located.  This
1-62     subsection does not apply to property acquired by the organization
1-63     using tax-exempt bond financing after January 1, 1997, and before
1-64     December 31, 2001.
 2-1           (e)  In addition to meeting the applicable requirements of
 2-2     Subsections (b) and (c), to receive an exemption under Subsection
 2-3     (b) for improved real property that includes a housing project the
 2-4     construction of which was financed with private activity tax-exempt
 2-5     bonds or low-income housing tax credits, the organization must:
 2-6                 (1)  control 100 percent of the interest in the general
 2-7     partner if the project is owned by a limited partnership;
 2-8                 (2)  make available not less than 10 percent of the
 2-9     rental units to persons whose median income is at or below 30
2-10     percent of the area median family income;
2-11                 (3)  comply with all rules of and laws administered by
2-12     the Texas Department of Housing and Community Affairs applicable to
2-13     community housing development organizations; and
2-14                 (4)  submit annually to the Texas Department of Housing
2-15     and Community Affairs and to the governing body of each taxing unit
2-16     for which the project receives an exemption for the housing project
2-17     evidence demonstrating that not less than 90 percent of the
2-18     project's annual cash flow in the preceding fiscal year as
2-19     determined by the audit required by Subsection (g) was spent by the
2-20     organization on social, educational, or economic development
2-21     services for eligible persons in the county in which the property
2-22     is located.
2-23           (f) [(c)  A person claiming an exemption for property
2-24     described under this section must comply with the requirements of
2-25     Sections 11.43(a) and (b).]
2-26           [(d)]  An organization entitled to an exemption under
2-27     Subsection (b) [(a)] is also entitled to an exemption from taxation
2-28     of any building or tangible personal property the organization owns
2-29     and uses in the administration of its acquisition, building,
2-30     repair, sale, or rental of property.  To qualify for an exemption
2-31     under this subsection, property must be used exclusively by the
2-32     organization, except that another person may use the property for
2-33     activities incidental to the organization's use that benefit the
2-34     beneficiaries of the organization.
2-35           (g)  To receive an exemption under Subsection (b) or (f), an
2-36     organization must annually have an audit prepared by an independent
2-37     certified public accountant. The audit must include a detailed
2-38     report on the organization's sources and uses of funds.  A copy of
2-39     the audit must be delivered to the Texas Department of Housing and
2-40     Community Affairs and to the chief appraiser of the appraisal
2-41     district in which the property subject to the exemption is located.
2-42           [(e)  In this section "community housing development
2-43     organization" has the meaning assigned that term by 42 U.S.C.
2-44     Section 12704.]
2-45           SECTION 2.  This Act takes effect January 1, 2002, and
2-46     applies only to ad valorem taxes imposed on or after that date.
2-47                                  * * * * *