By: Barrientos S.B. No. 1007
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of property
1-3 owned by charitable organizations that provide child-care services.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subsection (d), Section 11.18, Tax Code, is
1-6 amended 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
1-24 indigent health care are provided in an amount equal to at least
1-25 four percent of the hospital's or hospital system's net patient
2-1 revenue;
2-2 (C) charity care and government-sponsored
2-3 indigent health care are provided in an amount equal to at least
2-4 100 percent of the hospital's or hospital system's tax-exempt
2-5 benefits, excluding federal income tax;
2-6 (D) a nonprofit hospital that has been
2-7 designated as a disproportionate share hospital under the state
2-8 Medicaid program in the current year or in either of the previous
2-9 two fiscal years shall be considered to have provided a reasonable
2-10 amount of charity care and government-sponsored indigent health
2-11 care and shall be deemed in compliance with the standards in this
2-12 subsection;
2-13 (E) for tax years before 1996, charity care and
2-14 community benefits are provided in a combined amount equal to at
2-15 least five percent of the hospital's or hospital system's net
2-16 patient revenue, provided that charity care and
2-17 government-sponsored indigent health care are provided in an amount
2-18 equal to at least three percent of net patient revenue;
2-19 (F) beginning with the hospital's or hospital
2-20 system's tax year starting after 1995, charity care and community
2-21 benefits are provided in a combined amount equal to at least five
2-22 percent of the hospital's or hospital system's net patient revenue,
2-23 provided that charity care and government-sponsored indigent health
2-24 care are provided in an amount equal to at least four percent of
2-25 net patient revenue;
2-26 (G) a hospital operated on a nonprofit basis
3-1 that is located in a county with a population of less than 50,000
3-2 and in which the entire county or the population of the entire
3-3 county has been designated as a health professionals shortage area
3-4 is considered to be in compliance with the standards provided by
3-5 this subsection; or
3-6 (H) a hospital providing health care services to
3-7 inpatients or outpatients without receiving any payment for
3-8 providing those services from any source, including the patient or
3-9 person legally obligated to support the patient, third-party
3-10 payors, Medicare, Medicaid, or any other state or local indigent
3-11 care program but excluding charitable donations, legacies,
3-12 bequests, or grants or payments for research, is considered to be
3-13 in compliance with the standards provided by this subsection;
3-14 (2) providing support or relief to orphans,
3-15 delinquent, dependent, or handicapped children in need of
3-16 residential care, abused or battered spouses or children in need of
3-17 temporary shelter, the impoverished, or victims of natural disaster
3-18 without regard to the beneficiaries' ability to pay;
3-19 (3) providing support to elderly persons, including
3-20 the provision of recreational or social activities and facilities
3-21 designed to address the special needs of elderly persons, or to the
3-22 handicapped, without regard to the beneficiaries' ability to pay;
3-23 (4) preserving a historical landmark or site;
3-24 (5) promoting or operating a museum, zoo, library,
3-25 theater of the dramatic or performing arts, or symphony orchestra
3-26 or choir;
4-1 (6) promoting or providing humane treatment of
4-2 animals;
4-3 (7) acquiring, storing, transporting, selling, or
4-4 distributing water for public use;
4-5 (8) answering fire alarms and extinguishing fires with
4-6 no compensation or only nominal compensation to the members of the
4-7 organization;
4-8 (9) promoting the athletic development of boys or
4-9 girls under the age of 18 years;
4-10 (10) preserving or conserving wildlife;
4-11 (11) promoting educational development through loans
4-12 or scholarships to students;
4-13 (12) providing halfway house services pursuant to a
4-14 certification as a halfway house by the Board of Pardons and
4-15 Paroles;
4-16 (13) providing permanent housing and related social,
4-17 health care, and educational facilities for persons who are 62
4-18 years of age or older without regard to the residents' ability to
4-19 pay;
4-20 (14) promoting or operating an art gallery, museum, or
4-21 collection, in a permanent location or on tour, that is open to the
4-22 public;
4-23 (15) providing for the organized solicitation and
4-24 collection for distributions through gifts, grants, and agreements
4-25 to nonprofit charitable, education, religious, and youth
4-26 organizations that provide direct human, health, and welfare
5-1 services;
5-2 (16) performing biomedical or scientific research or
5-3 biomedical or scientific education for the benefit of the public;
5-4 (17) operating a television station that produces or
5-5 broadcasts educational, cultural, or other public interest
5-6 programming and that receives grants from the Corporation for
5-7 Public Broadcasting under 47 U.S.C. Section 396, as amended [and
5-8 its subsequent amendments];
5-9 (18) providing housing for low-income and
5-10 moderate-income families, for unmarried individuals 62 years of age
5-11 or older, for handicapped individuals, and for families displaced
5-12 by urban renewal, through the use of trust assets that are
5-13 irrevocably and, pursuant to a contract entered into before
5-14 December 31, 1972, contractually dedicated on the sale or
5-15 disposition of the housing to a charitable organization that
5-16 performs charitable functions described by Subdivision (9);
5-17 (19) providing housing and related services to persons
5-18 who are 62 years of age or older in a retirement community, if the
5-19 retirement community provides independent living services, assisted
5-20 living services, and nursing services to its residents on a single
5-21 campus:
5-22 (A) without regard to the residents' ability to
5-23 pay; or
5-24 (B) in which at least four percent of the
5-25 retirement community's combined net resident revenue is provided in
5-26 charitable care to its residents; [or]
6-1 (20) providing housing on a cooperative basis to
6-2 students of an institution of higher education if:
6-3 (A) the organization is exempt from federal
6-4 income taxation under Section 501(a), [of the] Internal Revenue
6-5 Code of 1986, as amended [and its subsequent amendments], by being
6-6 listed as an exempt entity under Section 501(c)(3) of that code;
6-7 (B) membership in the organization is open to
6-8 all students enrolled in the institution and is not limited to
6-9 those chosen by current members of the organization;
6-10 (C) the organization is governed by its members;
6-11 and
6-12 (D) the members of the organization share the
6-13 responsibility for managing the housing; or
6-14 (21) providing child care for all or part of the day,
6-15 directly by the organization in a child-care facility licensed by
6-16 the Department of Protective and Regulatory Services, through a
6-17 contract with a child-care facility licensed by that department, or
6-18 in association with a provider of a Head Start program, as defined
6-19 by Section 72.001, Human Resources Code, that provides educational
6-20 services to children in a child-care facility licensed by that
6-21 department, if the organization provides the child care using:
6-22 (A) donated funds, state funds, federal funds,
6-23 or a combination of those funds, without regard to the
6-24 beneficiaries' ability to pay; or
6-25 (B) money derived from fees paid for the child
6-26 care on a sliding scale based on the beneficiaries' ability to pay.
7-1 For purposes of satisfying Paragraph (F) of Subdivision (1),
7-2 a hospital or hospital system may not change its existing fiscal
7-3 year unless the hospital or hospital system changes its ownership
7-4 or corporate structure as a result of a sale or merger.
7-5 For purposes of this subsection, a hospital that satisfies
7-6 Paragraph (A), (D), (G), or (H) of Subdivision (1) shall be
7-7 excluded in determining a hospital system's compliance with the
7-8 standards provided by Paragraph (B), (C), (E), or (F) of
7-9 Subdivision (1).
7-10 For purposes of this subsection, the terms "charity care,"
7-11 "government-sponsored indigent health care," "health care
7-12 organization," "hospital system," "net patient revenue," "nonprofit
7-13 hospital," and "tax-exempt benefits" have the meanings set forth in
7-14 Sections 311.031 and 311.042, Health and Safety Code. A
7-15 determination of the amount of community benefits and charity care
7-16 and government-sponsored indigent health care provided by a
7-17 hospital or hospital system and the hospital's or hospital system's
7-18 compliance with the requirements of Section 311.045, Health and
7-19 Safety Code, shall be based on the most recently completed and
7-20 audited prior fiscal year of the hospital or hospital system.
7-21 The providing of charity care and government-sponsored
7-22 indigent health care in accordance with Paragraph (A) of
7-23 Subdivision (1) shall be guided by the prudent business judgment of
7-24 the hospital which will ultimately determine the appropriate level
7-25 of charity care and government-sponsored indigent health care based
7-26 on the community needs, the available resources of the hospital,
8-1 the tax-exempt benefits received by the hospital, and other factors
8-2 that may be unique to the hospital, such as the hospital's volume
8-3 of Medicare and Medicaid patients. These criteria shall not be
8-4 determinative factors, but shall be guidelines contributing to the
8-5 hospital's decision along with other factors which may be unique to
8-6 the hospital. The formulas contained in Paragraphs (B), (C), (E),
8-7 and (F) of Subdivision (1) shall also not be considered
8-8 determinative of a reasonable amount of charity care and
8-9 government-sponsored indigent health care.
8-10 The requirements of this subsection shall not apply to the
8-11 extent a hospital or hospital system demonstrates that reductions
8-12 in the amount of community benefits, charity care, and
8-13 government-sponsored indigent health care are necessary to maintain
8-14 financial reserves at a level required by a bond covenant, are
8-15 necessary to prevent the hospital or hospital system from
8-16 endangering its ability to continue operations, or if the hospital
8-17 or hospital system, as a result of a natural or other disaster, is
8-18 required substantially to curtail its operations.
8-19 In any fiscal year that a hospital or hospital system,
8-20 through unintended miscalculation, fails to meet any of the
8-21 standards in Subdivision (1), the hospital or hospital system shall
8-22 not lose its tax-exempt status without the opportunity to cure the
8-23 miscalculation in the fiscal year following the fiscal year the
8-24 failure is discovered by both meeting one of the standards and
8-25 providing an additional amount of charity care and
8-26 government-sponsored indigent health care that is equal to the
9-1 shortfall from the previous fiscal year. A hospital or hospital
9-2 system may apply this provision only once every five years.
9-3 SECTION 2. This Act takes effect January 1, 2002, and
9-4 applies only to an ad valorem tax year that begins on or after that
9-5 date.