SRC-AMY H.B. 1460 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 1460
78R13219 RCJ-FBy: Eiland (Jackson)
Intergovernmental Relations
5/12/2003
Engrossed


DIGEST AND PURPOSE 

Under current law, a chief appraiser is required to place a market value
on a wide array of income-producing properties and is authorized to use
the income method of appraisal on these properties for tax purposes.  The
chief appraiser may use the cost method, the market data comparison
method, or the income method of appraisal or a combination of the three
appraisal methods to determine the market value of real property.  The
income method of appraisal requires the chief appraiser to use rental
income to make such a determination; however, rental income does not cover
real property which generates "non-rental" income.  The Texas Constitution
requires that taxation be equal and uniform, but with the rental income
method rental income-producing properties might be valuated and taxed
differently than non-rental income-producing property.  H.B. 1460 conforms
the language to match that of the Uniform Standards of Professional
Appraisal Practice 2003 Edition. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 23.012, Tax Code, as follows:

Sec. 23.012.  INCOME METHOD OF APPRAISAL.  (a) Creates this subsection
from existing text.  Requires the chief appraiser, if the income method of
appraisal is the most appropriate method to use to determine the market
value of real property, to perform certain analyses and projections. 

(b) Requires the chief appraiser, in developing income and expense
statements and cash-flow projections, to consider historical information
and trends, current supply and demand factors affecting those trends, and
anticipated events such as competition from other similar properties under
construction. 

SECTION 2.  Amends Subchapter A, Chapter 23, Tax Code, by adding Section
23.014, as follows: 

Sec. 23.014.  EXCLUSION OF PROPERTY AS REAL PROPERTY.  Requires the chief
appraiser, in determining the market value of real property, to analyze
the effect of tangible personal property, including trade fixtures;
intangible personal property; or other property that is not subject to
appraisal as real property on that value and exclude that from the value. 

SECTION 3.  Effective date:  January 1, 2004.
                       Makes application of this Act prospective.