SRC-TJG H.B. 2416 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 2416
By: Hochberg (Janek)
Finance
5/20/2003
Engrossed


DIGEST AND PURPOSE 

Current statute allows nonprofit organizations to be exempt from ad
valorem taxation while improvements are under construction.  Due to the
current uncertain economic environment, some nonprofit organizations are
unable to raise the capital required to complete property improvements.
H.B. 2416 temporarily extends the tax exempt period, up to a maximum of
five years, for nonprofit organizations while improvements are under
construction. 

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

ARTICLE 1.  CHANGES EFFECTIVE BEGINNING WITH 2003 TAX YEAR

SECTION 1.01.  Amends Section 11.18(m), Tax Code, to prohibit a property
from being exempted under Subsection (a)(2) for more than five, rather
than three, years. 

SECTION 1.02.  Amends Section 11.184(i), Tax Code, as added by Chapter
1040, Acts of the 77th Legislature, Regular Session, 2001, to make a
conforming change. 

SECTION 1.03.  Amends Section 11.19(e), Tax Code, to make a conforming
change. 

SECTION 1.04.  Amends Section 11.20(f), Tax Code, to make a conforming
change. 

SECTION 1.05.  Amends Section 11.21(g), Tax Code, to make a conforming
change. 

SECTION 1.06.  Amends Section 11.23(1), Tax Code, to make a conforming
change. 

SECTION 1.07.  Amends Section 11.30(b), Tax Code, to make a conforming
change. 

SECTION 1.08.  Amends Section 23.55, Tax Code, by adding Subsection (m) to
provide that the sanctions provided by Subsection (a) do not apply to land
owned by an organization that qualifies as a charitable organization under
Section 11.18(c), is organized exclusively to perform religious or
charitable purposes, and engages in performing the charitable functions
described by Section 11.18(d)(19), if the organization converts the land
to a use for which the land is eligible for an exemption under Section
11.18(d)(19) within five years. 

ARTICLE 2.  CHANGES EFFECTIVE BEGINNING WITH 2006 TAX YEAR

Provides that the extensions set forth in Article 1 of this Act expire
December 31, 2005, and the current three-year exemption is then restored. 

ARTICLE 3.  EFFECTIVE DATE; TRANSITION

SECTION 3.01.  (a) Effective date: upon passage or September 1, 2003,
except as provided by Subsection (b) of this section. 
 
(b) Provides that Article 2 of this Act takes effect January 1, 2006.

SECTION 3.02.  (a) Makes application of Article 1 of this Act retroactive
to January 1, 2003. 

(b) Provides that notwithstanding Section 11.43, Tax Code, property that
was exempted from taxation under Section 11.18(a)(2), Tax Code, Section
11.184(c)(2), Tax Code, as added by Chapter 1040, Acts of the 77th
Legislature, Regular Session, 2001, or Section 11.19(a)(2), 11.20(a)(5),
11.21(a)(2), 11.23(l), or 11.30(a)(2), Tax Code, for the three years
preceding the 2003 tax year is entitled to an exemption under the
applicable provision for the 2003 tax year regardless of whether the owner
of the property applies for the exemption for the 2003 tax year if the
property otherwise qualifies for the exemption. Authorizes the chief
appraiser of the appraisal district in which the property is located to
require the owner of the property to file an application for the exemption
to confirm the owner's qualification for the exemption for the 2003 tax
year. 

(c) Makes application of Article 2 of this Act prospective to January 1,
2006.