78R11332 QS-D
By: Hardcastle, Christian, H.B. No. 1009
Keffer of Eastland, Flores, Guillen,
et al.
Substitute the following for H.B. No. 1009:
By: Solomons C.S.H.B. No. 1009
A BILL TO BE ENTITLED
AN ACT
relating to the acquisition and regulation of manufactured homes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1201.113, Occupations Code, is amended
to read as follows:
Sec. 1201.113. CERTIFICATION AND CONTINUING EDUCATION
PROGRAMS. (a) The board shall [department may] recognize,
prepare, or administer [a] certification and continuing education
programs [program] for persons regulated under this chapter.
[Participation in a certification program is voluntary.]
(b) [The board shall recognize, prepare, or administer a
continuing education program for its license holders.] A license
holder must participate in certification and [a] continuing
education programs as provided by Subsection (e) [program to the
extent required by the board to retain the person's license].
(c) To prepare or administer a certification or continuing
education program under this section, the board may contract with:
(1) a private, nonprofit organization that qualifies
for an exemption from federal income taxation under Section 501(a),
Internal Revenue Code of 1986, by being listed as an exempt
organization under Section 501(c)(3) of that code; or
(2) an educational institution.
(d) To be considered for a contract under Subsection (c), an
organization or institution must submit an application. The board
may charge an application fee to be set by the board in an amount
necessary to pay the costs of processing the application.
(e) Persons regulated under this chapter and directly
involved in the sale of manufactured housing must complete eight
hours of certification and continuing education programs each year.
The programs must address state and federal law applicable to all
manufactured housing retailer practices and relevant consumer
protection regulations and ethical standards.
(f) The department shall issue an appropriate certificate
to a person who completes a certification program and [or]
participates in a continuing education program under this section.
(g) The board shall suspend the license of a person
regulated under this chapter who does not complete the programs as
required by this section. The board shall reinstate the license on
the person's completion of the programs.
SECTION 2. If the Act of the 78th Legislature, Regular
Session, 2003, relating to nonsubstantive additions to and
corrections in enacted codes takes effect, Section 1201.162(a),
Occupations Code, is amended to read as follows:
(a) Before the completion of a credit application, the
retailer or agent must provide to the consumer the following
statement that is printed in at least 12-point [10-point] type and
not attached to or combined with any other written material:
"When buying a manufactured home, there are a number of
important considerations, including price, quality of
construction, features, floor plan, and financing alternatives.
"The United States Department of Housing and Urban
Development (HUD) helps protect consumers through regulation and
enforcement of HUD design and construction standards for
manufactured homes. Manufactured homes that meet HUD standards are
known as 'HUD-code manufactured homes.' The Texas Department of
Housing and Community Affairs regulates Texas manufacturers,
retailers, brokers, salespersons, installers, and rebuilders of
manufactured homes.
"If you plan to place a manufactured home on land that you own
or will buy, you should consider items such as:
"ZONING AND RESTRICTIVE COVENANTS. Municipalities [Some
municipalities] or subdivisions may restrict placement of
manufactured homes on certain lots, may prohibit the placement of
homes within a certain distance from property lines, may require
that homes be a certain size, and may impose certain construction
requirements. You may need to obtain building permits and
homeowner association approval before you place a manufactured home
on a certain lot. Contact the local municipality, county, and
subdivision manager to find out if you can place the manufactured
home of your choice on a certain lot.
"WATER. [Not all lots have immediate access to water lines.
You may have to drill a well.] Be sure that your lot has access to
water. If you must drill a well, contact several drillers for bids.
If water is available through [provided by] a municipality, utility
district, water district, or cooperative, you should inquire about
the rates you will have to pay and the costs necessary to join the
water system.
"SEWER. If your lot is not serviced by a municipal sewer
system or utility district, you will [may] have to install an
on-site sewer facility (commonly known as a septic system). There
are a number of concerns or restrictions that will determine if your
lot is adequate to support an on-site sewer facility. Check with
the local county or a licensed private installer to determine the
requirements that apply to your lot and the cost to install such a
system.
"HOMEOWNER ASSOCIATION FEES. Many subdivisions have
mandatory assessments and fees that lot owners must pay. Check with
the manager of the subdivision in which your lot is located to
determine if any fees apply to your lot.
"TAXES. Your home will be appraised and subject to ad
valorem taxes as are other single-family residential structures.
These taxes must be escrowed with your monthly payment, except that
your lender is not obligated to impose an escrow requirement in a
real property transaction involving a manufactured home if the
lender does not otherwise require the escrow of taxes, insurance
premiums, fees, or other charges in connection with loans secured
by residential real property. On closing, you will be notified of
all provisions pertaining to federal truth in lending disclosures.
"INSURANCE. Your lender may require you to obtain insurance
that meets lender requirements and protects your investment. You
should request quotes from the agent of your choice to obtain the
insurance.
"TYPES OF MORTGAGES AVAILABLE. The acquisition of a
manufactured home may be financed by a real estate mortgage or a
chattel mortgage. A real estate mortgage may have a lower interest
rate than a chattel mortgage.
"RIGHT OF RESCISSION. If you acquire a manufactured home, by
purchase, exchange, or lease-purchase, you may, not later than the
third day after the date the applicable contract is signed, rescind
the contract without penalty or charge." [In Texas, real property
is taxed annually based on its market value. Attaching a
manufactured home to a lot improves the lot's value and will
increase the taxes assessed on the lot. You are liable for the
payment of all ad valorem taxes assessed against your home by the
municipality, county, school district, and other tax authorities
(utility district, community college, etc.). As with other
residential structures, the applicable tax rate will apply to the
market value of the home. You should contact the local chief
appraiser or the county tax assessor-collector for specific tax
information. They will need to know the price you paid for, and the
specific location of, the home. If the manufactured home is your
principal place of residence, you should be able to claim a
HOMESTEAD EXEMPTION. You should also make certain that the lot or
land you are purchasing is not subject to any rollback tax liability
because of the change in use of the property."]
SECTION 3. If the Act of the 78th Legislature, Regular
Session, 2003, relating to nonsubstantive additions to and
corrections in enacted codes does not take effect, Section 21(a),
Texas Manufactured Housing Standards Act (Article 5221f, Vernon's
Texas Civil Statutes), is amended to read as follows:
(a) Prior to the completion of a credit application, the
retailer or agent must provide to the consumer the following
statement that is printed in at least 12-point [10-point] type and
not attached to or combined with any other written material:
"When buying a manufactured home, there are a number of
important considerations, including price, quality of
construction, features, floor plan, and financing alternatives.
"The United States Department of Housing and Urban
Development (HUD) helps protect consumers through regulation and
enforcement of HUD design and construction standards for
manufactured homes. Manufactured homes that meet HUD standards are
known as 'HUD-code manufactured homes.' The Texas Department of
Housing and Community Affairs regulates Texas manufacturers,
retailers, brokers, salespersons, installers, and rebuilders of
manufactured homes.
"If you plan to place a manufactured home on land that you own
or will buy, you should consider items such as:
"ZONING AND RESTRICTIVE COVENANTS. Municipalities [Some
municipalities] or subdivisions may restrict placement of
manufactured homes on certain lots, may prohibit the placement of
homes within a certain distance from property lines, may require
that homes be a certain size, and may impose certain construction
requirements. You may need to obtain building permits and
homeowner association approval before you place a manufactured home
on a certain lot. Contact the local municipality, county, and
subdivision manager to find out if you can place the manufactured
home of your choice on a certain lot.
"WATER. [Not all lots have immediate access to water lines.
You may have to drill a well.] Be sure that your lot has access to
water. If you must drill a well, contact several drillers for bids.
If water is available through [provided by] a municipality, utility
district, water district, or cooperative, you should inquire about
the rates you will have to pay and the costs necessary to join the
water system.
"SEWER. If your lot is not serviced by a municipal sewer
system or utility district, you will [may] have to install an
on-site sewer facility (commonly known as a septic system). There
are a number of concerns or restrictions that will determine if your
lot is adequate to support an on-site sewer facility. Check with
the local county or a licensed private installer to determine the
requirements that apply to your lot and the cost to install such a
system.
"HOMEOWNER ASSOCIATION FEES. Many subdivisions have
mandatory assessments and fees that lot owners must pay. Check with
the manager of the subdivision in which your lot is located to
determine if any fees apply to your lot.
"TAXES. Your home will be appraised and subject to ad valorem
taxes as are other single-family residential structures. These
taxes must be escrowed with your monthly payment, except that your
lender is not obligated to impose an escrow requirement in a real
property transaction involving a manufactured home if the lender
does not otherwise require the escrow of taxes, insurance premiums,
fees, or other charges in connection with loans secured by
residential real property. On closing, you will be notified of all
provisions pertaining to federal truth in lending disclosures.
"INSURANCE. Your lender may require you to obtain insurance
that meets lender requirements and protects your investment. You
should request quotes from the agent of your choice to obtain the
insurance.
"TYPES OF MORTGAGES AVAILABLE. The acquisition of a
manufactured home may be financed by a real estate mortgage or a
chattel mortgage. A real estate mortgage may have a lower interest
rate than a chattel mortgage.
"RIGHT OF RESCISSION. If you acquire a manufactured home, by
purchase, exchange, or lease-purchase, you may, not later than the
third day after the date the applicable contract is signed, rescind
the contract without penalty or charge." [In Texas, real property
is taxed annually based on its market value. Attaching a
manufactured home to a lot improves the lot's value and will
increase the taxes assessed on the lot. You are liable for the
payment of all ad valorem taxes assessed against your home by the
municipality, county, school district, and other tax authorities
(utility district, community college, etc.). As with other
residential structures, the applicable tax rate will apply to the
market value of the home. You should contact the local chief
appraiser or the county tax assessor-collector for specific tax
information. They will need to know the price you paid for, and the
specific location of, the home. If the manufactured home is your
principal place of residence, you should be able to claim a
HOMESTEAD EXEMPTION. You should also make certain that the lot or
land you are purchasing is not subject to any rollback tax liability
because of the change in use of the property."]
SECTION 4. Subchapter D, Chapter 1201, Occupations Code, is
amended by adding Sections 1201.1505, 1201.1521, 1201.163, and
1201.164 to read as follows:
Sec. 1201.1505. DEPOSIT ON SPECIALLY ORDERED MANUFACTURED
HOMES. A retailer may require an earnest money deposit on a
specially ordered manufactured home only if:
(1) an earnest money contract has been signed by all
parties;
(2) if applicable, the original binding loan
commitment letter issued by the lender is delivered to the
consumer; and
(3) the consumer has not rescinded the contract under
Section 1201.1521.
Sec. 1201.1521. RESCISSION OF CONTRACT FOR SALE, EXCHANGE,
OR LEASE-PURCHASE OF HOME. A person who acquires a manufactured
home by purchase, exchange, or lease-purchase may, not later than
the third day after the date the applicable contract is signed,
rescind the contract without penalty or charge.
Sec. 1201.163. ADVANCE COPY OF INSTALLMENT CONTRACT AND
DISCLOSURE STATEMENT; OFFER BY RETAILER. In a chattel mortgage
transaction involving an installment contract, a retailer shall
deliver to a consumer at least 24 hours before the contract is fully
executed the disclosure statement required by this subchapter and
the contract, with all required information included, signed by the
retailer. The delivery of the disclosure statement and installment
contract, with all required information included, signed by the
retailer constitutes a firm offer by the retailer. The consumer may
accept the offer not earlier than 24 hours after the delivery of the
documents.
Sec. 1201.164. NONBINDING ESTIMATE. In a chattel mortgage
transaction, if a retailer provides a nonbinding estimate regarding
the contract price of a manufactured home or the monthly payments or
interest rate applicable to a loan issued in connection with the
home, the estimate must be made in writing and in good faith.
SECTION 5. Sections 1201.217(a)-(d), Occupations Code, are
amended to read as follows:
(a) Except as provided by Section 1201.218, if a
manufactured home is permanently attached [or becomes an
improvement] to real property, as defined by Section 2306.004,
Government Code, the manufacturer's certificate or the original
document of title may [shall] be surrendered to the department for
cancellation. [This requirement does not apply to an owner who is
not issued a title under Section 2.001(e) or (f), Property Code.]
(b) The legal description or the appropriate tract or parcel
number of the real property must be given to the department when the
manufacturer's certificate or original document of title is
surrendered. A [If a notice of attachment is to be filed, a] copy of
the notice of attachment filed under Subsection (d) must be
submitted with the manufacturer's certificate or the original
document of title [surrendered for cancellation]. The director may
require the filing of other information.
(c) The department shall issue a certificate of attachment
to real property to the person who surrenders the manufacturer's
certificate or original document of title. The certificate of
attachment to real property must:
(1) contain:
(A) the legal description or the appropriate
tract or parcel number of the real property; and
(B) the identification number of the home; and
(2) certify that the manufacturer's certificate or
original document of title has been canceled.
(d) Before the department issues a certificate of
attachment, [:
[(1)] a title insurance company [insurer] authorized
to engage in [do] business in this state or other person who [that]
surrenders the manufacturer's certificate or the original document
of title to the department shall [must] file a notice of
[improvement] attachment in the real property records of the county
in which the home is located[; and
[(2) a person who surrenders the manufacturer's
certificate or the original document of title to the department may
file a notice of attachment in the real property records of the
county in which the home is located].
SECTION 6. Section 1201.218(a), Occupations Code, is
amended to read as follows:
(a) The department may not cancel a manufacturer's
certificate or an original [a] document of title under Section
1201.217 if a lien on the manufactured home has been recorded with
the department.
SECTION 7. If the Act of the 78th Legislature, Regular
Session, 2003, relating to nonsubstantive additions to and
corrections in enacted codes takes effect, Sections 1201.222(a),
(b), and (c), Occupations Code, are amended to read as follows:
(a) A manufactured home that is permanently attached to real
property and titled in the name of the consumer under a deed or
contract for sale is classified [and taxed] as real property if the
manufacturer's certificate of origin or the original document of
title is surrendered for cancellation and a notice of attachment or
a certificate of attachment, as described by Section 1201.217, is
filed in the real property records of the county in which the home
is located [the real property to which the home is attached is
titled in the name of the consumer under a deed or contract for
sale]. A manufactured home is considered permanently attached to
real property if the home is secured to a foundation and connected
to a utility, including a utility providing water, electric,
natural gas, propane or butane gas, or wastewater service.
(b) The closing of a transaction for the acquisition of real
property and a manufactured home considered to be real property
under this section must occur at the office of a federally insured
financial institution, a title insurer, or an attorney at law. If
the real property is purchased under a contract of sale, the
contract must be filed in the real property records of the county in
which the home is attached [installed].
(c) Attachment [Installation] of a manufactured home
considered to be real property under this section must occur in a
manner that satisfies the lending requirements of the Federal
Housing Administration (FHA), Fannie Mae, or Freddie Mac for
long-term mortgage loans or for FHA insurance. In addition, the
attachment [The installation] of a new manufactured home must
meet[, in addition to applicable state standards,] the
manufacturer's specifications required to validate the
manufacturer's warranty.
SECTION 8. If the Act of the 78th Legislature, Regular
Session, 2003, relating to nonsubstantive additions to and
corrections in enacted codes does not take effect, Sections 19A(a),
(b), and (c), Texas Manufactured Housing Standards Act (Article
5221f, Vernon's Texas Civil Statutes), are amended to read as
follows:
(a) A manufactured home that is permanently attached to real
property and titled in the name of the consumer under a deed or
contract for sale is classified [and taxed] as real property if the
manufacturer's certificate of origin or the original document of
title is surrendered for cancellation and a notice of attachment or
a certificate of attachment, as described by Section 1201.217,
Occupations Code, is filed in the real property records of the
county in which the home is located [the real property to which the
home is attached is titled in the name of the consumer under a deed
or contract for sale]. A manufactured home is considered
permanently attached to real property if the home is secured to a
foundation and connected to a utility, including a utility
providing water, electric, natural gas, propane or butane gas, or
wastewater services.
(b) The closing of a transaction for the acquisition of real
property and a manufactured home considered to be real property
under this section must occur at the office of a federally insured
financial institution, a title company, or an attorney at law. If
the real property is purchased under a contract of sale, the
contract must be filed in the real property records of the county in
which the home is attached [installed].
(c) Attachment [Installation] of a manufactured home
considered to be real property under this section must occur in a
manner that satisfies the lending requirements of the Federal
Housing Administration (FHA), Fannie Mae, or Freddie Mac for
long-term mortgage loans or for FHA insurance. In addition, the
attachment [The installation] of a new manufactured home must
meet[, in addition to applicable state standards,] the
manufacturer's specifications required to validate the
manufacturer's warranty.
SECTION 9. Section 1201.508, Occupations Code, is amended
by adding Subsection (d) to read as follows:
(d) The retailer may not require a consumer to make a down
payment on the acquisition of a manufactured home from the
retailer's inventory until the time the installment contract is
executed.
SECTION 10. Section 1201.551, Occupations Code, is amended
by adding Subsection (c) to read as follows:
(c) Notwithstanding Subsection (a), the director may not
suspend or revoke a license for a single violation of the
requirements of this chapter regarding the provision of information
by a retailer to a consumer. The director may suspend the license
for a second violation of those requirements and may suspend or
revoke the license for any subsequent violation of those
requirements.
SECTION 11. Section 1201.605, Occupations Code, is amended
to read as follows:
Sec. 1201.605. ADMINISTRATIVE PENALTY. (a) The director
may assess against a person who fails to obtain or maintain a
license as required by this chapter an administrative penalty in an
amount not to exceed $10,000 for each violation of this chapter and:
(1) reasonable attorney's fees;
(2) administrative costs;
(3) witness fees;
(4) investigative costs; and
(5) deposition expenses.
(b) The director may assess against a retailer who fails to
provide information to a consumer as required by this chapter an
administrative penalty in an amount not to exceed:
(1) $1,000 for the first violation;
(2) $2,000 for the second violation; and
(3) $4,000 for each subsequent violation.
SECTION 12. Section 347.254, Finance Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) Except as provided by Subsection (c), a [A] creditor
shall [may] require a consumer to pay ad valorem taxes on the
manufactured home through the creditor.
(c) The escrow requirement of Subsection (a) does not apply
to a real property transaction involving a manufactured home if the
creditor does not otherwise require the escrow of taxes, insurance
premiums, fees, or other charges in connection with loans secured
by residential real property.
SECTION 13. Section 2.001(a), Property Code, is amended to
read as follows:
(a) Except as provided by Subsection (b), a manufactured
home is personal [real] property.
SECTION 14. Section 2.001(b), Property Code, as amended by
Chapters 899 and 1055, Acts of the 77th Legislature, Regular
Session, 2001, is reenacted and amended to read as follows:
(b) A manufactured home is real property if[:
[(1)] the home is permanently attached to real
property[;] and if:
(1) [(2)] the manufacturer's certificate of origin or
the original document of title is surrendered for cancellation and
a notice of attachment or a certificate of attachment, as described
by Section 1201.217, Occupations Code [the Texas Manufactured
Housing Standards Act (Article 5221f, Vernon's Texas Civil
Statutes)], is filed in the real property records of the county in
which the home is located; or
(2) the owner of the home has entered into a lease for
the real property on which the home is located and the lease
specifically permits the recording of a notice of attachment or a
certificate of attachment.
SECTION 15. Section 2.001, Property Code, is amended by
amending Subsections (c), (e), and (i) and adding Subsection (e-1)
to read as follows:
(c) In this section, "consumer," "document of title,"
"first retail sale," "manufactured home," and "mobile home" have
the meanings assigned by Chapter 1201, Occupations Code [the Texas
Manufactured Housing Standards Act (Article 5221f, Vernon's Texas
Civil Statutes)].
(e) Except for a manufactured home that is real property as
provided by Subsection (b), the [The] Texas Department of Housing
and Community Affairs shall [may not] issue a document of title for
a new and untitled manufactured home at the first retail sale of the
home or for a titled manufactured home at a subsequent sale of the
home, regardless of whether [if] the home is to be temporarily or
permanently installed by a retailer directly on real property
titled in the name of the consumer under a deed or contract for
sale.
(e-1) In a real property transaction described by Section
1201.222, Occupations Code [Before installation], the consumer
must provide the retailer with a legible copy of the deed containing
a legal description of the real property. The retailer is not
required to determine the validity of the legal description of the
real property. [A title company or attorney at law conducting the
closing of a transaction under Section 19A, Texas Manufactured
Housing Standards Act (Article 5221f, Vernon's Texas Civil
Statutes), or the retailer or retailer's agent shall file in the
public land records for the county in which the real property is
located a notice of installation not later than the 30th working day
after the date the installation is completed and shall forward the
manufacturer's certificate of origin and a copy of the notice of
installation to the Texas Department of Housing and Community
Affairs. The notice of installation serves as a completed
cancellation application.]
(i) This section does not require a retailer or retailer's
agent to obtain a license under Chapter 1101, Occupations Code [The
Real Estate License Act (Article 6573a, Vernon's Texas Civil
Statutes)].
SECTION 16. Sections 32.014(a) and (b), Tax Code, are
amended to read as follows:
(a) Regardless of the classification of the manufactured
home under the Property Code, if the owner of a manufactured home
has been issued a certificate of attachment by the Texas Department
of Housing and Community Affairs and [If] the ownership of the real
property on which a manufactured home is affixed and the
manufactured home are the same, the manufactured home shall be
appraised and taxed as an improvement to the real property, and the
tax lien attaches to the real property on which the manufactured
home is affixed [located regardless of the classification of the
manufactured home under the Property Code].
(b) If the owner of a manufactured home has not been issued a
certificate of attachment by the Texas Department of Housing and
Community Affairs, regardless of whether the ownership of the
manufactured home[, whether by deed or contract for sale,] and the
real property on which the manufactured home is affixed are [not]
the same, the personal property manufactured home shall be
separately appraised and taxed at the same rate and on the same ad
valorem basis as other single-family residential structures. The
tax lien on the manufactured home does not attach to the real
property if the owner of the manufactured home has not been issued a
certificate of attachment [when the ownership of the manufactured
home and real property are different].
SECTION 17. Section 623.104, Transportation Code, is
amended by amending Subsection (d) and adding Subsection (e) to
read as follows:
(d) Except as provided by Subsection (e), if [If] the
offense involves the movement of a manufactured house over a
highway, road, or street in this state without a permit issued by
the department, the offense is a misdemeanor punishable by a fine of
not more than $1,000 [$500].
(e) If it is shown on the trial of an offense under
Subsection (a) that the defendant has previously been punished
under Subsection (d):
(1) one time, the offense is punishable by a fine of
not more than $2,000; or
(2) two or more times, the offense is punishable by a
fine of not more than $4,000.
SECTION 18. (a) In accordance with Section 311.031(c),
Government Code, which gives effect to a substantive amendment
enacted by the same legislature that codifies the amended statute,
the text of Sections 1201.113 and 1201.217, Occupations Code, as
set out in this Act, gives effect to changes made by Chapters 899,
1055, and 1367, Acts of the 77th Legislature, Regular Session,
2001.
(b) To the extent of any conflict, this Act prevails over
another Act of the 78th Legislature, Regular Session, 2003,
relating to nonsubstantive additions and corrections in enacted
codes.
SECTION 19. If the Act of the 78th Legislature, Regular
Session, 2003, relating to nonsubstantive additions to and
corrections in enacted codes takes effect, Sections 1201.162(b) and
(c), Occupations Code, are repealed. If that Act does not take
effect, Sections 21(b) and (c), Texas Manufactured Housing
Standards Act (Article 5221f, Vernon's Texas Civil Statutes), are
repealed.
SECTION 20. Sections 2.001(f), (g), and (h), Property Code,
are repealed.
SECTION 21. (a) The change in law made by this Act in
amending Section 623.104, Transportation Code, applies only to an
offense committed on or after the effective date of this Act. An
offense committed before the effective date of this Act is governed
by the law in effect on the date the offense was committed, and the
former law is continued in effect for that purpose. For purposes of
this section, an offense was committed before the effective date of
this Act if any element of the offense occurred before that date.
(b) The change in law made by this Act in amending Section
32.014, Tax Code, applies only to an ad valorem tax year that begins
on or after January 1, 2004. The change in law made in amending that
section does not affect a tax lien that attaches to property for a
tax year that begins before January 1, 2004, and the law in effect
immediately before January 1, 2004, continues in effect for
purposes of the tax lien.
SECTION 22. (a) Except as provided by Subsection (b) of
this section:
(1) this Act takes effect immediately if it receives a
vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution; and
(2) if this Act does not receive the vote necessary for
immediate effect, this Act takes effect September 1, 2003.
(b) Sections 1 and 16 of this Act take effect January 1,
2004.