78R159 SMH-D
By: Riddle H.B. No. 1044
A BILL TO BE ENTITLED
AN ACT
relating to the exemption from ad valorem taxation of certain
property used to provide low-income or moderate-income housing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 11.182, Tax Code, is
amended to read as follows:
Sec. 11.182. COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS
IMPROVING PROPERTY FOR LOW-INCOME AND MODERATE-INCOME HOUSING:
PROPERTY PREVIOUSLY EXEMPT.
SECTION 2. Section 11.182, Tax Code, is amended by adding
Subsections (j)-(l) to read as follows:
(j) An organization may not receive an exemption under
Subsection (b) or (f), as added by Chapter 1191, Acts of the 77th
Legislature, Regular Session, 2001, for property for a tax year
beginning on or after January 1, 2004, unless the organization
received an exemption under that subsection for that property for
the 2003 tax year.
(k) An organization that receives an exemption under this
section for property the organization owns may apply for an
exemption under Section 11.1825 for the property. The organization
must submit only the evidence required to meet any requirements for
an exemption under that section that are not imposed under this
section, except that the chief appraiser may require the
organization to submit additional information to establish the
organization's eligibility for the exemption under Section 11.1825
if the chief appraiser learns of any reason the organization is no
longer eligible for an exemption under this section. The chief
appraiser shall approve or deny the application not later than the
30th day after the date the application is received. If the chief
appraiser approves the application, the organization may not
receive an exemption under this section and Section 11.1825 for the
property in the same tax year.
(l) This section expires December 31, 2011.
SECTION 3. Subchapter B, Chapter 11, Tax Code, is amended by
adding Sections 11.1825 and 11.1826 to read as follows:
Sec. 11.1825. ORGANIZATIONS CONSTRUCTING OR REHABILITATING
LOW-INCOME HOUSING: PROPERTY NOT PREVIOUSLY EXEMPT. (a) In this
section, "department" means the Texas Department of Housing and
Community Affairs.
(b) An organization is entitled to an exemption from
taxation of real property owned by the organization that the
organization constructs or rehabilitates to provide housing to
individuals or families meeting the income eligibility
requirements of this section.
(c) To receive an exemption under this section, an
organization must meet the following requirements:
(1) for at least the preceding three years, the
organization:
(A) has been exempt from federal income taxation
under Section 501(a), Internal Revenue Code of 1986, as amended, by
being listed as an exempt entity under Section 501(c)(3) of that
code; and
(B) has had as its purpose providing low-income
housing; and
(2) at least one-third of the members of the board of
directors of the organization reside in this state.
(d) Notwithstanding Subsection (c), an owner of real
property that is not an organization described by that subsection
is entitled to an exemption from taxation of property under this
section if the property otherwise qualifies for the exemption and
the owner is:
(1) a general partnership or limited partnership and
each general partner is an organization that meets the requirements
of Subsection (c);
(2) a limited partnership and 100 percent of the
interest in each general partner is controlled by an organization
that meets the requirements of Subsection (c); or
(3) an entity the parent of which is an organization
that meets the requirements of Subsection (c).
(e) If the owner of the property is an entity described by
Subsection (d), the entity must:
(1) be organized under the laws of this state; and
(2) have its principal place of business in this
state.
(f) A reference in this section to an organization includes
an entity described by Subsection (d).
(g) For property to be exempt under this section, the
organization must own the property for the purpose of constructing
or rehabilitating a housing project on the property and renting the
housing to individuals or families whose median income is not more
than 60 percent of the median income of individuals or families in
this state as determined by the department.
(h) Property may not receive an exemption under this section
unless:
(1) at least 60 percent of the dwelling units in the
housing project are reserved for individuals or families described
by Subsection (g), if the project is located in a county in which
the median income of individuals or families as determined by the
department is less than $45,500; or
(2) at least 50 percent of the dwelling units in the
project are reserved for individuals or families described by
Subsection (g), if the project is located in a county not covered by
Subdivision (1).
(i) The monthly rent charged or to be charged for each
dwelling unit in the project may not exceed 30 percent of the
monthly income of the individual or family renting the unit at the
time the lease is entered into.
(j) The organization must give preference to public school
teachers and administrators, peace officers of counties or
municipalities, and persons serving on active duty as members of
the armed forces of the United States in renting at least three
percent of the dwelling units in the housing project. The rent
charged for those units must be at least 10 percent less than the
rent charged for other comparable units in the project.
(k) If the property is owned for the purpose of constructing
a housing project on the property:
(1) the property must be used to provide housing to
qualifying individuals or families; or
(2) the housing project must be under active
construction or other physical preparation.
(l) For purposes of Subsection (k)(2), a housing project is
under physical preparation if the organization has engaged in
architectural or engineering work, soil testing, land clearing
activities, or site improvement work necessary for the construction
of the project or has conducted an environmental or land use study
relating to the construction of the project.
(m) An organization may not receive an exemption for a
housing project constructed by the organization if the construction
of the project was completed before January 1, 2004.
(n) If the property is owned for the purpose of
rehabilitating a housing project on the property:
(1) the original construction of the housing project
must have been completed at least 10 years before the date the
organization began actual rehabilitation of the project;
(2) the person from whom the organization acquired the
project must have owned the project for at least five years, if the
organization is not the original owner of the project; and
(3) the organization must provide the chief appraiser
and, if the project was financed with bonds, the issuer of the
bonds, with a certificate prepared by a certified public accountant
stating that the organization has spent at least $6,000 for each
dwelling unit in the project on rehabilitation costs.
(o) If the organization acquires the property for the
purpose of constructing or rehabilitating a housing project on the
property, the organization must rent or offer to rent the property
to individuals or families who meet the income eligibility
requirements of this section not later than the third anniversary
of the date the organization acquires the property.
(p) If property qualifies for an exemption under this
section, the chief appraiser shall use the income method of
appraisal as provided by Section 23.012 to determine the appraised
value of the property. In appraising the property, the chief
appraiser:
(1) shall consider the restrictions provided by this
section on the income of the individuals or families to whom the
dwelling units of the housing project may be rented and the amount
of rent that may be charged for purposes of computing the actual
rental income from the property or projecting future rental income;
and
(2) may not use a capitalization rate that is less than
11.75 percent.
(q) The amount of the exemption under this section from
taxation is:
(1) for a school district, 50 percent of the appraised
value of the property; and
(2) for a taxing unit other than a school district:
(A) 75 percent of the appraised value of the
property if at least 75 percent of the dwelling units in the housing
project are reserved for individuals or families described by
Subsection (g); and
(B) 65 percent of the appraised value of the
property if Paragraph (A) does not apply.
(r) Notwithstanding Section 11.43(c), an exemption under
this section does not terminate if:
(1) the property is foreclosed on for any reason and,
not later than the 30th day after the date of the foreclosure sale,
the owner of the property submits evidence to the chief appraiser
that the property is owned by:
(A) an organization that meets the requirements
of Subsection (c); or
(B) an entity that meets the requirements of
Subsections (d) and (e); or
(2) in the case of property owned by an entity
described by Subsections (d) and (e), the organization meeting the
requirements of Subsection (c) that is or controls the general
partner of or is the parent of the entity as described by Subsection
(d) ceases to serve in that capacity and, not later than the 30th
day after the date the cessation occurs, the owner of the property
submits evidence to the chief appraiser that the organization has
been succeeded in that capacity by another organization that meets
the requirements of Subsection (c).
(s) The chief appraiser may extend the deadline provided by
Subsection (r)(1) or (2), as applicable, for good cause shown.
Sec. 11.1826. MONITORING OF COMPLIANCE WITH LOW-INCOME AND
MODERATE-INCOME HOUSING EXEMPTIONS. (a) In this section,
"department" means the Texas Department of Housing and Community
Affairs.
(b) Not later than July 25 of each year, the chief appraiser
shall submit to the department a list of the housing projects,
including projects under construction or rehabilitation or to be
constructed or rehabilitated, in the appraisal district receiving
an exemption under Section 11.182 or 11.1825 in that year.
(c) Not later than the second anniversary of the date the
department receives a list from the chief appraiser, the department
shall conduct an audit of each listed housing project to determine
whether the project is in material compliance with the requirements
of the low income housing tax credit program under Subchapter DD,
Chapter 2306, Government Code. The department by rule shall adopt
guidelines for conducting compliance audits under this subsection.
An organization that owns, or that is or controls the general
partner of or is the parent of the entity that owns, a project that
is the subject of an audit shall pay the department a fee to cover
the cost of the audit to the extent the department does not already
impose a compliance audit fee in connection with the low income
housing tax credit program. The amount of the fee is computed by
multiplying $25 by the number of dwelling units in the project.
(d) On a determination that a housing project of an
organization is in material noncompliance with the requirements of
the low income housing tax credit program, the department shall
notify the organization of the results of the audit and order the
organization to bring the project into material compliance with the
program. If the organization does not comply with the order of the
department before the 90th day after the date of the order, the
department shall assess an administrative penalty on the
organization in the manner provided for an administrative penalty
under Section 2306.6023, Government Code. The amount of the
penalty is computed by multiplying $200 by the number of dwelling
units in the project. The department shall impose a separate
penalty for each day the project fails to comply with the order of
the department. A penalty imposed by the department is payable to
the assessor–collector for the county for which the appraisal
district is established. The assessor–collector shall distribute
to each taxing unit from which the project received an exemption in
the year in which the list was submitted an amount equal to the
amount of the penalty multiplied by a fraction, the numerator of
which is the total dollar amount of taxes the taxing unit would have
imposed on the project in that year if the project had been subject
to taxation by that taxing unit in that year and the denominator of
which is the total dollar amount of taxes all of the taxing units
from which the project received an exemption in that year would have
imposed on the project in that year if the project had been subject
to taxation by those taxing units in that year.
(e) If the housing project remains in material
noncompliance with the requirements of the program, the department
shall consider the noncompliance for purposes of scoring an
application submitted by the organization under any program
administered by the department.
SECTION 4. Section 11.43(c), Tax Code, is amended to read as
follows:
(c) An exemption provided by Section 11.13, 11.17, 11.18,
11.182, 11.1825, 11.183, 11.19, 11.20, 11.21, 11.22, 11.23(j),
11.29, 11.30, or 11.31, once allowed, need not be claimed in
subsequent years, and except as otherwise provided by Subsection
(e), the exemption applies to the property until it changes
ownership or the person's qualification for the exemption changes.
However, the chief appraiser may require a person allowed one of the
exemptions in a prior year to file a new application to confirm the
person's current qualification for the exemption by delivering a
written notice that a new application is required, accompanied by
an appropriate application form, to the person previously allowed
the exemption.
SECTION 5. Sections 11.436(a) and (c), Tax Code, are
amended to read as follows:
(a) An organization that acquires property that qualifies
for an exemption under Section 11.181(a) or 11.1825 [11.182(a)] may
apply for the exemption for the year of acquisition not later than
the 30th day after the date the organization acquires the property,
and the deadline provided by Section 11.43(d) does not apply to the
application for that year.
(c) To facilitate the financing associated with the
acquisition of a property, an organization, before acquiring the
property, may request from the chief appraiser of the appraisal
district established for the county in which the property is
located a preliminary determination of whether the property would
qualify for an exemption under Section 11.1825 [11.182] if acquired
by the organization. The request must include the information that
would be included in an application for an exemption for the
property under Section 11.1825 [11.182]. Not later than the 15th
[21st] day after the date a request is submitted under this
subsection, the chief appraiser shall issue a written preliminary
determination for the property included in the request. A
preliminary determination does not affect the granting of an
exemption under Section 11.1825 [11.182].
SECTION 6. Subchapter B, Chapter 23, Tax Code, is amended by
adding Section 23.215 to read as follows:
Sec. 23.215. APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED
FOR LOW-INCOME OR MODERATE-INCOME HOUSING. (a) This section
applies only to real property owned by an organization:
(1) that on January 1, 2004, was rented without profit
to a low-income or moderate-income individual or family satisfying
the organization's income eligibility requirements and that
continues to be used for that purpose;
(2) that was financed under the low income housing tax
credit program under Subchapter DD, Chapter 2306, Government Code;
(3) that does not receive an exemption under Section
11.182 or 11.1825; and
(4) the owner of which has not entered into an
agreement with any taxing unit to make payments to the taxing unit
instead of taxes on the property.
(b) The chief appraiser shall appraise the property in the
manner provided by Section 11.1825(p) except that the
capitalization rate used in the appraisal may not be less than 12.5
percent.
SECTION 7. This Act takes effect January 1, 2004, and
applies only to ad valorem taxes imposed for a tax year beginning on
or after that date.