78R13760 T
By: Christian H.B. No. 3395
Substitute the following for H.B. No. 3395:
By: McReynolds C.S.H.B. No. 3395
A BILL TO BE ENTITLED
AN ACT
relating to the ad valorem tax appraisal of qualified timber land.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 23.71(2), Tax Code, is amended to read as
follows:
(2) "Net to land" means the average net income that
would have been earned by a category of land over the preceding five
years by a person using ordinary prudence in the management of land
and the timbers produced on the land. The net income for each year
is determined by multiplying the land's potential average annual
growth, expressed in tons [cords or board feet of wood], by the
[average] stumpage value, expressed in price per ton, of large pine
sawtimber, small pine sawtimber, pine pulpwood, hardwood
sawtimber, hardwood pulpwood, and any other significant timber
product, taking into consideration the three forest [general] types
and [of timber as produced on] the four different soil types, as
determined by using information for the East Texas timber-growing
region as a whole from the U.S. Forest Service, the Natural
Resources Conservation Service of the United States Department of
Agriculture [U.S. Geological Survey, the Soil Conservation
Service], the Texas Forest Service, and colleges and universities
within this state, and by subtracting from the product reasonable
management costs and other reasonable expenses directly
attributable to the production of timber that a prudent manager of
the land and timber, seeking to maximize return, would incur in the
management of the land and timber. Stumpage prices shall be
determined by using information collected for all types of timber
sales, including cutting contract, and gatewood sales.
SECTION 2. Section 23.74, Tax Code, is amended to read as
follows:
Sec. 23.74 CAPITALIZATION RATE. (a) The capitalization
rate to be used in determining the appraised value of qualified
timber land as provided by this subchapter is the greater of:
(1) the interest rate specified by the Farm Credit
Bank of Texas or its successor on December 31 of the preceding year
plus 2 1/2 percentage points; or
(2) the capitalization rate used in determining the
appraised value of qualified timber land as provided by this
subchapter for the preceding tax year.
(b) Notwithstanding Subsection (a):
(1) in the first tax year in which the capitalization
rate determined under that subsection equals or exceeds 10 percent,
the capitalization rate for that tax year is the rate determined
under Subsection (a) (1); and
(2) for each tax year following the tax year described
by Subdivision (1), the capitalization rate is the average of the
rate determined under Subsection (a)(1) for the current tax year
and the capitalization rate used for each of the four tax years
preceding the current tax year other than a tax year preceding the
tax year described by Subdivision (1).
SECTION 3. (a) This Act takes effect January 1, 2004.
(b) The change in law made by this Act applies only to the
appraisal of qualified timber land for ad valorem tax purposes for a
tax year that begins on or after the effective date of this Act. The
appraisal of qualified timber land for ad valorem tax purposes for a
tax year that began before the effective date of this Act is
governed by the law in effect when the appraisal of the land was
made, and the former law is continued in effect for that purpose.