| TO: | Honorable Frank Madla, Chair, Senate Committee on Intergovernmental Relations |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | HB3546 by Hamric (Relating to the exemption from ad valorem taxation of certain property used to provide low-income or moderate-income housing.), Committee Report 2nd House, Substituted |
The bill would amend existing sections and add new sections to Chapter 11 of the Tax Code concerning the property tax exemption of property owned by existing Community Housing Development Organizations (CHDOs) and a proposed "Organizations Constructing or Rehabilitating Low-Income or Extremely Low-Income Housing."
The bill would prohibit an organization from receiving a currently authorized CHDO exemption after January 1, 2004 unless the organization received an exemption in tax year 2003.
The bill would also provide a partial tax exemption to eligible CHDOs constructing or rehabilitating previously nonexempt property for qualified low-income housing. Organizations in counties with a population of at least 1.4 million would have to obtain approval from the governing body to receive an exemption. In addition, the organization must provide to the chief appraiser a written statement prepared by a certified public accountant stating that the organization had spent at least the greater of $5,000 or the amount required by the financial lender for each dwelling unit. Property qualified for this exemption would be appraised using the income appraisal method, and the capitalization rate used in the appraisal would be the rate that the chief appraiser uses to appraise other rent-restricted properties. The partial tax exemption amounts would be 50 percent of the appraised property value.
In addition, the bill would require that certain nonexempt property used for low or moderate income housing be appraised using the income appraisal method. The capitalization rate used in the appraisal would be the rate that the chief appraiser uses to appraise other rent-restricted properties.
Section 403.302 of the Government Code requires the Comptroller to conduct a property value study to determine the total taxable value for each school district. Total taxable value is an element in the state's school funding formula. To the degree additional property becomes eligible for exemption, passage of this bill would reduce school district taxable values reported to the Commissioner of Education by the Comptroller and increase state costs to the Foundation School Fund.
| Source Agencies: | 304 Comptroller of Public Accounts, 332 Department of Housing and Community Affairs
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| LBB Staff: | JK, DLBa, SD, WP, DLBe
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