By:  Lucio                                                        S.B. No. 724
	(In the Senate - Filed February 24, 2005; March 2, 2005, 
read first time and referred to Committee on Intergovernmental 
Relations; May 2, 2005, reported adversely, with favorable 
Committee Substitute by the following vote:  Yeas 5, Nays 0; 
May 2, 2005, sent to printer.)


COMMITTEE SUBSTITUTE FOR S.B. No. 724                                    By:  Gallegos


A BILL TO BE ENTITLED

AN ACT


relating to the appraisal for ad valorem tax purposes 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.  Section 23.215, Tax Code, is amended 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 the effective date of this section was 
rented 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 use the income method of 
appraisal as provided by Section 23.012 and shall apply a 
capitalization rate as set forth in Subsection (c).
	(c)  The capitalization rate to be used in determining the 
appraised value under this section is computed by adding eight 
percentage points to the prime rate as published in The Wall Street 
Journal on the first day of each calendar year that is not a 
Saturday, Sunday, or legal holiday.  The net operating income 
capitalized shall be inclusive of all property taxes [appraise the 
property in the manner provided by Section 11.1825(q)].
	(d)  The use of the appraised value determined by this 
section shall be the market value of the property subject to appeal 
for the purpose of any study under Section 403.302, Government 
Code.
	SECTION 2.  This Act applies only to ad valorem taxes imposed 
for a tax year beginning on or after the effective date of this Act.
	SECTION 3.  This Act takes effect January 1, 2006.                             



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