80R8780 SMH-F

By: Bailey H.B. No. 2744

A BILL TO BE ENTITLED

AN ACT

relating to the 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. Section 11.1825, Tax Code, is amended by amending Subsections (q) and (r) and adding Subsections (q-1), (q-2), (r-1), and (r-2) to read as follows:

(q) If property qualifies for an exemption under this section, the appraised value of the property is equal to the greater of:

(1) the amount determined using the cost method of appraisal under Section 23.011; or

(2) the amount determined using the income method of appraisal under Section 23.012.

(q-1) In determining the appraised value of property that qualifies for an exemption under this section using the cost method of appraisal, the chief appraiser shall consider only data pertaining to the cost of the land on which a housing project is located and may not consider data pertaining to the cost of any structure located on the land.

(q-2) In determining the appraised value of property that qualifies for an exemption under this section using the income method of appraisal [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 shall:

(1) 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 net operating [rental] income from the property [or projecting future rental income]; [and]

(2) use the actual net operating income from the property; and

(3) use a [the same] capitalization rate of at least 13.5 percent, except as provided by Subsection (r-1) [that the chief appraiser uses to appraise other rent-restricted properties].

(r) For purposes of this section, "actual net operating income" means the actual income from property less the actual expenses incurred that are specific to the property, including compliance monitoring fees and operating and replacement reserves but not including the taxes imposed on the property [Not later than January 31 of each year, the appraisal district shall give public notice in the manner determined by the district, including posting on the district's website if applicable, of the capitalization rate to be used in that year to appraise property receiving an exemption under this section].

(r-1) The chief appraiser may conduct a study of sales of comparable properties that are located in the appraisal district to determine the appropriate capitalization rate to use in determining the market value of the property. If as a result of the study the chief appraiser determines that a capitalization rate of less than 13.5 percent is more appropriate for that purpose, the chief appraiser shall use that lesser rate.

(r-2) Not later than January 31 of each year, the chief appraiser shall give public notice in the manner determined by the appraisal district, including by posting on the district's website if applicable, of the capitalization rate to be used in that year to appraise property under this section if that rate is a rate of less than 13.5 percent.

SECTION 2. 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:

(1) real property that [owned by an organization]:

(A) [(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;

(B) [(3)that] does not receive an exemption under Section 11.182 or 11.1825; and

(C) is owned by an organization that [(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; or

(2) real property that meets the following requirements:

(A) the property is owned by an organization for the purpose of constructing or rehabilitating a housing project on the property and:

(i) renting the housing to individuals or families described by Section 11.1825(f)(1); or

(ii) selling single-family dwellings to individuals or families described by Section 11.1825(f)(2);

(B) at least 50 percent of the total square footage of the dwelling units in the housing project is reserved for individuals or families described by Section 11.1825(f); and

(C) the property does not receive an exemption under Section 11.1825.

(b) The chief appraiser shall appraise the property in the manner provided by Sections [Section] 11.1825(q), (q-1), and (q-2).

SECTION 3. (a) This Act applies only to ad valorem taxes imposed for a tax year beginning on or after January 1, 2007.

(b) As soon as practicable after this Act takes effect, a chief appraiser shall reappraise property for the 2007 tax year that was appraised before the effective date of this Act if a change in law made by this Act affects the appraised value of the property.

SECTION 4. 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. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2007.