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A BILL TO BE ENTITLED
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AN ACT
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relating to the ad valorem taxation of property used to provide |
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low-income or moderate-income housing. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 11.182, Tax Code, is amended by amending |
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Subsections (b), (e), (h), (j), and (k) and adding Subsections |
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(b-1) and (b-2) to read as follows: |
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(b) An organization is entitled to an exemption from |
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taxation of improved or unimproved real property it owns if the |
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organization: |
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(1) is organized as a community housing development |
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organization; |
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(2) meets the requirements of a charitable |
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organization provided by Sections 11.18(e) and (f); |
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(3) owns the property for the purpose of building or |
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repairing housing on the property to sell without profit to a |
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low-income or moderate-income individual or family satisfying the |
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organization's eligibility requirements or to rent without profit |
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to such an individual or family; and |
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(4) engages [exclusively] in the building, repair, and |
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sale or rental of housing as described by Subdivision (3) and |
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related activities. |
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(b-1) Notwithstanding Subsections (b)(1) and (2), an owner |
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of improved or unimproved real property that is not an organization |
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described by those subdivisions is entitled to an exemption from |
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taxation of the property under Subsection (b) if the owner |
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otherwise qualifies for the exemption and the owner is: |
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(1) a limited partnership of which 100 percent of the |
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interest of the general partner is owned or controlled by an |
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organization described by Subsections (b)(1) and (2); or |
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(2) an entity 100 percent of the interest in which is |
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owned or controlled by an organization described by Subsections |
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(b)(1) and (2). |
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(b-2) A reference in this section to an organization |
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includes a limited partnership or other entity described by |
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Subsection (b-1). |
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(e) In addition to meeting the applicable requirements of |
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Subsections (b) and (c), to receive an exemption under Subsection |
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(b) for improved real property [that includes a housing project
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constructed after December 31, 2001, and financed with qualified
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501(c)(3) bonds issued under Section 145 of the Internal Revenue
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Code of 1986, tax-exempt private activity bonds subject to volume
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cap, or low-income housing tax credits], the organization must: |
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(1) [control 100 percent of the interest in the
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general partner if the project is owned by a limited partnership;
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[(2)] comply with all rules of and laws administered |
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by the Texas Department of Housing and Community Affairs applicable |
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to community housing development organizations; and |
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(2) [(3)] submit annually to the Texas Department of |
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Housing and Community Affairs and to the governing body of each |
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taxing unit for which the project receives an exemption for the |
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housing project evidence demonstrating that the organization spent |
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an amount equal to at least 90 percent of the project's cash flow in |
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the preceding fiscal year as determined by the audit required by |
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Subsection (g), for eligible persons in the county in which the |
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property is located, on social, educational, or economic |
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development services, capital improvement projects, or rent |
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reduction. |
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(h) Subsections (d) and (e)(2) [(e)(3)] do not apply to |
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property owned by an organization if: |
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(1) the entity that provided the financing for the |
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acquisition or construction of the property: |
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(A) requires the organization to make payments in |
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lieu of taxes to the school district in which the property is |
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located; or |
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(B) restricts the amount of rent the organization |
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may charge for dwelling units on the property; or |
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(2) the organization has entered into an agreement |
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with each taxing unit for which the property receives an exemption |
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to spend in each tax year for the purposes provided by Subsection |
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(d) or (e)(2) [(e)(3)] an amount equal to the total amount of taxes |
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imposed on the property in the tax year preceding the year in which |
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the organization acquired the property. |
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(j) An organization may not receive an exemption under |
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Subsection (b) or (f) for property for a tax year unless the |
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organization applied for or received an exemption under that |
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subsection for the property for any part of the 2003 tax year. |
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(k) Notwithstanding Subsection (j) [of this section] and |
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Sections 11.43(a) and (c), an exemption under Subsection (b) or (f) |
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does not terminate because of a change in the ownership of the |
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property if the property is sold at a foreclosure sale and, not |
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later than the 30th day after the date of the sale, the owner of the |
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property submits to the chief appraiser evidence that the property |
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is owned by an organization that meets the requirements of |
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Subsections (b)(1), (2), and (4) or is owned by a limited |
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partnership described by Subsection (b-1)(1) or an entity described |
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by Subsection (b-1)(2) that meets the requirements of Subsection |
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(b)(4). If the owner of the property submits the evidence required |
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by this subsection, the exemption continues to apply to the |
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property for the remainder of the current tax year and for |
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subsequent tax years until the owner ceases to qualify the property |
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for the exemption. This subsection does not prohibit the chief |
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appraiser from requiring the owner to file a new application to |
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confirm the owner's current qualification for the exemption as |
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provided by Section 11.43(c). |
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SECTION 2. Sections 11.1825(c), (d), (q), and (t), Tax |
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Code, are amended to read as follows: |
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(c) Notwithstanding Subsection (b), an owner of real |
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property that is not an organization described by that subsection |
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is entitled to an exemption from taxation of property under this |
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section if the property otherwise qualifies for the exemption and |
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the owner is: |
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(1) a limited partnership of which an organization |
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that meets the requirements of Subsection (b) controls 100 percent |
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of the general partner interest; [or] |
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(2) an entity the parent of which is an organization |
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that meets the requirements of Subsection (b); or |
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(3) an entity the parent of which is controlled by an |
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organization that meets the requirements of Subsection (b). |
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(d) If the owner of the property is an entity described by |
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Subsection (c), the entity must[:
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[(1) be organized under the laws of this state; and
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[(2)] have its principal place of business in this |
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state. |
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(q) If property qualifies for an exemption under this |
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section, the chief appraiser shall use the income method of |
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appraisal as provided by Sections [Section] 23.012 and 23.215 to |
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determine the appraised value of the property. In appraising the |
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property, the chief appraiser shall: |
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(1) adjust for [consider] the restrictions provided by |
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this section on the income of the individuals or families to whom |
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the dwelling units of the housing project may be rented and the |
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amount of rent that may be charged for purposes of computing the |
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actual rental income from the property or projecting future rental |
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income; and |
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(2) use the same capitalization rate that the chief |
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appraiser uses to appraise other rent-restricted properties. |
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(t) Notwithstanding Section 11.43(c), an exemption under |
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this section does not terminate because of a change in ownership of |
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the property if: |
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(1) the property is foreclosed on for any reason and, |
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not later than the 30th day after the date of the foreclosure sale, |
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the owner of the property submits to the chief appraiser evidence |
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that the property is owned by: |
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(A) an organization that meets the requirements |
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of Subsection (b); or |
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(B) an entity that meets the requirements of |
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Subsections (c) and (d); or |
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(2) in the case of property owned by an entity |
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described by Subsections (c) and (d), the organization meeting the |
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requirements of Subsection (b) that controls the general partner |
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interest of, [or] is the parent of, or controls the parent of the |
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entity as described by Subsection (c) ceases to serve in that |
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capacity and, not later than the 30th day after the date the |
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cessation occurs, the owner of the property submits evidence to the |
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chief appraiser that the organization has been succeeded in that |
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capacity by another organization that meets the requirements of |
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Subsection (b). |
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SECTION 3. Section 11.1826, Tax Code, is amended by adding |
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Subsection (c-1) and amending Subsection (e) to read as follows: |
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(c-1) The audit is binding on the appraisal district and |
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constitutes proof of eligibility for, including compliance with all |
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statutory requirements necessary for, an exemption under Section |
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11.1825. |
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(e) Property may not be exempted under Section 11.182 for a |
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tax year unless the organization owning or controlling the owner of |
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the property complies with this section, except that the audit |
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required by this section must address compliance with the |
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requirements of Section 11.182. Subsection (c-1) applies to an |
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audit that addresses compliance with the requirements of Section |
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11.182 in the same manner as that subsection applies to an audit |
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that addresses compliance with the requirements of Section 11.1825. |
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SECTION 4. Section 23.215, Tax Code, is amended to read as |
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follows: |
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Sec. 23.215. APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED |
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FOR LOW-INCOME OR MODERATE-INCOME HOUSING. (a) This section |
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applies only to real property and only if: |
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(1) the property is owned for the purpose of operating |
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a housing project on the property the dwelling units in which are |
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required to be rented to individuals or families whose median |
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income is not more than 60 percent of the greater of: |
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(A) the area median family income for the |
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household's place of residence, as adjusted for family size and as |
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established by the United States Department of Housing and Urban |
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Development; or |
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(B) the statewide area median family income, as |
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adjusted for family size and as established by the United States |
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Department of Housing and Urban Development; |
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(2) at least 50 percent of the total square footage of |
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the dwelling units in the housing project on the property is |
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reserved for individuals or families described by Subdivision (1); |
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and |
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(3) the property is subject to a restrictive covenant |
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recorded in the real property records of the county in which the |
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property is located evidencing the restrictions described by |
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Subdivisions (1) and (2) [by an organization:
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[(1)
that on the effective date of this section was
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rented to a low-income or moderate-income individual or family
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satisfying the organization's income eligibility requirements and
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that continues to be used for that purpose;
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[(2)
that was financed under the low income housing
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tax credit program under Subchapter DD, Chapter 2306, Government
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Code;
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[(3)
that does not receive an exemption under Section
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11.182 or 11.1825; and
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[(4)
the owner of which has not entered into an
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agreement with any taxing unit to make payments to the taxing unit
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instead of taxes on the property]. |
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(b) In appraising the property, the [The] chief appraiser |
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shall use the income method of appraisal as provided by Section |
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23.012 and shall: |
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(1) estimate the gross potential income of the |
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property by: |
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(A) analyzing data on rental income of the |
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property contained in the statement of income and expenses for the |
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property for the preceding fiscal year and the rent roll for the |
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property for December of the preceding year, if the dwelling units |
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in the project were required to be rented to individuals or families |
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described by Subsection (a) during the preceding year; or |
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(B) analyzing the potential earnings capacity of |
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the property, if the construction of the dwelling units in the |
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project has commenced but has not been completed as of the date of |
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the appraisal or if for any other reason Paragraph (A) does not |
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apply; |
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(2) include deductions for reasonable replacement |
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reserves, franchise taxes imposed by this state, and fees imposed |
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by governmental entities; and |
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(3) use the capitalization rate determined by the |
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chief appraiser [appraise the property in the manner provided by
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Section 11.1825(q)]. |
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(c) In determining the capitalization rate, the chief |
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appraiser shall adjust for: |
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(1) the restrictions on the income of the individuals |
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or families to whom the dwelling units in the project are required |
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to be rented and the amount of rent that may be charged; |
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(2) the restrictions on transferability of the |
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property and the period for which the property is subject to a |
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restrictive covenant described by Subsection (a)(3); and |
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(3) the regulatory burdens associated with complying |
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with the restrictive covenant described by Subsection (a)(3) to |
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which the property is subject. |
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(d) Not later than January 1 of each year, the appraisal |
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district shall give public notice in the manner determined by the |
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district, including by posting on the district's Internet website |
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if applicable, of the capitalization rate to be used in that year to |
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appraise property under this section. |
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(e) In connection with an annual study conducted under |
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Section 403.302, Government Code, the value of a property described |
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by Subsection (a) that is selected for appraisal must be determined |
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in the manner required by this section. |
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SECTION 5. This Act applies only to ad valorem taxes imposed |
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for a tax year beginning on or after the effective date of this Act. |
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SECTION 6. This Act takes effect January 1, 2010. |