81R7171 SMH-F
 
  By: Hilderbran H.B. No. 2980
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the ad valorem taxation of property used to provide
  low-income or moderate-income housing.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 11.182, Tax Code, is amended by amending
  Subsections (b), (e), (h), and (k) and adding Subsections (b-1) and
  (b-2) to read as follows:
         (b)  An organization is entitled to an exemption from
  taxation of improved or unimproved real property it owns if the
  organization:
               (1)  is organized as a community housing development
  organization;
               (2)  meets the requirements of a charitable
  organization provided by Sections 11.18(e) and (f);
               (3)  owns the property for the purpose of building or
  repairing housing on the property to sell without profit to a
  low-income or moderate-income individual or family satisfying the
  organization's eligibility requirements or to rent without profit
  to such an individual or family; and
               (4)  engages [exclusively] in the building, repair, and
  sale or rental of housing as described by Subdivision (3) and
  related activities.
         (b-1)  Notwithstanding Subsections (b)(1) and (2), an owner
  of improved or unimproved real property that is not an organization
  described by those subdivisions is entitled to an exemption from
  taxation of the property under Subsection (b) if the owner
  otherwise qualifies for the exemption and the owner is:
               (1)  a limited partnership 100 percent of the interest
  of the general partner in which is owned or controlled by an
  organization described by Subsections (b)(1) and (2); or
               (2)  an entity 100 percent of the interest in which is
  owned or controlled by an organization described by Subsections
  (b)(1) and (2).
         (b-2)  A reference in this section to an organization
  includes a limited partnership or other entity described by
  Subsection (b-1).
         (e)  In addition to meeting the applicable requirements of
  Subsections (b) and (c), to receive an exemption under Subsection
  (b) for improved real property that is [includes a housing project
  constructed after December 31, 2001, and] financed with qualified
  501(c)(3) bonds issued under Section 145 of the Internal Revenue
  Code of 1986, tax-exempt private activity bonds subject to volume
  cap, or low-income housing tax credits, the organization must:
               (1)  [control 100 percent of the interest in the
  general partner if the project is owned by a limited partnership;
               [(2)]  comply with all rules of and laws administered
  by the Texas Department of Housing and Community Affairs applicable
  to community housing development organizations; and
               (2) [(3)]  submit annually to the Texas Department of
  Housing and Community Affairs and to the governing body of each
  taxing unit for which the project receives an exemption for the
  housing project evidence demonstrating that the organization spent
  an amount equal to at least 90 percent of the project's cash flow in
  the preceding fiscal year as determined by the audit required by
  Subsection (g), for eligible persons in the county in which the
  property is located, on social, educational, or economic
  development services, capital improvement projects, or rent
  reduction.
         (h)  Subsections (d) and (e)(2) [(e)(3)] do not apply to
  property owned by an organization if:
               (1)  the entity that provided the financing for the
  acquisition or construction of the property:
                     (A)  requires the organization to make payments in
  lieu of taxes to the school district in which the property is
  located; or
                     (B)  restricts the amount of rent the organization
  may charge for dwelling units on the property; or
               (2)  the organization has entered into an agreement
  with each taxing unit for which the property receives an exemption
  to spend in each tax year for the purposes provided by Subsection
  (d) or (e)(2) [(e)(3)] an amount equal to the total amount of taxes
  imposed on the property in the tax year preceding the year in which
  the organization acquired the property.
         (k)  Notwithstanding Subsection (j) [of this section] and
  Sections 11.43(a) and (c), an exemption under Subsection (b) or (f)
  does not terminate because of a change in the ownership of the
  property if the property is sold at a foreclosure sale and, not
  later than the 30th day after the date of the sale, the owner of the
  property submits to the chief appraiser evidence that the property
  is owned by an organization that meets the requirements of
  Subsections (b)(1), (2), and (4) or is owned by a limited
  partnership described by Subsection (b-1)(1) or an entity described
  by Subsection (b-1)(2) that meets the requirements of Subsection
  (b)(4).  If the owner of the property submits the evidence required
  by this subsection, the exemption continues to apply to the
  property for the remainder of the current tax year and for
  subsequent tax years until the owner ceases to qualify the property
  for the exemption.  This subsection does not prohibit the chief
  appraiser from requiring the owner to file a new application to
  confirm the owner's current qualification for the exemption as
  provided by Section 11.43(c).
         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 real property [owned by an organization]:
               (1)  that includes a development, as defined by Section
  2306.6702, Government Code:
                     (A)  the dwelling units in which are [on the
  effective date of this section was] rented or offered for rent to
  [a] low-income or moderate-income individuals [individual] or
  families [family] satisfying the [organization's] income
  eligibility requirements of Subchapter DD, Chapter 2306,
  Government Code [and that continues to be used for that purpose];
  and
                     (B) [(2)] that was financed under the low income
  housing tax credit program under Subchapter DD, Chapter 2306,
  Government Code;
               (2) [(3)] that does not receive an exemption under
  Section 11.182 or 11.1825; and
               (3) [(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)  In appraising the property, the [The] chief appraiser
  shall:
               (1)  estimate the gross income potential of the
  property by:
                     (A)  analyzing data on rental income of the
  property for the preceding fiscal year contained in the audited
  statement of income and expenses for the property provided under
  Subsection (g) to the chief appraiser if the dwelling units in the
  development were rented or offered for rent to individuals or
  families described by Subsection (a)(1)(A) for the entire fiscal
  year;
                     (B)  analyzing the potential earnings capacity of
  the property if the dwelling units in the development were not
  rented or offered for rent to individuals or families described by
  Subsection (a)(1)(A) during the preceding fiscal year; or
                     (C)  if the dwelling units in the development were
  rented or offered for rent to individuals or families described by
  Subsection (a)(1)(A) for only part of the preceding fiscal year,
  using the method prescribed by Paragraph (A) for the part of the
  fiscal year in which the dwelling units were rented or offered for
  rent and using the method prescribed by Paragraph (B) for the part
  of the fiscal year in which the dwelling units were not rented or
  offered for rent;
               (2)  estimate the operation and maintenance expenses of
  the property by:
                     (A)  analyzing data on operation and maintenance
  expenses of the property for the preceding fiscal year contained in
  the audited statement of income and expenses for the property
  provided under Subsection (g) to the chief appraiser if the
  dwelling units in the development were rented or offered for rent to
  individuals or families described by Subsection (a)(1)(A) for the
  entire fiscal year;
                     (B)  analyzing data on operation and maintenance
  expenses of comparable properties available to the chief appraiser
  if the dwelling units in the development were not rented or offered
  for rent to individuals or families described by Subsection
  (a)(1)(A) during the preceding fiscal year; or
                     (C)  if the dwelling units in the development were
  rented or offered for rent to individuals or families described by
  Subsection (a)(1)(A) for only part of the preceding fiscal year,
  using the method prescribed by Paragraph (A) for the part of the
  fiscal year in which the dwelling units were rented or offered for
  rent and using the method prescribed by Paragraph (B) for the part
  of the fiscal year in which the dwelling units were not rented or
  offered for rent;
               (3)  determine the appropriate capitalization rate as
  provided by Subsections (c) and (d); and
               (4)  compute the actual rental income from the property
  or project the future rental income from the property by
  considering the restrictions provided by Subchapter DD, Chapter
  2306, Government Code, on:
                     (A)  the income of the individuals or families to
  whom the property may be rented; and
                     (B)  the amount of rent that may be charged for the
  property [appraise the property in the manner provided by Section
  11.1825(q)].
         (c)  The chief appraiser shall appraise the property using a
  capitalization rate of at least 13.5 percent, except as provided by
  Subsection (d).
         (d)  The chief appraiser may conduct a study of sales of
  comparable properties described by Subsection (a) that are located
  in the appraisal district to determine the appropriate
  capitalization rate to use in appraising 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.
         (e)  Not later than January 31 of each year, the appraisal
  district shall give public notice in the manner determined by the
  district, including by posting on the district's website if
  applicable, of the capitalization rate to be used in that year to
  appraise property described by Subsection (a) if that rate is a rate
  of less than 13.5 percent.
         (f)  For purposes of determining the net operating income of
  the property, the operating income of the property for the
  preceding fiscal year is reduced by any disbursements made in that
  fiscal year for the operation and maintenance of the property,
  including disbursements for:
               (1)  standard property maintenance;
               (2)  debt service;
               (3)  ad valorem and franchise taxes;
               (4)  employee compensation;
               (5)  fees required by government agencies;
               (6)  expenses incurred in satisfaction of the
  requirements of lenders, including reserve requirements;
               (7)  insurance; and
               (8)  any other justifiable expense related to the
  operation and maintenance of the property.
         (g)  Not later than April 15 of each year, the property owner
  must provide to the chief appraiser an audited statement of the
  income and expenses for the property for the preceding fiscal year
  that includes data on rental income and operation and maintenance
  expenses for which disbursements described by Subsection (f) were
  made. The chief appraiser shall use the audited statement of income
  and expenses in appraising the property under this section. If the
  property owner fails to timely provide the audited statement of
  income and expenses, the chief appraiser shall appraise the
  property in the manner provided by Section 23.012.
         (h)  An audited statement of income and expenses for property
  provided to the chief appraiser under Subsection (g) is
  confidential and not available for public inspection. The chief
  appraiser may disclose information in the statement only to an
  employee of the appraisal office who appraises property, except as
  authorized by Subsection (i).
         (i)  Information made confidential by Subsection (h) may be
  disclosed:
               (1)  in a criminal proceeding;
               (2)  in a hearing conducted by the appraisal review
  board;
               (3)  on a judicial determination of good cause; or
               (4)  to a governmental agency, political subdivision,
  or regulatory body if the disclosure is necessary or proper for the
  enforcement of the laws of this or another state or of the United
  States.
         (j)  In connection with an annual study conducted under
  Section 403.302, Government Code, the value of a property described
  by Subsection (a) that is selected for appraisal must be determined
  in the manner required by this section.
         SECTION 3.  This Act applies only to ad valorem taxes imposed
  for a tax year beginning on or after the effective date of this Act.
         SECTION 4.  This Act takes effect January 1, 2010.