By: Merritt H.B. No. 4038

A BILL TO BE ENTITLED

AN ACT

relating to the system for appraising property for ad valorem tax purposes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 5.102(c) and (d), Tax Code, are amended to read as follows:

(c) If the review results in a finding that an appraisal district is not in compliance with generally accepted appraisal standards and practices, the comptroller shall deliver a report that details the comptroller's findings and recommendations for improvement to:

(1) the county assessor-collector who governs the appraisal district [district's chief appraiser and board of directors]; and

(2) the superintendent and board of trustees of each school district participating in the appraisal district.

(d) If the appraisal district fails to comply with the recommendations in the report and the comptroller finds that the county assessor-collector who governs [board of directors of] the appraisal district failed to take remedial action before the first anniversary of the date the report was issued, the comptroller shall notify the judge of each district court in the county for which the appraisal district is established, who shall appoint a board of conservators consisting of five members to implement the recommendations. The board of conservators shall exercise supervision and control over the operations of the appraisal district until the comptroller determines under Section 403.302, Government Code, that in the same year the taxable value of each school district for which the appraisal district appraises property is the local value for the school district. The appraisal district shall bear the costs related to the supervision and control of the district by the board of conservators.

SECTION 2. Sections 5.12(b) and (h), Tax Code, are amended to read as follows:

(b) At the written request of the governing bodies of a majority of the taxing units participating in an appraisal district or of a majority of the group of taxing units composed of the municipalities, school districts, and county participating in an [entitled to vote on the appointment of] appraisal district [directors], the comptroller shall audit the performance of the appraisal district. The governing bodies may request a general audit of the performance of the appraisal district or may request an audit of only one or more particular duties, practices, functions, departments, or other appraisal district matters.

(h) In addition to the performance audits required by Subsections (a), (b), and (c) and the review of appraisal standards required by Section 5.102, the comptroller may audit an appraisal district to analyze the effectiveness and efficiency of the policies, management, and operations of the appraisal district. The results of the audit shall be delivered in a report that details the comptroller's findings and recommendations for improvement to the county assessor-collector who governs the appraisal district [district's chief appraiser and board of directors] and the governing body of each taxing unit participating in the appraisal district. The comptroller may require reimbursement by the appraisal district for some or all of the costs of the audit, not to exceed the actual costs associated with conducting the audit.

SECTION 3. Sections 5.13(c), (f), and (h), Tax Code, are amended to read as follows:

(c) The comptroller must approve the specific plan for the performance audit of an appraisal district. Before approving an audit plan, the comptroller must provide any interested person an opportunity to appear before the comptroller and to comment on the proposed plan. Not later than the 20th day before the date the comptroller considers the plan for an appraisal district performance audit, the comptroller must notify the county assessor-collector who governs [presiding officer of] the appraisal district [board of directors] that the comptroller intends to consider the plan. The notice must include the time, date, and place of the meeting to consider the plan. [Immediately after receiving the notice, the presiding officer shall deliver a copy of the notice to the other members of the appraisal district board of directors.]

(f) The comptroller shall report the results of its audit in writing to the governing body of each taxing unit that participates in the appraisal district and[,] to the county assessor-collector who governs [chief appraiser, and to the presiding officer of] the appraisal district [board of directors]. If the audit was requested under Section 5.12(c) [of this code], the comptroller shall also provide a report to a representative of the property owners who requested the audit.

(h) At any time after the request for an audit is made, the comptroller may discontinue the audit in whole or in part if requested to do so by:

(1) the governing bodies of a majority of the taxing units participating in the district, if the audit was requested by a majority of those units;

(2) the governing bodies of a majority of the group of taxing units composed of the municipalities, school districts, and county participating in the [entitled to vote on the appointment of] appraisal district [directors], if the audit was requested by a majority of those units; or

(3) if the audit was requested under Section 5.12(c) [of this code], by the taxpayers who requested the audit.

SECTION 4. Section 6.02(b), Tax Code, is amended to read as follows:

(b) This section does not preclude the county assessor-collectors who govern [board of directors of] two or more adjoining appraisal districts from providing for the operation of a consolidated appraisal district by interlocal contract.

SECTION 5. Section 6.03, Tax Code, is amended to read as follows:

Sec. 6.03. GOVERNANCE [BOARD] OF APPRAISAL DISTRICTS [DIRECTORS]. (a) An [The] appraisal district is governed by the assessor-collector of the county for which the district is established as part of the duties of the office.

(b) The county assessor-collector is entitled to compensation for administering the appraisal district as provided by the appraisal district budget. [a board of directors. Five directors are appointed by the taxing units that participate in the district as provided by this section. If the county assessor-collector is not appointed to the board, the county assessor-collector serves as a nonvoting director. The county assessor-collector is ineligible to serve if the board enters into a contract under Section 6.05(b) or if the commissioners court of the county enters into a contract under Section 6.24(b). To be eligible to serve on the board of directors, an individual other than a county assessor-collector serving as a nonvoting director must be a resident of the district and must have resided in the district for at least two years immediately preceding the date the individual takes office. An individual who is otherwise eligible to serve on the board is not ineligible because of membership on the governing body of a taxing unit. An employee of a taxing unit that participates in the district is not eligible to serve on the board unless the individual is also a member of the governing body or an elected official of a taxing unit that participates in the district.

[(b) Members of the board of directors other than a county assessor-collector serving as a nonvoting director serve two-year terms beginning on January 1 of even-numbered years.

[(c) Members of the board of directors other than a county assessor-collector serving as a nonvoting director are appointed by vote of the governing bodies of the incorporated cities and towns, the school districts, and, if entitled to vote, the conservation and reclamation districts that participate in the district and of the county. A governing body may cast all its votes for one candidate or distribute them among candidates for any number of directorships. Conservation and reclamation districts are not entitled to vote unless at least one conservation and reclamation district in the district delivers to the chief appraiser a written request to nominate and vote on the board of directors by June 1 of each odd-numbered year. On receipt of a request, the chief appraiser shall certify a list by June 15 of all eligible conservation and reclamation districts that are imposing taxes and that participate in the district.

[(d) The voting entitlement of a taxing unit that is entitled to vote for directors is determined by dividing the total dollar amount of property taxes imposed in the district by the taxing unit for the preceding tax year by the sum of the total dollar amount of property taxes imposed in the district for that year by each taxing unit that is entitled to vote, by multiplying the quotient by 1,000, and by rounding the product to the nearest whole number. That number is multiplied by the number of directorships to be filled. A taxing unit participating in two or more districts is entitled to vote in each district in which it participates, but only the taxes imposed in a district are used to calculate voting entitlement in that district.

[(e) The chief appraiser shall calculate the number of votes to which each taxing unit other than a conservation and reclamation district is entitled and shall deliver written notice to each of those units of its voting entitlement before October 1 of each odd-numbered year. The chief appraiser shall deliver the notice:

[(1) to the county judge and each commissioner of the county served by the appraisal district;

[(2) to the presiding officer of the governing body of each city or town participating in the appraisal district, to the city manager of each city or town having a city manager, and to the city secretary or clerk, if there is one, of each city or town that does not have a city manager; and

[(3) to the presiding officer of the governing body of each school district participating in the district and to the superintendent of those school districts.

[(f) The chief appraiser shall calculate the number of votes to which each conservation and reclamation district entitled to vote for district directors is entitled and shall deliver written notice to the presiding officer of each conservation and reclamation district of its voting entitlement and right to nominate a person to serve as a director of the district before July 1 of each odd-numbered year.

[(g) Each taxing unit other than a conservation and reclamation district that is entitled to vote may nominate by resolution adopted by its governing body one candidate for each position to be filled on the board of directors. The presiding officer of the governing body of the unit shall submit the names of the unit's nominees to the chief appraiser before October 15.

[(h) Each conservation and reclamation district entitled to vote may nominate by resolution adopted by its governing body one candidate for the district's board of directors. The presiding officer of the conservation and reclamation district's governing body shall submit the name of the district's nominee to the chief appraiser before July 15 of each odd-numbered year. Before August 1, the chief appraiser shall prepare a nominating ballot, listing all the nominees of conservation and reclamation districts alphabetically by surname, and shall deliver a copy of the nominating ballot to the presiding officer of the board of directors of each district. The board of directors of each district shall determine its vote by resolution and submit it to the chief appraiser before August 15. The nominee on the ballot with the most votes is the nominee of the conservation and reclamation districts in the appraisal district if the nominee received more than 10 percent of the votes entitled to be cast by all of the conservation and reclamation districts in the appraisal district, and shall be named on the ballot with the candidates nominated by the other taxing units. The chief appraiser shall resolve a tie vote by any method of chance.

[(i) If no nominee of the conservation and reclamation districts receives more than 10 percent of the votes entitled to be cast under Subsection (h), the chief appraiser, before September 1, shall notify the presiding officer of the board of directors of each conservation and reclamation district of the failure to select a nominee. Each conservation and reclamation district may submit a nominee by September 15 to the chief appraiser as provided by Subsection (h). The chief appraiser shall submit a second nominating ballot by October 1 to the conservation and reclamation districts as provided by Subsection (h). The conservation and reclamation districts shall submit their votes for nomination before October 15 as provided by Subsection (h). The nominee on the second nominating ballot with the most votes is the nominee of the conservation and reclamation districts in the appraisal district and shall be named on the ballot with the candidates nominated by the other taxing units. The chief appraiser shall resolve a tie vote by any method of chance.

[(j) Before October 30, the chief appraiser shall prepare a ballot, listing the candidates whose names were timely submitted under Subsections (g) and, if applicable, (h) or (i) alphabetically according to the first letter in each candidate's surname, and shall deliver a copy of the ballot to the presiding officer of the governing body of each taxing unit that is entitled to vote.

[(k) The governing body of each taxing unit entitled to vote shall determine its vote by resolution and submit it to the chief appraiser before December 15. The chief appraiser shall count the votes, declare the five candidates who receive the largest cumulative vote totals elected, and submit the results before December 31 to the governing body of each taxing unit in the district and to the candidates. For purposes of determining the number of votes received by the candidates, the candidate receiving the most votes of the conservation and reclamation districts is considered to have received all of the votes cast by conservation and reclamation districts and the other candidates are considered not to have received any votes of the conservation and reclamation districts. The chief appraiser shall resolve a tie vote by any method of chance.

[(l) If a vacancy occurs on the board of directors other than a vacancy in the position held by a county assessor-collector serving as a nonvoting director, each taxing unit that is entitled to vote by this section may nominate by resolution adopted by its governing body a candidate to fill the vacancy. The unit shall submit the name of its nominee to the chief appraiser within 45 days after notification from the board of directors of the existence of the vacancy, and the chief appraiser shall prepare and deliver to the board of directors within the next five days a list of the nominees. The board of directors shall elect by majority vote of its members one of the nominees to fill the vacancy.]

SECTION 6. Sections 6.035(a) and (b), Tax Code, are amended to read as follows:

(a) An individual is [ineligible to serve on an appraisal district board of directors and is] disqualified from employment as chief appraiser if the individual:

(1) is related within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code, to an individual who is engaged in the business of appraising property for compensation for use in proceedings under this title or of representing property owners for compensation in proceedings under this title in the appraisal district; or

(2) owns property on which delinquent taxes have been owed to a taxing unit for more than 60 days after the date the individual knew or should have known of the delinquency unless:

(A) the delinquent taxes and any penalties and interest are being paid under an installment payment agreement under Section 33.02; or

(B) a suit to collect the delinquent taxes is deferred or abated under Section 33.06 or 33.065.

(b) A [member of an appraisal district board of directors or a] chief appraiser commits an offense if the [board member continues to hold office or the] chief appraiser remains employed knowing that an individual related within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code, to the [board member or] chief appraiser is engaged in the business of appraising property for compensation for use in proceedings under this title or of representing property owners for compensation in proceedings under this title in the appraisal district in which the [member serves or the] chief appraiser is employed. An offense under this subsection is a Class B misdemeanor.

SECTION 7. Sections 6.05 and 6.051, Tax Code, are amended to read as follows:

Sec. 6.05. APPRAISAL OFFICE; CHIEF APPRAISER. (a) Except as authorized by Subsection (b) [of this section], each appraisal district shall establish an appraisal office. The appraisal office must be located in the county for which the district is established. An appraisal district may establish branch appraisal offices outside the county for which the district is established.

(b) The county assessor-collector who governs [board of directors of] an appraisal district may contract with an appraisal office in another district or with a taxing unit in the district to perform the duties of the appraisal office for the district.

(c) The county assessor-collector may serve as the chief appraiser for the appraisal district or may appoint another person to serve as the chief appraiser.

(d) A county assessor-collector who appoints another person to serve ad the chief appraiser shall notify the comptroller and each taxing unit that participates in the appraisal district of that appointment.

(e) An appointed chief appraiser serves at the pleasure of the county assessor-collector and acts on behalf of the county assessor-collector on all matters delegated to the appointed chief appraiser by the county assessor-collector.

(f) The chief appraiser is the chief administrator of the appraisal office.

(g) An appointed [The chief appraiser is appointed by and serves at the pleasure of the appraisal district board of directors. If a taxing unit performs the duties of the appraisal office pursuant to a contract, the assessor for the unit is the chief appraiser.

[(d) The] chief appraiser is entitled to compensation as provided by the appraisal district budget for performing duties delegated to the appointed chief appraiser by the county assessor-collector [adopted by the board of directors]. The chief appraiser's compensation may not be directly or indirectly linked to an increase in the total market, appraised, or taxable value of property in the appraisal district.

(h) The chief appraiser may employ and compensate professional, clerical, and other personnel as provided by the budget.

[(e)] The chief appraiser may delegate authority to the chief appraiser's [his] employees.

(i) The county assessor-collector may not appoint a person to serve as the chief appraiser if the person is related to the county assessor-collector within the second degree by affinity or within the third degree by consanguinity, as determined under Chapter 573, Government Code. An appointed [(f) The] chief appraiser may not employ any individual related to the county assessor-collector [a member of the board of directors] within the second degree by affinity or within the third degree by consanguinity, as determined under Chapter 573, Government Code. A person commits an offense if the person intentionally or knowingly violates this subsection. An offense under this subsection is a misdemeanor punishable by a fine of not less than $100 or more than $1,000.

(j) [(g)] The chief appraiser is an officer of the appraisal district for purposes of the nepotism law, Chapter 573, Government Code. An appraisal district may not employ or contract with an individual or the spouse of an individual who is related to the chief appraiser within the first degree by consanguinity or affinity, as determined under Chapter 573, Government Code.

(k) A county assessor-collector who apoints another person to serve as the chief appraiser [(h) The board of directors of an appraisal district by resolution] may prescribe that specified actions of the chief appraiser relating to the finances or administration of the appraisal district are subject to the approval of the county assessor-collector [board].

(l) [(i)] To ensure adherence with generally accepted appraisal practices, the county assessor-collector [board of directors of an appraisal district] shall develop biennially a written plan for the periodic reappraisal of all property within the boundaries of the district according to the requirements of Section 25.18 and shall hold a public hearing to consider the proposed plan. Not later than the 10th day before the date of the hearing, the county assessor-collector [secretary of the board] shall deliver to the presiding officer of the governing body of each taxing unit participating in the district a written notice of the date, time, and place for the hearing. Not later than September 15 of each even-numbered year, the county assessor-collector [board] shall hold the hearing [complete its hearings], make any amendments, and [by resolution] finally approve the plan. Copies of the approved plan shall be distributed to the presiding officer of the governing body of each taxing unit participating in the district and to the comptroller within 60 days of the approval date.

Sec. 6.051. OWNERSHIP OR LEASE OF REAL PROPERTY. (a) The county assessor-collector who governs [board of directors of] an appraisal district may purchase or lease real property and may construct improvements as necessary to establish and operate the appraisal office or a branch appraisal office.

(b) The acquisition or conveyance of real property or the construction or renovation of a building or other improvement by an appraisal district must be approved by the governing bodies of three-fourths of the group of taxing units composed of the municipalities, school districts, and county participating in the appraisal district [entitled to vote on the appointment of board members]. The county assessor-collector [board of directors by resolution] may propose a property transaction or other action for which this subsection requires approval of the taxing units. The county assessor-collector [chief appraiser] shall notify the presiding officer of each governing body entitled to vote on the approval of the proposal by delivering a copy of the proposal [board's resolution], together with information showing the costs of other available alternatives to the proposal. On or before the 30th day after the date the presiding officer receives notice of the proposal, the governing body of a taxing unit by resolution may approve or disapprove the proposal. If a governing body fails to act on or before that 30th day or fails to file its resolution with the county assessor-collector [chief appraiser] on or before the 10th day after that 30th day, the proposal is treated as if it were disapproved by the governing body.

(c) The county assessor-collector [board of directors] may convey real property owned by the district, and the proceeds shall be credited to each taxing unit that participates in the district in proportion to the unit's allocation of the appraisal district budget in the year in which the transaction occurs. A conveyance must be approved as provided by Subsection (b) [of this section], and any proceeds shall be apportioned by an amendment to the annual budget made as provided by Section 6.06(c) [Subsection (c) of Section 6.06 of this code].

[(d) An acquisition of real property by an appraisal district before January 1, 1988, may be validated before March 1, 1988, in the manner provided by Subsection (b) of this section for the acquisition of real property.]

SECTION 8. Section 6.06, Tax Code, is amended by amending Subsections (a) through (d) and (f) through (k) and adding Subsection (1) to read as follows:

(a) Each year the county assessor-collector [chief appraiser] shall prepare a proposed budget for the operations of the district for the following tax year and shall submit copies to each taxing unit participating in the district [and to the district board of directors] before June 15. The county assessor-collector [He] shall include in the budget a list showing each proposed position, the proposed salary for the position, all benefits proposed for the position, each proposed capital expenditure, and an estimate of the amount of the budget that will be allocated to each taxing unit. Each taxing unit [entitled to vote on the appointment of board members] shall maintain a copy of the proposed budget for public inspection at its principal administrative office.

(b) The county assessor-collector [board of directors] shall hold a public hearing to consider the budget. The county assessor-collector [secretary of the board] shall deliver to the presiding officer of the governing body of each taxing unit participating in the district not later than the 10th day before the date of the hearing a written notice of the date, time, and place fixed for the hearing. The county assessor-collector [board] shall complete the [its] hearings, make necessary [any] amendments to the proposed budget [it desires], and finally approve a budget before September 15. If governing bodies of a majority of the group of taxing units composed of the municipalities, school districts, and county participating in the appraisal district [taxing units entitled to vote on the appointment of board members] adopt resolutions disapproving a budget and file them with the county assessor-collector [secretary of the board] within 30 days after its adoption, the budget does not take effect, and the county assessor-collector [board] shall adopt a new budget within 30 days of the disapproval.

(c) The county assessor-collector [board] may amend the approved budget at any time, but [the secretary of the board] must deliver a written copy of a proposed amendment to the presiding officer of the governing body of each taxing unit participating in the district not later than the 30th day before the date the county assessor-collector approves the amendment [board acts on it].

(d) Each taxing unit participating in the district is allocated a portion of the amount of the budget equal to the proportion that the total taxable value [dollar amount] of property located [taxes imposed] in the unit [district by the unit] for the tax year in which the budget proposal is prepared bears to the sum of the total taxable value [dollar amount] of property located [taxes imposed] in each participating unit [the district by each participating unit] for that year. For purposes of this subsection, the taxable value for each taxing unit is determined separately, without regard to the inclusion of the same property in the determination of the taxable value for other taxing units. If a taxing unit participates in two or more districts, only the taxable value of property appraised for the unit by [taxes imposed in] a district is [are] used to calculate the unit's cost allocations in that district. If the number of real property parcels in a taxing unit is less than 5 percent of the total number of real property parcels in the district and the total taxable value of property located in the taxing unit exceeds [imposes in excess of] 25 percent of the sum of the total taxable value of property in each participating taxing unit [total amount of the property taxes imposed in the district by all of the participating taxing units] for a year, the unit's allocation may not exceed a percentage of the appraisal district's budget equal to three times the unit's percentage of the total number of real property parcels appraised by the district.

(f) Payments shall be made to a depository designated by the county assessor-collector [district board of directors]. The district's funds may be disbursed only by a written check, draft, or order signed by the county assessor-collector [chairman and secretary of the board or, if authorized by resolution of the board, by the chief appraiser].

(g) If a taxing unit decides not to impose taxes for any tax year, the unit is not liable for any of the costs of operating the district in that year, and those costs are allocated among the other taxing units [as if that unit had not imposed taxes in the year used to calculate allocations]. However, if that unit has made any payments, it is not entitled to a refund.

(h) If a newly formed taxing unit or a taxing unit that did not impose taxes in the preceding year imposes taxes in any tax year, that unit is allocated a portion of the amount budgeted to operate the district. The total taxable value for the current year of property in the unit and appraised for the unit by the district [as if it had imposed taxes in the preceding year, except that the amount of taxes the unit imposes in the current year] is used to calculate its allocation. Before the total taxable value for the current year of property in the unit and appraised for the unit by the district [amount of taxes to be imposed for the current year] is known, the allocation may be based on an estimate to which the county assessor-collector [district board of directors] and the governing body of the unit agree, and the payments made after that amount is known shall be adjusted to reflect the actual amount [imposed]. The payments of a newly formed taxing unit that has no source of funds are postponed until the unit has received adequate tax or other revenues.

(i) The fiscal year of an appraisal district is the calendar year unless the governing bodies of three-fourths of the group of taxing units composed of the municipalities, school districts, and county participating in the appraisal district [taxing units entitled to vote on the appointment of board members] adopt resolutions proposing a different fiscal year and file them with the county assessor-collector [secretary of the board] not more than 12 and not less than eight months before the first day of the fiscal year proposed by the resolutions. If the fiscal year of an appraisal district is changed under this subsection, the county assessor-collector [chief appraiser] shall prepare a proposed budget for the fiscal year as provided by Subsection (a) [of this section] before the 15th day of the seventh month preceding the first day of the fiscal year established by the change[,] and [the board of directors] shall adopt a budget for the fiscal year as provided by Subsection (b) [of this section] before the 15th day of the fourth month preceding the first day of the fiscal year established by the change. Unless the appraisal district adopts a different method of allocation under Section 6.061 [of this code], the allocation of the budget to each taxing unit shall be calculated as provided by Subsection (d) [of this section] using the appropriate total taxable values [amount of property taxes imposed by each participating taxing unit] in the most recent tax year preceding the fiscal year established by the change for which the necessary information is available. Each taxing unit shall pay its allocation as provided by Subsection (e) [of this section], except that the first payment shall be made before the first day of the fiscal year established by the change and subsequent payments shall be made quarterly. The [In the year in which a change in the fiscal year occurs, the] budget for the fiscal year that precedes the fiscal year established by the change [that takes effect on January 1 of that year] may be amended as necessary as provided by Subsection (c) [of this section in order] to accomplish the change in fiscal years.

(j) If the total amount of the payments made or due to be made by the taxing units participating in an appraisal district exceeds the amount actually spent or obligated to be spent during the fiscal year for which the payments were made, the county assessor-collector [chief appraiser] shall credit the excess amount against each taxing unit's allocated payments for the following year in proportion to the amount of each unit's budget allocation for the fiscal year for which the payments were made. If a taxing unit that paid its allocated amount is not allocated a portion of the district's budget for the following fiscal year, the county assessor-collector [chief appraiser] shall refund to the taxing unit its proportionate share of the excess funds not later than the 150th day after the end of the fiscal year for which the payments were made.

(k) For good cause shown, the county assessor-collector [board of directors] may waive the penalty and interest on a delinquent payment under Subsection (e).

(l) In this subsection, "special district or authority" means any taxing unit other than a school district, municipality, or county and includes a junior college district or hospital district. Notwithstanding any other provision of this section, if the sum total portion of the budget of the appraisal district allocated under another provision of this section to the special districts or authorities that participate in the appraisal district exceeds 10 percent of the budget, the sum total portion of the budget that may be allocated to those special districts or authorities may not exceed 10 percent. The other provisions of this section govern the allocation of:

(1) that portion of the budget among the special districts or authorities if more than one special district or authority participates in the appraisal district; and

(2) the remainder of the budget among the other taxing units that participate in the appraisal district.

SECTION 9. Section 6.061, Tax Code, is amended to read as follows:

Sec. 6.061. CHANGES IN METHOD OF FINANCING. (a) The county assessor-collector who governs [board of directors of] an appraisal district, by signed order [resolution adopted and] delivered to each taxing unit participating in the district after June 15 and before August 15, may prescribe a different method of allocating the costs of operating the district unless the governing body of any taxing unit that participates in the district adopts a resolution opposing the different method, and files it with the county assessor-collector [board of directors] before September 1. If a [board] proposal is rejected, the county assessor-collector [board] shall notify, in writing, each taxing unit participating in the district before September 15.

(b) The taxing units participating in an appraisal district may adopt a different method of allocating the costs of operating the district if the governing bodies of three-fourths of the group of taxing units composed of the municipalities, school districts, and county participating in the appraisal district [taxing units that are entitled to vote on the appointment of board members] adopt resolutions providing for the other method. However, a change under this subsection is not valid if it requires any taxing unit to pay a greater proportion of the appraisal district's costs than the unit would pay under Section 6.06 [of this code] without the consent of the governing body of that unit.

(c) An official copy of a resolution under this section must be filed with the county assessor-collector [chief appraiser of the appraisal district] after April 30 and before May 15 or the resolution is ineffective.

(d) Before May 20, the county assessor-collector [chief appraiser] shall determine whether a sufficient number of eligible taxing units have filed valid resolutions proposing a change in the allocation of district costs for the change to take effect. Before May 25, the county assessor-collector [chief appraiser] shall notify each taxing unit participating in the district of each change that is adopted.

(e) A change in allocation of district costs made as provided by this section remains in effect until changed in a manner provided by this section or rescinded by resolution of a majority of the governing bodies of the group of taxing units composed of the municipalities, school districts, and county participating in the appraisal district [that are entitled to vote on appointment of board members under Section 6.03 of this code].

SECTION 10. Sections 6.062(a) and (c), Tax Code, are amended to read as follows:

(a) Not later than the 10th day before the date of the public hearing at which the county assessor-collector [board of directors] considers the appraisal district budget, the county assessor-collector [chief appraiser] shall give notice of the public hearing by publishing the notice in a newspaper having general circulation in the county for which the appraisal district is established. The notice may not be smaller than one-quarter page of a standard-size or tabloid-size newspaper and may not be published in the part of the paper in which legal notices and classified advertisements appear.

(c) The notice must state that the appraisal district is supported solely by payments from the local taxing units served by the appraisal district. The notice must also contain the following statement: "If approved by the county assessor-collector [appraisal district board of directors] at the public hearing, this proposed budget will take effect automatically unless disapproved by the governing bodies of the county, school districts, and municipalities [cities, and towns] served by the appraisal district. A copy of the proposed budget is available for public inspection in the office of each of those governing bodies."

SECTION 11. Section 6.063, Tax Code, is amended to read as follows:

Sec. 6.063. FINANCIAL AUDIT. (a) At least once each year, the county assessor-collector who governs [board of directors of] an appraisal district shall have prepared an audit of its affairs by an independent certified public accountant or a firm of independent certified public accountants.

(b) The report of the audit is a public record. A copy of the report shall be delivered to the county assessor-collector, the county judge, and the presiding officer of the governing body of each municipality and school district participating in the appraisal district [taxing unit eligible to vote on the appointment of district directors], and a reasonable number of copies shall be available for inspection at the appraisal office.

SECTION 12. Sections 6.09(b) and (c), Tax Code, are amended to read as follows:

(b) The county assessor-collector who governs an appraisal district [board of directors] shall designate as the district depository the financial institution or institutions that offer the most favorable terms and conditions for the handling of the district's funds.

(c) The county assessor-collector [board] shall solicit bids to be designated as depository for the district. The depository when designated shall serve for a term of two years and until its successor is designated and has qualified. The county assessor-collector [board] and the depository may agree to extend a depository contract for one additional two-year period.

SECTION 13. Sections 6.12(a) and (d), Tax Code, are amended to read as follows:

(a) The county assessor-collector who governs an [chief appraiser of each] appraisal district shall appoint[, with the advice and consent of the board of directors,] an agricultural advisory board composed of three or more members as determined by the needs of the district [board].

(d) The board shall meet at the call of the county assessor-collector [chief appraiser] at least three times a year.

SECTION 14. Sections 6.15(a), (b), and (c), Tax Code, are amended to read as follows:

(a) The county assessor-collector who governs [A member of the board of directors of] an appraisal district commits an offense if the county assessor-collector [member] directly or indirectly communicates with the chief appraiser on any matter relating to the appraisal of property by the appraisal district, except in:

(1) an open meeting of the county assessor-collector [appraisal district board of directors] or another public forum; or

(2) a closed meeting of the county assessor-collector [board of directors] held to consult with the county assessor-collector's [board's] attorney about pending litigation, at which the chief appraiser's presence is necessary for full communication between the county assessor-collector [board] and the county assessor-collector's [board's] attorney.

(b) A chief appraiser commits an offense if the chief appraiser directly or indirectly communicates with the county assessor-collector who governs [a member of the board of directors of] the appraisal district on any matter relating to the appraisal of property by the appraisal district, except in:

(1) an open meeting of the county assessor-collector [board of directors] or another public forum; or

(2) a closed meeting of the county assessor-collector [board of directors] held to consult with the county assessor-collector's [board's] attorney about pending litigation, at which the chief appraiser's presence is necessary for full communication between the county assessor-collector [board] and the county assessor-collector's [board's] attorney.

(c) Subsections (a) and (b) do not apply to a routine communication between the chief appraiser and the county assessor-collector that relates to the administration of an appraisal roll, including a communication made in connection with the certification, correction, or collection of an account[, regardless of whether the county assessor-collector was appointed to the board of directors of the appraisal district or serves as a nonvoting director].

SECTION 15. Subchapter A, Chapter 6, Tax Code, is amended by adding Section 6.16 to read as follows:

Sec. 6.16. CONTRACTS WITH TAXING UNITS. The county assessor-collector who governs an appraisal district may contract with the governing body of a taxing unit that participates in the appraisal district to consolidate employee benefit plans, vendor contracts, leases, or purchases if the consolidation will reduce the costs of those items for the appraisal district and the taxing unit.

SECTION 16. Sections 6.24(a) and (b), Tax Code, are amended to read as follows:

(a) The governing body of a taxing unit other than a county may contract as provided by Chapter 791, Government Code, for the performance of duties relating to the assessment or collection of taxes fur the taxing unit [the Interlocal Cooperation Act] with:

(1) the governing body of another taxing unit [or with the board of directors of an appraisal district] for the other unit [or the district] to perform those duties; or

(2) the county assessor-collector who governs an appraisal district for the appraisal district to perform those duties [relating to the assessment or collection of taxes].

(b) The commissioners court of a county with the approval of the county assessor-collector may contract as provided by Chapter 791, Government Code, [the Interlocal Cooperation Act] with the governing body of another taxing unit in the county [or with the board of directors of the appraisal district] for the other unit [or the district] to perform duties relating to the assessment or collection of taxes for the county. The commissioners court may contract as provided by Chapter 791, Government Code, with the county assessor-collector for the appraisal district established for the county to perform duties relating to the assessment or collection of taxes for the county. If a county contracts to have its taxes assessed and collected by another taxing unit or by the appraisal district, except as provided by Subsection (c), the contract shall require the other unit or the district to assess and collect all taxes the county is required to assess and collect.

SECTION 17. Section 6.26(f), Tax Code, is amended to read as follows:

(f) If a majority of the qualified voters voting on the question in the election favor the proposition, the entity or office named by the ballot shall perform the functions named by the ballot beginning with the next time property taxes are assessed or collected, as applicable, that is more than 90 days after the date of the election. If the governing bodies, [(]and the county assessor-collector who governs the appraisal district [board of directors] when the district is involved,[)] agree, a function may be consolidated when performance of the function begins in less than 90 days after the date of the election.

SECTION 18. Sections 6.41(b), (d), (e), and (f), Tax Code, are amended to read as follows:

(b) The board consists of three members. However, the county assessor-collector who governs the appraisal district [board of directors by resolution of a majority of its members] may increase the size of the appraisal review board to the number of members the county assessor-collector [board of directors] considers appropriate.

(d) Members of the board are appointed by the county assessor-collector who governs the appraisal district [by resolution of a majority of the appraisal district board of directors]. A vacancy on the board is filled in the same manner for the unexpired portion of the term.

(e) Members of the board hold office for terms of two years beginning January 1. The county assessor-collector [appraisal district board of directors by resolution] shall provide for staggered terms, so that the terms of as close to one-half of the members as possible expire each year. In making the initial or subsequent appointments, the county assessor-collector [board of directors] shall designate those members who serve terms of one year as needed to comply with this subsection.

(f) A member of the board may be removed from the board by the county assessor-collector who governs [a majority vote of] the appraisal district [board of directors]. Grounds for removal are:

(1) a violation of Section 6.412, 6.413, 41.66(f), or 41.69; or

(2) good cause relating to the attendance of members at called meetings of the board as established by written policy adopted by the county assessor-collector [a majority of the appraisal district board of directors].

SECTION 19. Sections 6.412(c) and (d), Tax Code, are amended to read as follows:

(c) A person is ineligible to serve on the appraisal review board if the person is the county assessor-collector [a member of the board of directors], an officer[,] or employee of the appraisal district, an employee of the comptroller, or a member of the governing body, an officer, or an employee of a taxing unit.

(d) A person is ineligible to serve on the appraisal review board of an appraisal district established for a county having a population of more than 100,000:

(1) if the person:

(A) has served for all or part of three previous terms as a board member or auxiliary board member on the appraisal review board; or

(B) is a former county assessor-collector who governed the appraisal district or a former [member of the board of directors,] officer[,] or employee of the appraisal district; [or]

(2) if the person served as a member of the governing body or as an officer of a taxing unit for which the appraisal district appraises property, until the fourth anniversary of the date the person ceased to be a member or officer; or

(3) if the person has ever appeared before the appraisal review board for compensation.

SECTION 20. Subchapter B, Chapter 22, Tax Code, is amended by adding Section 22.31 to read as follows:

Sec. 22.31. NOTICE TO COMPTROLLER REGARDING COMPLIANCE WITH FILING REQUIREMENT. (a) A person who owns tangible personal property used for the production of income and who is audited by the comptroller for any purpose shall notify the comptroller regarding whether the person filed a rendition statement or property report required by this chapter with the chief appraiser for the most recent tax year in which the person was required to file the statement or report.

(b) The comptroller shall forward to the chief appraiser the notice received by the comptroller under Subsection (a).

SECTION 21. Sections 23.23(a), (b), (c), (d), and (f), Tax Code, are amended to read as follows:

(a) The appraised value of a residence homestead for the first tax year after the year in which the owner acquires the property is the market value of the property. Notwithstanding Section 23.01, the appraised value of the property in each subsequent tax year until the end of the tax year in which the ownership of the property changes shall be the sum of:

(1) the appraised value of the property for the preceding tax year as adjusted for the current tax year to reflect the change from the preceding tax year in the purchasing power of the dollar for consumers in this state; and

(2) the market value of all new improvements to the property [Notwithstanding the requirements of Section 25.18 and regardless of whether the appraisal office has appraised the property and determined the market value of the property for the tax year, an appraisal office may increase the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of:

[(1) the market value of the property for the most recent tax year that the market value was determined by the appraisal office; or

[(2) the sum of:

[(A) 10 percent of the appraised value of the property for the preceding tax year;

[(B) the appraised value of the property for the preceding tax year; and

[(C) the market value of all new improvements to the property].

(b) For each tax year, using regional indexes that the comptroller considers to most accurately report changes in the purchasing power of the dollar for consumers in this state, the comptroller shall determine and publicize the percentage by which the appraised value of residence homesteads may be increased under Subsection (a)(1). The tax assessor-collector shall use the percentage determined by the comptroller under this subsection to determine the maximum appraised valued under Subsection (a) of residence homesteads appraised by that chief appraiser [When appraising a residence homestead, the chief appraiser shall:

[(1) appraise the property at its market value; and

[(2) include in the appraisal records both the market value of the property and the amount computed under Subsection (a)(2)].

(c) When appraising a residence homestead, the chief appraiser shall:

(1) determine the market value of the property; and

(2) include in the appraisal records both the market value of the property and the maximum appraised value of the property calculated under Subsection (a) [The limitation provided by Subsection (a) takes effect as to a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for an exemption under Section 11.13. The limitation expires on January 1 of the first tax year that neither the owner of the property when the limitation took effect nor the owner's spouse or surviving spouse qualifies for an exemption under Section 11.13].

(d) This section does not apply to property appraised under Subchapter C, D, E, F, [or] G, or H.

(f) For purposes of this section, the owner of a residence homestead on January 1, 2010, is considered to have acquired the property in the 2009 tax year [Notwithstanding Subsections (a) and (e) and except as provided by Subdivision (2), an improvement to property that would otherwise constitute a new improvement is not treated as a new improvement if the improvement is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by mold or water damage. For purposes of appraising the property in the tax year in which the structure would have constituted a new improvement:

[(1) the last year in which the property was appraised for taxation before the casualty or damage occurred is considered to be the last year in which the property was appraised for taxation for purposes of Subsection (a)(2)(A); and

[(2) the replacement structure is considered to be a new improvement only to the extent it is a significant improvement over the replaced structure as that structure existed before the casualty or damage occurred].

SECTION 22. Section 23.55(n), Tax Code, is amended to read as follows:

(n) Within one year of the conclusion of the two fiscal bienniums for which the comptroller issued a letter as provided under Subsection (m), the county assessor-collector who governs [board of directors of] the appraisal district[, by official board action,] may direct the chief appraiser to request the comptroller to determine if the amount of revenues was equal to or exceeded 20 times the amount of taxes and interest that would have been imposed under Subsection (a). The comptroller shall issue a finding as to whether the amount of revenue met the projected increases. The chief appraiser shall review the results of the comptroller's finding and shall make a determination as to whether sanctions under Subsection (a) should be imposed. If the chief appraiser determines that the sanctions provided by Subsection (a) shall be imposed, the sanctions shall be based on the date of the transfer of the property under Subsection (f)(4).

SECTION 23. Section 25.01(b), Tax Code, is amended to read as follows:

(b) The county assessor-collector who governs the appraisal district [chief appraiser with the approval of the board of directors of the district] may contract with a private appraisal firm to perform appraisal services for the district, subject to the county assessor-collector's [his] approval. A contract for private appraisal services is void if the amount of compensation to be paid the private appraisal firm is contingent on the amount of or increase in appraised, assessed, or taxable value of property appraised by the appraisal firm.

SECTION 24. Sections 25.18(a) and (b), Tax Code, are amended to read as follows:

(a) Each appraisal office shall implement the plan for periodic reappraisal of property approved by the county assessor-collector [board of directors] under Section 6.05(l) [6.05(i)].

(b) The plan shall provide for the following reappraisal activities for all residence homesteads in the district in the same year once every 10 years and for all other real and personal property in the district at least once every three years:

(1) identifying properties to be appraised through physical inspection or by other reliable means of identification, including deeds or other legal documentation, aerial photographs, land-based photographs, surveys, maps, and property sketches;

(2) identifying and updating relevant characteristics of each property in the appraisal records;

(3) defining market areas in the district;

(4) identifying property characteristics that affect property value in each market area, including:

(A) the location and market area of property;

(B) physical attributes of property, such as size, age, and condition;

(C) legal and economic attributes; and

(D) easements, covenants, leases, reservations, contracts, declarations, special assessments, ordinances, or legal restrictions;

(5) developing an appraisal model that reflects the relationship among the property characteristics affecting value in each market area and determines the contribution of individual property characteristics;

(6) applying the conclusions reflected in the model to the characteristics of the properties being appraised; and

(7) reviewing the appraisal results to determine value.

SECTION 25. Section 25.19(e), Tax Code, is amended to read as follows:

(e) The chief appraiser, with the approval of the county assessor-collector who governs the appraisal district [appraisal district board of directors], may dispense with the notice required by Subsection (a)(1) if the amount of increase in appraised value is $1,000 or less.

SECTION 26. Section 25.25(b), Tax Code, is amended to read as follows:

(b) The chief appraiser may change the appraisal roll at any time to correct a name or address, a determination of ownership, a description of property, multiple appraisals of a property, or a clerical error or other inaccuracy as prescribed by board rule that does not increase the amount of tax liability. Before the 10th day after the end of each calendar quarter, the chief appraiser shall submit to the appraisal review board and to the county assessor-collector who governs [board of directors of] the appraisal district a written report of each change made under this subsection that decreases the tax liability of the owner of the property. The report must include:

(1) a description of each property; and

(2) the name of the owner of that property.

SECTION 27. Section 41.66(g), Tax Code, is amended to read as follows:

(g) At the beginning of a hearing on a protest, each member of the appraisal review board hearing the protest must sign an affidavit stating that the board member has not communicated with another person in violation of Subsection (f). If a board member has communicated with another person in violation of Subsection (f), the member must be recused from the proceeding and may not hear, deliberate on, or vote on the determination of the protest. The county assessor-collector who governs [board of directors of] the appraisal district shall adopt and implement a policy concerning the temporary replacement of an appraisal review board member who has communicated with another person in violation of Subsection (f).

SECTION 28. Section 42.02, Tax Code, is amended by amending Subsections (a) and (c) and adding Subsection (d) to read as follows:

(a) The [On written approval of the board of directors of the appraisal district, the] chief appraiser is entitled to appeal an order of the appraisal review board determining:

(1) a taxpayer protest as provided by Subchapter C, Chapter 41, subject to Subsection (b); or

(2) a taxpayer's motion to change the appraisal roll filed under Section 25.25.

(c) The [On written approval of the board of directors of the appraisal district, the] chief appraiser may appeal an order of the appraisal review board determining a taxpayer protest otherwise prohibited by Subsection (b)[,] if the chief appraiser alleges that the taxpayer or a person acting on behalf of the taxpayer committed fraud, made a material misrepresentation, or presented fraudulent evidence in the hearing before the board. In an appeal under this subsection, the court shall first consider whether the taxpayer or a person acting on behalf of the taxpayer committed fraud, made a material misrepresentation, or presented fraudulent evidence to the appraisal review board. If the court does not find by a preponderance of the evidence that the taxpayer or a person acting on behalf of the taxpayer committed fraud, made a material misrepresentation, or presented fraudulent evidence to the appraisal review board, the court shall:

(1) dismiss the appeal; and

(2) award court costs and reasonable attorney's fees to the taxpayer.

(d) The county assessor-collector must approve an appeal under this section in writing.

SECTION 29. Subchapter Z, Chapter 152, Local Government Code, is amended by adding Section 152.908 to read as follows:

Sec. 152.908. COMPENSATION OF COUNTY TAX ASSESSOR-COLLECTOR. In setting the amount of the compensation of the county tax assessor-collector, the commissioners court of the county may not take into account the compensation the county tax assessor-collector receives for administering the appraisal district established for the county.

SECTION 30. Section 1151.004(a), Occupations Code, is amended to read as follows:

(a) A county assessor-collector [An appraisal district board of directors] or a governing body may not, as a necessity for employment, require an appraiser, assessor, or collector to:

(1) act in an unprofessional manner; or

(2) violate this chapter.

SECTION 31. The heading to Section 1151.151, Occupations Code, is amended to read as follows:

Sec. 1151.151. REGISTRATION REQUIRED; EXEMPTIONS [EXEMPTION].

SECTION 32. Section 1151.151, Occupations Code, is amended by amending Subsection (b) and adding Subsections (c) and (d) to read as follows:

(b) A county assessor-collector is not required to register with the board as an assessor, assessor-collector, or collector if the county, by contract entered into under Section 6.24(b), Tax Code, has its taxes assessed and collected by another taxing unit [or an appraisal district].

(c) A county assessor-collector is not required to register with the board as an appraiser if the duties of the appraisal office for the appraisal district established for the county are performed by another appraisal district or by a taxing unit under a contract authorized by Section 6.05(b), Tax Code.

(d) The exemption under Subsection (c) exists only while a contract under Section 6.05(b), Tax Code, is in effect.

SECTION 33. The following provisions of the Tax Code are repealed:

(1) Section 6.031;

(2) Section 6.033;

(3) Section 6.034;

(4) Section 6.036;

(5) Section 6.037;

(6) Section 6.04;

(7) Section 6.052;

(8) Section 6.10; and

(9) Section 31.03(c).

SECTION 34. (a) On the effective date of this Act, the tax assessor-collector of each county begins to govern the appraisal district established for that county and begins to serve as the chief appraiser of the appraisal district, and the board of directors of each appraisal district ceases to exist. On that date, the appraisal district as governed by the county tax assessor-collector succeeds to all the rights, duties, privileges, property, obligations, and liabilities of the appraisal district as governed by the board of directors.

(b) A measure taken or adopted by an appraisal district board of directors before the effective date of this Act that is in effect on the effective date continues in effect after the effective date of this Act until superseded by a measure taken or adopted by the county tax assessor-collector governing the district.

(c) The amendment by this Act of Section 6.41, Tax Code, does not affect the term of a member of an appraisal review board appointed before the effective date of this Act.

SECTION 35. This Act takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, authorizing the legislature to limit increases in the appraised value of a residence homestead for ad valorem tax purposes based on the inflation rate and to limit the frequency of reappraisals of residence homesteads is approved by the voters. If that amendment is not approved by the voters, this Act has no effect.