81(R) SB 475 - House Committee Report version



	By: Wentworth, et al.	S.B. No. 475

A BILL TO BE ENTITLED

AN ACT

relating to the exemption from ad valorem taxation of property

owned by certain organizations engaged primarily in performing

charitable functions or in providing services to aid in economic

development.

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

SECTION 1. Section 11.184, Tax Code, is amended by amending

Subsection (c) and adding Subsections (l), (m), and (n) to read as

follows:

charitable organization is entitled to an exemption from taxation

of:

(1) the buildings and other real property and the

tangible personal property that:

(A) are owned by the organization; and

(B) except as permitted by Subsection (d), are

used exclusively by the organization and other organizations

eligible for an exemption from taxation under this section or

Section 11.18; and

(2) the real property owned by the organization

consisting of:

(A) an incomplete improvement that:

(i) is under active construction or other

physical preparation; and

(ii) is designed and intended to be used

exclusively by the organization and other organizations eligible

for an exemption from taxation under this section or Section 11.18;

and

(B) the land on which the incomplete improvement

is located that will be reasonably necessary for the use of the

improvement by the organization and other organizations eligible

for an exemption from taxation under this section or Section 11.18.

(l) Notwithstanding the other provisions of this section, a

corporation that is not a qualified charitable organization is

entitled to an exemption from taxation of property under this

section if:

(1) the corporation is exempt from federal income

taxation under Section 501(a), Internal Revenue Code of 1986, by

being listed as an exempt entity under Section 501(c)(2) of that

code;

(2) the corporation holds title to the property for,

collects income from the property for, and turns over the entire

amount of that income, less expenses, to a qualified charitable

organization; and

(3) the qualified charitable organization would

qualify for an exemption from taxation of the property under this

section if the qualified charitable organization owned the

property.

(m) Before a corporation described by Subsection (l) may

submit an application for an exemption under this section, the

qualified charitable organization for which the corporation holds

title to the property must apply to the comptroller for the

determination described by Subsection (e) with regard to the

qualified charitable organization. The application for the

determination must also include an application to the comptroller

for a determination of whether the corporation meets the

requirements of Subsections (l)(1) and (2). The corporation shall

submit with the application for an exemption under this section a

copy of the determination letter issued by the comptroller. The

chief appraiser shall accept the copy of the letter as conclusive

evidence of the matters described by Subsection (h) as well as of

whether the corporation meets the requirements of Subsections

(l)(1) and (2).

(n) Notwithstanding Subsection (k), in order for a

corporation to continue to receive an exemption under Subsection

(l) after the fifth tax year after the year in which the exemption

is granted, the qualified charitable organization for which the

corporation holds title to property must obtain a new determination

letter and the corporation must reapply for the exemption.

SECTION 2. Subchapter B, Chapter 11, Tax Code, is amended by

adding Section 11.231 to read as follows:

Sec. 11.231. NONPROFIT COMMUNITY BUSINESS ORGANIZATION

PROVIDING ECONOMIC DEVELOPMENT SERVICES TO LOCAL COMMUNITY.

(a) In this section, "nonprofit community business organization"

means an organization that meets the following requirements:

(1) the organization has been in existence for at

least the preceding five years;

(2) the organization:

(A) is a nonprofit corporation organized under

the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,

Vernon's Texas Civil Statutes) or a nonprofit corporation formed

under the Texas Nonprofit Corporation Law, as described by Section

1.008, Business Organizations Code;

(B) is a nonprofit organization described by

Section 501(c)(6), Internal Revenue Code of 1986; and

(3) for at least the preceding three years, the

organization has maintained a dues-paying membership of at least 50

members; and

(4) the organization:

(A) has a board of directors elected by the

members;

(B) does not compensate members of the board of

directors for service on the board;

is engaged primarily in performing functions listed in Subsection

(d);

(D) is primarily supported by membership dues and

other income from activities substantially related to its primary

functions; and

(E) is not, has not formed, and does not

financially support a political committee as defined by Section

251.001, Election Code.

(b) An association that qualifies as a nonprofit community

business organization as provided by this section is entitled to an

exemption from taxation of:

(1) the buildings and tangible personal property that:

(A) are owned by the nonprofit community business

organization; and

(B) except as permitted by Subsection (c), are

used exclusively by qualified nonprofit community business

organizations to perform their primary functions; and

(2) the real property owned by the nonprofit community

business organization consisting of:

(A) an incomplete improvement that:

(i) is under active construction or other

physical preparation; and

(ii) is designed and intended to be used

exclusively by qualified nonprofit community business

organizations; and

(B) the land on which the incomplete improvement

is located that will be reasonably necessary for the use of the

improvement by qualified nonprofit community business

organizations.

community business organizations qualified as provided by this

section does not result in the loss of an exemption authorized by

this section if the use is incidental to use by qualified nonprofit

community business organizations and limited to activities that

benefit the beneficiaries of the nonprofit community business

organizations that own or use the property.

(d) To qualify for an exemption under this section, a

nonprofit community business organization must be engaged

primarily in performing one or more of the following functions in

the local community:

(1) promoting the common economic interests of

commercial enterprises;

(2) improving the business conditions of one or more

types of business; or

(3) otherwise providing services to aid in economic

development.

(e) In this section, "building" includes the land that is

reasonably necessary for use of, access to, and ornamentation of

the building.

(f) A property may not be exempted under Subsection (b)(2)

for more than three years.

(g) For purposes of Subsection (b)(2), an incomplete

improvement is under physical preparation if the nonprofit

community business organization has:

(1) engaged in architectural or engineering work, soil

testing, land clearing activities, or site improvement work

necessary for the construction of the improvement; or

(2) conducted an environmental or land use study

relating to the construction of the improvement.

SECTION 3. Subsection (d), Section 11.42, Tax Code, is

amended to read as follows:

(d) A person who acquires property after January 1 of a tax

year may receive an exemption authorized by Section 11.17, 11.18,

11.19, 11.20, 11.21, 11.23, 11.231, or 11.30 for the applicable

portion of that tax year immediately on qualification for the

exemption.

SECTION 4. Subsection (c), Section 11.43, Tax Code, is

amended to read as follows:

11.182, 11.183, 11.19, 11.20, 11.21, 11.22, 11.23(h), (j), or

(j-1), 11.231, 11.29, 11.30, or 11.31, once allowed, need not be

claimed in subsequent years, and except as otherwise provided by

Subsection (e), the exemption applies to the property until it

changes ownership or the person's qualification for the exemption

changes. However, the chief appraiser may require a person allowed

one of the exemptions in a prior year to file a new application to

confirm the person's current qualification for the exemption by

delivering a written notice that a new application is required,

accompanied by an appropriate application form, to the person

previously allowed the exemption.

SECTION 5. Subsection (b), Section 11.184, Tax Code, is

repealed.

SECTION 6. This Act applies only to ad valorem taxes imposed

for a tax year that begins on or after the effective date of this

Act.

SECTION 7. This Act takes effect January 1, 2010.

COMMITTEE AMENDMENT NO.

Amend S.B. 475 by adding the following appropriately numbered

SECTIONS to the bill and renumbering subsequent SECTIONS of the

bill accordingly:

SECTION ____. Section 11.1825, Tax Code, is amended by

adding Subsection (z) to read as follows:

(z) (1) A community housing development organization

entitled to an exemption from taxation under this section is also

entitled to an exemption from taxation of the buildings and other

real and tangible personal property that are owned by the

organization, and except as provided by Subsection (z)(2) are used

exclusively by the organization in the administration of its

acquisition, building, repair, sale, or rental of property, or by

political subdivisions of the state that:

(a) are eligible for an exemption from taxation under

Chapter 11 of this code, and

(b) are exempt from federal income taxes or have their

revenue exempted from federal income taxes under Section 115 of the

Internal Revenue Code.

(2) Use of property exempt by reason of this subsection by

persons not qualifying under (z)(1) above does not result in the

loss of an exemption authorized by this Subsection (z) if such use

is incidental to or furthers the exempt purposes of the owner or an

organization qualified under (1)(a) and (b) above.

Taylor

COMMITTEE AMENDMENT NO.

Amend S.B. 475 (engrossed version), on page 7, line 19

through line 21, by striking SECTION 6 and substituting new SECTION

6 as follows:

SECTION 6. Section 11.18(d), Tax Code, as amended by

Chapters 1034 (H.B. 1742) and 1341 (S.B. 1908), Acts of the 80th

Legislature, Regular Session, 2007, is reenacted and amended to

read as follows:

(d) A charitable organization must be organized exclusively

to perform religious, charitable, scientific, literary, or

educational purposes and, except as permitted by Subsections (h)

and (l), engage exclusively in performing one or more of the

following charitable functions:

(1) providing medical care without regard to the

beneficiaries' ability to pay, which in the case of a nonprofit

hospital or hospital system means providing charity care and

community benefits in accordance with Section 11.1801;

(2) providing support or relief to orphans,

delinquent, dependent, or handicapped children in need of

residential care, abused or battered spouses or children in need of

temporary shelter, the impoverished, or victims of natural disaster

without regard to the beneficiaries' ability to pay;

(3) providing support without regard to the

beneficiaries' ability to pay to:

(A) elderly persons, including the provision of:

(i) recreational or social activities; and

(ii) facilities designed to address the

special needs of elderly persons;[,] or

(B) [to] the handicapped, including training and

employment under 41 U.S.C. Sections 46-48c:

(i) in the production of commodities; or

(ii) in the provision of services [~~without~~

~~regard to the beneficiaries' ability to pay~~];

(4) preserving a historical landmark or site;

(5) promoting or operating a museum, zoo, library,

theater of the dramatic or performing arts, or symphony orchestra

or choir;

(6) promoting or providing humane treatment of

animals;

(7) acquiring, storing, transporting, selling, or

distributing water for public use;

(8) answering fire alarms and extinguishing fires with

no compensation or only nominal compensation to the members of the

organization;

(9) promoting the athletic development of boys or

girls under the age of 18 years;

(10) preserving or conserving wildlife;

(11) promoting educational development through loans

or scholarships to students;

(12) providing halfway house services pursuant to a

certification as a halfway house by the parole [~~pardons and~~

~~paroles~~] division of the Texas Department of Criminal Justice;

(13) providing permanent housing and related social,

health care, and educational facilities for persons who are 62

years of age or older without regard to the residents' ability to

pay;

(14) promoting or operating an art gallery, museum, or

collection, in a permanent location or on tour, that is open to the

public;

(15) providing for the organized solicitation and

collection for distributions through gifts, grants, and agreements

to nonprofit charitable, education, religious, and youth

organizations that provide direct human, health, and welfare

services;

(16) performing biomedical or scientific research or

biomedical or scientific education for the benefit of the public;

(17) operating a television station that produces or

broadcasts educational, cultural, or other public interest

programming and that receives grants from the Corporation for

Public Broadcasting under 47 U.S.C. Section 396, as amended;

(18) providing housing for low-income and

moderate-income families, for unmarried individuals 62 years of age

or older, for handicapped individuals, and for families displaced

by urban renewal, through the use of trust assets that are

irrevocably and, pursuant to a contract entered into before

December 31, 1972, contractually dedicated on the sale or

disposition of the housing to a charitable organization that

performs charitable functions described by Subdivision (9);

(19) providing housing and related services to persons

who are 62 years of age or older in a retirement community, if the

retirement community provides independent living services,

assisted living services, and nursing services to its residents on

a single campus:

(A) without regard to the residents' ability to

pay; or

(B) in which at least four percent of the

retirement community's combined net resident revenue is provided in

charitable care to its residents;

(20) providing housing on a cooperative basis to

students of an institution of higher education if:

(A) the organization is exempt from federal

income taxation under Section 501(a), Internal Revenue Code of

1986, as amended, by being listed as an exempt entity under Section

501(c)(3) of that code;

(B) membership in the organization is open to all

students enrolled in the institution and is not limited to those

chosen by current members of the organization;

and

(D) the members of the organization share the

responsibility for managing the housing;

(21) acquiring, holding, and transferring unimproved

real property under an urban land bank demonstration program

established under Chapter 379C, Local Government Code, as or on

behalf of a land bank; or

(22) acquiring, holding, and transferring unimproved

real property under an urban land bank program established under

Chapter 379E, Local Government Code, as or on behalf of a land bank.

Taylor

COMMITTEE AMENDMENT NO.

Amend S.B. No. 475 by adding the following appropriately numbered

SECTION to the bill and renumbering subsequent SECTIONS of the bill

accordingly:

SECTION ____. Subchapter B, Chapter 11, Tax Code, is

amended by adding Section 11.131 to read as follows:

Sec. 11.131. RESIDENCE HOMESTEAD OF 100 PERCENT OR TOTALLY

DISABLED VETERAN. (a) In this section:

(1) "Disabled veteran" has the meaning assigned by

Section 11.22.

(2) "Residence homestead" has the meaning assigned by

Section 11.13.

(b) A disabled veteran who receives from the United States

Department of Veterans Affairs or its successor 100 percent

disability compensation due to a service-connected disability and a

rating of 100 percent disabled or of individual unemployability is

entitled to an exemption from taxation of the total appraised value

of the veteran's residence homestead.

SECTION ____. Section 11.22(a), Tax Code, is amended to

read as follows:

(a) A disabled veteran is entitled to an exemption from

taxation of a portion of the assessed value of a property the

veteran owns and designates as provided by Subsection (f) [~~of this~~

~~section~~] in accordance with the following schedule:

an exemption of for a disability rating of

up to:

at least:

but less [~~not greater~~] than:

$5,000 of the

10%

30%

assessed value

7,500

30 [31]

10,000

50 [51]

12,000

70 [71] and over

SECTION ____. Section 11.43(c), Tax Code, is amended to

read as follows:

11.18, 11.182, 11.183, 11.19, 11.20, 11.21, 11.22, 11.23(h), (j),

or (j-1), 11.29, 11.30, or 11.31, once allowed, need not be claimed

in subsequent years, and except as otherwise provided by Subsection

(e), the exemption applies to the property until it changes

ownership or the person's qualification for the exemption changes.

However, the chief appraiser may require a person allowed one of the

exemptions in a prior year to file a new application to confirm the

person's current qualification for the exemption by delivering a

written notice that a new application is required, accompanied by

an appropriate application form, to the person previously allowed

the exemption.

SECTION ____. Section 11.431(a), Tax Code, is amended to

read as follows:

(a) The chief appraiser shall accept and approve or deny an

application for a residence homestead exemption, including a

disabled veteran residence homestead exemption, after the deadline

for filing it has passed if it is filed not later than one year after

the delinquency date for the taxes on the homestead.

SECTION ____. Section 403.302, Government Code, is amended

by adding Subsection (d-1) to read as follows:

(d-1) For purposes of Subsection (d), a residence homestead

that receives an exemption under Section 11.131, Tax Code, in the

year that is the subject of the study is not considered to be

taxable property.

SECTION ____. Section 11.131, Tax Code, as added by this

Act, applies to a tax year beginning on or after January 1, 2009.

SECTION ____. Except as otherwise provided by this Act,

this Act takes effect immediately if it receives a vote of

two-thirds of all the members elected to each house, as provided by

Section 39, Article III, Texas Constitution. If this Act does not

receive the vote necessary for immediate effect, this Act takes

effect September 1, 2009.

Hilderbran