82R26428 SMH-F
 
  By: Villarreal H.B. No. 1056
 
  Substitute the following for H.B. No. 1056:
 
  By:  Villarreal C.S.H.B. No. 1056
 
 
 
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(a), Tax Code, is amended by
  amending Subdivision (2) and adding Subdivisions (3) and (4) to
  read as follows:
               (2)  "Community housing development organization" has
  the meaning assigned by 24 C.F.R. Section 92.2, except that the
  term also includes an organization that otherwise qualifies as a
  community housing development organization under that section but
  that:
                     (A)  does not receive HOME funds as defined by
  that section; or
                     (B)  is governed by a board all of the members of
  which are appointed by a state or local government [42 U.S.C.
  Section 12704].
               (3)  "Control" includes:
                     (A)  with respect to a limited partnership, the
  control, directly or through a wholly controlled subsidiary, of 100
  percent of the general partner interest; and
                     (B)  with respect to a limited liability company,
  serving as the sole manager or managing member of the company.
               (4)  "Department" means the Texas Department of Housing
  and Community Affairs or its successor agency.
         SECTION 2.  Section 11.182, Tax Code, is amended by adding
  Subsections (a-1), (b-1), (b-2), (j-1), (l), (m), (n), (o), (p),
  (q), (r), and (s) and amending Subsections (e), (g), (h), (i), and
  (k) to read as follows:
         (a-1)  An organization is considered to own property for
  purposes of this section and the provisions of Section 2, Article
  VIII, Texas Constitution, authorizing the legislature by general
  law to exempt from taxation property owned by an institution
  engaged primarily in public charitable functions, if the
  organization has legal or equitable title to the property. By way
  of example, an organization has equitable title to property if it
  has a present right to compel legal title to the property to be
  conveyed to it in accordance with law, such as by means of an option
  to acquire the property. For purposes of eligibility for an
  exemption under this section, property owned by a tax credit
  partnership or limited liability company is considered to be owned
  by a community housing development organization if the general
  partner of the tax credit partnership or the manager of the limited
  liability company is, or is controlled by, the community housing
  development organization and the community housing development
  organization holds equitable title to the property pursuant to an
  option to acquire the property on terms negotiated between the
  parties.
         (b-1)  Notwithstanding Subsection (b), if the legal owner of
  property is not an organization described by that subsection, the
  legal owner is entitled to an exemption from taxation of property
  under this section if the property otherwise qualifies for the
  exemption and the legal owner is:
               (1)  an entity 100 percent of the interest in which is
  owned by an organization that meets the requirements of Subsection
  (b); or
               (2)  an entity controlled by an organization that meets
  the requirements of Subsection (b).
         (b-2)  A reference in this section to an organization
  includes an entity described by Subsection (b-1)(1) or (2).
         (e)  In addition to meeting the other applicable
  requirements of this section [Subsections (b) and (c)], to receive
  an exemption under Subsection (b) for improved real property that
  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 department [Texas Department of Housing and Community Affairs]
  applicable to community housing development organizations; and
               (2) [(3)]  submit annually to the department, if the
  property is a multifamily rental property consisting of more than
  four dwelling units, or to the chief appraiser of the appraisal
  district in which the property subject to the exemption is located,
  if the property is not such a property, [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.
         (g)  To receive an exemption under Subsection (b) or (f), an
  organization must annually have an audit prepared by an independent
  auditor. The audit must include a detailed report on the
  organization's sources and uses of funds. A copy of the audit must
  be delivered to the department, if the property is a multifamily
  rental property consisting of more than four dwelling units, or
  [Texas Department of Housing and Community Affairs and] to the
  chief appraiser of the appraisal district in which the property
  subject to the exemption is located, if the property is not such a
  multifamily rental property.
         (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.
         (i)  If any property owned by an organization receiving an
  exemption under this section has been acquired or sold during the
  preceding year, the [such] organization shall file by March 31 of
  the following year with the department, for multifamily rental
  properties consisting of more than four dwelling units, or with the
  chief appraiser in the county in which the relevant properties are
  [property is] located, for properties that are not such multifamily
  rental properties, on a form promulgated by the comptroller of
  public accounts, a list of such properties acquired or sold during
  the preceding year.
         (j-1)  Notwithstanding Subsection (j), an organization may
  not receive an exemption under Subsection (b) or (f) for property
  for the 2012 tax year or a subsequent tax year if:
               (1)  the organization did not claim an exemption under
  Subsection (b) or (f) for the property for the 2010 tax year; or
               (2)  the organization claimed an exemption under
  Subsection (b) or (f) for the property for the 2010 tax year and the
  organization is finally determined to be ineligible for the
  exemption for the property for that tax year.
         (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 department, if the property is a
  multifamily rental property consisting of more than four dwelling
  units, or the chief appraiser, if the property is not such a
  multifamily rental property, evidence that the property is owned by
  an organization that meets the requirements of Subsections (b)(1),
  (2), and (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 or the department, as applicable, 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).
         (l)  This subsection applies only to a multifamily rental
  property consisting of more than four dwelling units. If the chief
  appraiser of the appraisal district in which the property is
  located cancels the exemption or requires the organization that
  owns the property to file a new application to confirm the
  organization's current qualification for the exemption, the
  organization must file a new application for the exemption with the
  department. The provisions of this code governing the filing of an
  application under Section 11.43, action on the application, and the
  effect of the granting of the application by a chief appraiser apply
  to an application filed with the department under this subsection,
  except as otherwise provided by this section.
         (m)  The department shall prescribe the contents of the
  exemption application form for purposes of Subsection (l). The
  provisions of Section 11.43 governing the contents of an
  application form prescribed by the comptroller apply to an
  exemption application form prescribed by the department to the
  extent those provisions may be made applicable.
         (n)  Not later than the 60th day after the date an
  organization submits a complete application to the department under
  Subsection (l), the executive director of the department shall
  determine whether the organization is entitled to an exemption for
  the property under Subsection (b) or (f). In making a
  determination, the executive director may rely on the conclusions
  in any audit or legal opinion provided to the department or any
  determination letter issued by the United States Internal Revenue
  Service regarding the organization's status under Section 501,
  Internal Revenue Code of 1986.
         (o)  The executive director may request that an organization
  that files an application under Subsection (l) provide additional
  information. If the executive director makes such a request, the
  application is considered to be complete for purposes of Subsection
  (n) on the date on which all additional information requested by the
  executive director has been received by the department.
         (p)  Not later than the fifth day after the date the
  executive director makes a determination under Subsection (n), the
  executive director shall issue a letter to the applicant
  organization stating the executive director's determination. If
  the executive director determines that the organization is not
  entitled to an exemption for the property under Subsection (b) or
  (f), the letter must include the reasons for the determination and a
  description of the procedure for appealing the determination. The
  executive director shall send a copy of the letter by regular mail
  to the chief appraiser of each appraisal district that appraises
  the property. If the executive director determines that the
  organization is entitled to an exemption for the property under
  Subsection (b) or (f), the chief appraiser shall grant the
  exemption. If the executive director determines that the
  organization is not entitled to an exemption for the property under
  Subsection (b) or (f), the chief appraiser shall deny the
  exemption.
         (q)  The applicant organization or a taxing unit in which the
  property to which the application applies is located may appeal the
  executive director's determination under Subsection (p) to the
  governing board of the department in the manner provided by
  department rule. The organization may be represented in an appeal
  by an agent in accordance with Section 1.111. The organization or
  taxing unit may appeal under Chapter 42 a final determination by the
  governing board of the department in the same manner as provided by
  law for the appeal of a determination by an appraisal review board,
  except that the petition for review must be brought against the
  department rather than the appraisal district.
         (r)  The department shall employ sufficient personnel to
  process any applications received under Subsection (l) and may
  charge an organization filing an application a reasonable fee not
  to exceed the lesser of:
               (1)  $2,500; or
               (2)  the direct and indirect administrative costs of
  processing the application and issuing a determination under
  Subsection (n).
         (s)  The department shall adopt rules to implement its duties
  under this section. The rules must:
               (1)  establish procedures for considering exemption
  applications; and
               (2)  be sufficiently specific to ensure that
  determinations are equal and uniform.
         SECTION 3.  Section 11.1825, Tax Code, is amended by
  amending Subsections (a), (c), (d), (i), (j), (l), (s), (t), (u),
  (v), and (y) and adding Subsections (a-1), (a-2), (e-1), (z), (aa),
  (bb), (cc), (dd), (ee), (ff), and (gg) to read as follows:
         (a)  In this section:
               (1)  "Control" includes:
                     (A)  with respect to a limited partnership, the
  control, directly or through a wholly controlled subsidiary, of 100
  percent of the general partner interest; and
                     (B)  with respect to a limited liability company,
  serving as the sole manager or managing member of the company.
               (2)  "Department" means the Texas Department of Housing
  and Community Affairs or its successor agency.
         (a-1)  An organization is considered to own property for
  purposes of this section and the provisions of Section 2, Article
  VIII, Texas Constitution, authorizing the legislature by general
  law to exempt from taxation property owned by an institution
  engaged primarily in public charitable functions, if the
  organization has legal or equitable title to the property. By way
  of example, an organization has equitable title to property if it
  has a present right to compel legal title to the property to be
  conveyed to it in accordance with law, such as by means of an option
  to acquire the property. For purposes of eligibility for an
  exemption under this section, property owned by a tax credit
  partnership or limited liability company is considered to be owned
  by an organization if the general partner of the tax credit
  partnership or the manager of the limited liability company is, or
  is controlled by, the organization and the organization holds
  equitable title to the property pursuant to an option to acquire the
  property on terms negotiated between the parties.
         (a-2)  An organization is entitled to an exemption from
  taxation of real property owned by the organization that the
  organization constructs or rehabilitates and uses to provide
  housing to individuals or families meeting the income eligibility
  requirements of this section.
         (c)  Notwithstanding Subsection (b), if the legal [an] owner
  of real property [that] is not an organization described by that
  subsection, the legal owner is entitled to an exemption from
  taxation of property under this section if the property otherwise
  qualifies for the exemption and the legal owner is:
               (1)  an entity 100 percent of the interest in which is
  owned by [a limited partnership of which] an organization that
  meets the requirements of Subsection (b) [controls 100 percent of
  the general partner interest]; or
               (2)  an entity controlled by [the parent of which is] an
  organization that meets the requirements of Subsection (b).
         (d)  If the legal owner of the property is an entity
  described by Subsection (c)[, the entity must]:
               (1)  the legal owner must be organized under the laws of
  this state[;] and
               [(2)] have its principal place of business in this
  state; and
               (2)  the organization that owns 100 percent of the
  interest in or controls the legal owner as described by Subsection
  (c) must have equitable title to the property.
         (e-1)  An application for an exemption under this section for
  a multifamily rental housing project consisting of more than four
  dwelling units may be filed with the chief appraiser or the
  department, except that if the legal owner of the property is an
  entity described by Subsection (c)(2), the application must be
  filed with the department.
         (i)  Property owned for the purpose of constructing or
  rehabilitating a housing project on the property is exempt under
  this section only if:
               (1)  the property is used to provide housing to
  individuals or families described by Subsection (f) and the housing
  project was under active construction or rehabilitation at the time
  the organization initially filed an application for the exemption;
  or
               (2)  the housing project is under active construction
  or rehabilitation or other physical preparation.
         (j)  For purposes of Subsection (i)(2), a housing project is
  under physical preparation if the organization has engaged in
  architectural or engineering work, soil testing, land clearing
  activities, or site improvement work necessary for the construction
  or rehabilitation of the project or has conducted an environmental
  or land use study relating to the construction or rehabilitation of
  the project.
         (l)  If the property is owned for the purpose of
  rehabilitating a housing project on the property:
               (1)  the original construction of the housing project
  must have been completed at least 10 years before the date the
  organization began actual rehabilitation of the project;
               (2)  the person from whom the organization acquired the
  project must have owned the project for at least five years, if the
  organization is not the original owner of the project, unless the
  organization acquired the project from a person that acquired the
  project by foreclosing on the project or receiving a deed or other
  instrument in lieu of foreclosure that conveyed the project to the
  person;
               (3)  the organization must provide to the department or
  the chief appraiser, as applicable, and, if the project was
  financed with bonds, the issuer of the bonds a written statement
  prepared by a certified public accountant stating that the
  organization has spent on rehabilitation costs at least the greater
  of $5,000 or the amount required by the financial lender for each
  dwelling unit in the project; and
               (4)  the organization must maintain a reserve fund for
  replacements:
                     (A)  in the amount required by the financial
  lender; or
                     (B)  if the financial lender does not require a
  reserve fund for replacements, in an amount equal to $300 per unit
  per year.
         (s)  Unless otherwise provided by the governing body of a
  taxing unit any part of which is located in a county with a
  population of at least 1.8 [1.4] million under Subsection (x), for
  property described by Subsection (f)(1), the amount of the
  exemption under this section from taxation is 50 percent of the
  appraised value of the property.
         (t)  Notwithstanding Section 11.43(c), an exemption under
  this section does not terminate because of a change in ownership of
  the property if:
               (1)  the property is foreclosed on for any reason and,
  not later than the 30th day after the date of the foreclosure sale,
  the owner of the property submits to the department or the chief
  appraiser, as applicable, evidence that the property is owned by:
                     (A)  an organization that meets the requirements
  of Subsection (b); or
                     (B)  an entity that meets the requirements of
  Subsections (c) and (d); or
               (2)  in the case of property owned by an entity
  described by Subsections (c) and (d), the organization meeting the
  requirements of Subsection (b) that owns 100 percent of the
  interest in or controls the [general partner interest of or is the
  parent of the] entity as described by Subsection (c) ceases to serve
  in that capacity and, not later than the 30th day after the date the
  cessation occurs, the owner of the property submits evidence to the
  department or the chief appraiser, as applicable, that the
  organization has been succeeded in that capacity by another
  organization that meets the requirements of Subsection (b).
         (u)  The department or the chief appraiser, as applicable,
  may extend the deadline provided by Subsection (t)(1) or (2), as
  applicable, for good cause shown.
         (v)  Notwithstanding any other provision of this section, an
  organization may not receive an exemption from taxation of property
  described by Subsection (f)(1) by a taxing unit any part of which is
  located in a county with a population of at least 1.8 [1.4] million
  unless the exemption is approved by the governing body of the taxing
  unit in the manner provided by law for official action.
         (y)  Not later than the fifth day after the date the
  governing body of the taxing unit takes action under Subsection
  (x), the taxing unit shall issue a letter to the organization
  stating the governing body's action and, if the governing body
  denied the exemption, stating whether the denial was based on a
  determination under Subsection (x)(3)(A) or (B) and the basis for
  the determination. The taxing unit shall send a copy of the letter
  by regular mail to the chief appraiser of each appraisal district
  that appraises the property for the taxing unit and to the
  department, if applicable. The governing body may charge the
  organization a fee not to exceed the administrative costs of
  processing the request of the organization, approving or denying
  the exemption, and issuing the letter required by this subsection.
  If the chief appraiser or the department, as applicable, determines
  that the property qualifies for an exemption under this section and
  the governing body of the taxing unit approves the exemption, the
  chief appraiser or the department, as applicable, shall grant the
  exemption in the amount approved by the governing body.
         (z)  This subsection applies only to an application for an
  exemption under this section filed with the department as
  authorized or required by Subsection (e-1). The provisions of this
  code governing the filing of an application under Section 11.43,
  action on the application, and the effect of the granting of the
  application by a chief appraiser apply to an application filed with
  the department, except as otherwise provided by this section.
         (aa)  The department shall prescribe the contents of the
  exemption application form for purposes of Subsection (z). The
  provisions of Section 11.43 governing the contents of an
  application form prescribed by the comptroller apply to an
  exemption application form prescribed by the department to the
  extent those provisions may be made applicable.
         (bb) Not later than the 60th day after the date an
  organization submits a complete application to the department under
  Subsection (z), the executive director of the department shall
  determine whether the organization is entitled to an exemption for
  the property under this section. In making a determination, the
  executive director may rely on the conclusions in any audit or legal
  opinion provided to the department or any determination letter
  issued by the United States Internal Revenue Service regarding the
  organization's status under Section 501, Internal Revenue Code of
  1986.
         (cc)  The executive director may request that an
  organization that files an application under Subsection (z) provide
  additional information. If the executive director makes such a
  request, the application is considered to be complete for purposes
  of Subsection (bb) on the date on which all additional information
  requested by the executive director has been received by the
  department.
         (dd)  Not later than the fifth day after the date the
  executive director makes a determination under Subsection (bb), the
  executive director shall issue a letter to the applicant
  organization stating the executive director's determination. If
  the executive director determines that the organization is not
  entitled to an exemption for the property under this section, the
  letter must include the reasons for the determination and a
  description of the procedure for appealing the determination. The
  executive director shall send a copy of the letter by regular mail
  to the chief appraiser of each appraisal district that appraises
  the property. If the executive director determines that the
  organization is entitled to an exemption for the property under
  this section, the chief appraiser shall grant the exemption. If the
  executive director determines that the organization is not entitled
  to an exemption for the property under this section, the chief
  appraiser shall deny the exemption.
         (ee)  The applicant organization or a taxing unit in which
  the property to which the application applies is located may appeal
  the executive director's determination under Subsection (dd) to the
  governing board of the department in the manner provided by
  department rule. The organization may be represented in an appeal
  by an agent in accordance with Section 1.111. The organization or
  taxing unit may appeal under Chapter 42 a final determination by the
  governing board of the department in the same manner as provided by
  law for the appeal of a determination by an appraisal review board.
         (ff)  The department shall employ sufficient personnel to
  process any applications received by the department under
  Subsection (e-1) and may charge an organization filing an
  application a reasonable fee not to exceed the lesser of:
               (1)  $2,500; or
               (2)  the direct and indirect administrative costs of
  processing the application and issuing a determination under
  Subsection (bb).
         (gg)  The department shall adopt rules to implement its
  duties under this section. The rules must:
               (1)  establish procedures for issuing preliminary
  determination letters and considering applications for exemptions;
  and
               (2)  be sufficiently specific to ensure that
  determinations are equal and uniform.
         SECTION 4.  Section 11.1826, Tax Code, is amended by
  amending Subsections (c) and (d) and adding Subsection (e-1) to
  read as follows:
         (c)  Not later than the 180th day after the last day of the
  organization's most recent fiscal year, the organization must
  deliver a copy of the audit to the department or [and] the chief
  appraiser of the appraisal district in which the property is
  located, whichever determines whether the property qualifies in the
  current tax year for the exemption for which the audit is conducted.
         (d)  Notwithstanding any other provision of this section, if
  the property contains not more than 36 dwelling units, the
  organization may deliver to the department or [and] the chief
  appraiser, as applicable, a detailed report and certification as an
  alternative to an audit.
         (e-1)  If an application for an exemption under Section
  11.182 or 11.1825 has been filed with the department, the executive
  director of the department shall monitor eligibility for the
  exemption. If the executive director learns of any reason
  indicating that an exemption previously allowed should be canceled,
  the executive director shall investigate. If the executive
  director determines that the property is not eligible for the
  exemption, the executive director shall notify the chief appraiser
  and the chief appraiser shall cancel the exemption and deliver
  written notice of the cancellation within five days after the date
  the chief appraiser makes the cancellation. If the executive
  director discovers that an exemption has been erroneously allowed
  by the department in any one of the five preceding years, the
  executive director shall notify the chief appraiser and the chief
  appraiser shall add the property or appraised value that was
  erroneously exempted for each year to the appraisal roll as
  provided by Section 25.21 for other property that escapes taxation.
  If an exemption that was erroneously allowed did not apply to all
  taxing units in which the property was located, the chief appraiser
  shall note on the appraisal records, for each prior year, the taxing
  units to which the exemption applied and that are entitled to impose
  taxes on the property or appraised value that escaped taxation.
         SECTION 5.  Section 303.042, Local Government Code, is
  amended by adding Subsections (f), (g), (h), (i), (j), and (k) to
  read as follows:
         (f)  A corporation that owns multifamily rental property
  used to provide housing for low-income individuals or families is
  engaged exclusively in the performance of governmental functions,
  and the corporation and the property are exempt from taxation by
  this state or a municipality or other political subdivision of this
  state.
         (g)  Notwithstanding Subsection (f), if the legal owner of
  property described by that subsection is not a corporation, the
  legal owner is entitled to an exemption from taxation of the
  property under this section if the property otherwise qualifies for
  the exemption and the legal owner is:
               (1)  an entity 100 percent of the interest in which is
  owned by a corporation; or
               (2)  an entity controlled by a corporation.
         (h)  If the legal owner of property described by Subsection
  (f) is an entity described by Subsection (g)(1) or (2):
               (1)  the legal owner must be organized under the laws of
  this state and have its principal place of business in this state;
  and
               (2)  the corporation that owns 100 percent of the
  interest in or exclusively controls the legal owner as described by
  Subsection (g) must have equitable title to the property.
         (i)  A person is considered to own property described by
  Subsection (f) for purposes of this section and the provisions of
  Section 2, Article VIII, Texas Constitution, authorizing the
  legislature by general law to exempt from taxation public property
  used for public purposes, if the person has legal or equitable title
  to the property. By way of example, a person has equitable title to
  property described by Subsection (f) if the person has a present
  right to compel legal title to the property to be conveyed to the
  person in accordance with law, such as by means of an option to
  acquire the property. For purposes of eligibility of property
  described by Subsection (f) for an exemption under this section,
  property owned by a tax credit partnership or limited liability
  company is considered to be owned by a corporation if the general
  partner of the tax credit partnership or the manager of the limited
  liability company is, or is controlled by, the corporation and the
  corporation holds equitable title to the property pursuant to an
  option to acquire the property on terms negotiated between the
  parties.
         (j)  For purposes of Subsections (g), (h), and (i), "control"
  means having the power to manage, direct, superintend, restrict,
  regulate, govern, administer, or oversee. For purposes of those
  subsections, "control" includes:
               (1)  with respect to a limited partnership, the
  control, directly or through a wholly controlled subsidiary, of 100
  percent of the general partner interest; and
               (2)  with respect to a limited liability company,
  serving as the sole manager or managing member of the company.
         (k)  A corporation or other person claiming an exemption
  under this section for property described by Subsection (f) may
  file an application for the exemption with the chief appraiser of
  the appraisal district in which the property is located or the Texas
  Department of Housing and Community Affairs or its successor
  agency. Sections 11.1825(z)-(gg), Tax Code, apply to an
  application filed under this subsection with the Texas Department
  of Housing and Community Affairs or its successor agency to the
  extent those provisions can be made applicable.
         SECTION 6.  (a)  Except as provided by Subsection (b) of this
  section, this Act applies only to ad valorem taxes imposed for a tax
  year beginning on or after the effective date of this Act.
         (b)  This Act applies to ad valorem taxes imposed on property
  for a tax year beginning before the effective date of this Act if on
  the effective date of this Act the property is the subject of a
  protest under Chapter 41, Tax Code, or an appeal under Chapter 42 of
  that code, the protest or appeal relates to the exemption of the
  property under Section 11.182 or 11.1825, Tax Code, or under
  Section 303.042, Local Government Code, the protest or appeal is
  pending on the effective date, and before the protest or appeal is
  finally determined the owner of the property notifies the appraisal
  review board or court in which the protest or appeal is pending that
  the owner elects to have this Act apply to the determination of the
  protest or appeal.
         (c)  If a property owner elects to have this Act apply to the
  determination of a protest or appeal regarding ad valorem taxes
  imposed on the property for a tax year beginning before the
  effective date of this Act as authorized by Subsection (b) of this
  section and the owner has paid all or part of the taxes imposed on
  the property for that tax year, the owner is not entitled to a
  refund of the amount of taxes paid if the property is finally
  determined to have been eligible for the exemption for that tax
  year.
         SECTION 7.  This Act takes effect January 1, 2012.