Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB2305 by Canales (Relating to the eligibility for an exemption from ad valorem taxation for property used by certain nonprofit community business organizations.), As Introduced
Passage of the bill would extend the property tax exemption for nonprofit community business organizations providing economic development to certain real and personal property owned by Type A and Type B corporations and would create a cost to the state through the operation of the school funding formulas to the extent that the property is not already exempt as public property or under another exemption in Chapter 11 of the Tax Code.
The bill would amend Chapter 11 of the Tax Code, regarding taxable property and exemptions, to provide that "nonprofit community business organization" also means a Type A and a Type B corporation as specified in Chapter 504 or 505, Local Government Code, related to certain economic development projects. This designation would extend the property tax exemption for nonprofit community business organizations providing economic development to certain real and personal property owned by Type A and Type B corporations.
The bill's provision of a property tax exemption to certain real and personal property owned by Type A and Type B corporations would create a cost to local governments and to the state through the operation of the school funding formulas to the extent that the property is not already exempt as public property or under another exemption in Chapter 11 of the Tax Code. There are over 700 Type A and Type B corporations in Texas. All of the property of Type B corporations, and much of the property of Type A corporations, however, is already exempt under current law (or under an interpretation of the law). The amount of property that would be exempted under the bill is unknown; consequently, the cost of the bill cannot be estimated.
The bill would take effect on January 1, 2016.
Local Government Impact
Passage of the bill would extend the property tax exemption for nonprofit community business organizations providing economic development to certain real and personal property owned by Type A and Type B corporations and would create a cost to local governments to the extent that the property is not already exempt as public property or under another exemption in Chapter 11 of the Tax Code.