86R7076 CJC-F
 
  By: Geren H.B. No. 2993
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the appraisal for ad valorem tax purposes of certain
  nonexempt property used for low-income or moderate-income housing.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 1.07(d), Tax Code, is amended to read as
  follows:
         (d)  A notice required by Section 11.43(q), 11.45(d),
  23.215(g), 23.44(d), 23.46(c) or (f), 23.54(e), 23.541(c),
  23.55(e), 23.551(a), 23.57(d), 23.76(e), 23.79(d), or 23.85(d)
  must be sent by certified mail.
         SECTION 2.  Section 23.215, Tax Code, is amended to read as
  follows:
         Sec. 23.215.  APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED
  FOR LOW-INCOME OR MODERATE-INCOME HOUSING. (a) This section
  applies only to real property owned by an organization:
               (1)  for the purpose of renting the property [that on
  the effective date of this section was rented] to a low-income or
  moderate-income individual or family satisfying the organization's
  income eligibility requirements [and that continues to be used for
  that purpose];
               (2)  that was financed under the low income housing tax
  credit program under Subchapter DD, Chapter 2306, Government Code,
  and is subject to a land use restriction agreement under that
  subchapter that has not expired or been terminated;
               (3)  that does not receive an exemption under Section
  11.182 or 11.1825; and
               (4)  the owner of which has not entered into an
  agreement with any taxing unit to make payments to the taxing unit
  instead of taxes on the property.
         (b)  In appraising property that is under construction or
  that has not reached stabilized occupancy on January 1 of the tax
  year in which the property is appraised, the [The] chief appraiser
  shall determine the appraised value of [appraise] the property in
  the manner provided by Section 11.1825(q), provided that the chief
  appraiser shall estimate the property's gross income potential and
  operating expenses based on the property's projected income and
  expenses for the first full year of operation as established and
  utilized in the underwriting report pertaining to the property
  prepared by the Texas Department of Housing and Community Affairs
  under Subchapter DD, Chapter 2306, Government Code, adjusted as
  provided by this subsection. For a property under construction on
  January 1, the income and expenses contained in the underwriting
  report shall be adjusted by multiplying those amounts by a
  fraction, the denominator of which is the total construction budget
  for the property and the numerator of which is the total amount
  spent in constructing the property as of January 1. For a property
  on which construction was completed but that has not reached
  stabilized occupancy on January 1, the income and expenses
  contained in the underwriting report shall be adjusted to reflect
  the actual occupancy of the property on January 1.
         (c)  In appraising property for the first tax year following
  the year in which construction on the property was completed and
  occupancy of the property had stabilized, the chief appraiser shall
  determine the appraised value of the property in the manner
  provided by Section 11.1825(q).
         (d)  In appraising property for the second and subsequent tax
  years following the year in which construction on the property was
  completed and occupancy of the property had stabilized, the chief
  appraiser shall determine the appraised value of the property by
  adjusting the appraised value of the property for the preceding tax
  year by the percentage change in the net income of the property in
  the preceding year as compared to the year preceding that year.
         (d-1)  Notwithstanding Subsection (d), for the 2020 tax
  year, in appraising property for which construction was completed
  on January 1, 2019, the chief appraiser shall determine the
  appraised value of the property by adjusting the average appraised
  value of the property for the preceding three-year period by the
  percentage change in the net income of the property in the 2019 tax
  year as compared to the 2018 tax year.  This subsection expires
  January 1, 2021.
         (e)  If property appraised under this section is sold and is
  no longer subject to a land use restriction agreement described by
  Subsection (a)(2) after the sale, the property is no longer
  eligible for appraisal under this section and an additional tax is
  imposed on the property. The additional tax due is an amount equal
  to the difference between the taxes imposed on the property for each
  of the three years preceding the year in which the property is sold
  that the property was appraised as provided by this section and the
  taxes that would have been imposed had the property been appraised
  in each of those years at the lesser of:
               (1)  the price for which the property is sold; or
               (2)  the price for which the property is sold, adjusted
  by the percentage change in the net income of the property for the
  applicable year in the manner provided by Subsection (d).
         (f)  A tax lien attaches to property to which Subsection (e)
  applies on the date the property is sold to secure payment of the
  additional tax imposed by that subsection. The lien exists in favor
  of all taxing units for which the additional tax is imposed.
         (g)  A determination that property is no longer eligible for
  appraisal under this section is made by the chief appraiser.  The
  chief appraiser shall deliver a notice of the determination to the
  owner of the property as soon as possible after making the
  determination and shall include in the notice an explanation of the
  owner's right to protest the determination.  If the owner does not
  file a timely protest or if the final determination of the protest
  is that the additional taxes are due, the assessor for each taxing
  unit shall prepare and deliver a bill for the additional taxes as
  soon as practicable.  The taxes are due and become delinquent and
  incur penalties and interest as provided by law for ad valorem taxes
  imposed by the taxing unit if not paid before the next February 1
  that is at least 20 days after the date the bill is delivered to the
  owner of the property.
         (h)  Notwithstanding any other law:
               (1)  a property owner may not bring a protest under
  Section 41.41(a)(2) alleging unequal appraisal of the owner's
  property on the ground of the appraised value of the property being
  greater than the median appraised value of a reasonable number of
  comparable properties appropriately adjusted for any tax year in
  which the appraised value of the property is determined as provided
  by this section; and
               (2)  a property appraised as provided by this section
  may not be used as a comparable property for the purpose of
  determining whether another property that is not appraised as
  provided by this section is unequally appraised.
         (i)  For purposes of this section, the chief appraiser, in
  determining the percentage change in the net income of property:
               (1)  shall use generally accepted appraisal methods and
  techniques to determine the property's operating expenses based on
  information contained in:
                     (A)  an audit of the organization that owns the
  property prepared by an independent auditor covering the relevant
  fiscal period; or
                     (B)  the most recent annual owner's compliance
  report filed by the organization that owns the property with the
  Texas Department of Housing and Community Affairs; and
               (2)  may not consider the taxes imposed on the property
  and paid by the organization that owns the property to be an
  operating expense of the property.
         (j)  Not later than May 1 of each year, the owner of a
  property appraised under this section shall provide to the chief
  appraiser of the appraisal district that appraises the property a
  copy of the document described by Subsection (i)(1)(A) or (B), as
  applicable. The chief appraiser may extend the deadline provided
  by this subsection for good cause shown.
         SECTION 3.  The change in law made by this Act applies only
  to an ad valorem tax year that begins on or after January 1, 2020.
         SECTION 4.  This Act takes effect January 1, 2020.