By: King of Parker, Burrows, Shine, Rogers, H.B. No. 3833

Harris, et al.

A BILL TO BE ENTITLED

AN ACT

relating to the appraisal of certain real property for ad valorem tax purposes.

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

SECTION 1. 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 is or will be [was] financed under the low income housing tax credit program under Subchapter DD, Chapter 2306, Government Code, and subject to a land use restriction agreement under that subchapter;

(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 value of [appraise] the property in the manner provided by Section 11.1825(q) using 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, and adjust that value as provided by this subsection to determine the appraised value of the property. For a property under construction on January 1, the chief appraiser shall adjust the value to reflect the percentage of the construction that is complete on January 1. For a property on which construction is complete but that has not reached stabilized occupancy on January 1, the chief appraiser shall adjust the value to reflect the actual occupancy of the property on January 1. For purposes of this subsection, a property is not considered to be under construction if the purpose of the work being performed on the property is the maintenance or rehabilitation of the property.

(c) In appraising property for the first tax year following the year in which construction on the property is complete and occupancy of the property has stabilized and any tax year subsequent to that year, the chief appraiser shall determine the appraised value of the property in the manner provided by Section 11.1825(q).

SECTION 2. Sections 23.55(a), (b), (e), (f), (m), and (n), Tax Code, are amended to read as follows:

(a) If the use of land that has been appraised as provided by this subchapter changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the three years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years[, plus interest at an annual rate of five percent calculated from the dates on which the differences would have become due]. For purposes of this subsection, the chief appraiser may not consider any period during which land is owned by the state in determining whether a change in the use of the land has occurred.

(b) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax [and interest] imposed by this section and any penalties and interest incurred if the tax becomes delinquent. The lien exists in favor of all taxing units for which the additional tax is imposed.

(e) Subject to Section 23.551, a determination that a change in use of the land has occurred is made by the chief appraiser. The chief appraiser shall deliver a notice of the determination to the owner of the land 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 [plus interest] as soon as practicable. The taxes [and interest] 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 land.

(f) The sanctions provided by Subsection (a) [of this section] do not apply if the change of use occurs as a result of:

(1) a sale for right-of-way;

(2) a condemnation;

(3) a transfer of the property to the state or a political subdivision of the state to be used for a public purpose; or

(4) a transfer of the property from the state, a political subdivision of the state, or a nonprofit corporation created by a municipality with a population of more than one million under the Development Corporation Act (Subtitle C1, Title 12, Local Government Code) to an individual or a business entity for purposes of economic development if the comptroller determines that the economic development is likely to generate for deposit in the general revenue fund during the next two fiscal bienniums an amount of taxes and other revenues that equals or exceeds 20 times the amount of additional taxes [and interest] that would have been imposed under Subsection (a) had the sanctions provided by that subsection applied to the transfer.

(m) For purposes of determining whether a transfer of land qualifies for the exemption from additional taxes provided by Subsection (f)(4), on an application of the entity transferring or proposing to transfer the land or of the individual or entity to which the land is transferred or proposed to be transferred, the comptroller shall determine the amount of taxes and other revenues likely to be generated as a result of the economic development for deposit in the general revenue fund during the next two fiscal bienniums. If the comptroller determines that the amount of those revenues is likely to equal or exceed 20 times the amount of additional taxes [and interest] that would be imposed under Subsection (a) if the sanctions provided by that subsection applied to the transfer, the comptroller shall issue a letter to the applicant stating the comptroller's determination and shall send a copy of the letter by regular mail to the chief appraiser.

(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 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 3. Sections 23.58(c) and (d), Tax Code, are amended to read as follows:

(c) A provision in an instrument pertaining to a loan secured by a lien in favor of the lender on land appraised according to this subchapter that requires the borrower to make a payment to protect the lender from loss because of the imposition of additional taxes [and interest] under Section 23.55 is void unless the provision:

(1) requires the borrower to pay into an escrow account established by the lender an amount equal to the additional taxes [and interest] that would be due under Section 23.55 if a change of use occurred on January 1 of the year in which the loan is granted or amended;

(2) requires the escrow account to bear interest to be credited to the account monthly;

(3) permits the lender to apply money in the escrow account to the payment of a bill for additional taxes [and interest] under Section 23.55 before the loan is paid and requires the lender to refund the balance remaining in the escrow account after the bill is paid to the borrower; and

(4) requires the lender to refund the money in the escrow account to the borrower on the payment of the loan.

(d) On the request of the borrower or the borrower's representative, the assessor for each taxing unit shall compute the additional taxes [and interest] that would be due that taxing unit under Section 23.55 if a change of use occurred on January 1 of the year in which the loan is granted or amended. The assessor may charge a reasonable fee not to exceed the actual cost of making the computation.

SECTION 4. Sections 23.76(a), (b), and (e), Tax Code, are amended to read as follows:

(a) If the use of land that has been appraised as provided by this subchapter changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the three years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years[, plus interest at an annual rate of five percent calculated from the dates on which the differences would have become due].

(b) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax [and interest] imposed by this section and any penalties and interest incurred if the tax becomes delinquent. The lien exists in favor of all taxing units for which the additional tax is imposed.

(e) A determination that a change in use of the land has occurred is made by the chief appraiser. The chief appraiser shall deliver a notice of the determination to the owner of the land 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 [and interest] as soon as practicable after the change of use occurs. The taxes [and interest] 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 land.

SECTION 5. Sections 23.86(a) and (b), Tax Code, are amended to read as follows:

(a) If land that has been appraised under this subchapter is no longer subject to a deed restriction or is diverted to a use other than recreational, park, or scenic uses, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the three [five] years preceding the year in which the change of use occurs or the deed restriction expires that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land not been restricted to recreational, park, or scenic uses in each of those years[, plus interest at an annual rate of seven percent calculated from the dates on which the differences would have become due].

(b) A tax lien attaches to the land on the date the change of use occurs or the deed restriction expires to secure payment of the additional tax [and interest] imposed by this section and any penalties and interest incurred if the tax becomes delinquent. The lien exists in favor of all taxing units for which the additional tax is imposed.

SECTION 6. Sections 23.96(a) and (b), Tax Code, are amended to read as follows:

(a) If airport property that has been appraised under this subchapter is no longer subject to a deed restriction, an additional tax is imposed on the property equal to the difference between the taxes imposed on the property for each of the three [five] years preceding the year in which the deed restriction expires that the property was appraised as provided by this subchapter and the tax that would have been imposed had the property not been restricted to use as public access airport property in each of those years[, plus interest at an annual rate of seven percent calculated from the dates on which the differences would have become due].

(b) A tax lien attaches to the property on the date the deed restriction expires to secure payment of the additional tax [and interest] imposed by this section and any penalties and interest incurred if the tax becomes delinquent. The lien exists in favor of all taxing units for which the additional tax is imposed.

SECTION 7. Sections 23.9807(a), (b), (c), and (f), Tax Code, are amended to read as follows:

(a) If the use of land that has been appraised as provided by this subchapter changes to a use that qualifies the land for appraisal under Subchapter E, an additional tax is imposed on the land equal to [the sum of:

[(1)] the difference between:

(1) [(A)] the taxes imposed on the land for each of the three [five] years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter; and

(2) [(B)] the taxes that would have been imposed had the land been appraised under Subchapter E in each of those years[; and

[(2) interest at an annual rate of seven percent calculated from the dates on which the differences would have become due].

(b) If the use of land that has been appraised as provided by this subchapter changes to a use that does not qualify the land for appraisal under Subchapter E or under this subchapter, an additional tax is imposed on the land equal to [the sum of:

[(1)] the difference between:

(1) [(A)] the taxes imposed on the land for each of the three [five] years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter; and

(2) [(B)] the taxes that would have been imposed had the land been taxed on the basis of market value in each of those years[; and

[(2) interest at an annual rate of seven percent calculated from the dates on which the differences would have become due].

(c) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax [and interest] imposed by this section and any penalties and interest incurred if the tax becomes delinquent. The lien exists in favor of all taxing units for which the additional tax is imposed.

(f) A determination that a change in use of the land has occurred is made by the chief appraiser. The chief appraiser shall deliver a notice of the determination to the owner of the land 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 [and interest] as soon as practicable after the change of use occurs. The taxes [and interest] 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 land.

SECTION 8. The change in law made by Section 23.215, Tax Code, as amended by this Act, applies only to an ad valorem tax year that begins on or after January 1, 2022.

SECTION 9. Section 23.55, Tax Code, as amended by this Act, applies only to a change of use of land appraised under Subchapter D, Chapter 23, Tax Code, that occurs on or after the effective date of this Act.

SECTION 10. Section 23.58, Tax Code, as amended by this Act, applies only to a loan secured by a lien on open-space land that is contracted for on or after the effective date of this Act.

SECTION 11. Section 23.76, Tax Code, as amended by this Act, applies only to a change of use of land appraised under Subchapter E, Chapter 23, Tax Code, that occurs on or after the effective date of this Act.

SECTION 12. Section 23.86, Tax Code, as amended by this Act, applies only to a change of use of land appraised under Subchapter F, Chapter 23, Tax Code, that occurs on or after the effective date of this Act.

SECTION 13. Section 23.96, Tax Code, as amended by this Act, applies only to a change of use of land appraised under Subchapter G, Chapter 23, Tax Code, that occurs on or after the effective date of this Act.

SECTION 14. Section 23.9807, Tax Code, as amended by this Act, applies only to a change of use of land appraised under Subchapter H, Chapter 23, Tax Code, that occurs on or after the effective date of this Act.

SECTION 15. 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, 2021.