BILL ANALYSIS

H.B. 3857

By: Thimesch

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The Tax Code provides for the appraisal of certain land designated for a qualifying agricultural use as "qualified open-space land," which results in a lower property tax bill. However, some county tax assessors apply the language in statute in a narrow, restrictive manner that prevents organic and other uncommon agricultural operations from qualifying. Local producers are often denied the same valuation as conventional farms despite using their property primarily to raise food for the community. H.B. 3857 seeks to address this discrepancy in property tax valuations and create a level playing field for small farmers by classifying fruits and vegetables as an agricultural use for appraisal purposes and providing for the development of guidelines for the appraisal of qualified open-space land used for uncommon agricultural uses.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 3857 amends the Tax Code to require the chief appraiser of an appraisal district to distinguish between the degree of intensity required for various agricultural production methods, including organic, sustainable, pastured poultry, rotational grazing, and other uncommon production methods or systems, for purposes relating to the eligibility of land for appraisal as qualified open-space land for property tax purposes. The bill classifies the production of fruits and vegetables as a qualifying agricultural use of land for such purposes.

H.B. 3857 requires the comptroller of public accounts, in consultation with the Texas A&M AgriLife Extension Service, individuals selected by the comptroller who represent appraisal districts, and individuals selected by the comptroller who represent affected producers, to develop guidelines for determining under what conditions the cumulative effect of multiple agricultural uses of a tract of land meets the degree of intensity generally accepted in the area for purposes of qualifying the land as open-space land for property tax purposes.

H.B. 3857 requires the comptroller, in consultation with the Texas A&M AgriLife Extension Service, individuals selected by the comptroller who represent appraisal districts, and individuals selected by the comptroller who represent small-scale producers, to develop guidelines for determining under what conditions land under 10 acres in size used for the production of fruits, vegetables, poultry, hogs, sheep, or goats qualifies for appraisal as open-space land. The bill requires that the guidelines prohibit land under 10 acres in size that qualifies for open-space appraisal solely on the basis of the guidelines from subsequently qualifying for open-space appraisal on the basis of the owner changing the use of the land to wildlife management.

H.B. 3857 authorizes the comptroller, in developing these various guidelines, to consider the following factors:

· the financial investment of a producer in an agricultural use of a tract of land;

· the degree of active management of a producer in the agricultural use of a tract of land;

· the percentage of a tract of land used by a producer for agricultural uses; and

· any other factor the comptroller considers appropriate.

The bill authorizes the various guidelines to include recordkeeping requirements consistent with normal practices of agricultural operations and requires the comptroller to distribute the guidelines not later than September 1, 2024, to each appraisal district. The bill requires the comptroller, in cooperation with appraisal districts, to provide educational resources to chief appraisers to assist with the appraisal of land using the guidelines and of land using an uncommon production method, such as organic production, sustainable production, and pastured poultry.

H.B. 3857 applies only to the appraisal of land for property tax purposes for a tax year that begins on or after January 1, 2025.

EFFECTIVE DATE

September 1, 2023.