89R15638 DRS-F

By: Gutierrez S.B. No. 2517

A BILL TO BE ENTITLED

AN ACT

relating to the exemption from ad valorem taxation of real property leased to certain local public entities for use as a hospital and related health care services.

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

SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by adding Section 11.1802 to read as follows:

Sec. 11.1802. REAL PROPERTY LEASED FOR CERTAIN HOSPITAL USE. (a) A person is entitled to an exemption from taxation of the portion of the real property that the person owns and leases to a governmental entity established under Subchapter B, Chapter 265, Health and Safety Code, for use as a hospital and the provision of related health care services if:

(1) the portion of the real property that is leased to the entity is:

(A) used exclusively by the entity for the operation or administration of the hospital and the provision of related health care services by the hospital; and

(B) reasonably necessary for a purpose described by Paragraph (A); and

(2) the owner of the portion of the real property that is leased to the entity certifies by affidavit to the entity that:

(A) if the lease agreement requires the entity to pay the taxes imposed on the real property as a portion of the total consideration paid to the property owner under the agreement, the owner will reduce the total consideration required to be paid by the entity under the lease agreement by an amount equal to the amount by which the taxes on the real property are reduced as a result of the exemption by providing a monthly or annual credit against the total consideration due under the agreement; or

(B) if the lease agreement requires the entity to pay the taxes imposed on the real property directly to the collector for the applicable taxing unit or to the owner or the property manager separately from the payment of rent to the property owner under the agreement, the entity is no longer required to pay the taxes to the collector, owner, or property manager, as applicable, and the rent charged to the entity under the agreement is not affected unless a term of the agreement specifically provides for a change in the amount of the rent.

(b) A property owner required to provide an affidavit described by Subsection (a)(2)(A) to a governmental entity shall:

(1) annually provide the entity with a disclosure document stating the amount by which the taxes on the real property are reduced as a result of the exemption and the method the owner will implement to ensure that the total consideration for the lease of the real property fully reflects the total amount of that reduction; and

(2) reduce the total consideration for the lease of the real property through a monthly or annual credit against the total consideration to reflect the amount by which the taxes on the real property are reduced as a result of the exemption.

(c) Section 25.07 does not apply to a leasehold interest in real property for which the owner receives an exemption under this section.

SECTION 2. This Act applies only to ad valorem taxes imposed for a tax year beginning on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2026, but only if the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, authorizing the legislature to exempt from ad valorem taxation real property leased to certain local public entities for use as a hospital and related health care services is approved by the voters. If that amendment is not approved by the voters, this Act has no effect.