Texas 2009 - 81st Regular

Texas House Bill HB2828 Compare Versions

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1	1	By: Menendez, Paxton, Hilderbran, Villarreal, H.B. No. 2828
2	2	Oliveira, et al.
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the ad valorem taxation of property used to provide
8	8	low-income or moderate-income housing.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 11.182, Tax Code, is amended by amending
11	11	Subsections (b), (e), (h), (j), and (k) and adding Subsections
12	12	(b-1) and (b-2) to read as follows:
13	13	(b) An organization is entitled to an exemption from
14	14	taxation of improved or unimproved real property it owns if the
15	15	organization:
16	16	(1) is organized as a community housing development
17	17	organization;
18	18	(2) meets the requirements of a charitable
19	19	organization provided by Sections 11.18(e) and (f);
20	20	(3) owns the property for the purpose of building or
21	21	repairing housing on the property to sell without profit to a
22	22	low-income or moderate-income individual or family satisfying the
23	23	organization's eligibility requirements or to rent without profit
24	24	to such an individual or family; and
25	25	(4) engages [exclusively] in the building, repair, and
26	26	sale or rental of housing as described by Subdivision (3) and
27	27	related activities.
28	28	(b-1) Notwithstanding Subsections (b)(1) and (2), an owner
29	29	of improved or unimproved real property that is not an organization
30	30	described by those subdivisions is entitled to an exemption from
31	31	taxation of the property under Subsection (b) if the owner
32	32	otherwise qualifies for the exemption and the owner is:
33	33	(1) a limited partnership of which 100 percent of the
34	34	interest of the general partner is owned or controlled by an
35	35	organization described by Subsections (b)(1) and (2); or
36	36	(2) an entity 100 percent of the interest in which is
37	37	owned or controlled by an organization described by Subsections
38	38	(b)(1) and (2).
39	39	(b-2) A reference in this section to an organization
40	40	includes a limited partnership or other entity described by
41	41	Subsection (b-1).
42	42	(e) In addition to meeting the applicable requirements of
43	43	Subsections (b) and (c), to receive an exemption under Subsection
44	44	(b) for improved real property [that includes a housing project
45	45	constructed after December 31, 2001, and financed with qualified
46	46	501(c)(3) bonds issued under Section 145 of the Internal Revenue
47	47	Code of 1986, tax-exempt private activity bonds subject to volume
48	48	cap, or low-income housing tax credits], the organization must:
49	49	(1) [control 100 percent of the interest in the
50	50	general partner if the project is owned by a limited partnership;
51	51	[(2)] comply with all rules of and laws administered
52	52	by the Texas Department of Housing and Community Affairs applicable
53	53	to community housing development organizations; and
54	54	(2) [(3)] submit annually to the Texas Department of
55	55	Housing and Community Affairs and to the governing body of each
56	56	taxing unit for which the project receives an exemption for the
57	57	housing project evidence demonstrating that the organization spent
58	58	an amount equal to at least 90 percent of the project's cash flow in
59	59	the preceding fiscal year as determined by the audit required by
60	60	Subsection (g), for eligible persons in the county in which the
61	61	property is located, on social, educational, or economic
62	62	development services, capital improvement projects, or rent
63	63	reduction.
64	64	(h) Subsections (d) and (e)(2) [(e)(3)] do not apply to
65	65	property owned by an organization if:
66	66	(1) the entity that provided the financing for the
67	67	acquisition or construction of the property:
68	68	(A) requires the organization to make payments in
69	69	lieu of taxes to the school district in which the property is
70	70	located; or
71	71	(B) restricts the amount of rent the organization
72	72	may charge for dwelling units on the property; or
73	73	(2) the organization has entered into an agreement
74	74	with each taxing unit for which the property receives an exemption
75	75	to spend in each tax year for the purposes provided by Subsection
76	76	(d) or (e)(2) [(e)(3)] an amount equal to the total amount of taxes
77	77	imposed on the property in the tax year preceding the year in which
78	78	the organization acquired the property.
79	79	(j) An organization may not receive an exemption under
80	80	Subsection (b) or (f) for property for a tax year unless the
81	81	organization applied for or received an exemption under that
82	82	subsection for the property for any part of the 2003 tax year.
83	83	(k) Notwithstanding Subsection (j) [of this section] and
84	84	Sections 11.43(a) and (c), an exemption under Subsection (b) or (f)
85	85	does not terminate because of a change in the ownership of the
86	86	property if the property is sold at a foreclosure sale and, not
87	87	later than the 30th day after the date of the sale, the owner of the
88	88	property submits to the chief appraiser evidence that the property
89	89	is owned by an organization that meets the requirements of
90	90	Subsections (b)(1), (2), and (4) or is owned by a limited
91	91	partnership described by Subsection (b-1)(1) or an entity described
92	92	by Subsection (b-1)(2) that meets the requirements of Subsection
93	93	(b)(4). If the owner of the property submits the evidence required
94	94	by this subsection, the exemption continues to apply to the
95	95	property for the remainder of the current tax year and for
96	96	subsequent tax years until the owner ceases to qualify the property
97	97	for the exemption. This subsection does not prohibit the chief
98	98	appraiser from requiring the owner to file a new application to
99	99	confirm the owner's current qualification for the exemption as
100	100	provided by Section 11.43(c).
101	101	SECTION 2. Sections 11.1825(c), (d), (q), and (t), Tax
102	102	Code, are amended to read as follows:
103	103	(c) Notwithstanding Subsection (b), an owner of real
104	104	property that is not an organization described by that subsection
105	105	is entitled to an exemption from taxation of property under this
106	106	section if the property otherwise qualifies for the exemption and
107	107	the owner is:
108	108	(1) a limited partnership of which an organization
109	109	that meets the requirements of Subsection (b) controls 100 percent
110	110	of the general partner interest; [or]
111	111	(2) an entity the parent of which is an organization
112	112	that meets the requirements of Subsection (b); or
113	113	(3) an entity the parent of which is controlled by an
114	114	organization that meets the requirements of Subsection (b).
115	115	(d) If the owner of the property is an entity described by
116	116	Subsection (c), the entity must[:
117	117	[(1) be organized under the laws of this state; and
118	118	[(2)] have its principal place of business in this
119	119	state.
120	120	(q) If property qualifies for an exemption under this
121	121	section, the chief appraiser shall use the income method of
122	122	appraisal as provided by Sections [Section] 23.012 and 23.215 to
123	123	determine the appraised value of the property. In appraising the
124	124	property, the chief appraiser shall:
125	125	(1) adjust for [consider] the restrictions provided by
126	126	this section on the income of the individuals or families to whom
127	127	the dwelling units of the housing project may be rented and the
128	128	amount of rent that may be charged for purposes of computing the
129	129	actual rental income from the property or projecting future rental
130	130	income; and
131	131	(2) use the same capitalization rate that the chief
132	132	appraiser uses to appraise other rent-restricted properties.
133	133	(t) Notwithstanding Section 11.43(c), an exemption under
134	134	this section does not terminate because of a change in ownership of
135	135	the property if:
136	136	(1) the property is foreclosed on for any reason and,
137	137	not later than the 30th day after the date of the foreclosure sale,
138	138	the owner of the property submits to the chief appraiser evidence
139	139	that the property is owned by:
140	140	(A) an organization that meets the requirements
141	141	of Subsection (b); or
142	142	(B) an entity that meets the requirements of
143	143	Subsections (c) and (d); or
144	144	(2) in the case of property owned by an entity
145	145	described by Subsections (c) and (d), the organization meeting the
146	146	requirements of Subsection (b) that controls the general partner
147	147	interest of, [or] is the parent of, or controls the parent of the
148	148	entity as described by Subsection (c) ceases to serve in that
149	149	capacity and, not later than the 30th day after the date the
150	150	cessation occurs, the owner of the property submits evidence to the
151	151	chief appraiser that the organization has been succeeded in that
152	152	capacity by another organization that meets the requirements of
153	153	Subsection (b).
154	154	SECTION 3. Section 11.1826, Tax Code, is amended by adding
155	155	Subsection (c-1) and amending Subsection (e) to read as follows:
156	156	(c-1) The audit is binding on the appraisal district and
157	157	constitutes proof of eligibility for, including compliance with all
158	158	statutory requirements necessary for, an exemption under Section
159	159	11.1825.
160	160	(e) Property may not be exempted under Section 11.182 for a
161	161	tax year unless the organization owning or controlling the owner of
162	162	the property complies with this section, except that the audit
163	163	required by this section must address compliance with the
164	164	requirements of Section 11.182. Subsection (c-1) applies to an
165	165	audit that addresses compliance with the requirements of Section
166	166	11.182 in the same manner as that subsection applies to an audit
167	167	that addresses compliance with the requirements of Section 11.1825.
168	168	SECTION 4. Section 23.215, Tax Code, is amended to read as
169	169	follows:
170	170	Sec. 23.215. APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED
171	171	FOR LOW-INCOME OR MODERATE-INCOME HOUSING. (a) This section
172	172	applies only to real property and only if:
173	173	(1) the property is owned for the purpose of operating
174	174	a housing project on the property the dwelling units in which are
175	175	required to be rented to individuals or families whose median
176	176	income is not more than 60 percent of the greater of:
177	177	(A) the area median family income for the
178	178	household's place of residence, as adjusted for family size and as
179	179	established by the United States Department of Housing and Urban
180	180	Development; or
181	181	(B) the statewide area median family income, as
182	182	adjusted for family size and as established by the United States
183	183	Department of Housing and Urban Development;
184	184	(2) at least 50 percent of the total square footage of
185	185	the dwelling units in the housing project on the property is
186	186	reserved for individuals or families described by Subdivision (1);
187	187	and
188	188	(3) the property is subject to a restrictive covenant
189	189	recorded in the real property records of the county in which the
190	190	property is located evidencing the restrictions described by
191	191	Subdivisions (1) and (2) [by an organization:
192	192	[(1) that on the effective date of this section was
193	193	rented to a low-income or moderate-income individual or family
194	194	satisfying the organization's income eligibility requirements and
195	195	that continues to be used for that purpose;
196	196	[(2) that was financed under the low income housing
197	197	tax credit program under Subchapter DD, Chapter 2306, Government
198	198	Code;
199	199	[(3) that does not receive an exemption under Section
200	200	11.182 or 11.1825; and
201	201	[(4) the owner of which has not entered into an
202	202	agreement with any taxing unit to make payments to the taxing unit
203	203	instead of taxes on the property].
204	204	(b) In appraising the property, the [The] chief appraiser
205	205	shall use the income method of appraisal as provided by Section
206	206	23.012 and shall:
207	207	(1) estimate the net income of the property by:
208	208	(A) analyzing data on rental income and expenses
209	209	of the property contained in the statement of income and expenses
210	210	for the property for the preceding fiscal year and the rent roll for
211	211	the property for December of the preceding year, if the dwelling
212	212	units in the project were required to be rented to individuals or
213	213	families described by Subsection (a) during the preceding year; or
214	214	(B) basing the potential income and expenses of
215	215	the property on reasonably clear and appropriate evidence, if the
216	216	construction of the dwelling units in the project has commenced but
217	217	has not been completed as of the date of the appraisal or if for any
218	218	other reason Paragraph (A) does not apply;
219	219	(2) include deductions for required replacement
220	220	reserves, franchise taxes imposed by this state, and fees imposed
221	221	by governmental entities;
222	222	(3) if Subdivision (1)(B) applies, reduce the
223	223	stabilized value of the property to account for the income lost
224	224	during the lease-up and construction period and for the percentage
225	225	of construction yet to be completed; and
226	226	(4) use the capitalization rate determined and
227	227	published by the chief appraiser [appraise the property in the
228	228	manner provided by Section 11.1825(q)].
229	229	(c) In determining the capitalization rate, the chief
230	230	appraiser shall adjust for:
231	231	(1) the restrictions on the income of the individuals
232	232	or families to whom the dwelling units in the project are required
233	233	to be rented and the amount of rent that may be charged;
234	234	(2) the restrictions on transferability of the
235	235	property and the period for which the property is subject to a
236	236	restrictive covenant described by Subsection (a)(3); and
237	237	(3) the regulatory burdens associated with complying
238	238	with the restrictive covenant described by Subsection (a)(3) to
239	239	which the property is subject.
240	240	(d) Not later than January 1 of each year, the appraisal
241	241	district shall give public notice in the manner determined by the
242	242	district, including by posting on the district's Internet website
243	243	if applicable, of the capitalization rate to be used in that year to
244	244	appraise property under this section.
245	245	(e) In connection with an annual study conducted under
246	246	Section 403.302, Government Code, the value of a property described
247	247	by Subsection (a) that is selected for appraisal must be determined
248	248	in the manner required by this section.
249	249	SECTION 5. This Act applies only to ad valorem taxes imposed
250	250	for a tax year beginning on or after the effective date of this Act.
251	251	SECTION 6. This Act takes effect January 1, 2010.