81R7171 SMH-F
By: Hilderbran H.B. No. 2980
A BILL TO BE ENTITLED
AN ACT
relating to the ad valorem taxation of property used to provide
low-income or moderate-income housing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 11.182, Tax Code, is amended by amending
Subsections (b), (e), (h), and (k) and adding Subsections (b-1) and
(b-2) to read as follows:
(b) An organization is entitled to an exemption from
taxation of improved or unimproved real property it owns if the
organization:
(1) is organized as a community housing development
organization;
(2) meets the requirements of a charitable
organization provided by Sections 11.18(e) and (f);
(3) owns the property for the purpose of building or
repairing housing on the property to sell without profit to a
low-income or moderate-income individual or family satisfying the
organization's eligibility requirements or to rent without profit
to such an individual or family; and
(4) engages [exclusively] in the building, repair, and
sale or rental of housing as described by Subdivision (3) and
related activities.
(b-1) Notwithstanding Subsections (b)(1) and (2), an owner
of improved or unimproved real property that is not an organization
described by those subdivisions is entitled to an exemption from
taxation of the property under Subsection (b) if the owner
otherwise qualifies for the exemption and the owner is:
(1) a limited partnership 100 percent of the interest
of the general partner in which is owned or controlled by an
organization described by Subsections (b)(1) and (2); or
(2) an entity 100 percent of the interest in which is
owned or controlled by an organization described by Subsections
(b)(1) and (2).
(b-2) A reference in this section to an organization
includes a limited partnership or other entity described by
Subsection (b-1).
(e) In addition to meeting the applicable requirements of
Subsections (b) and (c), to receive an exemption under Subsection
(b) for improved real property that is [includes a housing project
constructed after December 31, 2001, and] financed with qualified
501(c)(3) bonds issued under Section 145 of the Internal Revenue
Code of 1986, tax-exempt private activity bonds subject to volume
cap, or low-income housing tax credits, the organization must:
(1) [control 100 percent of the interest in the
general partner if the project is owned by a limited partnership;
[(2)] comply with all rules of and laws administered
by the Texas Department of Housing and Community Affairs applicable
to community housing development organizations; and
(2) [(3)] submit annually to the Texas Department of
Housing and Community Affairs and to the governing body of each
taxing unit for which the project receives an exemption for the
housing project evidence demonstrating that the organization spent
an amount equal to at least 90 percent of the project's cash flow in
the preceding fiscal year as determined by the audit required by
Subsection (g), for eligible persons in the county in which the
property is located, on social, educational, or economic
development services, capital improvement projects, or rent
reduction.
(h) Subsections (d) and (e)(2) [(e)(3)] do not apply to
property owned by an organization if:
(1) the entity that provided the financing for the
acquisition or construction of the property:
(A) requires the organization to make payments in
lieu of taxes to the school district in which the property is
located; or
(B) restricts the amount of rent the organization
may charge for dwelling units on the property; or
(2) the organization has entered into an agreement
with each taxing unit for which the property receives an exemption
to spend in each tax year for the purposes provided by Subsection
(d) or (e)(2) [(e)(3)] an amount equal to the total amount of taxes
imposed on the property in the tax year preceding the year in which
the organization acquired the property.
(k) Notwithstanding Subsection (j) [of this section] and
Sections 11.43(a) and (c), an exemption under Subsection (b) or (f)
does not terminate because of a change in the ownership of the
property if the property is sold at a foreclosure sale and, not
later than the 30th day after the date of the sale, the owner of the
property submits to the chief appraiser evidence that the property
is owned by an organization that meets the requirements of
Subsections (b)(1), (2), and (4) or is owned by a limited
partnership described by Subsection (b-1)(1) or an entity described
by Subsection (b-1)(2) that meets the requirements of Subsection
(b)(4). If the owner of the property submits the evidence required
by this subsection, the exemption continues to apply to the
property for the remainder of the current tax year and for
subsequent tax years until the owner ceases to qualify the property
for the exemption. This subsection does not prohibit the chief
appraiser from requiring the owner to file a new application to
confirm the owner's current qualification for the exemption as
provided by Section 11.43(c).
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) that includes a development, as defined by Section
2306.6702, Government Code:
(A) the dwelling units in which are [on the
effective date of this section was] rented or offered for rent to
[a] low-income or moderate-income individuals [individual] or
families [family] satisfying the [organization's] income
eligibility requirements of Subchapter DD, Chapter 2306,
Government Code [and that continues to be used for that purpose];
and
(B) [(2)] that was financed under the low income
housing tax credit program under Subchapter DD, Chapter 2306,
Government Code;
(2) [(3)] that does not receive an exemption under
Section 11.182 or 11.1825; and
(3) [(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 the property, the [The] chief appraiser
shall:
(1) estimate the gross income potential of the
property by:
(A) analyzing data on rental income of the
property for the preceding fiscal year contained in the audited
statement of income and expenses for the property provided under
Subsection (g) to the chief appraiser if the dwelling units in the
development were rented or offered for rent to individuals or
families described by Subsection (a)(1)(A) for the entire fiscal
year;
(B) analyzing the potential earnings capacity of
the property if the dwelling units in the development were not
rented or offered for rent to individuals or families described by
Subsection (a)(1)(A) during the preceding fiscal year; or
(C) if the dwelling units in the development were
rented or offered for rent to individuals or families described by
Subsection (a)(1)(A) for only part of the preceding fiscal year,
using the method prescribed by Paragraph (A) for the part of the
fiscal year in which the dwelling units were rented or offered for
rent and using the method prescribed by Paragraph (B) for the part
of the fiscal year in which the dwelling units were not rented or
offered for rent;
(2) estimate the operation and maintenance expenses of
the property by:
(A) analyzing data on operation and maintenance
expenses of the property for the preceding fiscal year contained in
the audited statement of income and expenses for the property
provided under Subsection (g) to the chief appraiser if the
dwelling units in the development were rented or offered for rent to
individuals or families described by Subsection (a)(1)(A) for the
entire fiscal year;
(B) analyzing data on operation and maintenance
expenses of comparable properties available to the chief appraiser
if the dwelling units in the development were not rented or offered
for rent to individuals or families described by Subsection
(a)(1)(A) during the preceding fiscal year; or
(C) if the dwelling units in the development were
rented or offered for rent to individuals or families described by
Subsection (a)(1)(A) for only part of the preceding fiscal year,
using the method prescribed by Paragraph (A) for the part of the
fiscal year in which the dwelling units were rented or offered for
rent and using the method prescribed by Paragraph (B) for the part
of the fiscal year in which the dwelling units were not rented or
offered for rent;
(3) determine the appropriate capitalization rate as
provided by Subsections (c) and (d); and
(4) compute the actual rental income from the property
or project the future rental income from the property by
considering the restrictions provided by Subchapter DD, Chapter
2306, Government Code, on:
(A) the income of the individuals or families to
whom the property may be rented; and
(B) the amount of rent that may be charged for the
property [appraise the property in the manner provided by Section
11.1825(q)].
(c) The chief appraiser shall appraise the property using a
capitalization rate of at least 13.5 percent, except as provided by
Subsection (d).
(d) The chief appraiser may conduct a study of sales of
comparable properties described by Subsection (a) that are located
in the appraisal district to determine the appropriate
capitalization rate to use in appraising the property. If as a
result of the study the chief appraiser determines that a
capitalization rate of less than 13.5 percent is more appropriate
for that purpose, the chief appraiser shall use that lesser rate.
(e) Not later than January 31 of each year, the appraisal
district shall give public notice in the manner determined by the
district, including by posting on the district's website if
applicable, of the capitalization rate to be used in that year to
appraise property described by Subsection (a) if that rate is a rate
of less than 13.5 percent.
(f) For purposes of determining the net operating income of
the property, the operating income of the property for the
preceding fiscal year is reduced by any disbursements made in that
fiscal year for the operation and maintenance of the property,
including disbursements for:
(1) standard property maintenance;
(2) debt service;
(3) ad valorem and franchise taxes;
(4) employee compensation;
(5) fees required by government agencies;
(6) expenses incurred in satisfaction of the
requirements of lenders, including reserve requirements;
(7) insurance; and
(8) any other justifiable expense related to the
operation and maintenance of the property.
(g) Not later than April 15 of each year, the property owner
must provide to the chief appraiser an audited statement of the
income and expenses for the property for the preceding fiscal year
that includes data on rental income and operation and maintenance
expenses for which disbursements described by Subsection (f) were
made. The chief appraiser shall use the audited statement of income
and expenses in appraising the property under this section. If the
property owner fails to timely provide the audited statement of
income and expenses, the chief appraiser shall appraise the
property in the manner provided by Section 23.012.
(h) An audited statement of income and expenses for property
provided to the chief appraiser under Subsection (g) is
confidential and not available for public inspection. The chief
appraiser may disclose information in the statement only to an
employee of the appraisal office who appraises property, except as
authorized by Subsection (i).
(i) Information made confidential by Subsection (h) may be
disclosed:
(1) in a criminal proceeding;
(2) in a hearing conducted by the appraisal review
board;
(3) on a judicial determination of good cause; or
(4) to a governmental agency, political subdivision,
or regulatory body if the disclosure is necessary or proper for the
enforcement of the laws of this or another state or of the United
States.
(j) In connection with an annual study conducted under
Section 403.302, Government Code, the value of a property described
by Subsection (a) that is selected for appraisal must be determined
in the manner required by this section.
SECTION 3. This Act applies only to ad valorem taxes imposed
for a tax year beginning on or after the effective date of this Act.
SECTION 4. This Act takes effect January 1, 2010.