Texas 2011 - 82nd Regular

Texas House Bill HB1056 Compare Versions

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1	1	82R26428 SMH-F
2	2	By: Villarreal H.B. No. 1056
3	3	Substitute the following for H.B. No. 1056:
4	4	By: Villarreal C.S.H.B. No. 1056
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the ad valorem taxation of property used to provide
10	10	low-income or moderate-income housing.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 11.182(a), Tax Code, is amended by
13	13	amending Subdivision (2) and adding Subdivisions (3) and (4) to
14	14	read as follows:
15	15	(2) "Community housing development organization" has
16	16	the meaning assigned by 24 C.F.R. Section 92.2, except that the
17	17	term also includes an organization that otherwise qualifies as a
18	18	community housing development organization under that section but
19	19	that:
20	20	(A) does not receive HOME funds as defined by
21	21	that section; or
22	22	(B) is governed by a board all of the members of
23	23	which are appointed by a state or local government [42 U.S.C.
24	24	Section 12704].
25	25	(3) "Control" includes:
26	26	(A) with respect to a limited partnership, the
27	27	control, directly or through a wholly controlled subsidiary, of 100
28	28	percent of the general partner interest; and
29	29	(B) with respect to a limited liability company,
30	30	serving as the sole manager or managing member of the company.
31	31	(4) "Department" means the Texas Department of Housing
32	32	and Community Affairs or its successor agency.
33	33	SECTION 2. Section 11.182, Tax Code, is amended by adding
34	34	Subsections (a-1), (b-1), (b-2), (j-1), (l), (m), (n), (o), (p),
35	35	(q), (r), and (s) and amending Subsections (e), (g), (h), (i), and
36	36	(k) to read as follows:
37	37	(a-1) An organization is considered to own property for
38	38	purposes of this section and the provisions of Section 2, Article
39	39	VIII, Texas Constitution, authorizing the legislature by general
40	40	law to exempt from taxation property owned by an institution
41	41	engaged primarily in public charitable functions, if the
42	42	organization has legal or equitable title to the property. By way
43	43	of example, an organization has equitable title to property if it
44	44	has a present right to compel legal title to the property to be
45	45	conveyed to it in accordance with law, such as by means of an option
46	46	to acquire the property. For purposes of eligibility for an
47	47	exemption under this section, property owned by a tax credit
48	48	partnership or limited liability company is considered to be owned
49	49	by a community housing development organization if the general
50	50	partner of the tax credit partnership or the manager of the limited
51	51	liability company is, or is controlled by, the community housing
52	52	development organization and the community housing development
53	53	organization holds equitable title to the property pursuant to an
54	54	option to acquire the property on terms negotiated between the
55	55	parties.
56	56	(b-1) Notwithstanding Subsection (b), if the legal owner of
57	57	property is not an organization described by that subsection, the
58	58	legal owner is entitled to an exemption from taxation of property
59	59	under this section if the property otherwise qualifies for the
60	60	exemption and the legal owner is:
61	61	(1) an entity 100 percent of the interest in which is
62	62	owned by an organization that meets the requirements of Subsection
63	63	(b); or
64	64	(2) an entity controlled by an organization that meets
65	65	the requirements of Subsection (b).
66	66	(b-2) A reference in this section to an organization
67	67	includes an entity described by Subsection (b-1)(1) or (2).
68	68	(e) In addition to meeting the other applicable
69	69	requirements of this section [Subsections (b) and (c)], to receive
70	70	an exemption under Subsection (b) for improved real property that
71	71	includes a housing project constructed after December 31, 2001, and
72	72	financed with qualified 501(c)(3) bonds issued under Section 145 of
73	73	the Internal Revenue Code of 1986, tax-exempt private activity
74	74	bonds subject to volume cap, or low-income housing tax credits, the
75	75	organization must:
76	76	(1) [control 100 percent of the interest in the
77	77	general partner if the project is owned by a limited partnership;
78	78	[(2)] comply with all rules of and laws administered by
79	79	the department [Texas Department of Housing and Community Affairs]
80	80	applicable to community housing development organizations; and
81	81	(2) [(3)] submit annually to the department, if the
82	82	property is a multifamily rental property consisting of more than
83	83	four dwelling units, or to the chief appraiser of the appraisal
84	84	district in which the property subject to the exemption is located,
85	85	if the property is not such a property, [Texas Department of Housing
86	86	and Community Affairs and to the governing body of each taxing unit
87	87	for which the project receives an exemption for the housing
88	88	project] evidence demonstrating that the organization spent an
89	89	amount equal to at least 90 percent of the project's cash flow in
90	90	the preceding fiscal year as determined by the audit required by
91	91	Subsection (g), for eligible persons in the county in which the
92	92	property is located, on social, educational, or economic
93	93	development services, capital improvement projects, or rent
94	94	reduction.
95	95	(g) To receive an exemption under Subsection (b) or (f), an
96	96	organization must annually have an audit prepared by an independent
97	97	auditor. The audit must include a detailed report on the
98	98	organization's sources and uses of funds. A copy of the audit must
99	99	be delivered to the department, if the property is a multifamily
100	100	rental property consisting of more than four dwelling units, or
101	101	[Texas Department of Housing and Community Affairs and] to the
102	102	chief appraiser of the appraisal district in which the property
103	103	subject to the exemption is located, if the property is not such a
104	104	multifamily rental property.
105	105	(h) Subsections (d) and (e)(2) [(e)(3)] do not apply to
106	106	property owned by an organization if:
107	107	(1) the entity that provided the financing for the
108	108	acquisition or construction of the property:
109	109	(A) requires the organization to make payments in
110	110	lieu of taxes to the school district in which the property is
111	111	located; or
112	112	(B) restricts the amount of rent the organization
113	113	may charge for dwelling units on the property; or
114	114	(2) the organization has entered into an agreement
115	115	with each taxing unit for which the property receives an exemption
116	116	to spend in each tax year for the purposes provided by Subsection
117	117	(d) or (e)(2) [(e)(3)] an amount equal to the total amount of taxes
118	118	imposed on the property in the tax year preceding the year in which
119	119	the organization acquired the property.
120	120	(i) If any property owned by an organization receiving an
121	121	exemption under this section has been acquired or sold during the
122	122	preceding year, the [such] organization shall file by March 31 of
123	123	the following year with the department, for multifamily rental
124	124	properties consisting of more than four dwelling units, or with the
125	125	chief appraiser in the county in which the relevant properties are
126	126	[property is] located, for properties that are not such multifamily
127	127	rental properties, on a form promulgated by the comptroller of
128	128	public accounts, a list of such properties acquired or sold during
129	129	the preceding year.
130	130	(j-1) Notwithstanding Subsection (j), an organization may
131	131	not receive an exemption under Subsection (b) or (f) for property
132	132	for the 2012 tax year or a subsequent tax year if:
133	133	(1) the organization did not claim an exemption under
134	134	Subsection (b) or (f) for the property for the 2010 tax year; or
135	135	(2) the organization claimed an exemption under
136	136	Subsection (b) or (f) for the property for the 2010 tax year and the
137	137	organization is finally determined to be ineligible for the
138	138	exemption for the property for that tax year.
139	139	(k) Notwithstanding Subsection (j) of this section and
140	140	Sections 11.43(a) and (c), an exemption under Subsection (b) or (f)
141	141	does not terminate because of a change in the ownership of the
142	142	property if the property is sold at a foreclosure sale and, not
143	143	later than the 30th day after the date of the sale, the owner of the
144	144	property submits to the department, if the property is a
145	145	multifamily rental property consisting of more than four dwelling
146	146	units, or the chief appraiser, if the property is not such a
147	147	multifamily rental property, evidence that the property is owned by
148	148	an organization that meets the requirements of Subsections (b)(1),
149	149	(2), and (4). If the owner of the property submits the evidence
150	150	required by this subsection, the exemption continues to apply to
151	151	the property for the remainder of the current tax year and for
152	152	subsequent tax years until the owner ceases to qualify the property
153	153	for the exemption. This subsection does not prohibit the chief
154	154	appraiser or the department, as applicable, from requiring the
155	155	owner to file a new application to confirm the owner's current
156	156	qualification for the exemption as provided by Section 11.43(c).
157	157	(l) This subsection applies only to a multifamily rental
158	158	property consisting of more than four dwelling units. If the chief
159	159	appraiser of the appraisal district in which the property is
160	160	located cancels the exemption or requires the organization that
161	161	owns the property to file a new application to confirm the
162	162	organization's current qualification for the exemption, the
163	163	organization must file a new application for the exemption with the
164	164	department. The provisions of this code governing the filing of an
165	165	application under Section 11.43, action on the application, and the
166	166	effect of the granting of the application by a chief appraiser apply
167	167	to an application filed with the department under this subsection,
168	168	except as otherwise provided by this section.
169	169	(m) The department shall prescribe the contents of the
170	170	exemption application form for purposes of Subsection (l). The
171	171	provisions of Section 11.43 governing the contents of an
172	172	application form prescribed by the comptroller apply to an
173	173	exemption application form prescribed by the department to the
174	174	extent those provisions may be made applicable.
175	175	(n) Not later than the 60th day after the date an
176	176	organization submits a complete application to the department under
177	177	Subsection (l), the executive director of the department shall
178	178	determine whether the organization is entitled to an exemption for
179	179	the property under Subsection (b) or (f). In making a
180	180	determination, the executive director may rely on the conclusions
181	181	in any audit or legal opinion provided to the department or any
182	182	determination letter issued by the United States Internal Revenue
183	183	Service regarding the organization's status under Section 501,
184	184	Internal Revenue Code of 1986.
185	185	(o) The executive director may request that an organization
186	186	that files an application under Subsection (l) provide additional
187	187	information. If the executive director makes such a request, the
188	188	application is considered to be complete for purposes of Subsection
189	189	(n) on the date on which all additional information requested by the
190	190	executive director has been received by the department.
191	191	(p) Not later than the fifth day after the date the
192	192	executive director makes a determination under Subsection (n), the
193	193	executive director shall issue a letter to the applicant
194	194	organization stating the executive director's determination. If
195	195	the executive director determines that the organization is not
196	196	entitled to an exemption for the property under Subsection (b) or
197	197	(f), the letter must include the reasons for the determination and a
198	198	description of the procedure for appealing the determination. The
199	199	executive director shall send a copy of the letter by regular mail
200	200	to the chief appraiser of each appraisal district that appraises
201	201	the property. If the executive director determines that the
202	202	organization is entitled to an exemption for the property under
203	203	Subsection (b) or (f), the chief appraiser shall grant the
204	204	exemption. If the executive director determines that the
205	205	organization is not entitled to an exemption for the property under
206	206	Subsection (b) or (f), the chief appraiser shall deny the
207	207	exemption.
208	208	(q) The applicant organization or a taxing unit in which the
209	209	property to which the application applies is located may appeal the
210	210	executive director's determination under Subsection (p) to the
211	211	governing board of the department in the manner provided by
212	212	department rule. The organization may be represented in an appeal
213	213	by an agent in accordance with Section 1.111. The organization or
214	214	taxing unit may appeal under Chapter 42 a final determination by the
215	215	governing board of the department in the same manner as provided by
216	216	law for the appeal of a determination by an appraisal review board,
217	217	except that the petition for review must be brought against the
218	218	department rather than the appraisal district.
219	219	(r) The department shall employ sufficient personnel to
220	220	process any applications received under Subsection (l) and may
221	221	charge an organization filing an application a reasonable fee not
222	222	to exceed the lesser of:
223	223	(1) $2,500; or
224	224	(2) the direct and indirect administrative costs of
225	225	processing the application and issuing a determination under
226	226	Subsection (n).
227	227	(s) The department shall adopt rules to implement its duties
228	228	under this section. The rules must:
229	229	(1) establish procedures for considering exemption
230	230	applications; and
231	231	(2) be sufficiently specific to ensure that
232	232	determinations are equal and uniform.
233	233	SECTION 3. Section 11.1825, Tax Code, is amended by
234	234	amending Subsections (a), (c), (d), (i), (j), (l), (s), (t), (u),
235	235	(v), and (y) and adding Subsections (a-1), (a-2), (e-1), (z), (aa),
236	236	(bb), (cc), (dd), (ee), (ff), and (gg) to read as follows:
237	237	(a) In this section:
238	238	(1) "Control" includes:
239	239	(A) with respect to a limited partnership, the
240	240	control, directly or through a wholly controlled subsidiary, of 100
241	241	percent of the general partner interest; and
242	242	(B) with respect to a limited liability company,
243	243	serving as the sole manager or managing member of the company.
244	244	(2) "Department" means the Texas Department of Housing
245	245	and Community Affairs or its successor agency.
246	246	(a-1) An organization is considered to own property for
247	247	purposes of this section and the provisions of Section 2, Article
248	248	VIII, Texas Constitution, authorizing the legislature by general
249	249	law to exempt from taxation property owned by an institution
250	250	engaged primarily in public charitable functions, if the
251	251	organization has legal or equitable title to the property. By way
252	252	of example, an organization has equitable title to property if it
253	253	has a present right to compel legal title to the property to be
254	254	conveyed to it in accordance with law, such as by means of an option
255	255	to acquire the property. For purposes of eligibility for an
256	256	exemption under this section, property owned by a tax credit
257	257	partnership or limited liability company is considered to be owned
258	258	by an organization if the general partner of the tax credit
259	259	partnership or the manager of the limited liability company is, or
260	260	is controlled by, the organization and the organization holds
261	261	equitable title to the property pursuant to an option to acquire the
262	262	property on terms negotiated between the parties.
263	263	(a-2) An organization is entitled to an exemption from
264	264	taxation of real property owned by the organization that the
265	265	organization constructs or rehabilitates and uses to provide
266	266	housing to individuals or families meeting the income eligibility
267	267	requirements of this section.
268	268	(c) Notwithstanding Subsection (b), if the legal [an] owner
269	269	of real property [that] is not an organization described by that
270	270	subsection, the legal owner is entitled to an exemption from
271	271	taxation of property under this section if the property otherwise
272	272	qualifies for the exemption and the legal owner is:
273	273	(1) an entity 100 percent of the interest in which is
274	274	owned by [a limited partnership of which] an organization that
275	275	meets the requirements of Subsection (b) [controls 100 percent of
276	276	the general partner interest]; or
277	277	(2) an entity controlled by [the parent of which is] an
278	278	organization that meets the requirements of Subsection (b).
279	279	(d) If the legal owner of the property is an entity
280	280	described by Subsection (c)[, the entity must]:
281	281	(1) the legal owner must be organized under the laws of
282	282	this state[;] and
283	283	[(2)] have its principal place of business in this
284	284	state; and
285	285	(2) the organization that owns 100 percent of the
286	286	interest in or controls the legal owner as described by Subsection
287	287	(c) must have equitable title to the property.
288	288	(e-1) An application for an exemption under this section for
289	289	a multifamily rental housing project consisting of more than four
290	290	dwelling units may be filed with the chief appraiser or the
291	291	department, except that if the legal owner of the property is an
292	292	entity described by Subsection (c)(2), the application must be
293	293	filed with the department.
294	294	(i) Property owned for the purpose of constructing or
295	295	rehabilitating a housing project on the property is exempt under
296	296	this section only if:
297	297	(1) the property is used to provide housing to
298	298	individuals or families described by Subsection (f) and the housing
299	299	project was under active construction or rehabilitation at the time
300	300	the organization initially filed an application for the exemption;
301	301	or
302	302	(2) the housing project is under active construction
303	303	or rehabilitation or other physical preparation.
304	304	(j) For purposes of Subsection (i)(2), a housing project is
305	305	under physical preparation if the organization has engaged in
306	306	architectural or engineering work, soil testing, land clearing
307	307	activities, or site improvement work necessary for the construction
308	308	or rehabilitation of the project or has conducted an environmental
309	309	or land use study relating to the construction or rehabilitation of
310	310	the project.
311	311	(l) If the property is owned for the purpose of
312	312	rehabilitating a housing project on the property:
313	313	(1) the original construction of the housing project
314	314	must have been completed at least 10 years before the date the
315	315	organization began actual rehabilitation of the project;
316	316	(2) the person from whom the organization acquired the
317	317	project must have owned the project for at least five years, if the
318	318	organization is not the original owner of the project, unless the
319	319	organization acquired the project from a person that acquired the
320	320	project by foreclosing on the project or receiving a deed or other
321	321	instrument in lieu of foreclosure that conveyed the project to the
322	322	person;
323	323	(3) the organization must provide to the department or
324	324	the chief appraiser, as applicable, and, if the project was
325	325	financed with bonds, the issuer of the bonds a written statement
326	326	prepared by a certified public accountant stating that the
327	327	organization has spent on rehabilitation costs at least the greater
328	328	of $5,000 or the amount required by the financial lender for each
329	329	dwelling unit in the project; and
330	330	(4) the organization must maintain a reserve fund for
331	331	replacements:
332	332	(A) in the amount required by the financial
333	333	lender; or
334	334	(B) if the financial lender does not require a
335	335	reserve fund for replacements, in an amount equal to $300 per unit
336	336	per year.
337	337	(s) Unless otherwise provided by the governing body of a
338	338	taxing unit any part of which is located in a county with a
339	339	population of at least 1.8 [1.4] million under Subsection (x), for
340	340	property described by Subsection (f)(1), the amount of the
341	341	exemption under this section from taxation is 50 percent of the
342	342	appraised value of the property.
343	343	(t) Notwithstanding Section 11.43(c), an exemption under
344	344	this section does not terminate because of a change in ownership of
345	345	the property if:
346	346	(1) the property is foreclosed on for any reason and,
347	347	not later than the 30th day after the date of the foreclosure sale,
348	348	the owner of the property submits to the department or the chief
349	349	appraiser, as applicable, evidence that the property is owned by:
350	350	(A) an organization that meets the requirements
351	351	of Subsection (b); or
352	352	(B) an entity that meets the requirements of
353	353	Subsections (c) and (d); or
354	354	(2) in the case of property owned by an entity
355	355	described by Subsections (c) and (d), the organization meeting the
356	356	requirements of Subsection (b) that owns 100 percent of the
357	357	interest in or controls the [general partner interest of or is the
358	358	parent of the] entity as described by Subsection (c) ceases to serve
359	359	in that capacity and, not later than the 30th day after the date the
360	360	cessation occurs, the owner of the property submits evidence to the
361	361	department or the chief appraiser, as applicable, that the
362	362	organization has been succeeded in that capacity by another
363	363	organization that meets the requirements of Subsection (b).
364	364	(u) The department or the chief appraiser, as applicable,
365	365	may extend the deadline provided by Subsection (t)(1) or (2), as
366	366	applicable, for good cause shown.
367	367	(v) Notwithstanding any other provision of this section, an
368	368	organization may not receive an exemption from taxation of property
369	369	described by Subsection (f)(1) by a taxing unit any part of which is
370	370	located in a county with a population of at least 1.8 [1.4] million
371	371	unless the exemption is approved by the governing body of the taxing
372	372	unit in the manner provided by law for official action.
373	373	(y) Not later than the fifth day after the date the
374	374	governing body of the taxing unit takes action under Subsection
375	375	(x), the taxing unit shall issue a letter to the organization
376	376	stating the governing body's action and, if the governing body
377	377	denied the exemption, stating whether the denial was based on a
378	378	determination under Subsection (x)(3)(A) or (B) and the basis for
379	379	the determination. The taxing unit shall send a copy of the letter
380	380	by regular mail to the chief appraiser of each appraisal district
381	381	that appraises the property for the taxing unit and to the
382	382	department, if applicable. The governing body may charge the
383	383	organization a fee not to exceed the administrative costs of
384	384	processing the request of the organization, approving or denying
385	385	the exemption, and issuing the letter required by this subsection.
386	386	If the chief appraiser or the department, as applicable, determines
387	387	that the property qualifies for an exemption under this section and
388	388	the governing body of the taxing unit approves the exemption, the
389	389	chief appraiser or the department, as applicable, shall grant the
390	390	exemption in the amount approved by the governing body.
391	391	(z) This subsection applies only to an application for an
392	392	exemption under this section filed with the department as
393	393	authorized or required by Subsection (e-1). The provisions of this
394	394	code governing the filing of an application under Section 11.43,
395	395	action on the application, and the effect of the granting of the
396	396	application by a chief appraiser apply to an application filed with
397	397	the department, except as otherwise provided by this section.
398	398	(aa) The department shall prescribe the contents of the
399	399	exemption application form for purposes of Subsection (z). The
400	400	provisions of Section 11.43 governing the contents of an
401	401	application form prescribed by the comptroller apply to an
402	402	exemption application form prescribed by the department to the
403	403	extent those provisions may be made applicable.
404	404	(bb) Not later than the 60th day after the date an
405	405	organization submits a complete application to the department under
406	406	Subsection (z), the executive director of the department shall
407	407	determine whether the organization is entitled to an exemption for
408	408	the property under this section. In making a determination, the
409	409	executive director may rely on the conclusions in any audit or legal
410	410	opinion provided to the department or any determination letter
411	411	issued by the United States Internal Revenue Service regarding the
412	412	organization's status under Section 501, Internal Revenue Code of
413	413	1986.
414	414	(cc) The executive director may request that an
415	415	organization that files an application under Subsection (z) provide
416	416	additional information. If the executive director makes such a
417	417	request, the application is considered to be complete for purposes
418	418	of Subsection (bb) on the date on which all additional information
419	419	requested by the executive director has been received by the
420	420	department.
421	421	(dd) Not later than the fifth day after the date the
422	422	executive director makes a determination under Subsection (bb), the
423	423	executive director shall issue a letter to the applicant
424	424	organization stating the executive director's determination. If
425	425	the executive director determines that the organization is not
426	426	entitled to an exemption for the property under this section, the
427	427	letter must include the reasons for the determination and a
428	428	description of the procedure for appealing the determination. The
429	429	executive director shall send a copy of the letter by regular mail
430	430	to the chief appraiser of each appraisal district that appraises
431	431	the property. If the executive director determines that the
432	432	organization is entitled to an exemption for the property under
433	433	this section, the chief appraiser shall grant the exemption. If the
434	434	executive director determines that the organization is not entitled
435	435	to an exemption for the property under this section, the chief
436	436	appraiser shall deny the exemption.
437	437	(ee) The applicant organization or a taxing unit in which
438	438	the property to which the application applies is located may appeal
439	439	the executive director's determination under Subsection (dd) to the
440	440	governing board of the department in the manner provided by
441	441	department rule. The organization may be represented in an appeal
442	442	by an agent in accordance with Section 1.111. The organization or
443	443	taxing unit may appeal under Chapter 42 a final determination by the
444	444	governing board of the department in the same manner as provided by
445	445	law for the appeal of a determination by an appraisal review board.
446	446	(ff) The department shall employ sufficient personnel to
447	447	process any applications received by the department under
448	448	Subsection (e-1) and may charge an organization filing an
449	449	application a reasonable fee not to exceed the lesser of:
450	450	(1) $2,500; or
451	451	(2) the direct and indirect administrative costs of
452	452	processing the application and issuing a determination under
453	453	Subsection (bb).
454	454	(gg) The department shall adopt rules to implement its
455	455	duties under this section. The rules must:
456	456	(1) establish procedures for issuing preliminary
457	457	determination letters and considering applications for exemptions;
458	458	and
459	459	(2) be sufficiently specific to ensure that
460	460	determinations are equal and uniform.
461	461	SECTION 4. Section 11.1826, Tax Code, is amended by
462	462	amending Subsections (c) and (d) and adding Subsection (e-1) to
463	463	read as follows:
464	464	(c) Not later than the 180th day after the last day of the
465	465	organization's most recent fiscal year, the organization must
466	466	deliver a copy of the audit to the department or [and] the chief
467	467	appraiser of the appraisal district in which the property is
468	468	located, whichever determines whether the property qualifies in the
469	469	current tax year for the exemption for which the audit is conducted.
470	470	(d) Notwithstanding any other provision of this section, if
471	471	the property contains not more than 36 dwelling units, the
472	472	organization may deliver to the department or [and] the chief
473	473	appraiser, as applicable, a detailed report and certification as an
474	474	alternative to an audit.
475	475	(e-1) If an application for an exemption under Section
476	476	11.182 or 11.1825 has been filed with the department, the executive
477	477	director of the department shall monitor eligibility for the
478	478	exemption. If the executive director learns of any reason
479	479	indicating that an exemption previously allowed should be canceled,
480	480	the executive director shall investigate. If the executive
481	481	director determines that the property is not eligible for the
482	482	exemption, the executive director shall notify the chief appraiser
483	483	and the chief appraiser shall cancel the exemption and deliver
484	484	written notice of the cancellation within five days after the date
485	485	the chief appraiser makes the cancellation. If the executive
486	486	director discovers that an exemption has been erroneously allowed
487	487	by the department in any one of the five preceding years, the
488	488	executive director shall notify the chief appraiser and the chief
489	489	appraiser shall add the property or appraised value that was
490	490	erroneously exempted for each year to the appraisal roll as
491	491	provided by Section 25.21 for other property that escapes taxation.
492	492	If an exemption that was erroneously allowed did not apply to all
493	493	taxing units in which the property was located, the chief appraiser
494	494	shall note on the appraisal records, for each prior year, the taxing
495	495	units to which the exemption applied and that are entitled to impose
496	496	taxes on the property or appraised value that escaped taxation.
497	497	SECTION 5. Section 303.042, Local Government Code, is
498	498	amended by adding Subsections (f), (g), (h), (i), (j), and (k) to
499	499	read as follows:
500	500	(f) A corporation that owns multifamily rental property
501	501	used to provide housing for low-income individuals or families is
502	502	engaged exclusively in the performance of governmental functions,
503	503	and the corporation and the property are exempt from taxation by
504	504	this state or a municipality or other political subdivision of this
505	505	state.
506	506	(g) Notwithstanding Subsection (f), if the legal owner of
507	507	property described by that subsection is not a corporation, the
508	508	legal owner is entitled to an exemption from taxation of the
509	509	property under this section if the property otherwise qualifies for
510	510	the exemption and the legal owner is:
511	511	(1) an entity 100 percent of the interest in which is
512	512	owned by a corporation; or
513	513	(2) an entity controlled by a corporation.
514	514	(h) If the legal owner of property described by Subsection
515	515	(f) is an entity described by Subsection (g)(1) or (2):
516	516	(1) the legal owner must be organized under the laws of
517	517	this state and have its principal place of business in this state;
518	518	and
519	519	(2) the corporation that owns 100 percent of the
520	520	interest in or exclusively controls the legal owner as described by
521	521	Subsection (g) must have equitable title to the property.
522	522	(i) A person is considered to own property described by
523	523	Subsection (f) for purposes of this section and the provisions of
524	524	Section 2, Article VIII, Texas Constitution, authorizing the
525	525	legislature by general law to exempt from taxation public property
526	526	used for public purposes, if the person has legal or equitable title
527	527	to the property. By way of example, a person has equitable title to
528	528	property described by Subsection (f) if the person has a present
529	529	right to compel legal title to the property to be conveyed to the
530	530	person in accordance with law, such as by means of an option to
531	531	acquire the property. For purposes of eligibility of property
532	532	described by Subsection (f) for an exemption under this section,
533	533	property owned by a tax credit partnership or limited liability
534	534	company is considered to be owned by a corporation if the general
535	535	partner of the tax credit partnership or the manager of the limited
536	536	liability company is, or is controlled by, the corporation and the
537	537	corporation holds equitable title to the property pursuant to an
538	538	option to acquire the property on terms negotiated between the
539	539	parties.
540	540	(j) For purposes of Subsections (g), (h), and (i), "control"
541	541	means having the power to manage, direct, superintend, restrict,
542	542	regulate, govern, administer, or oversee. For purposes of those
543	543	subsections, "control" includes:
544	544	(1) with respect to a limited partnership, the
545	545	control, directly or through a wholly controlled subsidiary, of 100
546	546	percent of the general partner interest; and
547	547	(2) with respect to a limited liability company,
548	548	serving as the sole manager or managing member of the company.
549	549	(k) A corporation or other person claiming an exemption
550	550	under this section for property described by Subsection (f) may
551	551	file an application for the exemption with the chief appraiser of
552	552	the appraisal district in which the property is located or the Texas
553	553	Department of Housing and Community Affairs or its successor
554	554	agency. Sections 11.1825(z)-(gg), Tax Code, apply to an
555	555	application filed under this subsection with the Texas Department
556	556	of Housing and Community Affairs or its successor agency to the
557	557	extent those provisions can be made applicable.
558	558	SECTION 6. (a) Except as provided by Subsection (b) of this
559	559	section, this Act applies only to ad valorem taxes imposed for a tax
560	560	year beginning on or after the effective date of this Act.
561	561	(b) This Act applies to ad valorem taxes imposed on property
562	562	for a tax year beginning before the effective date of this Act if on
563	563	the effective date of this Act the property is the subject of a
564	564	protest under Chapter 41, Tax Code, or an appeal under Chapter 42 of
565	565	that code, the protest or appeal relates to the exemption of the
566	566	property under Section 11.182 or 11.1825, Tax Code, or under
567	567	Section 303.042, Local Government Code, the protest or appeal is
568	568	pending on the effective date, and before the protest or appeal is
569	569	finally determined the owner of the property notifies the appraisal
570	570	review board or court in which the protest or appeal is pending that
571	571	the owner elects to have this Act apply to the determination of the
572	572	protest or appeal.
573	573	(c) If a property owner elects to have this Act apply to the
574	574	determination of a protest or appeal regarding ad valorem taxes
575	575	imposed on the property for a tax year beginning before the
576	576	effective date of this Act as authorized by Subsection (b) of this
577	577	section and the owner has paid all or part of the taxes imposed on
578	578	the property for that tax year, the owner is not entitled to a
579	579	refund of the amount of taxes paid if the property is finally
580	580	determined to have been eligible for the exemption for that tax
581	581	year.
582	582	SECTION 7. This Act takes effect January 1, 2012.