LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION April 30, 2013 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB835 by Eiland (relating to the application of the limit on appraised value of a residence homestead for ad valorem tax purposes to an improvement that is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage.), Committee Report 1st House, Substituted Passage of the bill would require that certain replacement structures with increased square footage or higher construction quality not be considered new improvements. This would create a cost to the state through the operation of the school funding formula because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not. The bill would amend Section 23.23, Tax Code, to provide that a replacement structure is not a new improvement if, to satisfy requirements of a specified disaster recovery program, it was necessary that the square footage of the original structure be increased or the exterior of the replacement structure be of higher quality construction than that of the replaced structure. Current law considers that all structures with increased square footage or higher quality construction that replace structures that were rendered uninhabitable or unusable by casualty, wind, or water damages are new improvements and consequently not subject to the 10 percent limitation on homestead appraised value increases normally afforded by law. The bill would define "disaster recovery program" as the disaster recovery program administered by the General Land Office that is funded with community development block grant disaster recovery money authorized by certain specified statutes. The bill's provision that certain replacement structures with increased square footage or higher construction quality not be considered new improvements would create a cost to units of local government and to the state through the operation of the school funding formula because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not. No information is available regarding future natural disasters that would render homesteads uninhabitable or regarding situations in which the specified disaster recovery program would require that a replacement structure exceed the original square footage or construction quality. Consequently the fiscal impact cannot be estimated. The bill would be effective on January 1, 2014. Local Government Impact The bill's provision that certain replacement structures with increased square footage or higher construction quality not be considered new improvements would create a cost to units of local government because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK, SD, SJS
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
April 30, 2013
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB835 by Eiland (relating to the application of the limit on appraised value of a residence homestead for ad valorem tax purposes to an improvement that is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage.), Committee Report 1st House, Substituted
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB835 by Eiland (relating to the application of the limit on appraised value of a residence homestead for ad valorem tax purposes to an improvement that is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage.), Committee Report 1st House, Substituted
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB835 by Eiland (relating to the application of the limit on appraised value of a residence homestead for ad valorem tax purposes to an improvement that is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage.), Committee Report 1st House, Substituted
HB835 by Eiland (relating to the application of the limit on appraised value of a residence homestead for ad valorem tax purposes to an improvement that is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage.), Committee Report 1st House, Substituted
Passage of the bill would require that certain replacement structures with increased square footage or higher construction quality not be considered new improvements. This would create a cost to the state through the operation of the school funding formula because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not.
Passage of the bill would require that certain replacement structures with increased square footage or higher construction quality not be considered new improvements. This would create a cost to the state through the operation of the school funding formula because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not.
Passage of the bill would require that certain replacement structures with increased square footage or higher construction quality not be considered new improvements. This would create a cost to the state through the operation of the school funding formula because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not.
The bill would amend Section 23.23, Tax Code, to provide that a replacement structure is not a new improvement if, to satisfy requirements of a specified disaster recovery program, it was necessary that the square footage of the original structure be increased or the exterior of the replacement structure be of higher quality construction than that of the replaced structure. Current law considers that all structures with increased square footage or higher quality construction that replace structures that were rendered uninhabitable or unusable by casualty, wind, or water damages are new improvements and consequently not subject to the 10 percent limitation on homestead appraised value increases normally afforded by law. The bill would define "disaster recovery program" as the disaster recovery program administered by the General Land Office that is funded with community development block grant disaster recovery money authorized by certain specified statutes. The bill's provision that certain replacement structures with increased square footage or higher construction quality not be considered new improvements would create a cost to units of local government and to the state through the operation of the school funding formula because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not. No information is available regarding future natural disasters that would render homesteads uninhabitable or regarding situations in which the specified disaster recovery program would require that a replacement structure exceed the original square footage or construction quality. Consequently the fiscal impact cannot be estimated. The bill would be effective on January 1, 2014.
Local Government Impact
The bill's provision that certain replacement structures with increased square footage or higher construction quality not be considered new improvements would create a cost to units of local government because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not.
The bill's provision that certain replacement structures with increased square footage or higher construction quality not be considered new improvements would create a cost to units of local government because such structures would be subject to the 10 percent limitation on homestead appraised value increases while under current law they are not.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD, SJS
UP, KK, SD, SJS