85R14860 TYPED
By: Johnson of Dallas H.B. No. 3752
A BILL TO BE ENTITLED
AN ACT
relating to the appraisal for ad valorem tax purposes of certain
nonexempt property used for low-income or moderate-income housing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.07(d), Tax Code, is amended to read as
follows:
(d) A notice required by Section 11.43(q), 11.45(d),
23.215(g), 23.44(d), 23.46(c) or (f), 23.54(e), 23.541(c),
23.55(e), 23.551(a), 23.57(d), 23.76(e), 23.79(d), or 23.85(d)
must be sent by certified mail.
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) for the purpose of renting the property [that on
the effective date of this section was rented] to a low-income or
moderate-income individual or family satisfying the organization's
income eligibility requirements [and that continues to be used for
that purpose];
(2) that was financed under the low income housing tax
credit program under Subchapter DD, Chapter 2306, Government Code,
and is subject to a land use restriction agreement under that
subchapter that has not expired or been terminated;
(3) that does not receive an exemption under Section
11.182 or 11.1825; and
(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 property that is under active
construction or lease up on January 1 of the tax year in which the
property is appraised, the [The] chief appraiser shall determine
the appraised value of [appraise] the property in the manner
provided by Section 11.1825(q), provided that the chief appraiser
shall estimate the property's gross income potential and operating
expenses based on the property's projected income and expenses for
the first full year of operation as contained in the underwriting
report pertaining to the property prepared by the Texas Department
of Housing and Community Affairs under Subchapter DD, Chapter 2306,
Government Code, as adjusted to reflect the percentage of
construction of the property that is complete as of January 1
calculated as the total construction cost expended as of January 1
divided by the construction budget for a property under active
construction and, for properties undergoing lease up, as adjusted
to reflect the actual occupancy.
(c) In appraising property for the first tax year following
the completion of active construction and stabilization of the
property, the chief appraiser shall determine the appraised value
of the property in the manner provided by Section 11.1825(q).
(d)
(d) In appraising property for any subsequent tax year after
the first year following completion of active construction and
stabilization of the property, the chief appraiser shall determine
the appraised value of the property by adjusting the appraised
value of the property for the preceding tax year by the percentage
change in the net income of the property in the preceding year as
compared to the year preceding that year.
(d-1) Notwithstanding Subsection (d), for the 2018 tax
year, in appraising property that was not under active construction
in 2017, the chief appraiser shall determine the appraised value of
the property by adjusting the average appraised value of the
property for the preceding three-year period by the percentage
change in the net income of the property in the 2017 tax year as
compared to the 2016 tax year. This subsection expires January 1,
2019.
(e) If property appraised under this section is sold and is
no longer subject to a land use restriction agreement described by
Subsection (a)(2) after the sale, the property is no longer
eligible for appraisal under this section and an additional tax is
imposed on the property. The additional tax due is an amount equal
to the difference between the taxes imposed on the property for each
of the three years preceding the year in which the property is sold
that the property was appraised as provided by this section and the
taxes that would have been imposed had the property been appraised
at the sale price in each of those years, indexed using each year's
net income percentage change derived from subsection (d). A tax
lien attaches to the property on the date the property is sold to
secure payment of the additional tax imposed by this subsection.
The lien exists in favor of all taxing units for which the
additional tax is imposed. The additional tax imposed by this
subsection does not apply to a year for which the tax has already
been paid off of the sale price.
(f) A determination that property is no longer eligible for
appraisal under this section is made by the chief appraiser. The
chief appraiser shall deliver a notice of the determination to the
owner of the property as soon as possible after making the
determination and shall include in the notice an explanation of the
owner's right to protest the determination. If the owner does not
file a timely protest or if the final determination of the protest
is that the additional taxes are due, the assessor for each taxing
unit shall prepare and deliver a bill for the additional taxes as
soon as practicable. The taxes are due and become delinquent and
incur penalties and interest as provided by law for ad valorem taxes
imposed by the taxing unit if not paid before the next February 1
that is at least 20 days after the date the bill is delivered to the
owner of the property.
(g) Notwithstanding any other law, a property owner may not
bring a protest under Section 41.43(b)(3) for any tax year in which
the appraised value of the owner's property is determined by
adjusting the property's appraised value by the percentage change
in the net income of the property as provided by this section.
(g-1) Notwithstanding any other law, a property appraised
under this section may not be utilized as a comparable property for
any property that is not appraised under this section.
(h) For purposes of this section, the chief appraiser shall
determine the percentage change in the net income of property using
generally accepted appraisal standards for expenses, based on
information contained in:
(1) an audit of the organization that owns the
property prepared by an independent auditor covering the relevant
fiscal period; or
(2) the most recent annual owner's compliance report
filed by the organization that owns the property with the Texas
Department of Housing and Community Affairs.
(i) Not later than May 1 of each year, an owner shall deliver
to the chief appraiser the audit or annual owner's compliance
report for the preceding year. The chief appraiser may extend the
deadline for good cause shown.
SECTION 3. The change in law made by this Act applies only
to an ad valorem tax year that begins on or after January 1, 2018.
SECTION 4. This Act takes effect January 1, 2018.