Texas 2017 - 85th Regular

Texas Senate Bill SB629 Compare Versions

Version 1 (Old)

Version 2 (New)

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1	1		By: Schwertner, et al. S.B. No. 629
2		-	(In the Senate - Filed January 26, 2017; February 13, 2017,
3		-	read first time and referred to Committee on Finance;
4		-	March 16, 2017, reported favorably by the following vote: Yeas 14,
5		-	Nays 0, 1 present not voting; March 16, 2017, sent to printer.)
6		-	Click here to see the committee vote
7	2
8	3
9	4		A BILL TO BE ENTITLED
10	5		AN ACT
11	6		relating to liability for interest if land appraised for ad valorem
12	7		tax purposes as agricultural or open-space land is sold or diverted
13	8		to a different use.
14	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
15	10		SECTION 1. Sections 23.46(c) and (d), Tax Code, are amended
16	11		to read as follows:
17	12		(c) If land that has been designated for agricultural use in
18	13		any year is sold or diverted to a nonagricultural use, the total
19	14		amount of additional taxes for the three years preceding the year in
20	15		which the land is sold or diverted [plus interest at the rate
21	16		provided for delinquent taxes] becomes due. Subject to Subsection
22	17		(f), a determination that the land has been diverted to a
23	18		nonagricultural use is made by the chief appraiser. For purposes of
24	19		this subsection, the chief appraiser may not consider any period
25	20		during which land is owned by the state in determining whether the
26	21		land has been diverted to a nonagricultural use. The chief
27	22		appraiser shall deliver a notice of the determination to the owner
28	23		of the land as soon as possible after making the determination and
29	24		shall include in the notice an explanation of the owner's right to
30	25		protest the determination. If the owner does not file a timely
31	26		protest or if the final determination of the protest is that the
32	27		additional taxes are due, the assessor for each taxing unit shall
33	28		prepare and deliver a bill for the additional taxes [plus interest]
34	29		as soon as practicable after the change of use occurs. If the
35	30		additional taxes are due because of a sale of the land, the assessor
36	31		for each taxing unit shall prepare and deliver the bill as soon as
37	32		practicable after the sale occurs. The taxes [and interest] are due
38	33		and become delinquent and incur penalties and interest as provided
39	34		by law for other delinquent ad valorem taxes imposed by the taxing
40	35		unit if not paid before the next February 1 that is at least 20 days
41	36		after the date the bill is delivered to the owner of the land.
42	37		(d) A tax lien attaches to the land on the date the sale or
43	38		change of use occurs to secure payment of the additional tax [and
44	39		interest] imposed by Subsection (c) [of this section] and any
45	40		penalties and interest incurred if the tax becomes delinquent. The
46	41		lien exists in favor of all taxing units for which the additional
47	42		tax is imposed.
48	43		SECTION 2. Sections 23.47(c) and (d), Tax Code, are amended
49	44		to read as follows:
50	45		(c) A provision in an instrument pertaining to a loan
51	46		secured by a lien in favor of the lender on land appraised according
52	47		to this subchapter that requires the borrower to make a payment to
53	48		protect the lender from loss because of the imposition of
54	49		additional taxes [and interest] under Section 23.46 is void unless
55	50		the provision:
56	51		(1) requires the borrower to pay into an escrow
57	52		account established by the lender an amount equal to the additional
58	53		taxes [and interest] that would be due under Section 23.46 if a sale
59	54		or change of use occurred on January 1 of the year in which the loan
60	55		is granted or amended;
61	56		(2) requires the escrow account to bear interest to be
62	57		credited to the account monthly;
63	58		(3) permits the lender to apply money in the escrow
64	59		account to the payment of a bill for additional taxes [and interest]
65	60		under Section 23.46 before the loan is paid and requires the lender
66	61		to refund the balance remaining in the escrow account after the bill
67	62		is paid to the borrower; and
68	63		(4) requires the lender to refund the money in the
69	64		escrow account to the borrower on the payment of the loan.
70	65		(d) On the request of the borrower or the borrower's
71	66		representative, the assessor for each taxing unit shall compute the
72	67		additional taxes [and interest] that would be due that taxing unit
73	68		under Section 23.46 if a sale or change of use occurred on January 1
74	69		of the year in which the loan is granted or amended. The assessor
75	70		may charge a reasonable fee not to exceed the actual cost of making
76	71		the computation.
77	72		SECTION 3. Sections 23.55(a), (b), (e), (f), (m), and (n),
78	73		Tax Code, are amended to read as follows:
79	74		(a) If the use of land that has been appraised as provided by
80	75		this subchapter changes, an additional tax is imposed on the land
81	76		equal to the difference between the taxes imposed on the land for
82	77		each of the five years preceding the year in which the change of use
83	78		occurs that the land was appraised as provided by this subchapter
84	79		and the tax that would have been imposed had the land been taxed on
85	80		the basis of market value in each of those years[, plus interest at
86	81		an annual rate of seven percent calculated from the dates on which
87	82		the differences would have become due]. For purposes of this
88	83		subsection, the chief appraiser may not consider any period during
89	84		which land is owned by the state in determining whether a change in
90	85		the use of the land has occurred.
91	86		(b) A tax lien attaches to the land on the date the change of
92	87		use occurs to secure payment of the additional tax [and interest]
93	88		imposed by this section and any penalties and interest incurred if
94	89		the tax becomes delinquent. The lien exists in favor of all taxing
95	90		units for which the additional tax is imposed.
96	91		(e) Subject to Section 23.551, a determination that a change
97	92		in use of the land has occurred is made by the chief appraiser. The
98	93		chief appraiser shall deliver a notice of the determination to the
99	94		owner of the land as soon as possible after making the determination
100	95		and shall include in the notice an explanation of the owner's right
101	96		to protest the determination. If the owner does not file a timely
102	97		protest or if the final determination of the protest is that the
103	98		additional taxes are due, the assessor for each taxing unit shall
104	99		prepare and deliver a bill for the additional taxes [plus interest]
105	100		as soon as practicable. The taxes [and interest] are due and become
106	101		delinquent and incur penalties and interest as provided by law for
107	102		ad valorem taxes imposed by the taxing unit if not paid before the
108	103		next February 1 that is at least 20 days after the date the bill is
109	104		delivered to the owner of the land.
110	105		(f) The sanctions provided by Subsection (a) [of this
111	106		section] do not apply if the change of use occurs as a result of:
112	107		(1) a sale for right-of-way;
113	108		(2) a condemnation;
114	109		(3) a transfer of the property to the state or a
115	110		political subdivision of the state to be used for a public purpose;
116	111		or
117	112		(4) a transfer of the property from the state, a
118	113		political subdivision of the state, or a nonprofit corporation
119	114		created by a municipality with a population of more than one million
120	115		under the Development Corporation Act (Subtitle C1, Title 12, Local
121	116		Government Code) to an individual or a business entity for purposes
122	117		of economic development if the comptroller determines that the
123	118		economic development is likely to generate for deposit in the
124	119		general revenue fund during the next two fiscal bienniums an amount
125	120		of taxes and other revenues that equals or exceeds 20 times the
126	121		amount of additional taxes [and interest] that would have been
127	122		imposed under Subsection (a) had the sanctions provided by that
128	123		subsection applied to the transfer.
129	124		(m) For purposes of determining whether a transfer of land
130	125		qualifies for the exemption from additional taxes provided by
131	126		Subsection (f)(4), on an application of the entity transferring or
132	127		proposing to transfer the land or of the individual or entity to
133	128		which the land is transferred or proposed to be transferred, the
134	129		comptroller shall determine the amount of taxes and other revenues
135	130		likely to be generated as a result of the economic development for
136	131		deposit in the general revenue fund during the next two fiscal
137	132		bienniums. If the comptroller determines that the amount of those
138	133		revenues is likely to equal or exceed 20 times the amount of
139	134		additional taxes [and interest] that would be imposed under
140	135		Subsection (a) if the sanctions provided by that subsection applied
141	136		to the transfer, the comptroller shall issue a letter to the
142	137		applicant stating the comptroller's determination and shall send a
143	138		copy of the letter by regular mail to the chief appraiser.
144	139		(n) Within one year of the conclusion of the two fiscal
145	140		bienniums for which the comptroller issued a letter as provided
146	141		under Subsection (m), the board of directors of the appraisal
147	142		district, by official board action, may direct the chief appraiser
148	143		to request the comptroller to determine if the amount of revenues
149	144		was equal to or exceeded 20 times the amount of taxes [and interest]
150	145		that would have been imposed under Subsection (a). The comptroller
151	146		shall issue a finding as to whether the amount of revenue met the
152	147		projected increases. The chief appraiser shall review the results
153	148		of the comptroller's finding and shall make a determination as to
154	149		whether sanctions under Subsection (a) should be imposed. If the
155	150		chief appraiser determines that the sanctions provided by
156	151		Subsection (a) shall be imposed, the sanctions shall be based on the
157	152		date of the transfer of the property under Subsection (f)(4).
158	153		SECTION 4. Sections 23.58(c) and (d), Tax Code, are amended
159	154		to read as follows:
160	155		(c) A provision in an instrument pertaining to a loan
161	156		secured by a lien in favor of the lender on land appraised according
162	157		to this subchapter that requires the borrower to make a payment to
163	158		protect the lender from loss because of the imposition of
164	159		additional taxes [and interest] under Section 23.55 is void unless
165	160		the provision:
166	161		(1) requires the borrower to pay into an escrow
167	162		account established by the lender an amount equal to the additional
168	163		taxes [and interest] that would be due under Section 23.55 if a
169	164		change of use occurred on January 1 of the year in which the loan is
170	165		granted or amended;
171	166		(2) requires the escrow account to bear interest to be
172	167		credited to the account monthly;
173	168		(3) permits the lender to apply money in the escrow
174	169		account to the payment of a bill for additional taxes [and interest]
175	170		under Section 23.55 before the loan is paid and requires the lender
176	171		to refund the balance remaining in the escrow account after the bill
177	172		is paid to the borrower; and
178	173		(4) requires the lender to refund the money in the
179	174		escrow account to the borrower on the payment of the loan.
180	175		(d) On the request of the borrower or the borrower's
181	176		representative, the assessor for each taxing unit shall compute the
182	177		additional taxes [and interest] that would be due that taxing unit
183	178		under Section 23.55 if a change of use occurred on January 1 of the
184	179		year in which the loan is granted or amended. The assessor may
185	180		charge a reasonable fee not to exceed the actual cost of making the
186	181		computation.
187	182		SECTION 5. Sections 23.46(c) and (d), Tax Code, as amended
188	183		by this Act, apply only to a sale or diversion to a nonagricultural
189	184		use of land appraised under Subchapter C, Chapter 23, Tax Code, that
190	185		occurs on or after the effective date of this Act.
191	186		SECTION 6. Sections 23.47(c) and (d), Tax Code, as amended
192	187		by this Act, apply only to a loan secured by a lien on land
193	188		designated for agricultural use that is contracted for on or after
194	189		the effective date of this Act.
195	190		SECTION 7. Sections 23.55(a), (b), (e), (f), (m), and (n),
196	191		Tax Code, as amended by this Act, apply only to a change of use of
197	192		land appraised under Subchapter D, Chapter 23, Tax Code, that
198	193		occurs on or after the effective date of this Act.
199	194		SECTION 8. Sections 23.58(c) and (d), Tax Code, as amended
200	195		by this Act, apply only to a loan secured by a lien on open-space
201	196		land that is contracted for on or after the effective date of this
202	197		Act.
203	198		SECTION 9. This Act takes effect September 1, 2017.
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