Texas 2017 - 85th 1st C.S.

Texas House Bill HB5 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	85S11062 SMH-D
2	2	By: Bonnen of Brazoria H.B. No. 5
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a limitation on increases in the appraised value for ad
8	8	valorem tax purposes of commercial or industrial real property.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 1.12(d), Tax Code, is amended to read as
11	11	follows:
12	12	(d) For purposes of this section, the appraisal ratio of a
13	13	homestead to which Section 23.23 applies or of commercial or
14	14	industrial real property to which Section 23.231 applies is the
15	15	ratio of the property's market value as determined by the appraisal
16	16	district or appraisal review board, as applicable, to the market
17	17	value of the property according to law. The appraisal ratio is not
18	18	calculated according to the appraised value of the property as
19	19	limited by Section 23.23 or 23.231.
20	20	SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by
21	21	adding Section 23.231 to read as follows:
22	22	Sec. 23.231. LIMITATION ON APPRAISED VALUE OF COMMERCIAL OR
23	23	INDUSTRIAL REAL PROPERTY. (a) In this section, "new improvement"
24	24	means an improvement to commercial or industrial real property made
25	25	after the most recent appraisal of the property that increases the
26	26	market value of the property and the value of which is not included
27	27	in the appraised value of the property for the preceding tax
28	28	year. The term does not include repairs to or ordinary maintenance
29	29	of an existing structure or the grounds or another feature of the
30	30	property.
31	31	(b) This section does not apply to:
32	32	(1) residential property;
33	33	(2) a mineral interest; or
34	34	(3) property appraised under Subchapter C, D, E, F, G,
35	35	or H.
36	36	(c) Notwithstanding the requirements of Section 25.18 and
37	37	regardless of whether the appraisal office has appraised the
38	38	property and determined the market value of the property for the tax
39	39	year, an appraisal office may increase the appraised value of a
40	40	parcel of commercial or industrial real property for a tax year to
41	41	an amount not to exceed the lesser of:
42	42	(1) the market value of the property for the most
43	43	recent tax year that the market value was determined by the
44	44	appraisal office; or
45	45	(2) the sum of:
46	46	(A) 20 percent of the appraised value of the
47	47	property for the preceding tax year;
48	48	(B) the appraised value of the property for the
49	49	preceding tax year; and
50	50	(C) the market value of all new improvements to
51	51	the property.
52	52	(d) When appraising a parcel of commercial or industrial
53	53	real property, the chief appraiser shall:
54	54	(1) appraise the property at its market value; and
55	55	(2) include in the appraisal records both the market
56	56	value of the property and the amount computed under Subsection
57	57	(c)(2).
58	58	(e) The limitation provided by Subsection (c) takes effect
59	59	as to a parcel of commercial or industrial real property on January
60	60	1 of the tax year following the first tax year in which the owner
61	61	owns the property on January 1 and in which the property qualifies
62	62	as commercial or industrial real property under this section.
63	63	Except as provided by Subsection (f), the limitation expires on
64	64	January 1 of the tax year following the first tax year in which the
65	65	owner of the property ceases to own the property or the property
66	66	ceases to qualify as commercial or industrial real property.
67	67	(f) If property subject to a limitation under this section
68	68	is owned by two or more persons, the limitation expires on January 1
69	69	of the tax year following the first tax year in which the ownership
70	70	of at least a 50 percent interest in the property is sold or
71	71	otherwise transferred.
72	72	(g) Notwithstanding Subsections (a) and (c) and except as
73	73	provided by Subdivision (2) of this subsection, an improvement to
74	74	property that would otherwise constitute a new improvement is not
75	75	treated as a new improvement if the improvement is a replacement
76	76	structure for a structure that was rendered unusable by a casualty
77	77	or by wind or water damage. For purposes of appraising the property
78	78	under Subsection (c) in the tax year in which the structure would
79	79	have constituted a new improvement:
80	80	(1) the appraised value the property would have had in
81	81	the preceding tax year if the casualty or damage had not occurred is
82	82	considered to be the appraised value of the property for that year,
83	83	regardless of whether that appraised value exceeds the actual
84	84	appraised value of the property for that year as limited by
85	85	Subsection (c); and
86	86	(2) the replacement structure is considered to be a
87	87	new improvement only if:
88	88	(A) the square footage of the replacement
89	89	structure exceeds that of the replaced structure as that structure
90	90	existed before the casualty or damage occurred; or
91	91	(B) the exterior of the replacement structure is
92	92	of higher quality construction and composition than that of the
93	93	replaced structure.
94	94	(h) In this subsection, "disaster recovery program" means
95	95	the disaster recovery program administered by the General Land
96	96	Office that is funded with community development block grant
97	97	disaster recovery money authorized by the Consolidated Security,
98	98	Disaster Assistance, and Continuing Appropriations Act, 2009 (Pub.
99	99	L. No. 110-329), and the Consolidated and Further Continuing
100	100	Appropriations Act, 2012 (Pub. L. No. 112-55). Notwithstanding
101	101	Subsection (g)(2), and only to the extent necessary to satisfy the
102	102	requirements of the disaster recovery program, a replacement
103	103	structure described by that subdivision is not considered to be a
104	104	new improvement if to satisfy the requirements of the disaster
105	105	recovery program it was necessary that:
106	106	(1) the square footage of the replacement structure
107	107	exceed that of the replaced structure as that structure existed
108	108	before the casualty or damage occurred; or
109	109	(2) the exterior of the replacement structure be of
110	110	higher quality construction and composition than that of the
111	111	replaced structure.
112	112	SECTION 3. Sections 25.19(b) and (g), Tax Code, are amended
113	113	to read as follows:
114	114	(b) The chief appraiser shall separate real from personal
115	115	property and include in the notice for each:
116	116	(1) a list of the taxing units in which the property is
117	117	taxable;
118	118	(2) the appraised value of the property in the
119	119	preceding year;
120	120	(3) the taxable value of the property in the preceding
121	121	year for each taxing unit taxing the property;
122	122	(4) the appraised value of the property for the
123	123	current year, the kind and amount of each exemption and partial
124	124	exemption, if any, approved for the property for the current year
125	125	and for the preceding year, and, if an exemption or partial
126	126	exemption that was approved for the preceding year was canceled or
127	127	reduced for the current year, the amount of the exemption or partial
128	128	exemption canceled or reduced;
129	129	(4-a) a statement of whether the property qualifies
130	130	for the limitation on appraised value provided by Section 23.231;
131	131	(5) if the appraised value is greater than it was in
132	132	the preceding year, the amount of tax that would be imposed on the
133	133	property on the basis of the tax rate for the preceding year;
134	134	(6) in italic typeface, the following
135	135	statement: "The Texas Legislature does not set the amount of your
136	136	local taxes. Your property tax burden is decided by your locally
137	137	elected officials, and all inquiries concerning your taxes should
138	138	be directed to those officials";
139	139	(7) a detailed explanation of the time and procedure
140	140	for protesting the value;
141	141	(8) the date and place the appraisal review board will
142	142	begin hearing protests; and
143	143	(9) a brief explanation that the governing body of
144	144	each taxing unit decides whether or not taxes on the property will
145	145	increase and the appraisal district only determines the value of
146	146	the property.
147	147	(g) By April 1 or as soon thereafter as practicable if the
148	148	property is a single-family residence that qualifies for an
149	149	exemption under Section 11.13, or by May 1 or as soon thereafter as
150	150	practicable in connection with any other property, the chief
151	151	appraiser shall deliver a written notice to the owner of each
152	152	property not included in a notice required to be delivered under
153	153	Subsection (a), if the property was reappraised in the current tax
154	154	year, if the ownership of the property changed during the preceding
155	155	year, or if the property owner or the agent of a property owner
156	156	authorized under Section 1.111 makes a written request for the
157	157	notice. The chief appraiser shall separate real from personal
158	158	property and include in the notice for each property:
159	159	(1) the appraised value of the property in the
160	160	preceding year;
161	161	(2) the appraised value of the property for the
162	162	current year and the kind of each partial exemption, if any,
163	163	approved for the current year;
164	164	(2-a) a statement of whether the property qualifies
165	165	for the limitation on appraised value provided by Section 23.231;
166	166	(3) a detailed explanation of the time and procedure
167	167	for protesting the value; and
168	168	(4) the date and place the appraisal review board will
169	169	begin hearing protests.
170	170	SECTION 4. Section 41.41(a), Tax Code, is amended to read as
171	171	follows:
172	172	(a) A property owner is entitled to protest before the
173	173	appraisal review board the following actions:
174	174	(1) determination of the appraised value of the
175	175	owner's property or, in the case of land appraised as provided by
176	176	Subchapter C, D, E, or H, Chapter 23, determination of its appraised
177	177	or market value;
178	178	(2) unequal appraisal of the owner's property;
179	179	(3) inclusion of the owner's property on the appraisal
180	180	records;
181	181	(4) denial to the property owner in whole or in part of
182	182	a partial exemption;
183	183	(4-a) determination that the owner's property does not
184	184	qualify for the limitation on appraised value provided by Section
185	185	23.231;
186	186	(5) determination that the owner's land does not
187	187	qualify for appraisal as provided by Subchapter C, D, E, or H,
188	188	Chapter 23;
189	189	(6) identification of the taxing units in which the
190	190	owner's property is taxable in the case of the appraisal district's
191	191	appraisal roll;
192	192	(7) determination that the property owner is the owner
193	193	of property;
194	194	(8) a determination that a change in use of land
195	195	appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
196	196	or
197	197	(9) any other action of the chief appraiser, appraisal
198	198	district, or appraisal review board that applies to and adversely
199	199	affects the property owner.
200	200	SECTION 5. Section 42.26(d), Tax Code, is amended to read as
201	201	follows:
202	202	(d) For purposes of this section, the value of the property
203	203	subject to the suit and the value of a comparable property or sample
204	204	property that is used for comparison must be the market value
205	205	determined by the appraisal district when the property is [a
206	206	residence homestead] subject to the limitation on appraised value
207	207	imposed by Section 23.23 or 23.231.
208	208	SECTION 6. Sections 403.302(d) and (i), Government Code,
209	209	are amended to read as follows:
210	210	(d) For the purposes of this section, "taxable value" means
211	211	the market value of all taxable property less:
212	212	(1) the total dollar amount of any residence homestead
213	213	exemptions lawfully granted under Section 11.13(b) or (c), Tax
214	214	Code, in the year that is the subject of the study for each school
215	215	district;
216	216	(2) one-half of the total dollar amount of any
217	217	residence homestead exemptions granted under Section 11.13(n), Tax
218	218	Code, in the year that is the subject of the study for each school
219	219	district;
220	220	(3) the total dollar amount of any exemptions granted
221	221	before May 31, 1993, within a reinvestment zone under agreements
222	222	authorized by Chapter 312, Tax Code;
223	223	(4) subject to Subsection (e), the total dollar amount
224	224	of any captured appraised value of property that:
225	225	(A) is within a reinvestment zone created on or
226	226	before May 31, 1999, or is proposed to be included within the
227	227	boundaries of a reinvestment zone as the boundaries of the zone and
228	228	the proposed portion of tax increment paid into the tax increment
229	229	fund by a school district are described in a written notification
230	230	provided by the municipality or the board of directors of the zone
231	231	to the governing bodies of the other taxing units in the manner
232	232	provided by former Section 311.003(e), Tax Code, before May 31,
233	233	1999, and within the boundaries of the zone as those boundaries
234	234	existed on September 1, 1999, including subsequent improvements to
235	235	the property regardless of when made;
236	236	(B) generates taxes paid into a tax increment
237	237	fund created under Chapter 311, Tax Code, under a reinvestment zone
238	238	financing plan approved under Section 311.011(d), Tax Code, on or
239	239	before September 1, 1999; and
240	240	(C) is eligible for tax increment financing under
241	241	Chapter 311, Tax Code;
242	242	(5) the total dollar amount of any captured appraised
243	243	value of property that:
244	244	(A) is within a reinvestment zone:
245	245	(i) created on or before December 31, 2008,
246	246	by a municipality with a population of less than 18,000; and
247	247	(ii) the project plan for which includes
248	248	the alteration, remodeling, repair, or reconstruction of a
249	249	structure that is included on the National Register of Historic
250	250	Places and requires that a portion of the tax increment of the zone
251	251	be used for the improvement or construction of related facilities
252	252	or for affordable housing;
253	253	(B) generates school district taxes that are paid
254	254	into a tax increment fund created under Chapter 311, Tax Code; and
255	255	(C) is eligible for tax increment financing under
256	256	Chapter 311, Tax Code;
257	257	(6) the total dollar amount of any exemptions granted
258	258	under Section 11.251 or 11.253, Tax Code;
259	259	(7) the difference between the comptroller's estimate
260	260	of the market value and the productivity value of land that
261	261	qualifies for appraisal on the basis of its productive capacity,
262	262	except that the productivity value estimated by the comptroller may
263	263	not exceed the fair market value of the land;
264	264	(8) the portion of the appraised value of residence
265	265	homesteads of individuals who receive a tax limitation under
266	266	Section 11.26, Tax Code, on which school district taxes are not
267	267	imposed in the year that is the subject of the study, calculated as
268	268	if the residence homesteads were appraised at the full value
269	269	required by law;
270	270	(9) a portion of the market value of property not
271	271	otherwise fully taxable by the district at market value because of:
272	272	(A) action required by statute or the
273	273	constitution of this state, other than Section 11.311, Tax Code,
274	274	that, if the tax rate adopted by the district is applied to it,
275	275	produces an amount equal to the difference between the tax that the
276	276	district would have imposed on the property if the property were
277	277	fully taxable at market value and the tax that the district is
278	278	actually authorized to impose on the property, if this subsection
279	279	does not otherwise require that portion to be deducted; or
280	280	(B) action taken by the district under Subchapter
281	281	B or C, Chapter 313, Tax Code, before the expiration of the
282	282	subchapter;
283	283	(10) the market value of all tangible personal
284	284	property, other than manufactured homes, owned by a family or
285	285	individual and not held or used for the production of income;
286	286	(11) the appraised value of property the collection of
287	287	delinquent taxes on which is deferred under Section 33.06, Tax
288	288	Code;
289	289	(12) the portion of the appraised value of property
290	290	the collection of delinquent taxes on which is deferred under
291	291	Section 33.065, Tax Code; and
292	292	(13) the amount by which the market value of property
293	293	[a residence homestead] to which Section 23.23 or 23.231, Tax Code,
294	294	applies exceeds the appraised value of that property as calculated
295	295	under Section 23.23 or 23.231, Tax Code, as applicable [that
296	296	section].
297	297	(i) If the comptroller determines in the study that the
298	298	market value of property in a school district as determined by the
299	299	appraisal district that appraises property for the school district,
300	300	less the total of the amounts and values listed in Subsection (d) as
301	301	determined by that appraisal district, is valid, the comptroller,
302	302	in determining the taxable value of property in the school district
303	303	under Subsection (d), shall for purposes of Subsection (d)(13)
304	304	subtract from the market value as determined by the appraisal
305	305	district of properties [residence homesteads] to which Section
306	306	23.23 or 23.231, Tax Code, applies the amount by which that amount
307	307	exceeds the appraised value of those properties as calculated by
308	308	the appraisal district under Section 23.23 or 23.231, Tax Code, as
309	309	applicable. If the comptroller determines in the study that the
310	310	market value of property in a school district as determined by the
311	311	appraisal district that appraises property for the school district,
312	312	less the total of the amounts and values listed in Subsection (d) as
313	313	determined by that appraisal district, is not valid, the
314	314	comptroller, in determining the taxable value of property in the
315	315	school district under Subsection (d), shall for purposes of
316	316	Subsection (d)(13) subtract from the market value as estimated by
317	317	the comptroller of properties [residence homesteads] to which
318	318	Section 23.23 or 23.231, Tax Code, applies the amount by which that
319	319	amount exceeds the appraised value of those properties as
320	320	calculated by the appraisal district under Section 23.23 or 23.231,
321	321	Tax Code, as applicable.
322	322	SECTION 7. This Act applies only to the appraisal of
323	323	commercial or industrial real property for ad valorem tax purposes
324	324	for a tax year that begins on or after the effective date of this
325	325	Act.
326	326	SECTION 8. This Act takes effect January 1, 2018, but only
327	327	if the constitutional amendment proposed by the 85th Legislature,
328	328	1st Called Session, 2017, to authorize the legislature to limit
329	329	increases in the appraised value of commercial or industrial real
330	330	property for ad valorem tax purposes to 20 percent or more of the
331	331	appraised value of the property for the preceding tax year is
332	332	approved by the voters. If that amendment is not approved by the
333	333	voters, this Act has no effect.