| 1 | 1 | | 86R3369 LHC-D |
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| 2 | 2 | | By: Murphy H.B. No. 614 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the additional tax imposed on land appraised for ad |
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| 8 | 8 | | valorem tax purposes as agricultural, open-space, or timber land if |
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| 9 | 9 | | the land is sold or diverted to a different use. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Sections 23.46(c) and (d), Tax Code, are amended |
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| 12 | 12 | | to read as follows: |
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| 13 | 13 | | (c) If land that has been designated for agricultural use in |
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| 14 | 14 | | any year is sold or diverted to a nonagricultural use, the total |
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| 15 | 15 | | amount of additional taxes for the three years preceding the year in |
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| 16 | 16 | | which the land is sold or diverted [plus interest at the rate |
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| 17 | 17 | | provided for delinquent taxes] becomes due. Subject to Subsection |
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| 18 | 18 | | (f), a determination that the land has been diverted to a |
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| 19 | 19 | | nonagricultural use is made by the chief appraiser. For purposes of |
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| 20 | 20 | | this subsection, the chief appraiser may not consider any period |
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| 21 | 21 | | during which land is owned by the state in determining whether the |
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| 22 | 22 | | land has been diverted to a nonagricultural use. The chief |
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| 23 | 23 | | appraiser shall deliver a notice of the determination to the owner |
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| 24 | 24 | | of the land as soon as possible after making the determination and |
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| 25 | 25 | | shall include in the notice an explanation of the owner's right to |
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| 26 | 26 | | protest the determination. If the owner does not file a timely |
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| 27 | 27 | | protest or if the final determination of the protest is that the |
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| 28 | 28 | | additional taxes are due, the assessor for each taxing unit shall |
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| 29 | 29 | | prepare and deliver a bill for the additional taxes [plus interest] |
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| 30 | 30 | | as soon as practicable after the change of use occurs. If the |
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| 31 | 31 | | additional taxes are due because of a sale of the land, the assessor |
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| 32 | 32 | | for each taxing unit shall prepare and deliver the bill as soon as |
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| 33 | 33 | | practicable after the sale occurs. The taxes [and interest] are due |
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| 34 | 34 | | and become delinquent and incur penalties and interest as provided |
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| 35 | 35 | | by law for other delinquent ad valorem taxes imposed by the taxing |
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| 36 | 36 | | unit if not paid before the next February 1 that is at least 20 days |
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| 37 | 37 | | after the date the bill is delivered to the owner of the land. |
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| 38 | 38 | | (d) A tax lien attaches to the land on the date the sale or |
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| 39 | 39 | | change of use occurs to secure payment of the additional tax [and |
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| 40 | 40 | | interest] imposed by Subsection (c) [of this section] and any |
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| 41 | 41 | | penalties and interest incurred if the tax becomes delinquent. The |
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| 42 | 42 | | lien exists in favor of all taxing units for which the additional |
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| 43 | 43 | | tax is imposed. |
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| 44 | 44 | | SECTION 2. Sections 23.47(c) and (d), Tax Code, are amended |
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| 45 | 45 | | to read as follows: |
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| 46 | 46 | | (c) A provision in an instrument pertaining to a loan |
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| 47 | 47 | | secured by a lien in favor of the lender on land appraised according |
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| 48 | 48 | | to this subchapter that requires the borrower to make a payment to |
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| 49 | 49 | | protect the lender from loss because of the imposition of |
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| 50 | 50 | | additional taxes [and interest] under Section 23.46 is void unless |
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| 51 | 51 | | the provision: |
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| 52 | 52 | | (1) requires the borrower to pay into an escrow |
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| 53 | 53 | | account established by the lender an amount equal to the additional |
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| 54 | 54 | | taxes [and interest] that would be due under Section 23.46 if a sale |
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| 55 | 55 | | or change of use occurred on January 1 of the year in which the loan |
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| 56 | 56 | | is granted or amended; |
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| 57 | 57 | | (2) requires the escrow account to bear interest to be |
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| 58 | 58 | | credited to the account monthly; |
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| 59 | 59 | | (3) permits the lender to apply money in the escrow |
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| 60 | 60 | | account to the payment of a bill for additional taxes [and interest] |
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| 61 | 61 | | under Section 23.46 before the loan is paid and requires the lender |
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| 62 | 62 | | to refund the balance remaining in the escrow account after the bill |
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| 63 | 63 | | is paid to the borrower; and |
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| 64 | 64 | | (4) requires the lender to refund the money in the |
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| 65 | 65 | | escrow account to the borrower on the payment of the loan. |
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| 66 | 66 | | (d) On the request of the borrower or the borrower's |
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| 67 | 67 | | representative, the assessor for each taxing unit shall compute the |
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| 68 | 68 | | additional taxes [and interest] that would be due that taxing unit |
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| 69 | 69 | | under Section 23.46 if a sale or change of use occurred on January 1 |
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| 70 | 70 | | of the year in which the loan is granted or amended. The assessor |
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| 71 | 71 | | may charge a reasonable fee not to exceed the actual cost of making |
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| 72 | 72 | | the computation. |
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| 73 | 73 | | SECTION 3. Sections 23.55(a), (b), (e), (f), (m), and (n), |
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| 74 | 74 | | Tax Code, are amended to read as follows: |
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| 75 | 75 | | (a) If the use of land that has been appraised as provided by |
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| 76 | 76 | | this subchapter changes, an additional tax is imposed on the land |
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| 77 | 77 | | equal to the difference between the taxes imposed on the land for |
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| 78 | 78 | | each of the three [five] years preceding the year in which the |
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| 79 | 79 | | change of use occurs that the land was appraised as provided by this |
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| 80 | 80 | | subchapter and the tax that would have been imposed had the land |
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| 81 | 81 | | been taxed on the basis of market value in each of those years[, |
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| 82 | 82 | | plus interest at an annual rate of seven percent calculated from the |
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| 83 | 83 | | dates on which the differences would have become due]. For purposes |
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| 84 | 84 | | of this subsection, the chief appraiser may not consider any period |
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| 85 | 85 | | during which land is owned by the state in determining whether a |
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| 86 | 86 | | change in the use of the land has occurred. |
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| 87 | 87 | | (b) A tax lien attaches to the land on the date the change of |
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| 88 | 88 | | use occurs to secure payment of the additional tax [and interest] |
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| 89 | 89 | | imposed by this section and any penalties and interest incurred if |
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| 90 | 90 | | the tax becomes delinquent. The lien exists in favor of all taxing |
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| 91 | 91 | | units for which the additional tax is imposed. |
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| 92 | 92 | | (e) Subject to Section 23.551, a determination that a change |
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| 93 | 93 | | in use of the land has occurred is made by the chief appraiser. The |
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| 94 | 94 | | chief appraiser shall deliver a notice of the determination to the |
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| 95 | 95 | | owner of the land as soon as possible after making the determination |
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| 96 | 96 | | and shall include in the notice an explanation of the owner's right |
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| 97 | 97 | | to protest the determination. If the owner does not file a timely |
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| 98 | 98 | | protest or if the final determination of the protest is that the |
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| 99 | 99 | | additional taxes are due, the assessor for each taxing unit shall |
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| 100 | 100 | | prepare and deliver a bill for the additional taxes [plus interest] |
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| 101 | 101 | | as soon as practicable. The taxes [and interest] are due and become |
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| 102 | 102 | | delinquent and incur penalties and interest as provided by law for |
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| 103 | 103 | | ad valorem taxes imposed by the taxing unit if not paid before the |
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| 104 | 104 | | next February 1 that is at least 20 days after the date the bill is |
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| 105 | 105 | | delivered to the owner of the land. |
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| 106 | 106 | | (f) The sanctions provided by Subsection (a) [of this |
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| 107 | 107 | | section] do not apply if the change of use occurs as a result of: |
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| 108 | 108 | | (1) a sale for right-of-way; |
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| 109 | 109 | | (2) a condemnation; |
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| 110 | 110 | | (3) a transfer of the property to the state or a |
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| 111 | 111 | | political subdivision of the state to be used for a public purpose; |
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| 112 | 112 | | or |
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| 113 | 113 | | (4) a transfer of the property from the state, a |
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| 114 | 114 | | political subdivision of the state, or a nonprofit corporation |
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| 115 | 115 | | created by a municipality with a population of more than one million |
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| 116 | 116 | | under the Development Corporation Act (Subtitle C1, Title 12, Local |
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| 117 | 117 | | Government Code) to an individual or a business entity for purposes |
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| 118 | 118 | | of economic development if the comptroller determines that the |
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| 119 | 119 | | economic development is likely to generate for deposit in the |
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| 120 | 120 | | general revenue fund during the next two fiscal bienniums an amount |
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| 121 | 121 | | of taxes and other revenues that equals or exceeds 20 times the |
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| 122 | 122 | | amount of additional taxes [and interest] that would have been |
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| 123 | 123 | | imposed under Subsection (a) had the sanctions provided by that |
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| 124 | 124 | | subsection applied to the transfer. |
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| 125 | 125 | | (m) For purposes of determining whether a transfer of land |
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| 126 | 126 | | qualifies for the exemption from additional taxes provided by |
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| 127 | 127 | | Subsection (f)(4), on an application of the entity transferring or |
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| 128 | 128 | | proposing to transfer the land or of the individual or entity to |
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| 129 | 129 | | which the land is transferred or proposed to be transferred, the |
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| 130 | 130 | | comptroller shall determine the amount of taxes and other revenues |
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| 131 | 131 | | likely to be generated as a result of the economic development for |
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| 132 | 132 | | deposit in the general revenue fund during the next two fiscal |
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| 133 | 133 | | bienniums. If the comptroller determines that the amount of those |
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| 134 | 134 | | revenues is likely to equal or exceed 20 times the amount of |
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| 135 | 135 | | additional taxes [and interest] that would be imposed under |
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| 136 | 136 | | Subsection (a) if the sanctions provided by that subsection applied |
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| 137 | 137 | | to the transfer, the comptroller shall issue a letter to the |
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| 138 | 138 | | applicant stating the comptroller's determination and shall send a |
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| 139 | 139 | | copy of the letter by regular mail to the chief appraiser. |
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| 140 | 140 | | (n) Within one year of the conclusion of the two fiscal |
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| 141 | 141 | | bienniums for which the comptroller issued a letter as provided |
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| 142 | 142 | | under Subsection (m), the board of directors of the appraisal |
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| 143 | 143 | | district, by official board action, may direct the chief appraiser |
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| 144 | 144 | | to request the comptroller to determine if the amount of revenues |
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| 145 | 145 | | was equal to or exceeded 20 times the amount of taxes [and interest] |
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| 146 | 146 | | that would have been imposed under Subsection (a). The comptroller |
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| 147 | 147 | | shall issue a finding as to whether the amount of revenue met the |
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| 148 | 148 | | projected increases. The chief appraiser shall review the results |
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| 149 | 149 | | of the comptroller's finding and shall make a determination as to |
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| 150 | 150 | | whether sanctions under Subsection (a) should be imposed. If the |
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| 151 | 151 | | chief appraiser determines that the sanctions provided by |
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| 152 | 152 | | Subsection (a) shall be imposed, the sanctions shall be based on the |
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| 153 | 153 | | date of the transfer of the property under Subsection (f)(4). |
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| 154 | 154 | | SECTION 4. Sections 23.58(c) and (d), Tax Code, are amended |
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| 155 | 155 | | to read as follows: |
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| 156 | 156 | | (c) A provision in an instrument pertaining to a loan |
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| 157 | 157 | | secured by a lien in favor of the lender on land appraised according |
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| 158 | 158 | | to this subchapter that requires the borrower to make a payment to |
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| 159 | 159 | | protect the lender from loss because of the imposition of |
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| 160 | 160 | | additional taxes [and interest] under Section 23.55 is void unless |
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| 161 | 161 | | the provision: |
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| 162 | 162 | | (1) requires the borrower to pay into an escrow |
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| 163 | 163 | | account established by the lender an amount equal to the additional |
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| 164 | 164 | | taxes [and interest] that would be due under Section 23.55 if a |
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| 165 | 165 | | change of use occurred on January 1 of the year in which the loan is |
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| 166 | 166 | | granted or amended; |
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| 167 | 167 | | (2) requires the escrow account to bear interest to be |
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| 168 | 168 | | credited to the account monthly; |
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| 169 | 169 | | (3) permits the lender to apply money in the escrow |
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| 170 | 170 | | account to the payment of a bill for additional taxes [and interest] |
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| 171 | 171 | | under Section 23.55 before the loan is paid and requires the lender |
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| 172 | 172 | | to refund the balance remaining in the escrow account after the bill |
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| 173 | 173 | | is paid to the borrower; and |
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| 174 | 174 | | (4) requires the lender to refund the money in the |
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| 175 | 175 | | escrow account to the borrower on the payment of the loan. |
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| 176 | 176 | | (d) On the request of the borrower or the borrower's |
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| 177 | 177 | | representative, the assessor for each taxing unit shall compute the |
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| 178 | 178 | | additional taxes [and interest] that would be due that taxing unit |
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| 179 | 179 | | under Section 23.55 if a change of use occurred on January 1 of the |
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| 180 | 180 | | year in which the loan is granted or amended. The assessor may |
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| 181 | 181 | | charge a reasonable fee not to exceed the actual cost of making the |
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| 182 | 182 | | computation. |
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| 183 | 183 | | SECTION 5. Sections 23.76(a), (b), and (e), Tax Code, are |
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| 184 | 184 | | amended to read as follows: |
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| 185 | 185 | | (a) If the use of land that has been appraised as provided by |
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| 186 | 186 | | this subchapter changes, an additional tax is imposed on the land |
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| 187 | 187 | | equal to the difference between the taxes imposed on the land for |
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| 188 | 188 | | each of the three [five] years preceding the year in which the |
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| 189 | 189 | | change of use occurs that the land was appraised as provided by this |
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| 190 | 190 | | subchapter and the tax that would have been imposed had the land |
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| 191 | 191 | | been taxed on the basis of market value in each of those years[, |
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| 192 | 192 | | plus interest at an annual rate of seven percent calculated from the |
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| 193 | 193 | | dates on which the differences would have become due]. |
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| 194 | 194 | | (b) A tax lien attaches to the land on the date the change of |
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| 195 | 195 | | use occurs to secure payment of the additional tax [and interest] |
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| 196 | 196 | | imposed by this section and any penalties and interest incurred if |
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| 197 | 197 | | the tax becomes delinquent. The lien exists in favor of all taxing |
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| 198 | 198 | | units for which the additional tax is imposed. |
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| 199 | 199 | | (e) A determination that a change in use of the land has |
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| 200 | 200 | | occurred is made by the chief appraiser. The chief appraiser shall |
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| 201 | 201 | | deliver a notice of the determination to the owner of the land as |
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| 202 | 202 | | soon as possible after making the determination and shall include |
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| 203 | 203 | | in the notice an explanation of the owner's right to protest the |
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| 204 | 204 | | determination. If the owner does not file a timely protest or if |
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| 205 | 205 | | the final determination of the protest is that the additional taxes |
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| 206 | 206 | | are due, the assessor for each taxing unit shall prepare and deliver |
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| 207 | 207 | | a bill for the additional taxes [and interest] as soon as |
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| 208 | 208 | | practicable after the change of use occurs. The taxes [and |
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| 209 | 209 | | interest] are due and become delinquent and incur penalties and |
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| 210 | 210 | | interest as provided by law for ad valorem taxes imposed by the |
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| 211 | 211 | | taxing unit if not paid before the next February 1 that is at least |
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| 212 | 212 | | 20 days after the date the bill is delivered to the owner of the |
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| 213 | 213 | | land. |
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| 214 | 214 | | SECTION 6. Sections 23.9807(a), (b), (c), and (f), Tax |
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| 215 | 215 | | Code, are amended to read as follows: |
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| 216 | 216 | | (a) If the use of land that has been appraised as provided by |
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| 217 | 217 | | this subchapter changes to a use that qualifies the land for |
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| 218 | 218 | | appraisal under Subchapter E, an additional tax is imposed on the |
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| 219 | 219 | | land equal to [the sum of: |
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| 220 | 220 | | [(1)] the difference between: |
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| 221 | 221 | | (1) [(A)] the taxes imposed on the land for each of the |
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| 222 | 222 | | three [five] years preceding the year in which the change of use |
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| 223 | 223 | | occurs that the land was appraised as provided by this subchapter; |
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| 224 | 224 | | and |
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| 225 | 225 | | (2) [(B)] the taxes that would have been imposed had |
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| 226 | 226 | | the land been appraised under Subchapter E in each of those years[; |
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| 227 | 227 | | and |
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| 228 | 228 | | [(2) interest at an annual rate of seven percent |
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| 229 | 229 | | calculated from the dates on which the differences would have |
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| 230 | 230 | | become due]. |
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| 231 | 231 | | (b) If the use of land that has been appraised as provided by |
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| 232 | 232 | | this subchapter changes to a use that does not qualify the land for |
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| 233 | 233 | | appraisal under Subchapter E or under this subchapter, an |
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| 234 | 234 | | additional tax is imposed on the land equal to [the sum of: |
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| 235 | 235 | | [(1)] the difference between: |
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| 236 | 236 | | (1) [(A)] the taxes imposed on the land for each of the |
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| 237 | 237 | | three [five] years preceding the year in which the change of use |
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| 238 | 238 | | occurs that the land was appraised as provided by this subchapter; |
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| 239 | 239 | | and |
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| 240 | 240 | | (2) [(B)] the taxes that would have been imposed had |
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| 241 | 241 | | the land been taxed on the basis of market value in each of those |
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| 242 | 242 | | years[; and |
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| 243 | 243 | | [(2) interest at an annual rate of seven percent |
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| 244 | 244 | | calculated from the dates on which the differences would have |
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| 245 | 245 | | become due]. |
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| 246 | 246 | | (c) A tax lien attaches to the land on the date the change of |
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| 247 | 247 | | use occurs to secure payment of the additional tax [and interest] |
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| 248 | 248 | | imposed by this section and any penalties and interest incurred if |
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| 249 | 249 | | the tax becomes delinquent. The lien exists in favor of all taxing |
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| 250 | 250 | | units for which the additional tax is imposed. |
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| 251 | 251 | | (f) A determination that a change in use of the land has |
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| 252 | 252 | | occurred is made by the chief appraiser. The chief appraiser shall |
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| 253 | 253 | | deliver a notice of the determination to the owner of the land as |
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| 254 | 254 | | soon as possible after making the determination and shall include |
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| 255 | 255 | | in the notice an explanation of the owner's right to protest the |
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| 256 | 256 | | determination. If the owner does not file a timely protest or if |
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| 257 | 257 | | the final determination of the protest is that the additional taxes |
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| 258 | 258 | | are due, the assessor for each taxing unit shall prepare and deliver |
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| 259 | 259 | | a bill for the additional taxes [and interest] as soon as |
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| 260 | 260 | | practicable after the change of use occurs. The taxes [and |
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| 261 | 261 | | interest] are due and become delinquent and incur penalties and |
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| 262 | 262 | | interest as provided by law for ad valorem taxes imposed by the |
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| 263 | 263 | | taxing unit if not paid before the next February 1 that is at least |
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| 264 | 264 | | 20 days after the date the bill is delivered to the owner of the |
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| 265 | 265 | | land. |
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| 266 | 266 | | SECTION 7. Sections 23.46(c) and (d), Tax Code, as amended |
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| 267 | 267 | | by this Act, apply only to a sale or diversion to a nonagricultural |
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| 268 | 268 | | use of land appraised under Subchapter C, Chapter 23, Tax Code, that |
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| 269 | 269 | | occurs on or after the effective date of this Act. |
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| 270 | 270 | | SECTION 8. Sections 23.47(c) and (d), Tax Code, as amended |
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| 271 | 271 | | by this Act, apply only to a loan secured by a lien on land |
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| 272 | 272 | | designated for agricultural use that is contracted for on or after |
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| 273 | 273 | | the effective date of this Act. |
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| 274 | 274 | | SECTION 9. Sections 23.55(a), (b), (e), (f), (m), and (n), |
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| 275 | 275 | | Tax Code, as amended by this Act, apply only to a change of use of |
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| 276 | 276 | | land appraised under Subchapter D, Chapter 23, Tax Code, that |
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| 277 | 277 | | occurs on or after the effective date of this Act. |
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| 278 | 278 | | SECTION 10. Sections 23.58(c) and (d), Tax Code, as amended |
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| 279 | 279 | | by this Act, apply only to a loan secured by a lien on open-space |
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| 280 | 280 | | land that is contracted for on or after the effective date of this |
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| 281 | 281 | | Act. |
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| 282 | 282 | | SECTION 11. Sections 23.76(a), (b), and (e), Tax Code, as |
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| 283 | 283 | | amended by this Act, apply only to a change of use of land appraised |
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| 284 | 284 | | under Subchapter E, Chapter 23, Tax Code, that occurs on or after |
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| 285 | 285 | | the effective date of this Act. |
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| 286 | 286 | | SECTION 12. Sections 23.9807(a), (b), (c), and (f), Tax |
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| 287 | 287 | | Code, as amended by this Act, apply only to a change of use of land |
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| 288 | 288 | | appraised under Subchapter H, Chapter 23, Tax Code, that occurs on |
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| 289 | 289 | | or after the effective date of this Act. |
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| 290 | 290 | | SECTION 13. This Act takes effect September 1, 2019. |
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