86R7076 CJC-F
By: Alvarado S.B. No. 1830
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 construction or
that has not reached stabilized occupancy 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 established and
utilized 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, adjusted as
provided by this subsection. For a property under construction on
January 1, the income and expenses contained in the underwriting
report shall be adjusted by multiplying those amounts by a
fraction, the denominator of which is the total construction budget
for the property and the numerator of which is the total amount
spent in constructing the property as of January 1. For a property
on which construction was completed but that has not reached
stabilized occupancy on January 1, the income and expenses
contained in the underwriting report shall be adjusted to reflect
the actual occupancy of the property on January 1.
(c) In appraising property for the first tax year following
the year in which construction on the property was completed and
occupancy of the property had stabilized, the chief appraiser shall
determine the appraised value of the property in the manner
provided by Section 11.1825(q).
(d) In appraising property for the second and subsequent tax
years following the year in which construction on the property was
completed and occupancy of the property had stabilized, 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 2020 tax
year, in appraising property for which construction was completed
on January 1, 2019, 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 2019 tax
year as compared to the 2018 tax year. This subsection expires
January 1, 2021.
(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
in each of those years at the lesser of:
(1) the price for which the property is sold; or
(2) the price for which the property is sold, adjusted
by the percentage change in the net income of the property for the
applicable year in the manner provided by Subsection (d).
(f) A tax lien attaches to property to which Subsection (e)
applies on the date the property is sold to secure payment of the
additional tax imposed by that subsection. The lien exists in favor
of all taxing units for which the additional tax is imposed.
(g) 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.
(h) Notwithstanding any other law:
(1) a property owner may not bring a protest under
Section 41.41(a)(2) alleging unequal appraisal of the owner's
property on the ground of the appraised value of the property being
greater than the median appraised value of a reasonable number of
comparable properties appropriately adjusted for any tax year in
which the appraised value of the property is determined as provided
by this section; and
(2) a property appraised as provided by this section
may not be used as a comparable property for the purpose of
determining whether another property that is not appraised as
provided by this section is unequally appraised.
(i) For purposes of this section, the chief appraiser, in
determining the percentage change in the net income of property:
(1) shall use generally accepted appraisal methods and
techniques to determine the property's operating expenses based on
information contained in:
(A) an audit of the organization that owns the
property prepared by an independent auditor covering the relevant
fiscal period; or
(B) 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; and
(2) may not consider the taxes imposed on the property
and paid by the organization that owns the property to be an
operating expense of the property.
(j) Not later than May 1 of each year, the owner of a
property appraised under this section shall provide to the chief
appraiser of the appraisal district that appraises the property a
copy of the document described by Subsection (i)(1)(A) or (B), as
applicable. The chief appraiser may extend the deadline provided
by this subsection 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, 2020.
SECTION 4. This Act takes effect January 1, 2020.